HomeMy WebLinkAbout98-590 RubinMitchell Rubin, Commissioner
Pennsylvania Turnpike Commission
Harrisburg, PA 17106 -7676
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 1 71 08 -1 470
(717) 783 -1610
1 -800- 932 -0936
ADVICE OF COUNSEL
August 26, 1998
98 -590
Re: Conflict; Public Official /Employee; Commissioner; Pennsylvania Turnpike
Commission; Private Employment or Business; For - Profit Corporation;
Shareholder; Legal Support Services; Client.
Dear Commissioner Rubin:
This responds to your letter of August 5, 1998 by which you requested advice
from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Law presents any
prohibition or restrictions upon a Commissioner of the Pennsylvania Turnpike
Commission ( "PTC ") who in his private capacity, is a 50% shareholder in a business
which provides legal support services to law firms, some of which law firms provide
legal services to the PTC.
Facts: As a Commissioner with the Pennsylvania Turnpike Commission ( "PTC "),
you request an advisory from the State Ethics Commission.
You have served as a Commissioner with the PTC since June 3, 1998. In your
private capacity, you are a 50% shareholder in B & R Services for Professionals, Inc.
( "B & R "), a for - profit corporation which provides legal support services — such as
court reporting, process serving, and court filings — to law firms. B & R provides such
services for a fee, either under an on -going contract or on an on -call request basis.
At formal meetings, the PTC Commissioners customarily approve as an agenda
item the payment of fees and expenses to outside law firms for legal services provided
to the PTC. Such law firms may include past, current, or potential customers of B &
R.
You state that, prior to the formal PTC meeting of July 21, 1998, you disclosed
to PTC Chief Counsel William A. Chesnutt that a law firm whose invoice was to be
approved at that meeting was a regular customer of B & R. Based upon his advice, you
abstained from voting on the approval of that invoice or the invoice of any other law
firm included in the same agenda item.
You ask for an advisory from the State Ethics Commission as to the
circumstances under which you may vote to approve the payment of invoices for legal
FAX : (717) 787 -0806 • Web Site: www.ethics.state.pa.us • e -mail: sec@state.pa.us
Rubin, 98 -590
August 26, '1998
Page 2
services rendered to the PTC. Pending your receipt of an advisory, you intend to
abstain from voting on the PTC agenda item in question.
Discussion: This Advice is limited to addressing the narrow question which you
have posed, involving voting as a Commissioner with the Pennsylvania Turnpike
Commission to approve payments to law firms which are past, present, or potential
clients of B & R Services for Professionals, Inc. ( "B & R ").
It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law,
65 P.S. §§407(10), (11), advisories are issued to the requestor based upon the facts
which the requestor has submitted. In issuing the advisory based upon the facts which
the requestor has submitted, the Commission does not engage in an independent
investigation of the facts, nor does it speculate as to facts which have not been
submitted. It is the burden of the requestor to truthfully disclose all of the material
facts relevant to the inquiry. 65 P.S. §§407(10), (11). An advisory only affords a
defense to the extent the requestor has truthfully disclosed all of the material facts.
As a Commissioner with the Pennsylvania Turnpike Commission ( "PTC "), you
are a public official as that term is defined in the Public Official and Employee Ethics
Law ( "Ethics Law "), and hence you are subject to the provisions of that law.
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,
Rubin, 98 -590
August 26, 1998
Page 3
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.
"Financial interest." Any financial interest in a legal
entity engaged in business for profit which comprises more
than 5% of the equity of the business or more than 5% of
the assets of the economic interest in indebtedness.
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 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.
In applying the above provisions of the Ethics Law to the instant matter, since
you are a 50% shareholder of B & R, it would be considered a business with which
you are associated.
It is generally noted that a conflict of interest exists pursuant to Section 3(a) of
the Ethics Law where a public official /public employee, in his official capacity,
participates, reviews or passes upon a matter involving a business with which he is
associated and /or private clients. Miller, Opinion No. 89 -024; Kannebecker, Opinion
No. 92 -010. A reasonable and legitimate expectation that a business relationship will
form may also support a finding of a conflict of interest. Amato, Opinion No. 89 -002;
Garner, Opinion No. 93 -004; Snyder, Order No. 979 -2, affirmed Snyder v. SEC, 686
A.2d 843 (Pa. Commw. Ct. 1996), alloc. den., No. 0029 M.D. Allocatur Docket 1997
(Pa. December 22, 1997). The State Ethics Commission has also held that it is a
Rubin, 98 -590
August 26, 1998
Page 4
conflict of interest under Section 3(a) for a public official /public employee to pursue
a private business opportunity in the course of public action. Metrick, Order No. 1037.
In each instance of a conflict of interest, the public official /public employee
must abstain from participation in his public capacity. The abstention requirement is
not limited merely to voting, but extends to any use of authority of office. In Juliante,
Order No. 809, the Commission recognized that the use of authority of office as
defined in the Ethics Law includes, for example, discussing, conferring with others,
and lobbying for a particular result.
In each instance of a conflict of interest, the public official must also satisfy the
disclosure requirements of Section 3(j) set forth above.
In Kannebecker, supra, the State Ethics Commission determined that a township
supervisor, who in his private capacity was an attorney, would have a conflict of
interest as to matters before the township involving ongoing client(s) or client(s) for
whom he was on retainer, even if he would not represent such client(s) as to the
matter pending before the township. The Commission determined that as a general
rule, a conflict would not exist as to former client(s), but that under certain
circumstances, a conflict could exist as to former client(s) depending upon factors
such as the number of prior representations of the given client and the period of time
over which such occurred.
Based upon the above precedents, it is clear that in your capacity as a PTC
Commissioner, you would have a conflict of interest in voting to approve payments to
law firms which would be existing clients of B & R or which could reasonably and
legitimately be expected to form a business relationship with B & R. A conflict of
interest could also exist as to past clients of B & R, depending upon factors such as
those enunciated in Kannebecker, supra.
In each instance of a conflict of interest, you would be required to abstain from
participation and to fully satisfy the disclosure requirements of Section 3(j) as set forth
above.
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 with the Pennsylvania Turnpike Commission
( "PTC "), you are a public official subject to the provisions of the Ethics Law. Since you
are a 50% shareholder of B & R Services for Professionals, Inc. ( "B & R "), it would be
considered a business with which you are associated. In your capacity as a PTC
Commissioner, you would have a conflict of interest in voting to approve payments to
law firms which would be existing clients of B & R or which could reasonably and
legitimately be expected to form a business relationship with B & R. A conflict of
interest could also exist as to past clients of B & R, depending upon factors such as
those enunciated in Kannebecker, Opinion No. 92 -010. In each instance of a conflict
of interest, you would be required to abstain from participation and to fully satisfy the
disclosure requirements of Section 3(j) as set forth above. 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
Rubin, 98 -590
August 26, 1998
Page 5
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.
cerely,
v
Vincent d'. Dopko
Chief Counsel