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HomeMy WebLinkAbout03-532 MellorK. Bradley Mellor, Esq. Blumling & Gusky, LLP 1200 Koppers Building 436 7 Avenue Pittsburgh, PA 15219 -1818 Re: Conflict; Public Official /Employee; Township; Supervisor; Attorney; Firm; Clients; Representation of Municipal Authority; Statement of Financial Interests. Dear Mr. Mellor: ADVICE OF COUNSEL March 26, 2003 03 -532 This responds to your letter of February 24, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.G.S. § 1101 et seq., would require a candidate /township supervisor who, in his private capacity, is special counsel to a municipal authority, to disclose his work as special counsel for the municipal authority on his Statement(s) of Financial Interests; and whether the township supervisor's recusal from issues presented by his firm or its clients would eliminate any potential conflict of interest with respect to such matters. Facts: As a prospective candidate for the office of Hempfield Township �rvisor, you seek an advisory from the State Ethics Commission based upon submitted facts which may be fairly summarized as follows. In your private capacity, you are an attorney licensed to practice law in the Commonwealth of Pennsylvania. Your law firm, Blumling & Gusky, LLP (the "Firm "), often performs legal work for developers and project owners. You are primarily engaged in construction industry related litigation. At the present time, you serve as special counsel on two separate construction related cases for the Hempfield Township Municipal Authority ( "Authority "). The Authority is controlled by a five - member Board. The Township Board of Supervisors has no active role in the management of the Authority but does appoint the Authority Board Members. You state that you are not, and have never been, solicitor for the Authority. You further state that you have never performed any legal work for the Hempfield Township ( "Township ") Board of Supervisors. Mellor 03 -532 March 26, 2003 Page 2 You have posed two questions within the jurisdiction of the State Ethics Commission: (1) Whether, as a candidate or, if elected, as a Township Supervisor, you would be required to disclose on your Statement(s) of Financial Interests your work as special counsel for the Authority; and (2) Whether, as a Township Supervisor, your recusal from any issues presented by the Firm or its client(s) would eliminate the potential for a conflict of interest with respect to such matters. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(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 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a candidate for the office of Township Supervisor, you would be subject to the financial disclosure requirements of the Ethics Act. If elected, upon assuming office as a Township Supervisor, you would become a public official and would be subject to the provisions of the Ethics Act that apply to public officials, including the requirements pertaining to financial disclosure as well as the restrictions and prohibitions pertaining to conflicts of interest. The Ethics Act requirements for filing Statements of Financial interests apply to: (1) current and former public officials and public employees; (2) full -time and part -time solicitors for political subdivisions; (3) candidates; and (4) nominees. 65 Pa.C.S. §§ 1104. Sections 1105(a) and (b) of the Ethics Act set forth substantively what must be disclosed on Statements of Financial Interests: § 1105. Statement of financial interests (a) Form. - The statement of financial interests filed pursuant to this chapter shall be on a form prescribed by the commission. All information requested on the statement shall be provided to the best of the knowledge, information and belief of the person required to file and shall be signed under oath or equivalent affirmation. (b) Required information. - The statement shall include the following information for the prior calendar year with regard to the person required to file the statement: (1) Name, address and public position. (2) Occupation or profession. (3) Any direct or indirect interest in any real estate which was sold or leased to the Commonwealth, any of its agencies or political subdivisions or purchased or leased from the Commonwealth, any of its agencies or political subdivisions or which was the subject of any condemnation Mellor 03 -532 March 26, 2003 Page 3 proceedings by the Commonwealth, any of its agencies or political subdivisions. (4) The name and address of each creditor to whom is owed in excess of $6,500 and the interest rate thereon. However, loans or credit extended between members of the immediate family and mortgages securing real property which is the principal or secondary residence of the person filing shall not be included. (5) The name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics or common law privileges. (6) The name and address of the source and the amount of any gift or gifts valued in the aggregate at $250 or more and the circumstances of each gift. This paragraph shall not apply to a gift or gifts received from a spouse, parent, parent by marriage, sibling, child, grandchild, other family member or friend when the circumstances make it clear that the motivation for the action was a personal or family relationship. However, for the purposes of this paragraph, the term "friend" shall not include a registered lobbyist or an employee of a registered lobbyist. (7) The name and address of the source and the amount of any payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where such actual expenses for transportation and lodging or hospitality exceed $650 in the course of a single occurrence. This paragraph shall not apply to expenses reimbursed by a governmental body or to expenses reimbursed by an organization or association of public officials or employees of political subdivisions which the public official or employee serves in an official capacity. (8) Any office, directorship or employment of any nature whatsoever in any business entity. (9) Any financial interest in any legal entity engaged in business for profit. (10) The identity of any financial interest in a business with which the reporting person is or has been associated in the preceding calendar year which has been transferred to a member of the reporting person's immediate family. 65 Pa.C.S. §§ 1105(a), (b). See also, the Commission Regulations at 51 Pa. Code §§ 17.1- 17.10. As for conflicts of interest under the Ethics Act, Section 1103(a) of the Ethics Act provides: Mellor 03 -532 March 26, 2003 Page 4 § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The following terms 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, 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. 65 Pa.C.S. § 1102. In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /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(j) of the Ethics Act provides as follows: § 1103. Restricted activities Mellor 03 -532 March 26, 2003 Page 5 (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 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(j). In each instance of a conflict, Section 1103(j) requires the public official/ employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to your inquiry, the first question that you have posed is whether, as a candidate or, if elected, as a Township Supervisor, you would be required to disclose on your Statement(s) of Financial Interests your work as special counsel for the Authority. You are advised that you would not be required to disclose your work as special counsel for the Authority for the following reasons. First, such work is undertaken in your capacity as a private attorney. Factually, there would be no solicitor relationship to disclose. Second, the source of your income from this work would presumably be the Firm rather than the Authority. Third, to the extent the identity of the Authority as your client would be protected by statute or existing professional codes of ethics or common law privileges, Section 1105(b)(5 ) of the Ethics Act would not require disclosure of the Authority as a source of income. Finally, no other category of disclosure would apply. The second question that you have posed is whether, as a Township Supervisor, your recusal from any issues presented by the Firm or its client(s) would eliminate the potential for a conflict of interest with respect to such matters. In response to your second question, you are advised as follows. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit Mellor 03 -532 March 26, 2003 Page 6 of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Generally, subject to the "de minimis" and "class /subclass" exclusions in the definition of "conflict " or conflict of interest" set forth above, a conflict of interest exists 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 legitim 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). 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 Act 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 1103(j) set forth above. Although you have not identified your specific relationship with the Firm, it is assumed that the Firm is a business with which you are associated as that term is defined in the Ethics Act. You are advised that generally, you would have a conflict of interest as a Township Supervisor in matters involving the Firm or your /the Firm's client(s). Miller, supra; Kannebecker, supra. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 Second Class Township Code or the Rules of Professional Conduct. Conclusion: As a candidate for the office of Township Supervisor of Hempfield I ownship (" Township "), you would be subject to the financial disclosure requirements of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. If elected, upon assuming office as a Township Supervisor, you would become a public official and would be subject to the provisions of the Ethics Act that apply to public officials, including the requirements pertaining to financial disclosure as well as the restrictions and prohibitions pertaining to conflicts of interest. As a candidate or, if elected, as a Township Supervisor, you would not be required to disclose on your Statement(s) of Financial Interests your work as special counsel for the Hempfield Township Municipal Authority. Assuming Blumling & Gusky, LLP (the "Firm ") is a business in which you are a director, officer, owner, employee, or have a financial interest, it is a business with which you are associated. Generally, you would have a conflict of interest as a Township Supervisor in matters involving the Firm or your /the Firm's client(s). In each instance of a conflict, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), 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 requestor has disclosed Mellor 03 -532 March 26, 2003 Page 7 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, Vincent J. Dopko Chief Counsel