CEO 98-14 -- July 23, 1998

CONFLICT OF INTEREST; VOTING CONFLICT

CITY COMMISSIONER RETAINED TO PROVIDE LEGAL SERVICES

BY COMPANY MERGING WITH FRANCHISEE OF THE CITY

To: Name Withheld At Person's Request (Coral Springs)

SUMMARY:

If a city commissioner were to accept an offer to become an attorney for a corporate client prior to its merger with a city franchisee, no prohibited conflict of interest would exist under Section 112.313(7)(a), Florida Statutes. However, once the corporate client merges with the city franchisee, he would have a prohibited conflict of interest under the first part of Section 112.313(7)(a) were he to be retained by the merged companies, since he would have a contractual relationship with a business entity which is subject to the regulation of his agency. The corporate franchisee, and therefore, the merged companies, providing recycling and solid waste services pursuant to a franchise agreement with the City is subject to the regulation of the city.

If either the merger were to take place after or the city commissioner were to accept the retention offer after the waste hauling contracts were put out to bid, the exemption of Section 112.313(12)(b), Florida Statutes, would apply to negate the prohibition, if the business were awarded pursuant to a sealed competitive bid and the requirements of the exemption were strictly adhered to.

Were the Section 112.313(12)(b) exemption to apply to permit the Commissioner to be retained by the merged companies, then Section 112.3143(3)(a), Florida Statutes, still would prohibit him from voting on measures which inure to the special private gain or loss of the companies, such as on maters relating to the waste hauling contracts or to the franchisee.

Section 112.3143(4), Florida Statutes, does not apply here because the Commissioner is an elected public officer, rather than an appointed one. Furthermore, the provisions of Section 112.311, Florida Statutes, are not standards of ethical conduct that can be violated by the city commissioner, and, under the circumstances presented, neither Section 112.313(2) nor Section 112.313(4), Florida Statutes, would be violated by the his acceptance of the retention offer.

QUESTION:

Is a prohibited conflict of interest created under the Code of Ethics by the retention of a City Commissioner by a company that will be merging with a franchisee of the City for purposes of the Commissioner providing legal services to the company?

Under the circumstances presented, if the retention occurs prior to the merger and the Commissioner has no employment or contractual relationship with the merged companies, your question is answered in the negative. However, if the retention occurs after the merger and before or absent the waste hauling contracts being awarded pursuant to a sealed competitive bid process, your question is answered in the affirmative.

In your letter requesting a formal opinion, and conversations with our staff in response to their questions, you advise that you are writing on behalf of City Commissioner Alan J. Polin, who, in his private capacity, is a lawyer. He has been engaged in discussions with a potential corporate client regarding whether he should be retained by it to provide legal services relative to various corporate legal issues, i.e., contracts with other companies, you write.

You advise further that the potential corporate client has announced that it will be merging with a current City franchisee which provides recycling and solid waste services to the City through one of its divisions. Although you advise that the Commissioner's retention might occur after the merger, his legal services would be unrelated to the merger. You also advise that the Commissioner has advised the potential client that the City's professional staff is considering placing the waste hauling contracts out to bid and any discussion regarding his representation of the client would have no bearing on his duties and responsibilities as an elected official nor would it influence in any way his decision concerning the waste hauling contracts.

You first ask whether a prohibited conflict of interest under Sections 112.311, 112.313(7)(a), and 112.3143(3)(a), Florida Statutes, would be created were the Commissioner to be retained by the corporate client. Secondly, you ask whether the Commissioner's retention by the corporate client would prohibit him from participating in discussions and voting on agenda items that come before the City Commission concerning the selection of a franchisee for the provision of recycling and solid waste services for the City.

In addition to the specific provisions of the Code of Ethics for Public Officers and Employees that you referenced in your letter and which are set forth below, are the following additional relevant provisions of the Code:

LEGISLATIVE INTENT AND DECLARATION OF POLICY.--

(1) It is essential to the proper conduct and operation of government that public officials be independent and impartial and that public office not be used for private gain other than the remuneration provided by law. The public interest, therefore, requires that the law protect against any conflict of interest and establish standards for the conduct of elected officials and government employees in situations where conflicts may exist.

(2) It is also essential that government attract those citizens best qualified to serve. Thus, the law against conflict of interest must be so designed as not to impede unreasonably or unnecessarily the recruitment and retention by government of those best qualified to serve. Public officials should not be denied the opportunity, available to all other citizens, to acquire and retain private economic interests except when conflicts with the responsibility of such officials to the public cannot be avoided.

* * *

(4) It is the intent of this act to implement these objectives of protecting the integrity of government and of facilitating the recruitment and retention of qualified personnel by prescribing restrictions against conflicts of interest without creating unnecessary barriers to public service.

(5) It is hereby declared to be the policy of the state that no officer or employee of a state agency or of a county, city, or other political subdivision of the state, and no member of the Legislature or legislative employee, shall have any interest, financial or otherwise, direct or indirect; engage in any business transaction or professional activity; or incur any obligation of any nature which is in substantial conflict with the proper discharge of his or her duties in the public interest. To implement this policy and strengthen the faith and confidence of the people of the state in their government, there is enacted a code of ethics setting forth standards of conduct required of state, county, and city officers and employees, and of officers and employees of other political subdivisions of the state, in the performance of their official duties. It is the intent of the Legislature that this code shall serve not only as a guide for the official conduct of public servants in this state, but also as a basis for discipline of those who violate the provisions of this part.

(6) It is declared to be the policy of the state that public officers and employees, state and local, are agents of the people and hold their positions for the benefit of the public. They are bound to uphold the Constitution of the United States and the State Constitution and to perform efficiently and faithfully their duties under the laws of the federal, state, and local governments. Such officers and employees are bound to observe, in their official acts, the highest standards of ethics consistent with this code and the advisory opinions rendered with respect hereto regardless of personal considerations, recognizing that promoting the public interest and maintaining the respect of the people in their government must be of foremost concern. [Sections 112.311(1), (2), (4), (5), & (6), Florida Statutes].

SOLICITATION OR ACCEPTANCE OF GIFTS.--No public officer, employee of an agency, or candidate for nomination or election shall solicit or accept anything of value to the recipient, including a gift, loan, reward, promise of future employment, favor, or service, based upon any understanding that the vote, official action, or judgment of the public officer, employee, or candidate would be influenced thereby. [Section 112.313(2), Florida Statutes.]

UNAUTHORIZED COMPENSATION.--No public officer or employee of an agency or his or her spouse or minor child shall, at any time, accept any compensation, payment, or thing of value when such public officer or employee knows, or, with the exercise of reasonable care, should know, that it was given to influence a vote or other action in which the officer or employee was expected to participate in his or her official capacity. [Section 112.313(4), Florida Statutes.]

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, excluding those organizations and their officers who, when acting in their official capacity, enter into or negotiate a collective bargaining contract with the state or any municipality, county, or other political subdivision of the state; 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. [Section 112.313(7)(a), Florida Statutes.]

VOTING CONFLICTS.--No county, municipal, or other local public officer shall vote in an official capacity upon any measure which inures to his or her special private gain or loss; which he or she knows would inure to the special private gain or loss of any principal by whom the officer is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained, other than an agency as defined in s. 112.312(3); or which he or she knows would inure to the special private gain or loss of a relative or business associate of the public officer. Such public officer shall, prior to the vote being taken, publicly state to the assembly the nature of the officer's interest in the matter from which he or she is abstaining from voting and, within 15 days after the vote occurs, disclose the nature of his or her interest as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting, who shall incorporate the memorandum in the minutes. [Section 112.3143(3)(a), Florida Statutes.]

VOTING CONFLICTS.--No appointed public officer shall participate in any matter which would inure to the officer's special private gain or loss; which the officer knows would inure to the special private gain or loss of any principal by whom he or she is retained or to the parent organization or subsidiary of a corporate principal by which he or she is retained; or which he or she knows would inure to the special private gain of a relative or business associate of the public officer, without first disclosing the nature of his or her interest in the matter. [Section 112.3143(4), Florida Statutes.]

Section 112.311(1), (2), (4), (5), and (6), are parts of the expression of intent of the Legislature for enacting the Code of Ethics--to avoid conflicts of interest of public officials in matters under their charge and to eliminate private gain directly or indirectly, by financial compensation or otherwise, in carrying out their official duties on behalf of the government they are sworn to serve--and not standards of ethical conduct within the jurisdiction of the Commission on Ethics that the Commissioner could violate.

Section 112.313(2), Florida Statutes, prohibits the Commissioner, as a public officer, from soliciting or accepting a gift or any other thing of value based on an understanding that his actions, as a public officer, would be influenced thereby. Because there is no indication, under the facts that you have provided, that the Commissioner's possible acceptance of a retention offer by the corporation was or is based on an understanding that his actions as a City Commissioner, for example, with respect to the waste hauling contracts, would be influenced thereby, we find that it does not appear that the Commissioner would violate Section 112.313(2) were he to accept the offer.

Section 112.313(4), Florida Statutes, also prohibits the Commissioner, as a public officer, from accepting compensation, payment, or a thing of value if he knew or should have known that it was given to influence his official actions, as a City Commissioner, such as voting on the acceptance of the merged corporations' bid to provide waste hauling services. We previously have advised that this provision places the burden upon the public officer to exercise reasonable care in determining whether a particular payment or thing of value has been given with the intent to influence his official action. We have said that assuming the donor, the potential corporate client in this case, is in a position to be benefited by the public officer's action, the officer or employee should weigh the value of the thing received against the ostensible purpose for its being given. The larger its value, the more difficult it should be to justify its being given for any reason except to influence, assuming that there is some official action on the part of the recipient anticipated in the future, such as the Commissioner's voting on matters related to the City's waste hauling contract, which would affect the potential corporate client or some other specific person or entity. See CEO 80-60. Because, under the circumstances presented, there is no indication that the Commissioner accepted or is about to accept the retention offer when he knows, knew, or should have known that it was given to influence his official actions, it does not appear that he either has violated or would violate Section 112.313(4) here either by his acceptance of the offer.

Unless one of the exemptions of Section 112.313(12), Florida Statutes, apply, the first part of Section 112.313(7)(a), Florida Statutes, also prohibits the Commissioner from holding an employment or contractual relationship with a business entity which either is doing business with or is regulated by the City Commission. Thus, assuming that the Commissioner accepts the retention offer and becomes an attorney for the corporate client prior to its merger with the City's franchisee, we find that no prohibited conflict of interest would exist under the first part of Section 112.313(7)(a). The Commissioner would have an employment or contractual relationship with a company which neither is doing business with nor is regulated by his agency, the City Commission. Similarly, we find no violation of the second part of Section 112.313(7)(a) would be created by the retention, because despite the fact that the prospects for the potential client merging with the City's franchisee are great, the employment or contractual relationship created by the Commissioner's retention would not create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or would impede the full and faithful discharge of his public duties as a City Commissioner.

However, once the client merges with the City franchisee, the Commissioner would have a prohibited conflict under the first part of Section 112.313(7)(a) were he to be retained by the merged companies. In CEO's 79-1 and 79-13, we pointed out that where a public officer personally sells to his agency's franchise holder, he has a contractual relationship with a business entity which is subject to the regulation of his agency in violation of Section 112.313(7)(a), Florida Statutes. In re: James K. Gordon, 13 FALR 1864, 1891-1893 (Commission on Ethics 1990), we found that Mr. Gordon, a Coral Springs City Commissioner, had violated Section 112.313(7)(a), Florida Statutes, by virtue of his employment with two City of Coral Springs franchisees. [Although overturned on other grounds, these findings were upheld by the Appellate Court in Gordon v. State Commission on Ethics, 609 So. 2d 125 (Fla. 4th DCA 1992)].

Notwithstanding the above, if either the merger takes place after or the Commissioner accepts the retention offer after the waste hauling contracts are put out to bid, as you suggested the City's professional staff is contemplating, the exemption of Section 112.313(12)(b), Florida Statutes, might apply to negate the prohibition, if the business is awarded pursuant to a sealed competitive bid and the requirements of the exemption are strictly adhered to.

Section 112.313(12)(b) exempts business awarded under a system of sealed competitive bidding, but only where: (1) neither the official nor his or her spouse or child has participated in either the determination of the bid specifications or the lowest and best bidder; (2) neither the official nor his spouse or child has used or attempted to use their influence to persuade the City Commission or any of its employees to enter into such a contract, other than by the mere submission of a bid; and (3) the officer, prior to or at the time of submission of the bid, has filed a statement with the Supervisor of Elections disclosing his interest, or the interest of his spouse or child, and the nature of the intended business. This disclosure should be made on CE Form 3A. See CEO 94-9. Thus, in order to comply with the requirements of this exemption, we find that the Commissioner would not be able to participate in discussions or vote on agenda items that come before the City Commission concerning the selection of a franchisee for the provision of recycling and solid waste services for the City.

Under the above circumstances, if any matter concerning the franchise agreement or the franchisee were to infrequently present itself before the City Commission, any conflict could be avoided through the Commissioner's abstaining from voting on the matter and following the procedures set forth in the voting conflicts law, Section 112.3143(3), Florida Statutes, which prohibits the Commissioner from voting on a measure which inures to his special private gain or loss, to the special private gain or loss of a principal by whom he is retained, or to the special private gain or loss of a relative or business associate. It also contains an affirmative duty of disclosure so that interested parties and the public will understand why he abstained from voting. The Commission on Ethics has promulgated CE Form 8B for this purpose.

Additionally, Section 112.3143(4) prohibits appointed public officers from "participating" in any matter which would inure to their special private gain or loss or to the special private gain or loss of their principals without first disclosing their conflict prior to their participation in the matters. For purposes of this provision, the term "participation" has been defined at Section 112.3143(4)(c) to mean "any attempt to influence the decision by oral or written communication whether made by the officer or at his direction." Because the Commissioner is an elected public officer, rather than an appointed public officer, we find that Section 112.3143(4), Florida Statutes, does not apply to prohibit him from participating in discussions regarding the waste hauling contracts or bids.

Accordingly, under the circumstances presented, we find that if the retention of the City Commissioner by the company occurs only prior to the merger of the company with the City franchisee, and the Commissioner has no employment or contractual relationship with the merged companies, no prohibited conflict of interest would exist. However, if the retention of the City Commissioner by the company occurs after it has merged with the City franchisee and before or absent the waste hauling contracts being awarded pursuant to a sealed competitive bid process, a prohibited conflict of interest would exist.

ORDERED by the State of Florida Commission on Ethics meeting in public session on July 23, 1998 and RENDERED this 28th day of July, 1998.

__________________________

Charles A. Stampelos

Chairman