Code of Conduct: Synopsis of 2000 Opinions
Jurisdiction
Alleged Violations of Federal & State Criminal Laws 1
Elected School Board Members 1
Conduct of Legislator 1
Allegations of False Arrest, Perjury, etc. 2
Campaign Finance 2
Personal or Private Interests
Hearing Officer's Personal/Private Interest in Board Decision 2
Board Member Cannot Hear Cases Presented by His Law Firm 6
Appearance of Impropriety 10
Personal Interests Arising from Outside Hobby & Employment 12
Personal Interests Arising from Ownership in Business 16
Zoning Decisions in General 18
Ministerial Capacity 19
Legislative Capacity 20
Judicial Capacity 21
No Evidence of a Violation 22
The Facts Do Not Support an Appearance of Impropriety 23
Representing Private Enterprise Before Own Agency
Writing a History Book - Waiver Granted 26
Representing Clients before Own Agency 29
Accepting Anything of Monetary Value
Gifts & Payment of Expenses
Payment to Attend Association Dinner 30
Soliciting from Private Companies 33
Donation from Licensee 36
Fruit Basket from Law Firm 38
Trip to a Foreign Country 40
Gift to Stay at Hotel 41
Payment of Family's Expenses 43
Concurrent Employment
Local Official Contracts with his Local Government 45
Concurrent Employment as a Licensed Professional 46
Full Disclosure if Regulated by, or Doing Business with, the State 47
Restrictions on Holding Other Employment 48
Dual Compensation from State Agencies 54
Disclosure of Business Dealings with the Government
Contracting with the State - Violations Found 56
Contracting with Local Government 63
Post-Employment
From State Nurse to Private Nurse Practitioner 65
Pension Offset Law Cannot be Waived by Commission 66
Working for Private Company on State Contracts 67
Pension Offset is Not Enough to Waive Post-Employment Law 68
Case Manager Seeks Post-Employment with State Contractor 72
Former Board Member to Represent Clients Before Board 73
Insufficient Facts to Make A Decision 74
Post-employment Applies to Matters "Involving the State" 75
Post-Employment as a Lobbyist 77
Private Contract to Perform Former State Job - Waiver Denied 78
Project Manager Position 82
No Assignments to Work With Former Agency 83
One Month Waiver Granted 84
Waiver Denied; Two-Year Restriction Begins Upon Terminating State Employment 88
Jurisdiction
Alleged Violations of Federal & State Criminal Laws
Complainant alleged irregular procedures and violations of federal and State criminal laws by several State officials. There were allegations of misuse of government funds; bribery; failure to pay child support; constitutional violations; inadequate qualifications for a job; sexual harassment, etc. The Commission's jurisdiction is limited to interpreting Title 29, Chapter 58. Commission Op. No. 95-5. Allegations of misuse of government funds, constitutional violations, sexual harassment, and personnel issues (e.g., job qualifications) are not within its jurisdiction. Commission Op. No. 97-28. Nor does it have jurisdiction over Title 11 criminal provisions (e.g., bribery, etc.). Commission Op. No. 96-10. Thus, the complaint was dismissed for failure to state a claim, pursuant to 29 Del. C. § 5809(3). (Commission Op. No. 00-22).
Elected School Board Members
Complainant alleged that: (1) four elected School Board members may have violated a Board Policy; and (2) while the Board was negotiating with school teachers, two Board members allegedly made "not-so-veiled threats" to a teacher. The Commission has no jurisdiction over local, elected School Board members. Commission Op. No. 91-16. As the complaint failed to state a claim, it was dismissed pursuant to 29 Del. C. § 5809(3). (Commission Op. No. 00-23).
Conduct of Legislator
Correspondence sent to the Commission alleged that a General Assembly member had a conflict of interest. First, to the extent the letter was meant as a complaint, the statute requires that complaints be sworn. 29 Del. C. § 5810(a). Second, even if it were sworn, the Commission has no jurisdiction over General Assembly members regarding conflicts of interest. Commission Op. No. 97-14. The General Assembly has a separate statute on conflicts of interest, and has House and Senate Ethics Committees to administer that law. 29 Del. C., Chapter 10. Thus, the matter was dismissed for failure to state a claim. 29 Del. C. § 5809(3). (Commission Op. No. 00-28).
Allegations of False Arrest, Perjury, etc.
It was alleged that local government officials were engaging in conduct such as false arrest, perjury, discrimination, etc. Complainant wanted the Commission to represent him in legal actions against the officials. The complaint was not a sworn statement as required by 29 Del. C. § 5810(a). Even if that legal formality were met, the Commission has no jurisdiction over the types of charges alleged. See, Commission Op. Nos. 95-5; 96-38; 96-10; and 98-25. Also, the Commission has no authority to represent private citizens in any legal action. (Commission Op. No. 00-33).
Campaign Finance
A candidate for a State office which regulated certain industries asked if those industries could make campaign contributions to candidates for that office. The Commission has jurisdiction over candidates for State office only under the financial disclosure law. See, 29 Del. C. § 5812(a)(3). Campaign contributions and expenditures are governed by 15 Del. C., Chapter 80. (Commission Op. No. 00-14).
Personal or Private Interests
Hearing Officer's Personal/Private Interest in Board Decision
The Commission was asked if any restrictions applied to a State Board's hearing officers, and the Board's members concerning participation in a claim against the State by one of the Board's hearing officers. The Commission found that some restrictions do apply. The agency, in most instances, had already implemented ways to avoid violating the Code of Conduct.
I. Applicable Law
State employees, officers and honorary State officials may not review or dispose of matters in which they have a personal or private interest which tends to impair independent judgment in performing official duties. 29 Del. C. § 5805(a)(1).
Such persons also may not engage in conduct that may raise suspicion that the public trust is being violated. 29 Del. C. § 5806(a). An actual violation is not required as this provision only requires conduct that "may raise suspicion," and is, therefore, basically an "appearance of impropriety test." Commission Op. No. 93-12.
II. Application of Law to Facts
Several State employees were legal advisors to this Board. They also may serve as hearing officers, in lieu of the Board, if the parties consent. One hearing officer petitioned for certain benefits, and the decision on her petition would normally be heard by this Board, or one of its hearing officers. The hearing officer has a lawyer to represent her before the Board. Another lawyer will represent the opposing side. The lawyers, and members of their firms, regularly appear before the Board or its hearing officers. The hearing officer who filed the claim will not participate in her official capacity on her own case. However, the agency asked if these circumstances create other conflicts and, if so, how to resolve those issues. The agency's questions and our conclusions are as follows:
(A) Would it violate the Code of Conduct for the State employee who seeks the benefits to provide legal advice to the Board on cases being handled by: (1) her lawyer or her lawyer's law firm; and/or (2) the opposing side's lawyer or his law firm ?
The State employee's duties require her to give legal advice to the Board and draft its decisions. Her personal or private interest is her business relationship with her attorney who regularly appears before the Board. Business relationships can create a personal or private interest that requires recusal of a State employee, even where the official will not directly benefit from the decision and where any comments by the official are neutral and unbiased. Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J. (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996). Moreover, even where the official's participation was "not direct and substantial" it was held that he should not have participated. PrisonHealth Services Inc. v. State, Del. Ch., C.A. No. 13,010, V.C. Hartnett III (July 2, 1993).
While the State employee might not directly benefit from her decisions on other cases handled by her lawyer or her lawyer's firm, the State employee's participation would be direct and substantial as she would be giving legal advice to the Board and drafting its opinions. The same rationale applies to her reviewing and disposing of matters involving the opposing lawyer or his law firm. As in Beebe and Prison Health, it could appear that her judgment in performing official duties could be impaired because of her business relationship. The agency has assigned other hearing officers to hear cases presented by these two attorneys and their firms. It expects to continue the arrangement. Thus, if the State employee does not serve as legal counsel to the Board in cases presented by the two attorneys, or their firms, she would not be violating the restriction against reviewing or disposing of matters where there is a personal or private interest.
(B) Assuming the parties consent, could the State employee adjudicate a case in lieu of the Board if the case is handled by the employee's attorney, the opposing attorney, or their firms?
Such activity would create even more direct and substantial involvement by the State employee. Thus, based on the law cited above, this too would be a conflict. While the parties' consent may be appropriate under the Delaware Lawyers' Rules of Professional Responsibility, under the Code of Conduct consent of the parties is insufficient, by itself, to cure the conflict. See, In re: Ridgely, Del. Supr., 106 A.2d 527 (1954). In Ridgely, a "personal interest" created a conflict for a State attorney. The Court noted that under the lawyer's rules of ethics he could proceed in the face of a conflict if the parties agreed. However, the Court said it need not consider the lawyer's rules of ethics because this lawyer was a State officer and, therefore, his duty to the public commanded precedence over the lawyers' rules of ethics. We have followed that ruling, and held that where a hearing officer has a conflict of interest, the parties' consent, by itself, cannot resolve the conflict for a State officer. Commission Op. No. 99-51. Again, the agency has arranged the cases to avoid the State employee's participation as a hearing officer on cases presented by her attorney, the opposing attorney, and their firms. If that continues, the Code of Conduct would not be violated.
(C) Would it violate the Code of Conduct if: (1) the present Board members, who are appointees, or (2) other hearing officers presided over the hearing, participated in the hearing or deliberations, adjudicated the State employee's claims, and/or drafted the written decision?
(1) Effect on Board Members
The Code requires that the interest be "personal and private." We
assume the relationship between the State employee and the Board members is official; not "personal and private." However, even assuming a conflict if Board members decided her claim, the statute provides that if there is a statutory duty that cannot be delegated, then the officials may proceed, if the matter was fully disclosed to the Commission. 29 Del. C. § 5805(3). Here, the Board has the statutory duty to decide these types of cases. (Citation omitted). The only clear delegation authorized by the statute is that the Board may delegate its authority to a hearing officer, if the parties consent.
However, if Board members have a conflict in this situation, the hearing officers would have even more of a conflict: They have the same status and authority as the State employee who filed the claim; she is their colleague; and unlike Board members, the hearing officers work in the same office with her on a daily basis. Their participation as a hearing officer to decide her claim raises appearance that their relationship with her is closer than her relationship with Board members. Moreover, if they acted as hearing officer, as the single decision maker they would have the opportunity to make subjective decisions about their own colleague, e.g., credibility, etc. Because their decision would be subjective it could appear that the hearing officers would give their co-worker favorable treatment. Also, it puts them in an unnecessary and probably uncomfortable position of judging their own colleague.
Thus, given the two options, having it heard by the Board, or by a hearing officer, the latter is the least attractive. We, therefore, conclude that the Board members can proceed to make the decision based on the statutory exception which permits them to proceed if they cannot delegate. The agency had discussed with the law firms the possibility of having an independent mediator for the State employee's claim. Our ruling does not preclude the parties from pursuing other legal avenues that could result in the decision being made by someone other than the Board.
(2) Effect on Hearing Officers
That leaves the issue of whether the other hearing officers can act as legal advisors to the Board when her case comes before it. When the hearing officers act as legal counsel it does not require the same type of decision making required if they act as the hearing officer, e.g., they insure the Board is informed of the applicable law; they do not make factual determinations, etc. Accordingly, they would have less of an opportunity to make more subjective decisions, such as credibility of witnesses, etc., if they are a legal advisor. Moreover, this is one of their statutory duties. As noted above, if there is a statutory duty that cannot be delegated, then they can proceed after disclosure to this Commission. We understand that the agency is considering having a legal advisor from another agency (e.g., the Attorney General's office) advise the Board on this State employee's case. Again, we do not, preclude use of other legal avenues that could result in a legal advisor other than a hearing officer from the agency.
(D) If the Board or the hearing officers are or are not permitted to preside over the State employee's petition, what, if any, procedural or administrative measures must the Board and hearing officers take to avoid violating the Code of Conduct?
First, by law, when an advisory opinion is issued, if the persons seeking the opinion fully disclose the matter to the Commission and act in good faith reliance on that advice, then they shall not be subject to discipline or other sanction under the Code with respect to those matters. 29 Del. C. § 5807(c). Thus, all Board members and hearing officers should be made aware of this opinion in order to comply with it. Second, after reviewing the opinion, if there is additional factual information that needs to be disclosed to this Commission by a particular hearing officer or Board member, then they should so advise the Commission. For example, if a hearing officer or Board member has some "personal or private interest," in the State employee's situation, which creates a conflict for them, e.g., if they are related to her; if they expect to be called as a witness; if they have a close personal friendship outside the office, etc., then they should bring that to the Commission's attention to insure full disclosure, and further guidance if necessary. (Commission Op. No. 00-09).
Board Member Cannot Hear Cases Presented by His Law Firm
The Chair of a State Board which regulated a certain industry sought advice on restrictions to participating in matters related to an industry member when the industry member was also a client of his law firm and is represented by his partners in the law firm on several matters, as described below. Based on the following law and facts, the Commission held that he should not, as an appointee to the Board, be involved in matters regarding this company while it is a client of his law firm.
I. Background to the Decision
Our jurisdiction is limited to interpreting the State Code of Conduct, and does not include authority to interpret the Lawyers' Rules on Professional Conduct. Commission Opinion 94-01. Therefore, we do not decide what restrictions may be imposed under those rules of conduct. Moreover, Delaware Courts have held that where there is a possible conflict under the Lawyers' Rules of Professional Conduct, and a possible conflict arising from an individual's duty as a public officer, the ruling would be based on the duties owed by public officers. In re Ridgely, Del. Supr., 106 A.2d 527, 530-31 (1954).
Ridgely was decided before the Code of Conduct was enacted; thus, it interpreted the common law restriction against public officials having a personal or private interest which would impair judgment in performing official duties. The court said the reason for not having personal interests which are opposed to public duties is because "no man can serve two masters," and that in choosing between the State and the outside employment, "his private interest must yield to the public one." Id. at 531.
In Ridgely, the State officer derived a direct financial benefit from his outside law practice. Here, the appointee addressed at length the restrictions on participating in decisions when a State official has a financial interest in a private enterprise that would be affected, to a lesser or greater extent than others similarly situated, by the official's action or inaction. See, 29 Del. C. § 5805(a)(2). By operation of law, such pecuniary interests tend to impair judgment. Commission Op. No. 96-61.
However, we need not focus on § 5805(a)(2), because § 5805(a)(1)--the restriction on reviewing or disposing of matters where there is a "personal or private interest" --is not limited to direct pecuniary benefits. See, e.g., Commission Op. Nos. 97-24 and 97-30. We based those decisions on both common law decisions on conflicts arising from "personal or private interests," and later decisions interpreting the codification of that common law.
At common law, Delaware Courts recognized that relationships between a government official and a law firm or other business or social interest can raise issues of conflicts. Commission Op. Nos. 97-24 and 97-30. Conflict of interest statutes generally do not abrogate common law conflict of interest principles. Commission Op. Nos. 97-24 and 97-30 (citing 63C Am. Jur. 2d Public Officers and Employees § 253 (1997)). Moreover, the common law restriction on participating where there is a personal or private interest was codified at 29 Del. C. § 5805(a)(1).
The common law concern against public officials participating in decisions if they have a "personal or private interest" is the same as arises under the State Code which restricts such officials from "reviewing and disposing of matters in which they have a personal or private interest that tends to impair independence of judgment." 29 Del. C. § 5805(a)(1).
Delaware Courts have twice interpreted 29 Del. C. § 5805(a)(1). Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J. (June 30, 1995), aff'd, Del. Supr., No. 304, Veasey, J. (January 29, 1996), and Prison Health Services, Inc. v. State of Delaware, Del. Ch., C.A. No. 13,010, V.C. Hartnett, III (June 29, 1993). In both cases, Delaware Courts continued to hold that an outside business relationship of an official can raise a "personal or private interest" which tends to impair independent judgment, even where no facts alleged any direct financial benefit to the official.
II. Restriction on Reviewing or Disposing of Matters if There is a Personal or Private Interest
In Beebe, a State appointee was one of a five-member committee which had to recommend whether a hospital's application should be approved. The agency made the final decision. The official said he thought he had a conflict, but proceeded to discuss the application. After the discussion, he declared a conflict and did not participate in the vote. It was not alleged that he violated 29 Del. C. § 5805(a)(2) because he or his private employer would experience a financial benefit to a lesser or greater extent than others similarly situated. Rather, it was alleged that the business relationship between the official's private employer and the applicant created a "personal or private interest" which tended to impair his judgment in violation of 29 Del. C. § 5805(a)(1). The Court found that his comments were "neutral and unbiased," but said he should have recused himself from the outset.
Similarly, in Prison Health, a State official attended a meeting of his agency's contracting committee which discussed the awarding of a State contract. The official was not on the committee, but he gave it a list of his agency's employees from which to select an agency representative for the committee. Also, he asked several questions. The contract was awarded to a company which employed his wife. It was not argued that as a result of the decision his wife or her employer experienced a benefit or detriment to a greater extent than others of the same class or group, under 29 Del. C. § 5805(a)(2). Rather, it was argued that he had a "personal or private interest" because of his wife's employment. The Court said: "his personal participation was not direct and substantial," but went on to hold that: "Undoubtedly [his] conduct was inappropriate and he should have abstained from even this limited role in the procurement process because his wife is an employee (albeit a fairly low-level employee) of one of the bidders." Prison Health, supra.
We apply those decisions to this situation as follows:
Like the Beebe official, this official was appointed to a State Board, and therefore, an "honorary State official" under the Code of Conduct. 29 Del. C. § 5805(13). His Board, like the Beebe Board, makes decisions about applications. Also, as in Beebe, his employer has an alliance (attorney-client relationship) with an applicant. However, while the Beebe Board only made a recommendation to the State agency, his Board is the final authority on whether applications will be approved. By statute, the applicant must file certain documents for his Board to review. (Citation omitted). Those documents include a statement of its resources and liabilities. (Citation omitted). Moreover, the Board is to have access at all times to the books, records and accounts of the applicant. Id. A partner at his law firm provides legal services to the applicant on financial and tax-related matters, business organizational questions, and some commercial transactions. His partner's work would be an underlying basis for the source materials of the applicant's resources and liabilities. Thus, in reviewing the application, his Board would consider the underlying work of his law firm. While this may seem remote, the Beebe situation appears to be more attenuated, as there was no indication that the official's outside employer was involved with the application being considered.
Also, the Board addresses complaints against the regulated company by users of the facilities, and can sanction the company. To date, no complaint has been filed. He said that if that situation arose, his law firm would not represent the company, but even if it did, he concluded that the disposition of the matter would not result in a financial benefit or detriment to his firm, "at least not directly." However, that type of relationship is what created the conflict in Beebe--the outside employer was not involved in the proceedings and it was not argued that the official's company was benefitting from the official's participation in the application decision; rather, it was argued that the business relationship, by itself, tended to impair the official's judgment, and resulted in a benefit to a party seeking the decision.
Here, the honorary official said there could be no matter pending before the Board where the disposition would augment or detract from the law firms' compensation, although "it certainly might result in a financial benefit or detriment to the law firms' client" (the applicant). Again, in Beebe, no facts indicated that the official's outside employer would directly benefit from the Board's decision; rather, the applicant who had an alliance with the official's outside employer would benefit. Here, also, the appointee's law firm might not directly benefit, but the applicant who has a business alliance with his firm could directly benefit from the Board's decision.
Like the official in Beebe, his outside employment is his primary source of income; he has a duty to his private employer which has a vested interest in seeing its business alliance be successful. In Beebe, that relationship was enough for the Court to conclude that the official should not have participated even to the limited extent of making "neutral and unbiased" comments.
Aside from the partner who advises the company on its finances, a commercial transaction involving the applicant's caterer resulted in litigation, and another of his partners represents the applicant in that matter. That litigation would not be considered by the Board. However, the litigation could impact on the assets/liabilities of the applicant, which are considered by the Board. We address the concerns that this raises in the latter part of our opinion dealing with appearances of impropriety.
Consistent with Beebe, we hold that it would be improper for him to review or dispose of matters related to the company's annual application for a license, or complaints against the company. As indicated in Beebe, he should recuse himself from the outset of such matters even if the Board's ruling is only a recommendation, not a final decision; and he should not engage in even neutral or unbiased comments on the matters.
In Prison Health, the Court noted that the official's spouse was a low-level employee, and that his participation was not "direct or substantial. " The record showed that some of his conduct appeared to be purely ministerial, e.g., providing a list of his agency's employees to the committee making the decision. Here, the official's partners are not employees of the company, but have a significant role in dealing with its finances, liabilities, etc., which impact on its applications, a matter for which he normally would be directly and substantially responsible. Moreover, we understand that as Chair, he has been routinely called by companies which his Board regulates to discuss various matters. Thus, in matters affecting the entities over which he makes decisions, his participation has been more direct and substantial than occurred in Prison Health. Consistent with Prison Health, we hold that: it would be improper for him to participate in discussions on matters relating to the applicant which is a client of his law firm, even if he is not voting on the matter; and he should attempt to avoid ex parte communications with the company. "Persons charged with upholding the integrity of the administrative process must be scrupulous in ensuring that all claimants receive a fair and unadulterated examination of the merits of their individual claims. Any conduct giving the appearance that impropriety is involved therein should be studiously avoided." Kulesza v. Star Services Inc., Del. Super., C.A. No. 93A-01-002, n. 8, J. Toliver (December 20, 1993)(noting the importance of avoiding ex parte communications). We understand that recently his Board hired an administrator, and the administrator should be able to deal with those types of issues, rather than the company calling him.
III. Appearance of Impropriety
While these restrictions may appear rather stringent, we believe they are consistent with the Court's interpretations of 29 Del. C. § 5805(a)(1). Moreover, as the appointee noted, the Code also requires that he not engage in conduct that may raise suspicion among the public that the public trust is being violated. 29 Del. C. § 5806(a). It also restricts his activities if he has any interest that is in substantial conflict with performing official duties and if outside employment may result in: (1) impaired independence of judgment in performing official duties; (2) official decisions outside official channels; (3) preferential treatment to any person; and (4) any adverse effect on the public's confidence in the integrity of its government. 29 Del. C. § 5806(b).
We have held that actual misconduct is not required; only a showing that a course of conduct could "raise suspicion" or "may result in" conduct that reflects unfavorably or adversely on the public's confidence in its government. See, e.g., Commission Op. No. 92-11. Thus, it becomes a question of whether there is an appearance of impropriety. He was clearly aware of that issue and believed that acting on matters related to the company when it is a client of his firm may raise an appearance of impropriety. Moreover, he advised us that previously one of his partners represented another company in a personal injury matter. That company, which is also regulated by his State Board, raised a concern about the involvement of his partner in the lawsuit because of his status as Chair of the Board. We know that matter was addressed by the Bar Association's Committee on Professional Ethics. It concluded that under the lawyers' rules of conduct he should not participate in his official capacity on matters that directly relate to that company and should recuse himself not only from any formal proceeding before, or decisions, of the Board, but his isolation should extend to any informal discussions, contacts or the like.
The significance of that situation is that he is now in a similar position where a partner in his law firm is representing another company in a civil matter, when that company is regulated by him in his State capacity. Clearly, under similar circumstances the law firm's client and the Committee on Professional Ethics thought his participation on the Board in matters related to the company, when his firm was representing it, "may raise suspicions" of at least an appearance of impropriety. Similarly, we believe that his participation on matters related to this applicant could raise the same suspicions.
His firm obviously has an interest in maintaining the company as its client, and in providing it with the legal services on finances, taxes, liability issues, etc., that can have some impact on decisions by his Board. Also, his firm has an interest in the outcome of the litigation referred to above. His law firm's connection to the company, combined with his official responsibilities which can impact on the company's application, complaints against it, etc., could raise suspicion that: his judgment may be impaired; he would be in a position to make official decisions outside official channels; or the company may receive preferential treatment in Board decisions because of its status as a private client with his law firm. For example, if he participated in State decisions affecting the company, such as ruling on complaints, it may appear that he would give it a favorable decision because he would not want to sanction his law firm's client, or if he continued taking calls from the company to discuss various matters, it may appear that while officially recusing himself, he was making decisions outside official channels. These are merely examples of how the public may perceive the conduct, and are certainly no indication that he would actually engage in such activities. However, by imposing these restrictions, the possibility of such perceptions is greatly diminished.
IV. Conclusion
Based on the foregoing, he should recuse himself from participating as a Board member in "matters" relating to the company as long as it is a client of his firm. "Matters" is broadly defined as "any application, petition, request, business dealing or transaction of any sort." 29 Del. C. § 5804(6). "Matters" are not limited to just formal proceedings. Thus, as indicated above, he should recuse himself not only in formal proceedings, such as the company's annual application or complaints against it, but refrain from discussing matters related to the company, even if the comments would be neutral and unbiased; delegate discussions of matters pertaining to the company to the Board's administrator; and exercise caution even in purely ministerial matters dealing with the company. (Commission Op. No. 00-04).
NOTE: Generally, requests for advisory opinions are confidential. 29 Del. C. § 5807(d). However, an exception to the rule of confidentiality is that the applicant for an advisory opinion may give the Commission written authorization to release the information. 29 Del. C. § 5807(d)(1) and § 5810(h)(1)(I). In the instance below, such authority was given.
Personal Interests Arising from Outside Hobby & Employment
Dear Mr. Schrader:
This is the State Public Integrity Commission's written opinion on the two issues you raised in your request for an advisory opinion. You wanted to properly advise your Town clients on complying with any Code of Conduct restrictions on their participation on a land use ordinance. As you know, we concluded that: (1) Council President Orem was not required to recuse himself; and (2) Council Member Susan White, who has recused herself from participating, should comply with the post-recusal conduct discussed below.
I. Applicable Law
(A) Officials are restricted from reviewing or disposing of matters if they have a personal or private interest which tends to impair independence of judgment in performing official duties. 29 Del. C. § 5805(a)(1).
(B) Officials are restricted from representing or otherwise assisting a private enterprise before the agency by which they are associated by employment or appointment. 29 Del. C. § 5805(b)(1).
(C) Officials may not engage in conduct which may raise suspicion among the public that they are engaging in conduct which would violate the public trust. 29 Del. C. § 5806(a).
(D) Officials are restricted from participating in official decisions if as a result of their outside employment, their participation may result in: (1) impaired independence of judgment in performing official duties; (2) preferential treatment to any person; (3) official decisions outside official channels; or (4) any adverse effect on the public's confidence in the integrity of its government. 29 Del. C. § 5806(b).
II. Facts Applied to the Law
ISSUE 1 - Does Robert H. Orem, Town Council President, have a personal or private interest in the home-occupation ordinance such that he should recuse himself from participating?
Town Council is to consider a zoning amendment on the use of private residences as "home occupation" sites. At a town meeting on February 1, 2000, Council President read a letter signed by 17 persons. It suggested that Mr. Orem and Ms. White may have a conflict of interest if they participate in a zoning ordinance decision. It alleged that Mr. Orem has a "possible conflict of interest" because he "may, in the future, have a home-based craft workshop for the sale of handcrafted items." By affidavit, Mr. Orem stated: "I have at no time nor do I have any plans to, receive any monetary reimbursement for any object constructed in my woodworking shop which is located in a garage on my property...." He said woodworking is a lifelong hobby and he develops such things as furnishings for his church, furniture for his home and for others free of charge.
Mr. Orem may participate in the decision on the home-occupation ordinance. For Mr. Orem to have a conflict, he must have a "personal or private interest" in the home-occupation ordinance. "Home occupation" means: "any enterprise or activity conducted solely by one or more members of a family." That definition does not say if the ordinance applies only to commercial enterprises. However, another ordinance section refers to "Business Licenses." Reading the business license ordinance in conjunction with the zoning amendment, leads to the conclusion that the zoning ordinance applies to commercial ventures, not hobbies.
Mr. Orem's "personal and private interest" is in maintaining a hobby, not in making money. Thus, his interest is not one that would be affected by the ordinance.
The citizens who wrote the letter of complaint said that he had "a possible conflict of interest" because "he may, in the future, have a home based craft workshop for the sale of handcrafted items." This is a speculative and conclusory allegation. Delaware Courts, in interpreting the Code of Conduct, have noted that is a "strong presumption" of honesty in the actions of public officials. Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J. (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996). Mr. Orem has submitted an affidavit that he does not have a pecuniary interest at present or in the future in "home occupation" ventures. Against that statement, which carries the "strong presumption of honesty," is the conclusory and speculative allegation. Conclusory allegations of conflicts of interest without specific factual grounds are insufficient to state a claim. See, e.g. Camas v. Delaware Board of Medical Practice, Del. Super., C.A. No. 95A-05-008, J. Graves (November 21, 1995). Accordingly, we hold that Mr. Orem may participate in the decision on the zoning ordinance.
ISSUE 2 - As Ms. White will not be participating in her official capacity, what is the proper post-recusal conduct to insure compliance with the Code of Conduct?
Because Ms. White has a home-owned business, she contacted the Public Integrity Commission in December 1999 and was sent information on the Commission's prior rulings, Delaware Court decisions, etc., which discussed when officials should recuse themselves. In that correspondence, she was advised that the Commission had never specifically ruled on what limits would apply to officials after they recused themselves, and that she may, therefore, wish to seek an advisory opinion. Based apparently on that correspondence, she decided to recuse herself. However, her post-recusal conduct was questioned because, among other things, she was attending and participating in public meetings, and had signed the "letter of protest" which said she and Orem may have conflicts of interest and they should obtain an advisory opinion. Those events occurred at a public meeting and were reported in The Wave. The editorial concluded that if Ms. White had truly recused herself on the home-based business ordinance, then her obligation was to remain neutral--even outside of Council Chambers.
At that point, your request had been sent to the Commission, identifying some post-recusal conduct which you believed required advice from this Commission. The facts regarding Ms. White's signature on the "letter of protest" were not in your request as that event happened after your request was submitted. A private citizen sent The Wave article to this Commission on the date before it met. That information was given to the Commissioners and you at the meeting, so we could decide if those facts had relevance.
As the Town Attorney, you recommend to Town Council members who have been recused that they leave the meeting during consideration of the matter. This precludes them from participating in any way in the deliberation. Further, you advise them not to express oral opinions on the matter; not to gesture or request third parties or others to participate or express opinions on their behalf; and to generally conform themselves to the standards expected from judiciary members. You asked if you should continue giving that advice to your Town clients in this matter.
Ms. White wanted to attend the public meetings on the ordinance; did attend an ordinance workshop; and wanted to know if she could speak at these public meetings. In response to her inquiry, it was noted that the Commission had not specifically addressed an official's post-recusal conduct, and it was suggested that she could seek an advisory opinion. See, Ltr to Ms. White, p.2. As Town Attorney, you are now acting on her behalf to obtain clarification on the advice you should give her.
First, the statute clearly states that even if an official recuses himself, he may respond to questions if asked. 29 Del. C. § 5805(a)(1). From that language, it appears the official would not have to leave the meeting, and could comment if asked. However, it appears that Delaware Courts have indicated that where it is proper for the official to recuse, it is then improper to comment even if the comments are"neutral and unbiased" and even if the participation is "indirect and unsubstantial." See, Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J. (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996) and Prison Health v. State, Del. Ch., C.A. No. 13,010, V.C. Hartnett, III (June 29, 1993).
Also, the Code restricts officials from representing or otherwise assisting a private enterprise before their own agency. 29 Del. C. § 5805(b)(1). The purpose of that restriction is to insure that there is no undue influence and/or that they will not receive preferential treatment from their colleagues. Thus, to the extent Ms. White's participation could be construed as "representing or otherwise assisting" her private enterprise before her own agency (the Town Council), then her participation should be restricted.
We note that "representing and otherwise assisting" after a recusal is discussed not only in Delaware cases, but also in a federal court decision interpreting a similar federal ethics law. Van EE v. EPA, D.C. Dist. Ct., 55 F. Supp. 2d 1 (1999).
In Van EE, the employee wanted to speak at public meetings regarding the use of certain federal lands. The meetings were not before his own agency. The Court held the government had a compelling interest in restricting a federal employee's speech before federal agencies. It said his speech was not prohibited in all circumstances, only before the federal agencies. The applicable Delaware law, in this situation would only restrict her activities before her own Town agency. The government's interest is to insure not only compliance with the law, but also insure that there is no appearance of impropriety. The concerns of improper appearances "surely are greater" when an employee addresses their own agency, and when the audience is aware that the speaker is an employee of that agency. Van EE.
Here, Ms. White wants to engage in conduct which the Code restricts--representing or otherwise assisting a private enterprise before her own agency. Moreover, as noted in Van EE the appearance of impropriety is "surely greater" because she would not only be addressing her own agency, but certainly the audience at the Ocean View town meeting will know she is a Town official because they elected her to that position.
Other federal case law supports the restriction on her activities, such as having others speak on her behalf. Where one purpose of the ethics restrictions is to insure the official does not exercise undue influence on their colleagues, even if the official does not participate at all in the meeting, by being in attendance he potentially could have used his inside knowledge to help direct the statements and activities of those participating. United States v. Schaltenbrand, 11th Cir., 922 F.2d 1565(1991). Accordingly, based on the above law and facts, we conclude that the advice you have been providing to your Town Council clients regarding post-recusal conduct comports with the Code of Conduct in this particular situation.
III. Conclusion
We find and hold as follows: (1) Mr. Orem does not have a "personal or private interest" in the zoning matter, and, therefore need not be recused; (2) Ms. White has properly recused herself from participating because of her "personal or private interest" (her private business); and (3) Ms. White should continue complying with the Code by not "representing or otherwise assisting" her private enterprise before her own agency. (Commission Op. No. 00-10).
NOTE: Generally, advisory opinions or complaints are confidential. 29 Del. C. § 5807(d) & § 5810 (h)(1). However, applicants for advisory opinions, or the person charged in a complaint, can give the Commission written authorization to release the information. 29 Del. C. § 5807(d)(1) & § 5810(h)(1)(I). In the next case, such authority was given.
Personal Interests Arising from Ownership in Business
I. INTRODUCTION
The State Public Integrity Commission issued a ruling on March 31, 2000 holding that Dale R. Dukes, a Sussex County Council member, and the other Sussex County Council members did not have conflicts of interest which would disqualify them from participating in a re-zoning matter scheduled for presentation at the April 4, 2000 meeting of Sussex County Council. That ruling stated that an opinion providing a more detailed discussion of the law would be forth coming. What follows is that further discussion of the law.
II. JURISDICTION AND FACTS
On March 7, 2000, a complaint was filed with the Public Integrity Commission alleging that Mr. Dukes (hereinafter "Respondent"), a Sussex County Council member, may have a conflict of interest and should not participate in a vote on a re-zoning matter on April 4, 2000 or thereafter. The matter to be considered is Carl M. Freeman Communities' (hereinafter "Freeman") proposal to develop approximately 887 acres near Fenwick Island into a 2,895-home development. The Freeman proposal needs County Council's approval to re-zone the acreage from its present Farm and Agriculture status to a high-density zone. It is alleged that if Mr. Dukes' participates, his private company, Dukes' Lumber Co., might profit if the development is approved, and if Freeman or his subcontractors then decide to buy building supplies from his company. By statute, when a complaint is filed the Respondent has statutory rights to such things as personal service of the complaint, a specific time to answer, an opportunity to be heard, and the right to subpoena witnesses, etc. See, 29 Del. C. § 5810. Mr. Dukes waived such rights so the Commission could expedite its proceedings and render a decision before the April 4, 2000 Sussex County Council meeting. Mr. Dukes did, however, request an advisory opinion under 29 Del. C. § 5807(c) concerning the issue.
Because other County Council members have private business interests which also might allegedly profit, the County's legal counsel, Richard Berl, also asked for an advisory opinion on their situations. The other Council members and their private enterprises are: (1) Lynn J. Rogers, President, Rogers Sign Company, Inc., a commercial sign and outdoor advertising company; (2) Finley B. Jones, Jr., President, M.A. Willey & Sons, a steel material supply company; (3) George B. Cole, Realtor, Sea Coast Realtor (Eastern Sussex County) and owner, Beach Plum Antiques; and (4) Vance C. Phillips, president, Vance Phillip, Inc., Woodrow W. Phillips Spray Co., V.P. Produce, and Realtor, Laurel Realty (Western Sussex County).
The only Council member who has had a contract or an account indirectly with Freeman is Mr. Rogers, who did approximately $1,000 worth of sign work as a subcontractor for a company which contracted with Freeman on an earlier and different project. All Council members deny that they have: (1) an agreement with Freeman for future contracts; (2) sold any real property to Freeman; or (3) own or have an interest in any land in the vicinity of the development which will benefit from this project if it is approved.
III. APPLICABLE LAW
Complainant alleges that common law decisions prior to the enactment of the State Code of Conduct are not applicable. We decided that issue in 1997. See, e.g., Commission Op. Nos. 97-24 and 97-30. We held that the Code of Conduct provision which restricts government officials from reviewing or disposing of matters before their government entity if they have a personal or private interest which tends to impair their independent judgment in performing official duties is a codification of the common law.
Conflict of interest statutes do not generally abrogate the common law unless expressly so provided. Id. (citing 63 Am. Jr. 2d Public Officers and Employees § 253). The General Assembly did not expressly abrogate the common law. Nor did it impliedly repeal the common law restricting officials from participating when a conflict of interest was alleged in a zoning situation. Delaware courts have recognized that there must be order, certainty, and stability in land use laws. See, e.g., Stafursky v. County Council of Sussex, Del. Ch., C.A. No. 1242, C. Allen (August 12, 1987); Acierno v. Folsom, Del. Supr., 337 A.2d 309 (1975). To hold that the common law does not apply could result in this Commission destablizing long-standing Delaware decisions on zoning and conflict of interests restrictions.
At common law, when government officials act on zoning matters and a conflict of interest or personal interest is alleged, the standard to be applied depends on whether the government officials were acting in a: legislative, ministerial, or quasi-judicial capacity. (See cases cited herein). The decision on which standard to apply turns on the particular facts--e.g., what is the alleged "personal or private interest"; how would such an alleged interest affect the official's judgment; what type of zoning interest is being considered; and what is the official's capacity (role) in deciding the zoning issue.
Having concluded that common law decisions apply in this situation, we next address the facts in the context of the three common law standards which Courts have applied when an alleged conflict results from a zoning matter.
IV. BACKGROUND TO THE DECISION
(A) Zoning Decisions in General
Council Member Dukes' authority to vote on the zoning issue is being challenged because he has a private business which allegedly might benefit from a favorable decision on the matter. When Delaware Courts review challenges to zoning decisions, a threshold issue is whether the decision maker was participating in: (1) a "legislative" capacity; (2) "judicial" capacity; or (3) a "ministerial" capacity. This is true regardless of the basis of the zoning challenge, e.g., due process, Freedom of Information (FOIA) violation, or conflict of interest. See, e.g, Lawson v. Sussex County Council, Del. Ch., C.A. No. 1615-S, C. Allen (August 6, 1995) p. 8(zoning is a "legislative action," but some aspects are "quasi-judicial"); Conner v. Shellburne, Inc., Del. Supr., 281 A.2d 608 (1971) (zoning hearings of Levy Court were quasi-judicial in nature); Green v. Sussex County Planning and ZoningCommission, Del. Ch., 340 A.2d 852(1974)(zoning hearing of County Council is basically similar to the law making process of any legislative body); East Lake Partners v. City of Dover Planning Commission, Del. Super., 655 A.2d 821(1974)); See also, other cases cited herein).
If the capacity in which the official acts is legislative, then substantial deference is given and courts will decline to question the motives of the official who participated in the zoning decision, even if a possible presence of a conflict of interest is alleged. See generally, Zoning: Proof of Bias or Conflict of Interest in Zoning Decision, 32 Am. Jur. Proof of Facts 3d § 5 (hereinafter "Zoning: Proof of Bias or Conflict"); See, e.g., Lawson at 8-10 (when zoning is viewed as a legislative action, the court will not substitute its judgment for the legislative body, absent fraud or bad faith); Krahmer v. McClafferty, Del. Super, 288 A.2d 678 (1972)(when government body acts in legislative capacity, courts will not inquire into the motives of or inducements to the officials as to what may have influenced them in passing the act or resolution, absent fraud or bad faith).
A more probing standard is used if the act is characterized as quasi-judicial. Id; See, e.g., Shellburne, Inc. v. Roberts, Del. Supr., 238 A.2d 331(1967) (when quasi-judicial body acts, there is a presumption of honesty and integrity and court will look at motive if complainant establishes a prima facie case to overcome the presumption).
A "matter" is considered "ministerial" when the duty is prescribed with such precision and certainty that nothing is left to discretion or judgment. Darby v. New Castle Gunning Bedford Education Assoc., Del. Supr., 336 A.2d 209, 211(1975). Where government officials are bound by zoning regulations, there is no discretion of choice involved. State ex rel. Rappa v. Buck, Del. Super., 275 A.2d 795 (1971). Thus, if the matter is merely "ministerial" the presence or absence of a conflict of interest is immaterial. Since Mr. Dukes and the other Council members do exercise discretion and judgment in ruling on zoning matters, we hold that the "ministerial" standard does not apply.
(B) Identifying the Capacity in Which the Council Members are Acting
Having disposed of the "ministerial standard," the threshold issue is now whether the County officials would be acting in a legislative or judicial capacity.
Delaware Courts decide if an official is acting on a zoning matter in a legislative or quasi-judicial capacity; or a combination thereof by looking at the specific structure of the land use laws. There is no Delaware case dealing directly with which test would be applied to Sussex County Council members in a re-zoning situation. However, Delaware Courts have decided the standard to be applied under the specific zoning laws of other counties and cities. See, Lawson, C.A. No. 1615-S (zoning is a "legislative function," but some aspects are "quasi-judicial"); Conner, 281 A.2d 608 (zoning hearings of Levy Court are quasi-judicial); East Lake, 655 A.2d 821 (comparing site development decision to subdivision decision, Court recognized that the City's Planning Board could act, in part, in all three capacities).
From those decisions it is clear that the capacity in which an official acts turns on the complexities of the particular area's zoning laws. As this Commission finds no authority interpreting which capacity would apply to Sussex County Council members based on the structure of the Sussex County Zoning laws, we test the issues under both the legislative and quasi-judicial standards.
(1) LEGISLATIVE CAPACITY STANDARD
Delaware Courts will not inquire into the motives of public officials who act in a legislative capacity on zoning actions if they act within the scope of their admitted powers, unless the complaining party proves bad faith or fraud on the part of the official. Campbell v. Commissioners of Bethany Beach, Del. Supr., 139 A.2d 493 (1958).
In Campbell, it was alleged that zoning Commissioners approved the zoning of a new state highway through Bethany Beach, because it would increase their individual property values. Id. at 496-497. The Delaware Supreme Court said there was "absolutely no evidence of capriciousness or bad faith or fraud." Id. at 496. It noted that as a matter of law, the Commissioners had complete power to act on the matter. Id. Regarding the allegation that they were motivated to approve the request because of their desire for personal gain, the Court said "[T]he short answer is:" most of the property lying east of Delaware Avenue would presumably benefit from any increase in value as a result of a new highway. Id. at 497. "The mere fact of possible enhancement" of their personal properties did not preclude their participation, because as a practical matter, no Board of Commissioners could then be obtained to validly consent to a new highway since, by law, all Commissioners were property owners. Id.
As in Campbell, it is "possible" that all Council members could personally gain if the ordinance is passed. For example, Freeman "might" decide he wants: Mr. Dukes' building supplies; Mr. Findley's steel materials; Mr. Cole and Mr. Phillip's real estate sales expertise; Mr. Cole's antiques to dress up the developer's show home; or Mr. Rogers signs to announce the coming of the new development or identifying the location, etc. But Mr. Dukes and the other Council members have each represented that they: (1) have no agreement with Freeman for future contracts; (2) have not sold any real property to Freeman; and (3) do not own or have an interest in any land in the vicinity of the development which will benefit from this project if it is approved.
Under the statute, and at common law, to prove that an official has a "personal interest," sufficient to impair his judgment, complainant must overcome "a strong presumption of honesty and integrity." Beebe Medical Center, Inc. v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, J. Terry (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996); See also, Shellburne, 238 A.2d 331(when acting within scope of authority, there is a rebuttable presumption of good faith and propriety of conduct that inures to all public officers); Mack v. Kent County Vocational-Tech Sch. Dist., Del. Super., C.A. No. 86A-AU-2, J. Bush (May 20, 1987). However, the complaint recites "the mere fact" that if the ordinance is passed, then Mr. Dukes "might" profit.
All well-pleaded allegations must be accepted as true. Kershaw Excavating v. City Systems, Inc., Del. Supr., 581 A.2d 1111 (1990). However, inferences and speculative facts are not to be assumed as true without specific allegations of fact to support such inferences or conclusions. Bergstein v. Texas Int'l Co., Del. Ch., 453 A.2d 467 (1982), appeal den., Del. Supr., 461 A.2d 695 (1983)(alleged Board member's private enterprise would benefit from decision). Here, it is merely alleged that the officials "might" profit if the ordinance is passed and if the developer then decides to do business with one or all of those officials. This allegation is more tenuous than in Campbell, where the Court ruled that there was no evidence of fraud or bad faith. Id. at 139 A.2d 493. Where there is no showing of bad faith or fraud, Courts will dismiss the complaint. Klaw v. Pau-Mar Construction Co., Del. Supr., 135 A.2d 123 (1957).
Accordingly, we dismiss the complaint against Council Member Dukes, and advise Mr. Dukes, and all Council members, that to the extent any action on the re-zoning matter would be in their legislative capacity, they are not precluded from participating.
(2) JUDICIAL CAPACITY STANDARD
We find that even under the stricter judicial/quasi-judicial standard there is no violation of the State Code of Conduct. When the judicial standard is applied, complainant must again overcome "a strong presumption of honesty and integrity." Beebe Medical Center, Inc. v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, J. Terry (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996). Delaware Courts have noted how remote and nebulous alleged conflicts can be. Thus, for the interest to be sufficient to require an official to recuse himself, the claim cannot be merely conclusory. Shellburne, 238 A.2d 331; Camas v. Delaware Board of Medical Practice, Del. Super., C. A. No. 95A-05-008, J. Graves (November 21, 1995). We have held that claims cannot be based on suspicion and innuendo. There must be hard facts. Commission Op. No. 96-75(citing CACI, Inc-Federal v. United States, Fed. Cir., 719 F.2d 1567(1967)). Here, the hard facts support the presumption of honesty and integrity.
(A)There is no evidence of a violation of 29 Del. C. § 5805 (a)(2)(b) or (a)(1).
Officials may not review or dispose of matters if they have a personal or private interest which tends to impair independent judgment in performing official duties. 29 Del. C. § 5805 (a)(1). By law, an official's judgment would tend to be impaired if their financial interest would benefit to a lesser or greater extent than other private enterprises similarly situated. 29 Del. C. § 5805 (a)(2)(b). Here, the allegations merely say that Mr. Dukes' private business "might" profit "if" the ordinance is passed, and "if" Freeman or his subcontractors then decide to do business with Mr. Dukes. The allegations require several assumptions before any interest would exist: (1) the ordinance will pass; (2) the developer or his subcontractors will use Mr. Dukes' company or the companies of other Council members; and (3) their companies would benefit to a greater or lesser extent than other similar private enterprises. Such assumptions are too indefinite and speculative to support a finding of a disqualifying conflict of interest, particularly in light of each member of Council's denial of the existence of any agreements related to the planned project.
Even assuming the first two speculative requirements are met, no facts support the allegation that their private enterprises would benefit more than other private enterprises which offer similar products or services. For example, the developer could deal with a building supply company other than Mr. Dukes' from the same local area, such as Masten Lumber and Building Supply. Similarly, he could select companies other than those of the remaining Council members for the other goods and services he needs. As no facts indicate that the Council Members' businesses would benefit to a lesser or greater extent than other similarly situated private enterprises, the allegations fail to meet the element required by law--that their financial interests would benefit to a greater extent than others similarly situated.
The next question is whether the speculative, prospective interests would be sufficient to create any associational relationship "personal or private interest" between the Council members and Freeman which would tend to impair judgment under 29 Del. C. § 5805 (a)(1). "The decision as to whether a particular interest is sufficient to disqualify is necessarily a factual one and depends upon the circumstances of the particular case." Prison Health Services Inc. v. State, Del. Ch., C.A. No. 13,010, V.C. Hartnett III (July 2, 1993)(citing Van Itallie v. Borough of Franklin Lakes, N.J. Supr., 146 A.2d 111, 116 (1958)).
In Van Itallie, it was alleged that an official who participated in a zoning decision had a personal interest because his brother-in-law held a low-level position with the company seeking the zoning action. The Court held that the official's familial relationship with an employee of the company which was seeking the decision was not an interest sufficient to require recusal. Similarly, Delaware Courts have held that the mere allegation of a relationship without additional facts to support a charge of a conflict of interest is insufficient to state a claim. Camas v. Delaware Board of Medical Practice, Del. Super., C. A. No. 95A-05-008, J. Graves (November 21, 1995)(no facts were given to support an allegation that a State officer's marital relationship created a conflict of interest where her spouse investigated a claim of improper medical practice for his employer, a private hospital, against a doctor of that hospital, and the same matter came before her State board).
Here, all Council members deny that they have any agreement with Freeman for future contracts, etc. No facts indicate any personal or private ties to Freeman. Thus, the allegations of a personal or private relationship are speculative and conclusory, without facts to support the type of relationship between the officials and Freeman that is sufficient to create the type of interest which Courts deem to be sufficient.
(B) The Facts Do Not Support the Claim of an Appearance of Impropriety
As the conclusory and speculative allegations are insufficient to establish that the officials have the requisite "personal or private interest," the question becomes whether the facts are sufficient to support the allegation of an appearance of impropriety.
In deciding if there is an appearance of impropriety, we consider the totality of the circumstances. Commission Op. No. 96-78. However, those circumstances must be contained within the framework of the Code's purpose which is to achieve a balance between a "justifiable impression" that the Code is being violated by an official, while not "unduly circumscribing" their conduct so that citizens are encouraged to assume public office and employment. 29 Del. C. § 5802(1) and 5802(3). To achieve that balance, we must start with the strong legal presumption of honesty and integrity to which public officials are entitled. Beebe. Added to that presumption are the following legally significant facts:
(1) Capable Citizens Would be Discouraged from Holding Public Office if Remote and Speculative Interests were Enough to defeat the Purpose of the Code of Conduct. The balance that must be struck when public officials are alleged to have remote and speculative interests was well expressed by the Court in a New Jersey zoning decision. The statute, similar to Delaware's, restricted local planning officials from acting "on any matter in which he has either directly or indirectly any personal or financial interest." The Court said:
Local governments would be seriously handicapped if every possible interest, no matter how remote and speculative, would serve as a disqualification of an official. If this were so, it would discourage capable men and women from holding public office. Of course, courts should scrutinize the circumstances with great care and should condemn anything which indicates the likelihood of corruption or favoritism. But in doing so they must also be mindful that to abrogate a municipal action at the suggestion that some remote and nebulous interest is present, would be to unjustifiably deprive a municipality in many important instances of the services of its duly elected or appointed officials. The determinations of municipal officials should not be approached with a general feeling of suspicion, for as Justice Holmes said, "Universal distrust creates universal incompetency." Van Itallie at 269.
Similarly, we have held that in deciding if there is an appearance of impropriety because of an alleged prior professional or social relationship, it is improper to ascribe evil motives to a public official based only on suspicion and innuendo; not on hard facts. Commission Op. No. 96-75(citing CACI, Inc-Federal v. United States, Fed. Cir., 719 F.2d 1567(1967)).
That conclusion is consistent with a Delaware decision where it was alleged that there was an appearance of impropriety under a provision of the Lawyer's Rules of Professional Conduct because of the business relationship created by the individual's State role and his private employment. The Court said: Absent the existence of a conflict, it would not disqualify the individual based on an unarticulated concern for the "appearance of impropriety." It noted that appearances of impropriety claims have been criticized as being too "imprecise, leading to ad hoc results." Moreover, such unsubstantiated claims were sometimes used as a tactical tool just to disqualify an official from participating when, in fact, there was no conflict. Seth v. State of Delaware, Del. Supr., 592 A.2d 436 (1991).
As in Seth, here, the public position and private employment created the alleged appearance problem, but there were no articulated, specific facts to support the claim. Just as the rules of conduct for lawyers are not to be used for tactical purposes to disqualify officials when there is no conflict, so too the State Code of Conduct should not be used for tactical purposes to disqualify public officials when there is, in fact, no conflict. Here, based solely on appearances without any supporting facts, it is alleged that Mr. Dukes should be disqualified because he "might" profit--if the developer's proposal is approved; and if the developer or if his subcontractor decides to buy supplies from Mr. Dukes' company. Apparently no other Council members were questioned about the possibility that their private businesses might be enhanced. The only complaint filed was against Mr. Dukes. After he was charged, the Town attorney, understanding that if the charges against Mr. Dukes constituted a conflict of interest, then all Council members would have the same conflict, sought an advisory opinion not only for Mr. Dukes but for all Council members.
Delaware Courts have noted that zoning decision makers are residents of the town or county for which they are responsible. As such, they bring their experience as citizens and residents of the town or county. When exercising judgment they are required by their office to follow a process set-out by statute or dictated by due process. They need not approach their duties with no preconceptions about the course that would best promote the public good. Pettinaro Enter. v. Stango, Del. Ch., C.A. Nos. 1488, 1501, C. Allen (July 24, 1992).
(2) The Council Members' Discretion is Restrained by State and Local Zoning Law. Having concluded that speculative claims do not support the purpose of the Code, we also note that Sussex County Council Members are to comply with the State Comprehensive Development law when making zoning decisions. 9 Del. C., Chapters 68 and 69. Delaware courts have held that the State law limits the discretion of those making land use decisions and that such "limits on discretion" are legally and judicially significant. Lawson, C.A. No. 1615-S; See, Green v. County Council of Sussex County, Del. Ch., 508 A.2d 885 (1986). Land use decisions are also restrained by local zoning laws and regulations. See, Sussex County Code, Chapter 99. The local restraints include the requirement that the developer must consult with such sources as the County's Land Use Planning staff; the County Engineer; the State's Department of Natural Resources; the State Fire Marshal's office; and other professional and technical representatives as deemed necessary. Id. Public hearings are held so property owners can provide input, and a Committee then submits a report with recommendations to the Council. Id. Thus, the developer's application is reviewed by a multitude of persons for compliance with not only the State comprehensive plan, but local ordinances and regulations, with public input, before Council ever votes.
As zoning laws limit the discretion of those making land use decisions, such "limits on discretion" are of importance when it is alleged that there may be an appearance that an official's discretion/judgment would be impaired because of a mere possibility that he might benefit from a land use decision.
(3) Like Delaware, other jurisdictions have held that claims of conflicts of interest in the zoning context can be too remote and nebulous to require an official to recuse. A review of case decisions from other jurisdictions, reveals that before the courts would hold that an interest in the zoning "matter" being considered, was sufficient to create a conflict, they required some ascertainable benefit; not speculative benefits based on conclusory allegations. See, "Zoning: Proof of Bias and Conflict;" Van Itallie 146 A.2d 111 (1958) (cited by Delaware Court in Prison Health); Moody v. University Park, Tex. App., 278 S.W.2d 915(1955); and Touphoeus v. Joy, N. J. Super., 196 A.2d 250 (1963).
Complainant must overcome a strong legal presumption of honesty and integrity. Beebe, C.A. No. 94A-01-0004; Mack, C.A. No. 86A-AU-2. Here, the presumption of honesty and integrity is bolstered by facts which Delaware Courts have found to be legally significant, such as the legal restraints imposed by State and local zoning laws. In stark contrast, is the conclusory allegation that the activity could create a strong potential for a conflict.
V. CONCLUSION
Based on the foregoing law and facts, the complaint against Council Member Dale Dukes is dismissed as the speculative allegations fail to establish either a conflict of interest or even the appearance of a conflict. Further, we find that all Council members, like Mr. Dukes, might possibly enhance their private interests if the re-zoning request is approved. However, they, like Mr. Dukes, can only be said to have a potential speculative interest, which is insufficient to require recusal. (Commission Op. No. 00-18).
Representing Private Enterprise Before Own Agency
NOTE: When a waiver is granted, proceedings before the Commission become a matter of public record. 29 Del. C. § 5807(a).
Writing a History Book - Waiver Granted
Dear Mr. Carter:
The State Public Integrity Commission, based on the following law and facts, grants a waiver for you to accept a grant from the Delaware Heritage Commission (DHC), of which you are a member, to update a history you wrote in 1984 on former Governor John Townsend.
When a State employee, officer or honorary official does business with the State, they must submit a "full disclosure" to the Commission. 29 Del. C. § 5806(d). "Full disclosure" means sufficient information to decide if the conduct violates the Code. Here, you and the agency acknowledged that accepting the grant would result in a violation, and asked for a waiver. The prohibitions requiring a waiver are: (1) the restriction on contracting with the agency to which you are appointed, 29 Del. C. § 5805(b)(1); and (2) the requirement for public notice and bidding, 29 Del. C. § 5805(c).(1)
The Commission may grant a waiver if the literal application of the prohibition is not necessary to achieve the public purposes of the statute or would result in an undue hardship on the employee or the agency. 29 Del. C. § 5807(a).
The public purpose served by prohibiting contracting with one's own agency was noted in a 1971 Court opinion. W. Paynter Sharp & Son v. Heller, Del. Ch. 280 A.2d 748, 752 (1971). In Heller, the Court upheld an agency's decision not to contract with one of its appointees, saying that when State officials contract with their own agency the concern is that the award of such contracts "has been suspect, often because of alleged favoritism, undue influence, conflict and the like." The Court noted that, at that time, the State had no conflicts of interest law. Subsequently, the Code of Conduct was passed, and restricted State officials from dealing with their own agency. 29 Del. C. § 5805(b)(1). This insures that State officials do not use their influence within their own agency to affect the decisions of their colleagues or employees or use their access to information or influence within their own agency to obtain preferential treatment, unfair advantage, or unwarranted privileges, private advantage or gain. Commission Op. No. 98-23.
As the public purpose is to insure the contract does not result from favoritism, undue influence, etc., we looked at why DHC wants to contract with you. DHC selected you to update the history of former Governor Townsend because in 1984, many years before you were a DHC appointee, you wrote a lengthy history on Governor Townsend. In writing that book, you obtained historical documents, conducted interviews, established a trusting relationship with the family, etc. DHC is now publishing histories on all of Delaware's former Governors as part of a series. Thus, you are the person most familiar with the history of the former Governor, and have the information and expertise to update the book. Further, other authors have been selected to write histories of other former Governors. Thus, this is not a unique opportunity created solely for you. The histories will be completed in a consistent format and made available for purchase at $5. You will not receive any portion of those sales. In updating your 1984 book, you will accomplish such things as adding footnotes to make it more scholarly, adding information that was not included in the initial writing, etc. Also, you will scan the existing book into a desktop publishing program to reformat it so it will be consistent in appearance with the other histories in the series. An additional step you will take that other authors are not taking is to make the book camera ready.
Based on those facts we conclude that the public purpose--insuring that the contract was not based on favoritism, undue influence, etc.--has been served. Thus, the literal application of the restriction against contracting with one's own agency is not necessary to serve the public purpose and a waiver is granted.
Regarding the requirement for public notice and bidding, Delaware Courts have held that: "Statutes dealing with bidding on public work are to be construed in the light of their primary purpose--to protect the public against the wasting of its money. These statutes seek to prevent waste through favoritism and yet permit proper supervision over the qualifications of the bidders. Thus, there is the desire to see that public officials have public work done as cheaply as possible." Fetters v. Mayor and Council of Wilmington, Del. Ch., 72 A.2d 626(1950); Heller, supra; and Delaware Technical and Community College v. C&D Contractors, Inc., Del. Supr., 338 A.2d 568 (1975).
The Code of Conduct includes two methods by which the Commission can address the issue of expenditure of funds on a State contract: (1) public notice and bidding or (2) insuring that there is arms' length negotiation. 29 Del. C. 5805(c). Public notice and bidding aids in avoiding favoritism by creating a public record that insures such things as qualifications of bidders and fairness in prices. Here, public notice and bidding would be merely perfunctory because of the reasons given above concerning why your qualifications resulted in your selection. Thus, to insure the public purpose is served we review your situation under the arms' length negotiations standard.
Delaware Courts, in ruling on arms' length negotiations, have noted that the "most economically meaningful way to judge fairness is to compare the price paid with the price likely to be available in alternative transactions." Commission Op. Nos. 98-23; 99-17 (citing Oberly v. Kirby, Del. Super., 92 A.2d 445(1991)). Here, DHC plans to contract with you for $4,000. It said that authors of history books on other former governors are being paid $3,000, but the additional money is because you will make your book camera ready, while the other authors will not. DHC will undertake the tasks and associated costs to make the other authors' books camera ready. Thus, the actual costs to the agency is essentially the same for all authors. Accordingly, your contract appears to be no more favorable than what is being paid as the market price to other authors writing histories of former governors.
We also note that when a contract is publicly noticed and bid, the results become a public record so that the public has access to information on the contract. Access to this information instills public confidence that the contract was not issued out of favoritism, etc. While public notice and bidding will not occur in this case, by law, when we grant a waiver the proceedings become a public record. 29 Del. C. § 5807(b)(4). Thus, the public will know that its concerns, such as the potential for favoritism, use of public office for an unfair advantage or gain, etc., were addressed. Therefore, the literal application of the requirement for public notice and bidding is not necessary to serve the public purpose, and a waiver of that prohibition is granted. (Commission Op. No. 00-32).
Representing Clients before Own Agency
An individual was considering accepting an appointment by a Cabinet Secretary to serve on the agency's strategic planning policy subcommittee to develop policies by one of the agency's Divisions and one of its Commissions. He asked if accepting the appointment raised any Code of Conduct issues. Based on his correspondence, the Commission found that the appointment would raise an issue under the provision which restricts honorary State officials from representing or assisting a private enterprise on matters before the agency to which they are appointed. 29 Del. C. § 5805(b). The State appointment would require him to develop policy for the particular Commission and Division, and he and members of his private enterprise would be representing complainants or respondents before the same Commission and Division on issues dealing with the policies. Under those circumstances, it would violate the Code of Conduct if he accepted the appointment and he or his law firm represented clients before that same agency. (Commission Op. No. 00-11).
For another case dealing with representing or assisting a private enterprise before one's own agency, see "Contracting with the State - Violations Found," p. 56.
Accepting Anything of Monetary Value
Gifts & Payment of Expenses
Payment of Costs to Attend Private Association's Annual Dinner
The Commission concluded that it would not violate the Code of Conduct if a State officer accepted payment of his expenses from the a private Association to be its guest at its annual meeting dinner. Funding for his agency came from the Association members rather than from the State's general fund. As the officer had raised the issue of this Association paying his expenses at a prior meeting, when we had no particular facts on which to rule, and he expected the Association would offer to pay his costs to attend future events, this opinion should provide guidance not only on these particular facts but in making those future decisions.
(A) Restrictions on Accepting Things of Monetary Value
The Code of Conduct restricts acceptance of other employment, gifts, payment of expenses or anything of monetary value if acceptance may result in:
- impaired independence of judgment in performing official duties;
- preferential treatment of any persons;
- official decisions outside official channels; or
- any adverse effect in the public's confidence in the integrity of its government. 29 Del. C. § 5806(b).
(B) Application of Law to Facts
(1) May acceptance result in impaired independent judgment?
In deciding if an official's judgment in performing official duties is impaired, Delaware Courts look at the official's decision making authority and the events surrounding the exercise of such authority, including the timing of the decision, as it relates to the outside interest that raises the question of a conflict. Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J. (June 30, 1995), aff'd, Del. Supr., No. 304, Veasey, C.J. (January 29, 1996). In Beebe, it was alleged that an official's judgment was impaired in participating in a decision concerning a private entity. The Court noted the official's decision making authority over the entity, and pointed out that while the record was not clear when the relationship creating the conflict arose, that about two weeks after his favorable decision for the entity, the official's private employer announced a business arrangement with that entity. The Court held that the official should not have participated even though his comments were "neutral and unbiased."(2)
Here, we placed his decisional authority as it relates to Association in the context of the events leading to the question of whether acceptance may impair your independent judgment.
He nor his office regulated the Association, but it is registered as a lobbying organization. When an organization registers to lobby, it has clearly expressed an interest in matters over which State officials exercise decisional authority. Commission Op. Nos. 99-05 and 99-17. The Association membership consists of persons from an industry which his office regulated. The Commission addressed his significant and constant regulatory authority over this industry in a prior opinion. Commission Op. No. 99-52. He confirmed that the Association does lobby his agency and the General Assembly on issues related to the particular industry and other issues every year. Thus, he routinely deals with matters affecting the Association and its members.
Two specific issues of interest to Association this year were: (1) legislation giving him more authority over the industry the Association members represent, and (2) legislation extending for five more years a particular program under the laws governing this industry. On the first matter, apparently he and the Association supported the legislation, but there was an indication of contention on the legislation from other lobbyists. He believed that arose from misunderstanding the law. No facts indicated that he was deciding issues on implementing that law at present or in the near future, or that it would be raised at Association's annual meeting. The second bill extends the life of an existing tax credit program. The Association's interest is in the tax credit for the industry it represents. His office's interest arises because it collects certain taxes from this particular industry. No facts indicated that extending the life of that law impacts on his existing decisional authority. Also, similar legislation has been introduced to extend tax benefits to other businesses qualifying for a tax credit as a result of job creation and economic investment in Delaware. Thus, extending the tax credits for those purposes was not unique to this industry. Based on the facts, the Commission did not find that accepting payment of his expenses to attend the Association's annual meeting would impair his independent judgment in making official decisions concerning those issues known to be pending. We address the more general issue of whether acceptance raises any appearance of impaired judgment, etc., in Section (3) below.
(2) May acceptance result in preferential treatment or official decisions outside official channels?
As head of a State agency with decisional authority impacting on Association, which lobbies his agency, he is in a position to engage in preferential treatment or make official decisions outside official channels. However, there is a "strong presumption of honesty and integrity" in the conduct of public officials. Beebe. Moreover, there must be facts to substantiate actual or perceived preferential treatment or official decisions outside official channels. Here, no facts suggested that he has or will actually engage in such activities. Again, we address the more general issue of appearances of improper conduct below.
(3) May acceptance result in an appearance of impropriety?
The restriction on accepting things of monetary value if acceptance may result in any adverse effect in the public's confidence in the integrity of its government is, in essence, an appearance of impropriety test. Commission Op. No. 91-12. In a prior opinion where a lobbying organization paid an official's expenses, some Commission members "struggled" with the appearances when officials accept things of monetary value from lobbying organizations. Commission Op. No. 99-05. However, the Code does not ban gifts from lobbyists, so the question of appearances raised when accepting gifts from lobbyists is the same as when any private source makes such offers. They are: (1) the official may be beholden to the private interest and prone to provide "favors" in return; and (2) even if there is no reason to suspect the private payor is trying to curry favor, the employee's acceptance of benefits from a private source may raise the specter that he is using public office for unwarranted privileges, private advancement or gain.(3) To evaluate whether acceptance results in such improper appearances, we look at the totality of the circumstances. Commission Op. No. 96-78.
His decisional authority and dealings with the Association on a routine basis on matters of interest to the Association and its members, places him in a position where he could provide "favors." However, we balance that fact against other relevant facts, which include: (1) the nature and status of the matters of interest to the Association; (2) the nature of the Association's event; (3) the reason his attendance; etc.
The facts did not indicate that the Association's annual meeting would provide a significant chance to lobby him on any matters; the legislation over which there was contention has been passed; the other legislation extends existing law and is not unique to the banking industry; and no facts indicate any pending decisions on those matters. Also, the occasion was not a purely social activity, but was an annual meeting with an afternoon of speakers and panel discussions, followed by a reception and dinner with speakers. While he could not attend the afternoon business sessions, he would attend the reception and dinner at the Hotel du Pont. No facts indicated the value or lavishness of the event. Obviously, the du Pont Hotel is known for its fine dining, etc.(4) We assume the event would include fairly typical fare for such events, rather than a lavish dinner and evening of entertainment. Although his State agency was paying for two other persons from his office to attend and could pay the cost of his attendance, his agency's funding comes from the Association's members, not the public's tax funds. No facts indicate that accepting payment from the Association for this particular event under these circumstances would raise the specter that he was using public office for unwarranted privileges, private advancement or gain. Based on all those facts, it would not raise an appearance of impropriety for him to accept payment of his expenses to attend the Association's annual meeting. (Commission Op. No. 00-15).
Soliciting from Private Companies
A State agency asked if its employees may solicit private companies, which contract with it, to pay for a conference to be hosted by agency. The Commission concluded that such conduct would violate the Code of Conduct based on the following law and facts.
I. Applicable Law
State employees are restricted from accepting anything of monetary value if acceptance may result in: (1) impaired independent judgment in performing official duties; (2) preferential treatment to any person; (3) official decisions outside official channels; or (4) any adverse effect on the public's confidence in the integrity of its government. 29 Del. C. § 5805(b).
II. Facts Applied to Law
The agency was asked to host a conference that would be open to the public. Approximately 300 people were expected to attend. The agency wanted to finance the conference by soliciting private companies as sponsors. Their sponsorship category, and the amount of recognition the companies will receive, would be based on the amount contributed. At the highest level, certain sponsors would be solicited for $10,000. They would be recognized as major sponsors in all promotional material; the company logo would be on the program brochure, registration brochure, and T-shirts. Additionally, those sponsors would have a free exhibit table; company name recognition at the beginning of the program; 30 scholarships for employees; and recognition as a lunch sponsor. At the lowest level, sponsors would be solicited for $1,500. Their company logo would be on the program and registration brochures and a T-shirt.
The agency identified a number of private companies to solicit. It contracts with most of them. It had gone through the list of companies with which it contracts, selecting a number of them to solicit. Other agency contractors were not selected. The solicitation calls would be made by such persons as the key assistants, policy advisors, Division Directors, and heads of sections. The money would be used to reduce registration costs, pay for food, beverages, guest speakers, use of facilities, etc. The beneficiaries of these contributions will primarily be the general public. However, as it is open to all women, some State employees may attend and receive the benefit. For example, State employees who comprised the agency's planning committee would be expected to attend and would receive the benefits. The estimated cost was $100,000 for a one day event. The agency apparently did not want to incur the costs out of its budget.
While the Commission agreed that this particular conference was a worthy cause, the manner in which the agency planned to finance the event raised a number of concerns.
First, the Delaware Code does not authorize this particular agency to solicit funds. A review of the entire Delaware Code reflects that where the General Assembly wanted an agency or one of its sections to have authority to solicit private sources, it has clearly and specifically done so. See, e.g., 14 Del C. § 132(d)(Department of Education's Education Science in Motion Fund); 14 Del C. § 3453 (DOE's Engineering and Applied Science Recruitment Fund); 29 Del. C. § 53 (State Archives Museum); 29 Del. C. § 3203 (Delaware Heritage Commission); 31 Del. C. § 303 (Division of Child Protective Services); 31 Del. C. § 405 (Delaware Children's Trust Fund); 31 Del. C. § 3203 (Delaware Heritage Commission). Thus, it appears clear that the General Assembly intended to limited solicitation authority to only those seven (7) entities. This agency was not one of them.
Second, the agency planned to use fairly high-level employees to solicit. Even if we could graft solicitation authority onto the Code of Conduct statute, the limits on acceptance embedded in the gift provision raise further concerns. Specifically, it restricts acceptance if it may result in impaired judgment in performing official duties; preferential treatment; official decisions outside official channels; or any adverse effect on the public's confidence in the integrity of its government. 29 Del. C. § 5806(b)(emphasis added).
The agency said it will not have these employees solicit a company which contracts with their specific Division or Section. That reduces the possibility of, or the appearance that, their judgment may be impaired in performing official duties (e.g., contract renewals with those companies, etc.). However, this would not dispel at least the appearance that persons in key positions--principal assistant, policy advisor, division director, and heads of various sections--"carry great weight" within the agency, and because of their status would be in a position to insure preferential trea