Hubbard v. State (Ex parte Hubbard)

• Decision Date: 10 April 2020
• Docket Number: 1180047
• Citation: 321 So.3d 70
• Parties: EX PARTE Michael Gregory HUBBARD (In re: Michael Gregory Hubbard v. State of Alabama )
• Court: Alabama Supreme Court

321 So.3d 70

EX PARTE Michael Gregory HUBBARD

(In re: Michael Gregory Hubbard

v.State of Alabama )

1180047

Supreme Court of Alabama.

April 10, 2020

Rehearing Denied August 28, 2020

William J. Baxley, Joel E. Dillard, and David McKnight of Baxley, Dillard, McKnight, James & McElroy, Birmingham; R. Lance Bell of Trussell Funderburg Rea & Bell PC, Pell City; Sam Heldman of The Gardner Firm, Washington, D.C.; and Philip E. Adams, Jr., and Blake Oliver of Adams White Oliver Short & Forbus LLP, Opelika, for petitioner.

Steve Marshall, atty. gen., and Edmund G. Lacour, Jr., and James R. Houts, deputy attys. gen., and Kyle Beckman, asst. atty. gen., for respondent.

Howard P. Walthall, Sr., and Leslie S. Wright, Cumberland School of Law, Samford University, Birmingham, for amicus curiae Professor Edward P. Walthall, Sr., in support of the petitioner.

Matthew C. McDonald of Jones Walker LLP, Mobile, for amicus curiae Alabama Council of Association Executives, in support of the petitioner.

PARKER, Chief Justice.

Michael Gregory Hubbard was charged with 23 counts of violating Alabama's "Code of Ethics for Public Officials, Employees, Etc.," §§ 36-25-1 to -30, Ala. Code 1975 ("the Ethics Code").¹ The Lee Circuit Court entered a judgment on a jury verdict convicting Hubbard on 12 of the 23 counts. Hubbard appealed to the Court of Criminal Appeals, which affirmed the convictions on 11 counts and reversed the conviction on 1 count. Hubbard petitioned this Court for certiorari review of the 11 counts affirmed by the Court of Criminal Appeals, and we granted review. For the reasons below, we affirm the judgment of the Court of Criminal Appeals as to Hubbard's convictions on six counts, and we reverse as to the convictions on five counts because they were based on insufficient evidence or incorrect interpretations of the Ethics Code.

I. Factual Background

In 1994, Hubbard formed Auburn Network, Inc. ("Auburn Network"), a radio network that held the media rights for Auburn University athletics. Hubbard later sold the broadcasting/media portion of Auburn Network to International Sports Properties, Inc. ("ISP"), and stayed on as president of Auburn ISP Network. Hubbard received a salary from ISP but also continued to operate what remained of Auburn Network.

In 1998, Hubbard was elected to the Alabama House of Representatives. He was elected minority leader of the House in 2004 and then was elected chairman of the Alabama Republican Party. As chairman, he helped orchestrate the Republican takeover of both chambers of the Alabama Legislature in the 2010 election. That statewide effort was conducted on a platform dubbed "The Handshake with Alabama," which included a promise of ethics reform.

Thus, shortly after the 2010 election, the Governor called a special session of the new Republican-majority legislature to reform the Ethics Code. At the beginning of the session, Hubbard was elected Speaker of the House. Under Hubbard's leadership, the legislature revised the Ethics Code to, among other things, tighten restrictions on gifts to public officials and employees from lobbyists and their employers.

Soon thereafter, Hubbard began experiencing personal financial difficulties. In January 2011, ISP was purchased by International Management Group, which laid off Hubbard two months later. Hubbard began looking for ways to replace his lost income. In particular, he began seeking clients with which he could contract as a consultant. To that end, he enlisted the aid of Will Brooke, an executive of an asset-management firm and the then chairman of the Business Council of Alabama ("the BCA"). Brooke was ultimately unable to find any clients for Hubbard, but Hubbard eventually obtained several clients through other means.

In 2012, Hubbard experienced further difficulties when Craftmaster Printers, Inc. ("Craftmaster"), a printing company in which he held a 25 percent interest, was teetering on the edge of financial collapse. Hubbard again reached out to Brooke, who crafted a turnaround plan for the company. To implement the plan, Hubbard located eight investors who each contributed $150,000 in exchange for Craftmaster stock.

In 2014, Hubbard was indicted on 23 counts of violating the Ethics Code. After a 4-week jury trial, he was convicted on 12 of those counts. The trial court ordered that some of his sentences were to run concurrently and some consecutively, for an effective total of 4 years in prison and 16 years of probation, and he was ordered to pay various fines.

On appeal, the Court of Criminal Appeals affirmed Hubbard's convictions on 11 counts and reversed the conviction on 1 count. Hubbard v. State, [Ms. CR-16-0012, Aug. 27, 2018] 321 So. 3d 8, 68 (Ala. Crim. App. 2018). Hubbard petitioned this Court for certiorari review of the 11 affirmed counts, and we granted review.

II. Discussion

A. Craftmaster investments and Brooke's assistance (counts 16-19, 23)

Hubbard was convicted on five counts of soliciting or receiving a thing of value from a principal of a lobbyist, in violation of § 36-25-5.1(a), Ala. Code 1975. Counts 16-19 were based on Hubbard's receiving the Craftmaster investments. Count 23 was based on Hubbard's soliciting Brooke's help with finding new clients and Hubbard's receiving Brooke's advice regarding the financial-turnaround plan for Craftmaster.²

1. Facts relating to counts 16-19 and 23

In 2008, Craftmaster obtained a loan of approximately $600,000 from Regions Bank, of which Hubbard personally guaranteed 33 percent. In August 2012, Regions Bank determined that Craftmaster was not generating enough income to repay the loan. In addition, Craftmaster had defaulted on the loan by failing to pay $350,000 in payroll taxes. Regions Bank transferred the loan to its problem-assets department.

Hubbard reached out to Brooke for advice. Based on financial information provided by Hubbard, Brooke concluded that Craftmaster was undercapitalized, and he developed a financial-turnaround plan. Under Brooke's plan, Hubbard would locate several investors to each invest $150,000 in Craftmaster. Craftmaster would then use the money to pay off part of the Regions Bank loan and to pay all the payroll taxes. Each investor would receive Craftmaster stock with a promise of a quarterly dividend at an annualized rate of six percent of the invested amount.

Hubbard procured eight investors, including Brooke. At the time, Brooke was a member of the BCA's executive committee. The BCA retained lobbyists to represent its interests before the legislature. The lobbyists reported to the BCA's executive director (a lobbyist), who in turn reported to the executive committee. Among the other Craftmaster investors were Sterne Agee Group, Inc. ("Sterne Agee"); Jimmy Rane, president of Great Southern Wood; and Rob Burton, president of Hoar Construction, LLC.

Brooke testified that he received the promised six percent return, which he said was a "very, very good return." A Sterne Agee employee testified that the investment was a "good business deal." Rane testified that the stock "was a good investment" and that Craftmaster never missed a dividend payment. Burton testified that he received a four percent return, although he was supposed to receive six percent.

Based on Hubbard's receiving the subject four investments in Craftmaster, he was convicted of receiving a thing of value from Brooke (count 16), from Sterne Agee (count 17), from Rane (count 18), and from Burton (count 19). (The State did not charge Hubbard with any offense for receiving the investments from the remaining four investors.) Based on Hubbard's requests to Brooke for help in obtaining clients for his consulting work and based on Hubbard's receiving Brooke's turnaround plan for Craftmaster, Hubbard was convicted on an additional count of soliciting or receiving a thing of value from Brooke (count 23).

2. Discussion regarding counts 16-19 and 23

The section of the Ethics Code under which Hubbard was convicted provides: "[N]o public employee or public official or family member of the public employee or family member of the public official shall solicit or receive a thing of value from a lobbyist, subordinate of a lobbyist, or principal." § 36-25-5.1(a), Ala. Code 1975 (emphasis added). Thus, on counts 16-19 and 23, the State was required to prove (1) that Hubbard was a public employee or public official (2) who solicited or received a "thing of value" (3) from a lobbyist, a lobbyist's subordinate, or a "principal," and (4) that he did so intentionally (see § 36-25-27(a)(1), Ala. Code 1975 ).

Hubbard challenges these convictions on two bases. First, he argues that his receiving the Craftmaster investments from Brooke, Sterne Agee, Rane, and Burton did not violate the Ethics Code because, he argues, the investments came within a statutory exclusion for when an official "pays full value" for the thing received. Second, Hubbard contends that Brooke, Rane, and Burton were not "principals" because they did not hire lobbyists to represent them personally. Hubbard does not dispute that Sterne Agee was a principal.

a. The full-value exclusion

For purposes of the prohibition of receiving a thing of value from a principal, the Ethics Code broadly defines "thing of value" as "[a]ny gift, benefit, favor, service, gratuity, tickets to or passes to an entertainment, social or sporting event, unsecured loan, other than those loans and forbearances made in the ordinary course of business, reward, promise of future employment, or honoraria or other item of monetary value." § 36-25-1(34)a, Ala. Code 1975. The Ethics Code then sets forth a negative definition of "thing of value": "The term, thing of value, does not include any of the following, provided that no particular course of action is required as a condition to the receipt thereof ...." § 36-25-1(34) b. The negative definition includes 18 subparts, which we will refer to in this opinion as "exclusions."³ In particular, the Ethics Code defines as not being a thing of value "[a]...