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HomeMy WebLinkAbout09-546 LambMichael E. Lamb, Esquire 1015 Grandview Avenue Pittsburgh, PA 15211 Dear Mr. Lamb: ADVICE OF COUNSEL May 5, 2009 09 -546 This responds to your letter received April 6, 2009, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. §1101 et seq., would impose any prohibitions or restrictions upon an individual serving as the — Controller of the City of Pittsburgh, who in a private capacity is an attorney licensed to practice law in Pennsylvania, with regard to engaging in the private practice of law in general; and whether the Ethics Act would impose any prohibitions or restrictions upon such individual with regard to serving as an of counsel member of a law firm that may do business with the City of Pittsburgh or its related authorities, where: (1) the individual would not be involved with any City or City authority related work; (2) the individual would receive no compensation for City or City authority related work; and (3) the individual would not be an equity member sharing in the joint profits of the law firm. Facts: As the elected Controller of the City of Pittsburgh (also referred to herein as the City "), you request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You state that you were sworn into office as the City Controller on January 7, 2008. You previously served as the Prothonotary and the Deputy Prothonotary of Allegheny County. You note that the powers and duties of the City Controller are governed by the City of Pittsburgh Home Rule Charter. You state that the City Controller has no authority to approve contracts for the City or its related authorities. You state that the role of the City Controller in the contracting process is to act as a counter - signator to verify that funds are appropriated and available to satisfy the contract amount. In your private capacity, you are an attorney licensed to practice law in Pennsylvania. You state that you are engaged in the general practice of law, primarily in the area of estate planning and administration, and you plan to expand your practice to include matters of public finance. You plan to become an of counsel" member of the law firm of Campbell and Levine, LLC ( "the Law Firm "). You state that under your of counsel" agreement with Lamb, 09 -546 May 5, 2009 Page 2 the Law Firm, you will be compensated only for the work you generate or in which you are actively involved, and you will not hold any equity interest in the Law Firm or share in its profits. You state that the Law Firm practices in the area of public finance and from time to time may seek to represent the City or its related authorities as bond counsel. You state that while your own ethical obligations and the Rules of Professional Conduct may bar your participation as to representing the City or its related authorities as bond counsel, you plan to participate in representing other municipalities, authorities, and non - profit organizations as bond counsel. You state that if the Firm would do business with the City or its related authorities, you would have no contact with such work and would not be compensated in any way from such work. Based upon the above submitted facts, you pose the following specific questions: 1. Whether the Ethics Act would impose any prohibitions or restrictions upon you with regard to engaging in the private practice of law in general; and 2. Whether the Ethics Act would permit you to engage in the practice of law as an of counsel" member of the Law Firm. 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 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint, which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall, be addressed. As the City Controller, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (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 Lamb, 09 -546 May 5, 2009 Page 3 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), (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. "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. Lamb, 09 -546 May 5, 2009 Page 4 65 Pa.C.S. § 1103(f). "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. 65 Pa.C.S. § 1102. 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 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. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend 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. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public 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. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. The term "contract" is defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or Lamb, 09 -546 May 5, 2009 Page 5 arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also provides that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. In applying the above provisions of the Ethics Act to the instant matter, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest 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 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 or private client(s). Miller, Opinion 89- 024 Kannebecker, Opinion 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 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Any business as to which you are a director, officer, owner, or employee or in which you have a financial interest would be considered a business with which you are associated. A sole proprietorship or self - employed individual is included within the definition of the term "business" as set forth in the Ethics Act. 65 Pa.C.S. § 1102; In Re: Nomination Petition of Paulmier, 594 Pa. 433, 937 A.2d 364 (2007). Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as the City Controller, you would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the customer(s) / client(s) of any business(es) with which you are associated. See, Kannebecker, supra; Miller, supra. Having established the above general principles, your specific questions are addressed as follows. Lamb, 09 -546 May 5, 2009 Page 6 Section 1103(a) of the Ethics Act would apply to you in your public capacity as the City Controller but would not apply to you in your private capacity as an attorney. Cf., Shaulis v. State Ethics Commission, 574 Pa. 680, 833 A.2d 123 (2003). Based upon the submitted facts, Section 1103(a) of the Ethics Act would not prohibit you from engaging in the private practice of law -- either generally or as an of counsel" member of the Law Firm - -while also serving as the City Controller. Cf., Giangrieco, Advice 07 -589; Confidential Advice, 97 -596; Conway, Advice 92 -542. However, in your public capacity as the City Controller, you generally would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the client(s) of any business(es) with which you are associated. To the extent that you would perform work as an independent contractor to the Law Firm, such business relationship with the Law Firm generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the Law Firm. See, Kannebecker, supra; Miller, supra. To the extent that you would be an employee of the Law Firm, the Law Firm would be a business with which you are associated, and in your public capacity as the City Controller, you generally would have a conflict of interest in matters that would financially impact you, the Law Firm, or the Law Firm's client(s). In each instance of a conflict of interest, you would be required to abstain fully from participation. The abstention requirement would extend to any use of authority of office. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. The propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the City of Pittsburgh Home Rule Charter or the Rules of Professional Conduct. Conclusion: As the Controller of the City of Pittsburgh ( "City "), you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. Based upon the submitted facts that: (1) in your private capacity, you are an attorney licensed to practice law in Pennsylvania, and you plan to expand your practice to include matters of public finance; (2) you plan to become an of counsel' member of the law firm of Campbell and Levine, LLC ( "the Law Firm "); (3) under your of counsel" agreement with the Law Firm, you will be compensated only for the work you generate or in which you are actively involved, and you will not hold any equity interest in the Law Firm or share in its profits; (4) the Law Firm practices in the area of public finance and from time to time may seek to represent the City or its related authorities as bond counsel; (5) you plan to participate in representing authorities, non- profit organizations, and municipalities other than the City as bond counsel; and (6) if the Firm would do business with the City or its related authorities, you would have no contact with such work and would not be compensated in any way from such work, you are advised as follows. Section 1103(a) of the Ethics Act would apply to you in your public capacity as the City Controller but would not apply to you in your private capacity as an attorney. Based upon the submitted facts, Section 1103(a) of the Ethics Act would not prohibit you from engaging in the private practice of law -- either generally or as an of counsel" member of the Law Firm - -while also serving as the City Controller. In your public capacity as the City Controller, you generally would have a conflict of interest in matters that would financially impact you, any business(es) with which you are associated, or the client(s) of any business(es) with which you are associated. To the extent that you would perform work as an independent contractor to the Law Firm, such business Lamb, 09 -546 May 5, 2009 Page 7 relationship with the Law Firm generally would form the basis for you to have a conflict of interest in your public capacity in matters involving the Law Firm. To the extent that you would be an employee of the Law Firm, the Law Firm would be a business with which you are associated, and in your public capacity as the City Controller, you generally would have a conflict of interest in matters that would financially impact you, the Law Firm, or the Law Firm's client(s). In each instance of a conflict of interest, you would be required to abstain fully from participation. The abstention requirement would extend to any use of authority of office. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever 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 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, Robin M. Hittie Chief Counsel