HomeMy WebLinkAbout15-504 Wild
ADVICE OF COUNSEL
February 12, 2015
Susan Ellis Wild, Esquire
Gross McGinley, LLP
33 S. Seventh Street
P.O. Box 4060
Allentown, PA 18105
15-504
Dear Ms. Wild:
This responds to your two letters dated December 19, 2014, by which you
requested an advisory from the Pennsylvania State Ethics Commission.
Issue:
Whether, upon assuming part-time employment as a city solicitor, an
individual who is a partner in a law firm would have a conflict of interest under Section
1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103
et seq., in matters pertaining to open litigation cases which were contracted to the law
firm by the prior city solicitor, where the individual would continue to be a partner in the
law firm after becoming the city solicitor.
Facts:
You request an advisory from the Pennsylvania State Ethics Commission
based upon submitted facts that may be fairly summarized as follows.
You are a partner in the law firm of Gross McGinley, LLP (the “Firm”). At the time
that you submitted your inquiry, you stated that you would become the City Solicitor for
the City of Allentown (“City”) effective January 7, 2015. As the City Solicitor, you would
be a part-time employee of the City, and you would be paid a salary and not a retainer
or hourly rate. You stated that you would continue to be a partner at the Firm after
becoming the City Solicitor.
For approximately the past eight years, you handled personal injury defense
litigation work for the City which was contracted to the Firm by then-City Solicitor Jerry
A. Snyder (“Mr. Snyder”). Several Firm associates and a paralegal also performed
tasks associated with the aforesaid work for the City, although you handled all trials and
significant depositions.
There are currently seven open cases (the “Open Cases”) at varying stages of
litigation which were referred to the Firm by Mr. Snyder. The contract/engagement
letter between the City and the Firm regarding the Open Cases was prepared by Mr.
Snyder as the City Solicitor. Firm lawyers currently assigned to the Open Cases are
fully familiar with the facts and status of the litigation. It is anticipated that most or all of
Wild, 15-504
February 12, 2015
Page 2
the Open Cases will come to a conclusion within the next twelve to eighteen months.
The City administration and Mr. Snyder have expressed a preference that you and the
Firm would continue to handle the Open Cases even after you would become the City
Solicitor, in order to prevent duplicative legal expense from having new counsel become
familiar with the Open Cases.
You stated that if the Firm would be permitted to continue its representation of
the City in the Open Cases, you would supervise the Open Cases in your dual capacity
as a partner in the Firm and as the City Solicitor, but no hourly billings would be
generated by you in such dual capacity. You stated that you would consider your
involvement in the Open Cases to be within the scope of your employment as the City
Solicitor without further remuneration. Other attorneys and paralegals in the Firm who
would work on the Open Cases would bill in accordance with the hourly fee agreements
previously entered into by the Firm and the City. You stated that all bills for legal
services from the Firm would be submitted to and approved by an appropriate individual
within the City other than you.
The narrow question that you have posed is whether you would have any
obligations with respect to the Open Cases upon assuming employment as the City
Solicitor. You express your understanding that no future legal work of any nature may
be referred to the Firm by you as the City Solicitor. You further express your view that
retention of the Open Cases by the Firm would not result in a violation of Section
1103(f) of the Ethics Act.
Discussion:
Pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65
Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts
that the requester has submitted. In issuing the advisory based upon the facts that the
requester has submitted, the Commission does not engage in an independent
investigation of the facts, nor does it speculate as to facts that have not been submitted.
It is the burden of the requester to truthfully disclose all of the material facts relevant to
the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the
extent the requester has truthfully disclosed all of the material facts.
It is initially noted that this Advice is limited to addressing the narrow question
posed.
Upon assuming employment as the City Solicitor, you would be considered a
public employee subject to the Ethics Act. This conclusion is based upon the submitted
fact that as the City Solicitor, you would be a salaried part-time employee of the City.
See, P.J.S. v. State Ethics Commission, 555 Pa. 149, 723 A.2d 174 (1999) (holding that
a solicitor who is employed by a governmental body and not just on retainer would be
considered a “public employee” subject to the provisions of the Ethics Act); cf., C.P.C. v.
State Ethics Commission, 698 A.2d 155 (Pa. Cmwlth. 1997), alloc. den., 550 Pa. 686,
704 A.2d 640 (1997) (holding that retained--as opposed to employed--solicitors are not
public officials/public employees under the Ethics Act).
Sections 1103(a) and 1103(j) of the Ethics Act provide:
§ 1103. Restricted activities
(a)Conflict of interest.--
No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
(j)Voting conflict.--
Where voting conflicts are not
otherwise addressed by the Constitution of Pennsylvania or
by any law, rule, regulation, order or ordinance, the following
procedure shall be employed. Any public official or public
Wild, 15-504
February 12, 2015
Page 3
employee who in the discharge of his official duties would be
required to vote on a matter that would result in a conflict of
interest shall abstain from voting and, prior to the vote being
taken, publicly announce and disclose the nature of his
interest as a public record in a written memorandum filed
with the person responsible for recording the minutes of the
meeting at which the vote is taken, provided that whenever a
governing body would be unable to take any action on a
matter before it because the number of members of the body
required to abstain from voting under the provisions of this
section makes the majority or other legally required vote of
approval unattainable, then such members shall be
permitted to vote if disclosures are made as otherwise
provided herein. In the case of a three-member governing
body of a political subdivision, where one member has
abstained from voting as a result of a conflict of interest and
the remaining two members of the governing body have cast
opposing votes, the member who has abstained shall be
permitted to vote to break the tie vote if disclosure is made
as otherwise provided herein.
65 Pa.C.S. §§ 1103(a), (j).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"Conflict" or "conflict of interest."
Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate
family or a business with which he or a member of his
immediate family is associated. The term does not include
an action having a de minimis economic impact or which
affects to the same degree a class consisting of the general
public or a subclass consisting of an industry, occupation or
other group which includes the public official or public
employee, a member of his immediate family or a business
with which he or a member of his immediate family is
associated.
"Authority of office or employment."
The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
"Business."
Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self-employed individual, holding company,
joint stock company, receivership, trust or any legal entity
organized for profit.
"Business with which he is associated."
Any
business in which the person or a member of the person's
immediate family is a director, officer, owner, employee or
has a financial interest.
Wild, 15-504
February 12, 2015
Page 4
65 Pa.C.S. § 1102.
It is noted that Section 1103(a) of the Ethics Act does not prohibit public
officials/public employees from having outside business activities or employment.
However, subject to the statutory exclusions to the Ethics Act’s definition of the term
“conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee
may not use the authority of his public position--or confidential information obtained by
being in that position--for the advancement of his own private pecuniary benefit or that
of a business with which he is associated. Pancoe, Opinion 89-011. Examples of
conduct that could form the basis for a conflict of interest under Section 1103(a) of the
Ethics Act would include the pursuit of a private business opportunity in the course of
public action (Metrick, Order 1037) and the participation in an official capacity as to
matters involving the business with which the public official/public employee is
associated in his private capacity or private client(s) (Miller, Opinion 89-024;
Kannebecker, Opinion 92-010). A reasonable and legitimate expectation that a business
relationship will form may support a finding of a conflict of interest (Amato, Opinion 89-
002).
In each instance of a conflict of interest, the public official/public employee would
be required to abstain from participation. The abstention requirement would extend to
any use of authority of office including, but not limited to, discussing, conferring with
others, and lobbying for a particular result. Juliante, Order 809.
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the \[public official/public employee\] of the potential
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public official/public employee “must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of
one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231.
Based upon Kistler, the existence of a violation of Section 1103(a) would depend
upon the circumstances in a given case. Raphael, Opinion 13-003.
In addition, Sections 1103(b) and 1103(c) of the Ethics Act, 65 Pa.C.S. §§
1103(b), (c), provide in part that no person shall offer or give to a public official/public
employee anything of monetary value and no public official/public employee shall solicit
or accept anything of monetary value based upon the understanding that the vote,
official action, or judgment of the public official/public employee would be influenced
thereby. Reference is made to these provisions of the law not to imply that there has
been or will be any transgression thereof but merely to provide a complete response to
the question presented.
Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows:
§ 1103. Restricted activities
(f)Contract.--
No public official or public employee or
his spouse or child or any business in which the person or
Wild, 15-504
February 12, 2015
Page 5
his spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with
which the public official or public employee is associated or
any subcontract valued at $500 or more with any person
who has been awarded a contract with the governmental
body with which the public official or public employee is
associated, unless the contract has been awarded through
an open and public process, including prior public notice and
subsequent public disclosure of all proposals considered and
contracts awarded. In such a case, the public official or
public employee shall not have any supervisory or overall
responsibility for the implementation or administration of the
contract. Any contract or subcontract made in violation of
this subsection shall be voidable by a court of competent
jurisdiction if the suit is commenced within 90 days of the
making of the contract or subcontract.
65 Pa.C.S. § 1103(f).
The term “contract” is defined in the Ethics Act as follows:
§ 1102. Definitions
"Contract."
An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as
one party and a public official or public employee as the
other party, concerning his expense, reimbursement, salary,
wage, retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
65 Pa.C.S. § 1102.
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official/public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the governmental body, or
subcontracting with any person who has been awarded a contract with the
governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an
“open and public process” be observed as to the contract with the governmental body.
Section 1103(f) of the Ethics Act also provides that the public official/public employee
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
Having established the above general principles, you are advised as follows.
The Firm is a business with which you are associated in your capacity as a
partner.
Section 1103(a) of the Ethics Act, pertaining to conflict of interest, imposes
restrictions upon public officials and public employees. Therefore, Section 1103(a)
would impose restrictions upon you in your capacity as a public employee, rather than
upon you in your private capacity as a partner in the Firm.
Wild, 15-504
February 12, 2015
Page 6
The submitted facts do not specify what actions you would take in “supervising”
the Open Cases upon becoming City Solicitor. You are advised that although the
Ethics Act would not prohibit you from providing legal representation to the City for the
Open Cases in your capacity as the salaried City Solicitor, Section 1103(a) of the Ethics
Act would prohibit you from acting in your capacity as City Solicitor for the private
pecuniary benefit of the Firm. Specifically, you would have a conflict of interest and
would transgress Section 1103(a) of the Ethics Act by action(s) taken in your capacity
as the City Solicitor if: (1) you would be consciously aware of a private pecuniary benefit
for you or the Firm; (2) your action(s) would constitute one or more specific steps to
attain that benefit; and (3) neither of the statutory exclusions to the definition of "conflict"
or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be
applicable. In each instance of a conflict of interest, you would be required to abstain
fully from participation.
Section 1103(f) of the Ethics Act would not be applicable to the current
contract(s) between the Firm and the City involving the Open Cases given that such
contract(s) would have been entered into prior to you assuming employment as the City
Solicitor. Cf., Lewis, Advice 13-587; Bowers, Advice 07-588; Burkhart, Advice 03-535.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the City of Allentown Home Rule Charter or the Rules of Professional Conduct.
Conclusion:
Based upon the submitted facts that: (1) you are a partner in the
law firm of Gross McGinley, LLP (the “Firm”); (2) at the time that you submitted your
inquiry, you stated that you would become the City Solicitor for the City of Allentown
(“City”) effective January 7, 2015; (3) as the City Solicitor, you would be a part-time
employee of the City, and you would be paid a salary and not a retainer or hourly rate;
(4) you would continue to be a partner at the Firm after becoming the City Solicitor; (5)
for approximately the past eight years, you handled personal injury defense litigation
work for the City which was contracted to the Firm by then-City Solicitor Jerry A. Snyder
(“Mr. Snyder”); (6) several Firm associates and a paralegal also performed tasks
associated with the aforesaid work for the City, although you handled all trials and
significant depositions; (7) there are currently seven open cases (the “Open Cases”) at
varying stages of litigation which were referred to the Firm by Mr. Snyder; (8) the
contract/engagement letter between the City and the Firm regarding the Open Cases
was prepared by Mr. Snyder as the City Solicitor; (9) Firm lawyers currently assigned to
the Open Cases are fully familiar with the facts and status of the litigation; (10) it is
anticipated that most or all of the Open Cases will come to a conclusion within the next
twelve to eighteen months; (11) the City administration and Mr. Snyder have expressed
a preference that you and the Firm would continue to handle the Open Cases even after
you would become the City Solicitor, in order to prevent duplicative legal expense from
having new counsel become familiar with the Open Cases; (12) if the Firm would be
permitted to continue its representation of the City in the Open Cases, you would
supervise the Open Cases in your dual capacity as a partner in the Firm and as the City
Solicitor, but no hourly billings would be generated by you in such dual capacity; (13)
you would consider your involvement in the Open Cases to be within the scope of your
employment as the City Solicitor without further remuneration; (14) other attorneys and
paralegals in the Firm who would work on the Open Cases would bill in accordance with
the hourly fee agreements previously entered into by the Firm and the City; and (15) all
bills for legal services from the Firm would be submitted to and approved by an
appropriate individual within the City other than you, you are advised as follows.
Upon assuming employment as the City Solicitor, you would become a public
employee subject to the provisions of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1101 et seq. The Firm is a business with which you are
Wild, 15-504
February 12, 2015
Page 7
associated in your capacity as a partner. Section 1103(a) of the Ethics Act, pertaining
to conflict of interest, imposes restrictions upon public officials and public employees.
Therefore, Section 1103(a) would impose restrictions upon you in your capacity as a
public employee, rather than upon you in your private capacity as a partner in the Firm.
The submitted facts do not specify what actions you would take in “supervising”
the Open Cases upon becoming City Solicitor. You are advised that although the
Ethics Act would not prohibit you from providing legal representation to the City for the
Open Cases in your capacity as the salaried City Solicitor, Section 1103(a) of the Ethics
Act would prohibit you from acting in your capacity as City Solicitor for the private
pecuniary benefit of the Firm. Specifically, you would have a conflict of interest and
would transgress Section 1103(a) of the Ethics Act by action(s) taken in your capacity
as the City Solicitor if: (1) you would be consciously aware of a private pecuniary benefit
for you or the Firm; (2) your action(s) would constitute one or more specific steps to
attain that benefit; and (3) neither of the statutory exclusions to the definition of "conflict"
or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be
applicable. In each instance of a conflict of interest, you would be required to abstain
fully from participation.
Section 1103(f) of the Ethics Act would not be applicable to the current
contract(s) between the Firm and the City involving the Open Cases given that such
contract(s) would have been entered into prior to you assuming employment as the City
Solicitor. Lastly, the propriety of the proposed conduct has only been addressed under
the Ethics Act.
Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense
in any enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any other civil or criminal proceeding, provided the requester has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such
.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717-787-0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel