HomeMy WebLinkAbout98-518 FrymanLouis W. Fryman, Esq.
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market St., 10th Floor
Philadelphia, PA 19103 -3291
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
March 4, 1998
98 -518
Re: Conflict, Public Official, Appointment, Commissioner, State Ethics Commission,
Attorney, Law Firm, Business with which Associated, Political Contributions,
Representation, Clients, Commonwealth of Pennsylvania, Political Subdivisions.
Dear Mr. Fryman:
This responds to your letter of February 24, 1998 by which you requested advice
from the State Ethics Commission.
Whether the Ethics Law imposes any prohibition or restrictions upon the
managing partner of a law firm from serving as a State Ethics Commission (SEC)
Commissioner when the law firm makes political contributions as well as represents the
Commonwealth of Pennsylvania in various matters and represents political subdivisions.
Facts: By letter dated February 24, 1998, you state that you are to be appointed
by the Honorable Robert C. Jubelirer, President Pro Tempore, to replace Roy W. Wilt as
an SEC Commissioner. You are the managing partner of Fox, Rothschild, O'Brien and
Frankel (Firm), a law firm of 175 attorneys which operates as a limited liability partnership.
The Firm makes contributions to various candidates and political parties. In addition, the
Firm represents the Commonwealth of Pennsylvania in certain matters and represents
political subdivisions. You do not personally represent any of those government clients nor
would you represent any governmental bodies while a member of the Commission. You
state that you will "...not (1) campaign for any political office; (2) hold office in any
political party or political subcommittee; (3) actively participate in or contribute to any
political campaign; (4) directly or indirectly attempt to influence any decision by a
governmental body other than a court of law or as a representative of the Commission on
a matter within the jurisdiction of the Commission; (5) be employed by the
Commonwealth or a political subdivision in any other capacity whether or not for
compensation nor have ...[you]; (6) served as an officer in a political party for one year
prior to ... [your] appointment."
You have informed the administrators of the Firm that you intend to accept the
appointment as an SEC Commissioner and that any political contributions made by the
Firm should not be attributed to your percentage of ownership in the partnership.
However, since it is not practical to segregate income from the Firm as to work performed
on the behalf of Commonwealth and political subdivisions, you state that the Firm cannot
Fryman., 98 -518
March 4, 1998
Page 2
reduce any fractional portion of the fees received from such entities from the amount
distributed to yourself. You inquire as to whether such circumstances would present any
problems or prevent your appointment to the SEC.
Discussion: As a Commissioner for the State Ethics Commission (SEC), you would
be a public official as that term is defined in the Public Official and Employe Ethics Law
( "Ethics Law "), and hence you would be subject to the provisions of that law as well as
the Code of Conduct for SEC Commissioners. See, 65 P.S. §401 et sea.; 51 Pa. Code
§23.21 et seq.
Section 3(a) of the Ethics Law provides:
Section 3. Restricted Activities.
(a) No public official or public employee shall engage in
conduct that constitutes a conflict of interest.
The following terms are defined in the Ethics Law as follows:
Section 2. 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. "Conflict" or "conflict of interest"
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.
Section 3(j) of the Ethics Law provides as follows:
Section 3. Restricted activities
(j) 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 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
Fryman, 98 -518
March 4, 1998
Page 3
65 P.S. §406(d).
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.
Section 6. State Ethics Commission
(d) No individual, while a member or employee of the
commission, shall:
(1) hold or campaign for any other public office;
(2) hold office in any political party or political
committee;
(3) actively participate in or contribute to any political
campaign;
(4) directly or indirectly attempt to influence any
decision by a governmental body, other than a court of law or
as a representative of the commission on a matter within the
jurisdiction of the commission; or
(5) be employed by the Commonwealth or a political
subdivision in any other capacity, whether or not for
compensation.
In responding to your inquiry, Section 6(d) will be addressed first, followed by
Sections 3(a) and 3(j) of the Ethics Law.
Given the factual statements in your letter against holding or campaigning for other
public office (Section 6(d)(1)) or an office in a political party /committee (Section 6(d)(2)),
only Sections 6(d)(3) through (5) have possible application. As to Section 6(d)(3), you
have stated that you do not contribute to any political campaigns and the Firm segregates
any such contributions out of the share of profits attributable to you. Accordingly, since
you neither personally, nor as a partner in the Firm, participate or make any contributions
to political campaigns, Section 6(d)(3) presents no bar to your appointment.
Turning to Section 6(d)(4) of the Ethics Law, this subsection prohibits direct or
indirect attempts to influence any decision of a governmental body, subject to certain
exceptions not here applicable. Since you have stated that you personally would not
represent the Commonwealth or any political subdivisions, the question is whether your
Firm's representation of the Commonwealth or political subdivisions, constitutes an
attempt by you to influence any decision by a governmental body. The Firm's legal
representation of the Commonwealth or political subdivisions necessitates giving legal
advice to such governmental clients. Such advice would constitute an attempt to influence
decisions by those governmental bodies. However, as noted, you would have no
Fryman, 98 -518
March 4, 1998
Page 4
involvement and take no action as to your Firm's representation of such governmental
clients.
In McGuire and Marchitello v. State Ethics Commission, 657 A2d. 1346 (1995),
Commonwealth Court overturned SEC decisions which found that members of a municipal
authority, who received wages to which they were not entitled, violated the Ethics Law.
Because those public officials took no action to give themselves such illegal compensation
but merely accepted the monies which were approved by a prior board, Commonwealth
Court held that such action did not rise to the level of a "use" of office so as to constitute
actionable conduct:
While Yacobet does not require intent in order to find a violation of
Section 3(a) of the Ethics Act has occurred, it does not mean that a public
official does not have to take action to fall within that section's
prohibition...The SEC's belief that mere acceptance of a check constitutes
"use" of a public office reaches beyond the limits of the normal
interpretation of that term in the context provided...there was no action
taken by either McGuire or Marchitello regarding the monthly meeting pay
they received...As such, they merely accepted what was given to them and
did not use their office for personal financial gain.
Id. at 1351, 1352.
See also, Stevens v. State Ethics Commission, 571 A.2d 1120 (1990).
Therefore, in light of the fact that you will neither take any action nor have any
involvement with your Firm's representation of the Commonwealth or political
subdivisions, your nonaction would not constitute an attempt to influence a government
body. Hence, your conduct would not implicate Section 6(d)(4) of the Ethics Law.
As to the prohibition of Section 6(d)(5) against being employed by the
Commonwealth or a political subdivision, the Regulations of this Commission are
instructive as to the meaning of the term "employed by." The quoted phrase is defined
under the Regulations as "Used in any capacity, with or without compensation." See, 51
Pa. Code §11.1. The prohibition of Section 6(d)(5) against a Commissioner being used in
any capacity by the Commonwealth or political subdivision is indicative of a restriction
against action by a Commissioner as to such governmental bodies. Whether you receive
a portion of your Firm's fees in representing such governmental bodies is irrelevant since
the operative phraseology is "employed by" and "used in any capacity." The terminology
"with or without compensation" negates from consideration the fact that you will be
receiving a percentage of such fees for representing the government client. Since you
have indicated that you would not have any involvement or take any action as to your
Firm's governmental clients, Section 6(d)(5) would have no application. See, McGuire and
Marchitello v. State Ethics Commission, supra.
Section 3(a) will now be reviewed to determine whether you, as an SEC
Commissioner, would have conflict, given that your Firm is a business with which you are
associated as that term is defined under the Ethics Law. See, 65 P.S. §402. There are
two leading SEC opinions in this area: Connor, Opinion 85 -026 and Kannebecker, Opinion
92 -010.
The Commission in Connor, supra, addressed the question of whether the then
Chairman of the SEC, who was a practicing attorney and independent businessman, had
any conflicts when businesses with which he was associated held or entered into various
contracts with the Commonwealth or political subdivisions. In particular, Chairman Connor
had a 90% ownership in the Yellow Cab Co., which contracted with certain school
districts for services and also contracted with the Pennsylvania Department of. Revenue
(Revenue) for lottery advertisements on the cabs. Chairman Connor was also the
managing partner of a partnership which owned the Manor Building in Pittsburgh and
Fryman, 98 -518
March 4, 1998
Page 5
which had a lease with the Department of General Services (DGS), for a regional office
for the Office of Pennsylvania Attorney General (OAG). The SEC considered the issue both
under the conflict section, the contracting section and Section 6(d)(4) of the Ethics Law.
The following excerpt of the SEC's opinion is instructive:
The apparent intent of the State Ethics Act was to restrict members
and employees of the Commission from representing private interests before
other governmental bodies and personally attempting to influence those
governmental bodies in relation to such interests....This construction, of
course, results in a limitation of certain private rights and interests of
Commission members and employees. This rationale, however, is in accord
with one of the stated presumptions in determining legislative intent, i.e.,
that the General Assembly intends to favor the public interest as against any
private interest....the above restriction would not prevent a member or
employee of the Commission from making appropriate applications to or
seeking the services of other governmental bodies....Such a Commission
member, however, would be limited in the role that they [sic] personally
may play in relation thereto. Similarly, we do not believe that this provision
of law was intended to prohibit a business owned by a Commission member
from negotiating and executing contracts with other governmental bodies.
id. at 5, 6.
Although the Commission found no prohibitions as to such business contracts with
governmental bodies, the Commission found conflicts which required the Chairman's
abstention in matters involving any official of a school district for which his cab company
had negotiated or received a contract, any official of Revenue who was involved in the
award of the Bureau of State Lottery advertising contract to his cab company, and any
DGS, OAG, Board of Public Grounds and Buildings, or any other state agency official who
was involved in the review or approval of the lease agreement for the Manor Building.
The second SEC opinion in this area is Kannebecker, supra, wherein the
Commission held that a second -class township supervisor had a conflict as to individuals
who had matters pending before the township board when the supervisor, as an attorney,
represented those individuals in nonrelated matters:
"We believe that you would indeed have a conflict as to an ongoing
client or a client who is on a retainer even if you would not represent the
client as to a matter pending before the Township. However, as to former
or past clients, we do not believe as a general rule that you would have a
conflict. Under certain circumstances, a conflict could exist as to past
clients; such would depend upon factors like the number of prior
representations of any given client and the period of time over which that
occurred."
Id. at 15.
See Blso, Miller, Opinion 89 -024.
Based upon the above precedent, you would have a conflict in matters before the
Commission involving your Firm, its clients, and the officials in the Commonwealth or
political subdivisions who arranged or voted for the representation by your Firm.
In addition, you would have a conflict in all cases as delineated in the Code of
Conduct for SEC Commissioners, 51 Pa. Code § §23.21 gt egg. A photocopy of the Code
of Conduct is attached for your information and review. Any specific questions about the
application of the Code of Conduct may be submitted in a request for additional or
Fryman, 98 -518
March 4, 1998
Page 6
supplemental advice. Recusal as per Section 3(j) of the Ethics Law and the Code of
Conflict is required in any instances of conflict as delineated above.
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Law; the applicability of any other statute, code, ordinance, regulation or other
code of conduct other than the Ethics Law has not been considered in that they do not
involve an interpretation of the Ethics Law.
Conclusion: As a Commissioner for the State Ethics Commission (SEC), you would
be a public official subject to the provisions of the Ethics Law. Although the Ethics Law
would not prohibit your appointment as an SEC Commissioner when the law firm in which
you are the managing partner makes political contributions as well as represents the
Commonwealth in various matters and represents political subdivisions, you would have
a conflict in matters before the Commission involving your firm, its clients, and the
officials in the Commonwealth or political subdivisions who arranged or voted for the
representation by your firm. You will also be subject to the Code of Conduct for SEC
Commissioners. In instances of conflict, you must recuse yourself as per Section 3(j) of
the Ethics Law. Lastly, the propriety of the proposed conduct has only been addressed
under the Ethics Law.
Pursuant to Section 7(11), 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 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.
Si i cerely,
Vincent J. s opko
Chief Counsel