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HomeMy WebLinkAbout22-540 Domenick PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL October 11, 2022 To the Requester: Debra Domenick, Esquire 22-540 Dear Ms. Domenick: This responds to your email dated September 21, 2022, by which you requested an advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the issue presented below: Issue: Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., would impose prohibitions or restrictions upon an individual serving as a County Commissioner for Lackawanna County(the “County”), who in a private capacity is an attorney, with regard to accepting a referral fee from a law firm (the “Firm”), where: (1) (1) after being elected as a County Commissioner in 2019, the individual referred a client’s (the “Client”) personal injury case to the Firm; (2) the Client’s personal injury case arose from injuries sustained by the Client while a passenger on a bus; (3) in 2022, the Client contacted the Firm for representation in a personal injury case against the Housing Authority of the County of Lackawanna (the “County Housing Authority”) for injuries sustained while in a County Housing Authority apartment; and (4) because the Client contacted the Firm for representation in the County Housing Authority case due to the Firm’s representation of the Client in the personal injury case that the individual referred to the Firm, the Firm considers the County Housing Authority case to be a referral from the individual, thereby entitling the individual toa referral fee. Brief Answer: NO. The Ethics Act would not prohibit the individual from accepting a referral fee from the Firm in relation to the Client’s personal injury case against the County Housing Authority. Domenick, 22-540 October 11, 2022 Page 2 Facts: You request an advisory from the Commission based upon submitted facts, the material portion of which may be fairly summarized as follows. In 2019, you were elected as a County Commissioner for Lackawanna County (the “County”), Pennsylvania. In a private capacity, you are an attorney, and you practice law in Scranton, Pennsylvania. After you were elected as a County Commissioner, you referred some personal injury cases to other lawyers or law firms. In pertinent part, you referred the personal injury case of a client you represented(the “Client”) to a local law firm (the “Firm”). The Client’s personal injury case arose from injuries that she sustained while she was a passenger on a bus. In 2022, the Client sustained significant bodily injuries when she fell through the interior steps of her apartment, which is located in one of the developments of the Housing Authority of the County of Lackawanna (the “County Housing Authority”). The Client subsequently contacted the Firm for representation in a personal injury case against theCounty Housing Authority. Because the Client contacted the Firm for representation in the County Housing Authority case due to the Firm’s representation of her in the bus passenger case that you referred to the Firm, the Firm considers the County Housing Authority case to be a referral from you, thereby entitling you to a referral fee. The County Housing Authority is an entity separate from the County, and it does not fall under the authority of the County Commissioners. The County Commissioners do not establish, implement, or enforce any policies or procedures relative to the County Housing Authority. The County Commissioners’ only duty that pertains to the County Housing Authority is the duty to appoint the Members of the Board of the County Housing Authority. The County Housing Authority has its own insurance, and the County Housing Authority Board does not vote on the potential settlement of personal injury lawsuits filed against the County Housing Authority. Based upon the above submitted facts, you ask whether the Ethics Act would permit you to accept a referral fee from the Firm in relation to the Client’s personal injury case against the County Housing Authority. 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 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 material facts. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities Domenick, 22-540 October 11, 2022 Page 3 (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 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), 1103(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. Domenick, 22-540 October 11, 2022 Page 4 “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. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act, pertaining to conflict of interest, restricts public officials and public employees in their public capacities, not their private capacities. 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 employeeis prohibited from using the authority of public office or confidential information received by holding such a public position for the private pecuniary (financial) benefit 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. The use of authority of office is not limited merely to voting but extends 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. In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. 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 benefitas 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. Domenick, 22-540 October 11, 2022 Page 5 Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a County Commissioner, you are a public officialsubject to the provisions of the Ethics Act. Your law practice is a business with which you are associated in your private capacity. The Ethics Act would not prohibit you, in your private capacity as an attorney, from accepting a referral fee from the Firm in relation to the Client’s personal injury case against the County Housing Authority. In your public capacity as a County Commissioner, you would have a conflict of interest with regard to participating in matters pertaining to the County Housing Authority if: (1) you would be consciously aware of a private pecuniary (financial) benefit for yourself or your law practice; (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. 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 receivedat 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. Respectfully, Bridget K. Guilfoyle Chief Counsel