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HomeMy WebLinkAbout87-632 MchughPatrick M. McHugh, Esquire Suite 1510, Two Penn Center Plaza 15th & JFK Boulevard Philadelphia, PA 19102 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 November 19, 1987 ADVICE OF COUNSEL Re: Statement of Financial Interests, Attorney 87 -632 Dear Mr. McHugh: This responds to your letter of October 14, 1987, wherein you indicate that you represent Mr. Gary DiVito who is a former public employee /attorney with the Liquor Control Board (LCB) and who has failed to file the Statement of Financial Interests. This matter has been processed as a request for an advice from the State Ethics Commission. Issue: Whether a former Chief Counsel for the Pennsylvania Liquor Control Board is a public employee as that term is defined in the State Ethics Act and, therefore, required to file a Statement of Financial Interests in accordance with the Act. Facts: Pursuant to your letter dated October 14, 1987, you have stated that Mr. DiVito, as a former public employee, has refused to file the Statement of Financial Interests and that the decision of the Supreme Court in State Ethics Commission v. Maunus /Thau, 38 M.D. 1987 will, in all likelihood, be diapositive of the issue herein. No other basis for the refusal to file the Statement of Financial Interests has been asserted and it is, therefore, assumed for the purpose of this advice that you have adopted the same legal arguments as set forth by Mr. Thau and Ms. Maunus in their court appeal. Generally, those individuals have not contested the fact that they are public employees within the purview of the State Ethics Act; rather, they have asserted that they are exempted from Ethics Act coverage by virtue of their positions as attorneys. As such, your question will be addressed within the purview of that assertion. Patrick M. Mchugh, Esquire November 19, 1987 Page 2 Discussion: Generally, as former Chief Counsel to the Liquor Control Board of Pennsylvania, hereinafter the LCB, there is no doubt that Mr. DiVito is a public employee within the purview of the State Ethics Act. 65 P.S. §402. 51 Pa. Code §1.1. Mr. DiVito is, therefore, required to comply with the provisions of the State Ethics Act. Generally, the State Ethics Act provides that public employees must file a Statement of Financial Interests by May 1 of each year in which they serve and of the year after they leave such position. Said statement is to cover financial interests for the prior calendar year. Generally, the Commission has addressed the specific question which you are asserting in the opinions that have been issued to Maunus, 84 -020B; and Thau, 84 -020A. In those opinions, the Commission generally set forth its rationale in finding that those individuals were not exempt from the Ethics Act coverage in light of their positions as attorneys. For the purpose of this advice, the analysis of the Commission as set forth in the opinions issued to those individuals will be restated. With respect to your argument that an attorney should be exempt from the financial reporting and disclosure provisions of the State Ethics Act, reliance is placed upon the ruling of the Commonwealth Court in Ballou v. State Ethics Commission, 424 A.2d 983, 56 Pa. Cmwlth. 240 (1981). It should be noted that this ruling of the Commonwealth Court was subject to further review by the Supreme Court and its ruling may be found at Ballou v. State Ethics Commission, 496 Pa. 127, 436 A.2d 186 (1981). A short review of these cases and theft ffactual context and their conclusions is appropriate in reviewing your advice request. The above case arose when a township solicitor, Richard D. Ballou, filed a petition for declaratory judgment and injunctive relief seeking to be exempted from the financial reporting and di sl cosure requirements of the Ethics Act. The factual context in which this declaratory judgment was sought was clearly that the individual, Mr. Ballou, served as a solicitor to a county coroner, a municipal authority and several townships and he raised the question on the applicability of the Ethics Act to municipal solicitors and also the question of constitutionality of the financial reporting and disclosure requirements. Mr. Ballou's first argument was that he was not a "public employee" because he was an independent contractor and, therefore, not within the definition of "public employee" as contained in Section 2 of the Ethics Act, 65 P.S. §402. Essentially, Mr. Ballou argued that he did not fall within the class of "public employees" because he was not an "individual employed by the Commonwealth or a political sub- division." Similarly, Mr. Ballou argued that he was not a "public employee" because his duties as township solicitor did not include responsibility for taking or recommending any official action. With respect to these two arguments the Commonwealth Court ruled that as a municipal solicitor, Mr. Ballou would be considered a "public employee" as defined in the State Ethics Act. Thus, absent any exemption, Mr. Ballou would have been found to be a "public employee" subject to the Ethics Act. Patrick M. Mchugh, Esquire November 19, 1987 Page 3 However, the Court was also asked to address the question of whether the imposition of the provisions of the Ethics Act upon Mr. Ballou, as a municipal solicitor and an attorney, was unconstitutional as an infringement upon the Supreme Court's exclusive power to govern the conduct of persons privileged to practice law in Pennsylvania. As to this argument, the Commonwealth Court agreed that the "subject of conflict of interest, including disclosure of financial interest, has been fully regulated with respect to attorneys by the Supreme Court" and, therefore, held that the financial reporting and disclosure provisions of the Ethics Act, as applied to attorneys, infringed upon the Supreme Court's inherent and exclusive power to regulate the conduct of attorneys. Therefore, the Commonwealth Court concluded that the preliminary objections of the State Ethics Commission should be overruled. Following the entry of final judgment in this matter, the State Ethics Commission appealed this ruling to the Supreme Court. Upon review, the Supreme Court issued an Opinion on October 3, 1981. This Opinion concluded as follows: "The order of Commonwealth Court is In affirmed insofar as it directs judgment in favor of appellee ( Ballou)." its Opinion, the Supreme Court made it clear that they were not reviewing the conclusions of the Commonwealth Court as to the possibility that the application of the Ethics Act would constitute an unconstitutional infringement upon the Supreme Court's exclusive power to govern the conduct of persons privileged to practice law in Pennsylvania. Essentially, the Supreme Court criticized the Commonwealth Court for reaching, addressing, and deciding a constitutional and u aof the on nonrconstitutional found, groundscase could be properly decided disposed Specifically, the Supreme Court in reviewing the case clearly based its determination on statutory, not constitutional grounds. The Supreme Court's ruling in effect concluded that an individual serving in the capacity of solicitor to a municipality was neither a public employee nor public official within the scope of the Ethics Act. Thus, it was unnecessary for the Commonwealth Court to have reached and for the Supreme Court, therefore, to review the question of the constitutionality of financial reporting and disclosure requirements of the Ethics Act as applied to attorneys, in general. The Supreme Court's conclusion was basically that municipal because for are situated similarily to members of advisory boards who, p power to expend public funds or to otherwise exercise the power of the state, should not be considered to be "public employees" or in that context to be "employed by the Commonwealth" and to be responsible for taking or recommending official action with respect to the categories listed in the definition of "public employee" under the Ethics Act. As noted above, in your particular case, you have not argued that Mr. DiVito was not "employed by the Commonwealth" or "responsible for taking or recommending official action" with respect to the categories outlined in the Patrick M. Mchugh, Esquire November 19, 1987 Page 4 definition of "public employee" within the Ethics Act. Therefore, based upon this concession, your situation is factually, substantially different from that situation which was addressed by both the Commonwealth Court and the Supreme Court in Ballou. The Supreme Court's ruling in that case was limited to and exempted from the statutory definition of "public employee" or "public official" only those persons who served in the part -time capacity as independent contractors as solicitors with the municipality; your factual situation is substantially different or has not been challenged to this point. Thus, even your reliance upon the Commonwealth Court's Ballou ruling may not be presented as persuasive or dispositive precedent because the factual circumstances, which you have not challenged in the present case, are substantially different from those which the Commonwealth Court itself was reviewing. Accordingly, the Commission found that the Commonwealth Court ruling is not dispositive, fully persuasive or binding with respect to the situation you present. Basically, the Commission is not willing to nor does it have the power to declare the provisions of the Ethics Act unconstitutional or to concede that this power of the Supreme Court extends to or is applicable to this situation absent a clear and palpable demonstration case and factual unconstitutionality of these provisions as app circumstances and absent cogent argument that the Commonwealth Court ruling in Ballou must be mandatorilY observed and applied to your factual l i itua i io . on a Basically, no case which you present or argue in your appeal factual basis or is clearly applicable to mandate the conclusion that the Legislature may not adopt and apply the e Ethics esAct s and its Mrinancial reporting and disclosure provisions to full-time Lacking any specific dispositive or clearly, factually applicable or identical case or precedent, your arguments and appeal on this score must be rejected. The above issue, which was presented to the Commonwealth Court in Thau and Maunus and which is therptthan Pennsylvania the did not assert any new grounds ds o its opinion. The Courts, however, have not to date issued any rulings that indicates the position of the respondents in that matter is one which is most likely to be determined in their favor. Additionally, the Commonwealth Court of Pennsylvania has made no indication that they would issue any type of indivviduadual s. or Mr. DiVitogisrnot which indiil not a party in the Commission's preceedi ngs involving these individuals. As such, it is not believed that the fact tWhilehtheredare appropriatevstepsethat case currently affects you in any way. may be taken which may result in a postponement of the filing requirement as applied to Mr. DiVito, this Commission, has not to date issued any order, Patrick M. Mchugh, Esquire November 19, 1987 Page 5 opinion, advice or policy statement that would require the suspension of the filing requirement as to classes of individuals absent the issuance of a court order so directing. As such, Mr. DiVito is a public employee covered by the State Ethics Act and is required to file a Statement of Financial Interests. Conclusion: As former Chief Counsel to the Pennsylvania Liquor Control Board, Mr. DiVito is to be considered a former public employee within the purview of the State Ethics Act. The Ethics Act would require that a Statement of Financial Interests be filed by him on or before May 1 of each year in which he served and of the year after he left such a position. To date, no court cases have determined that full -time publicly employed attorneys are exempt from the State Ethics Act. This Commission does not believe that the fact that one court case is pending wherein the issue may be resolved is sufficient justification for this agency to suspend the filing requiremnt as to all other potentially affected individuals. Pursuant to Section 7(9)(ii), this 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, providing the requestor 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. Sincerely, Vincent J. Dopko General Counsel