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HomeMy WebLinkAbout05-598 CONFIDENTIALADVICE OF COUNSEL November 30, 2005 05 -598 Re: Conflict; Public Official; A Board; Business With Which Associated; Law Firm; Private Clients. This responds to your letter of October 28, 2005, by which you requested a confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon a member of the A Board who is also an attorney in a law firm with regard to: (1) participating in matters involving private clients; and (2) providing legal counsel to a company that is seeking a business relationship with another company that may become licensed by the A Board. Facts: As Chief Counsel to the A Board, you seek an advisory on behalf of an A Board Member who, in a private capacity, is a partner in a law firm composed of [number] attorneys. Based upon these facts, you pose the following specific inquiries: 1. Whether attorneys in the Board Member's law firm may represent individuals or entities that hold B licenses issued by the A Board in non -A Board matters such as [description of various types of cases]; 2. If the answer to the first question is in the affirmative, whether the Board Member must recuse himself from decisions on licensing matters involving those licensees that come before the A Board; and 3. Whether the Board Member may provide legal counsel to a company that is seeking a business relationship with a company that may become licensed by the A Board such as a management company that wishes to manage a C licensee that may seek a B license issued by the A Board. You reference a section in the D Code that provides that A Board members are subject to the Ethics Act. You also reference other provisions in the D Code relating to certain restrictions on A Board members. Finally, you quote several provisions in the A Board's Official Code of Conduct relating to restrictions on A Board members. 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 requester based Confidential Advice, 05 -598 November 30, 2005 Page 2 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 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 requester has truthfully disclosed all of the material facts. The A Board Member on whose behalf you seek this advisory is a "public official" as that term is defined in the Ethics Act, and hence he is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 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. 65 Pa.C.S. § 1102. "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. Confidential Advice, 05 -598 November 30, 2005 Page 3 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 (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, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental Confidential Advice, 05 -598 November 30, 2005 Page 4 telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private customer(s)/client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). 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 clients 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. The Commission has also held that a reasonable and legitimate expectation that a business relationship will form may support a finding of a conflict of interest. Amato, Opinion 89 -002. In the instant matter, the A Board Member's law firm would be considered a business with which he is associated. The Ethics Act would not prohibit the A Board Member in his private capacity from continuing to do business with clients who would have matters before the A Board. However, pursuant to Section 1103(a) of the Ethics Act, the A Board Member would generally have a conflict of interest in his public capacity in matters that would come before the A Board that would financially impact himself, the law firm, or a private client. Thus, if a matter would come before the A Board involving such a private client, the A Board Member would generally be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. As a general rule, a conflict would not exist as to former customer(s)/client(s), but under certain circumstances, a conflict could exist as to former customer(s)/client(s) depending upon factors such as the number of prior business transactions involving the given customer /client and the period of time over which such occurred. Having established the above general principles, your specific inquiries shall now be addressed. In response to your first question, it is noted that this advisory only addresses the conduct of those individuals who have specifically given you their permission to submit your inquiry on their behalf. As to all others, you are considered a third party without legal standing. Because the other attorneys in the A Board Member's law firm have not authorized you to seek this advisory on their behalf, you lack standing with respect to their conduct. Furthermore, in that those attorneys are private attorneys and not public officials /public employees, the State Ethics Commission lacks jurisdiction to address their conduct to the extent that it constitutes the practice of law. In response to your second question, the A Board Member would have a conflict of interest and could not participate in matters involving a private client based upon Miller, supra and Kannebecker, supra. In response to your third question, the Ethics Act would not prohibit the A Board Member from providing legal counsel to a company that is seeking a business relationship with another company that may become licensed by the A Board conditioned upon the assumption that the A Board Member would be providing such counsel in his private time and would not be using the authority of his position as a A Board Member or confidential information to obtain or perform such work. Confidential Advice, 05 -598 November 30, 2005 Page 5 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. This advice is also limited to the questions posed. Specifically not addressed herein is the applicability of the D Code and the A Board's Official Code of Conduct. Conclusion: The A Board Member on whose behalf you seek this advisory is a "public official" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The A Board Member's law firm would be considered a business with which he is associated. The Ethics Act would not prohibit the A Board Member in his private capacity from continuing to do business with clients who would have matters before the A Board. However, pursuant to Section 1103(a) of the Ethics Act, the A Board Member would generally have a conflict of interest in his public capacity in matters that would come before the A Board that would financially impact himself, the law firm, or a private client. Thus, if a matter would come before the A Board involving such a private client, the A Board Member would generally be required to abstain from participating and to satisfy the disclosure requirements of Section 1103(] of the Ethics Act. The Ethics Act would not prohibit the A Board Member from providing legal counsel to a company that is seeking a business relationship with a company that may become licensed by the A Board conditioned upon the assumption that the A Board Member would be providing such counsel in his private time and would not be using the authority of his position as a A Board Member or confidential information to obtain or perform such work. 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 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 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