CONFLICT OF INTEREST

PORT AUTHORITY EXECUTIVE DIRECTOR
HOLDING SEVERANCE PACKAGE FROM FORMER EMPLOYER

To: Jason R. Gabriel, Assistant General Counsel (Jacksonville)

SUMMARY:

Under the circumstances presented, a prohibited conflict of interest under Section 112.313(7)(a), Florida Statutes, would not exist were the executive director of a port authority to hold a severance package from his former private employer, a company moving cargo through port terminals but not contracting with the port, due, in part, to the application of Section 112.316, Florida Statutes. CEOs 88-43, 07-2, 11-12, and 11-18 are referenced, and CEOs 03-17 and 08-5 are distinguished.¹

QUESTION:

Would a prohibited conflict of interest exist were a port authority executive director to hold a severance package from a former employer?

Under the circumstances presented, your question is answered in the negative.

In your letter of inquiry and accompanying materials, you state that the Jacksonville Port Authority ("JPA"), an independent agency of the City of Jacksonville, recently selected … as its next Executive Director,² and is now in negotiations with him regarding an employment agreement. Further, you relate that the Executive Director is subject to a separation agreement, a non-compete, non-solicitation, and non-disclosure agreement, and a release by executive agreement ("severance package"), all executed in conjunction with his termination of employment, on November 30, 2012, with a company³ that moves cargo through JPA terminals through the company's arrangements with another corporation⁴ which is not the former employer of the Executive Director and with which the Executive Director holds no relationship or agreement. More particularly, you state that the other corporation and JPA are parties to an operating and lease agreement entered into in 2006, a tariff discount agreement entered into in 2011, and a settlement agreement (relating to damaged dockside container cranes) entered into in 2010.

Pertinent to your inquiry is Section 112.313(7)(a), Florida Statutes,⁵ which provides:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.-No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he or she is an officer or employee . . .; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his or her private interests and the performance of his or her public duties or that would impede the full and faithful discharge of his or her public duties.

The first part of Section 112.313(7)(a) prohibits a public employee (e.g., an executive director of a port authority) from holding employment or a contractual relationship with a business entity which is subject to the regulation of, or which is doing business with, his government agency

We find that the "doing business" prong of the prohibition of the first part would not be violated by the Executive Director's holding of the severance package with the company because the company is not the business entity which is doing business with JPA; rather, the other corporation, with which the Executive Director holds no relationship, is the business entity which is doing business with (contracting with) JPA. We have often found that a business entity is not doing business with a public agency when it does business with another business entity which, in turn, is doing business with the public agency. See among others, CEO 88-43, CEO 07-2, CEO 11-12, and CEO 11-18. However, it does appear that JPA "regulates" the company, due to the company's operations at (movement of cargo through) JPA terminals. See CEO 03-17 and CEO 08-5, in which we found that port authorities regulated a shipping company and a shipping agent, respectively, operating at the ports. Therefore, were we to apply Section 112.313(7)(a), in isolation, we would be compelled to find a prohibited conflict. Nevertheless, we decline to apply the statute in isolation, but, rather, we recognize that the Code of Ethics also provides, in Section 112.316, Florida Statutes, as follows:

CONSTRUCTION.-It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his or her duties to the state or the county, city, or other political subdivision of the state involved.

In the instant situation, we find it appropriate to apply Section 112.316, and, thus, find that a prohibited conflict does not exist for the Executive Director due to his holding of the severance package. Such a vested, static situation is readily distinguishable from that of CEO 03-17, in which the public officer would have held an active, and high (president), position with a shipping company, and from that of CEO 08-5, in which the public officer would have been an active employee of a shipping agent, positions likely not possessed of vested, certain rights and benefits such as those of the severance package, but, rather, positions anchored in a less-certain, "need-to-please-to-continue-private-employment" dynamic supportive of the "temptation to dishonor" prohibited by the statute. Zerweck v. State Commission on Ethics, 409 So. 2d 57 (Fla. 4th DCA 1982). And, similarly, under the second part of Section 112.313(7)(a), we find that the situation presented is not indicative of a continuing or frequently recurring conflict, or an impediment to the full and faithful discharge of the Executive Director's duties in behalf of JPA, occasioned by the severance package he would hold with his former private employer.

Your question is answered accordingly.

ORDERED by the State of Florida Commission on Ethics meeting in public session on July 26, 2013, and RENDERED this 31st day of July, 2013.

____________________________________

Morgan R. Bentley, Chair

^[1]Prior opinions of the Commission on Ethics may be obtained from its website (www.ethics.state.fl.us).

^[2]Also called Chief Executive Officer.

^[3]Horizon Lines, Inc.

^[4]APM Terminals of North America, Inc.

^[5]We find that the situation presented is not indicative of a prohibited conflict of interest under Section 112.313(3), Florida Statutes, in that there is no indication that the company with which the Executive Director holds a severance package is renting, leasing, or selling realty, goods, or services to JPA, much less that the Executive Director is an officer, director, holder of a material interest in, or salesman for the company vis-à-vis JPA.