Kelly v. New York State Ethics Com'n

• Decision Date: 07 June 1994
• Citation: 614 N.Y.S.2d 996,161 Misc.2d 706
• Parties: Erwin J. KELLY, Plaintiff, v. NEW YORK STATE ETHICS COMMISSION and Public Employment Relations Board, Defendants.
• Court: New York Supreme Court

Page 996

614 N.Y.S.2d 996

161 Misc.2d 706

Erwin J. KELLY, Plaintiff, v. NEW YORK STATE ETHICS COMMISSION and Public Employment Relations Board, Defendants.

Supreme Court, Motion Term Albany County.

June 7, 1994.

Hinman, Straub, Pigors & Manning, P.C., Albany, for petitioner.

G. Oliver Koppell, Atty. Gen. of State of New York (David Fruchter, Asst. Atty. Gen., of counsel), for respondent New York State Ethics Com'n.

Ernest F. Hart, Albany, for respondent Public Employment Relations Bd.

JOSEPH HARRIS, Justice.

Petitioner moves by way of CPLR Article 78 for a judgment annulling and rescinding Advisory Opinion No. 91-9 issued by the New York State Ethics Commission on July 2, 1991, which, among other things, concluded that petitioner's service on the Mediation/Fact-Finding (M/FF) and Grievance Arbitration (GA) panels of the Public Employment Relations Board (PERB) within two years from his retirement from PERB is prohibited under Public Officers Law, section 73(8). Respondent Public Employment Relations Board supports the motion; respondent New York State Ethics Commission opposes the motion.

THE FACTS

Petitioner was employed at PERB for approximately 21 years. He served as Director of Conciliation from 1978 until his retirement from state service effective January 11, 1990. On December 19, 1989, before his scheduled retirement from PERB, petitioner applied for membership on PERB's M/FF and GA panels; this application was forwarded by PERB's Office of Conciliation to PERB's Board; on December 21, 1989 petitioner's application to serve on the M/FF and GA panels was approved by PERB's Board.

Several months after his retirement petitioner was appointed by PERB ¹ as a fact-finder in an impasse. On June 4, 1990, petitioner issued a fact-finding report which was transmitted to the parties and, in accordance with Civil Service Law § 209(3)(c) was made public within five (5) days thereafter.

By letter dated September 12, 1990 petitioner requested an opinion from the respondent New York State Ethics Commission as to whether his service on the PERB's M/FF panel and/or the GA panel would conflict with the "revolving door" provision of the Ethics in Government Act contained in Public Officers Law (POL) § 73(8).

On July 2, 1991 the respondent New York State Ethics Commission issued Advisory Opinion No. 91-9 in which it:

A. Concluded that a former employee of PERB, including petitioner, may not serve as a mediator/fact finder or arbitrator on panels administered by PERB within two years of termination from State service "because the required submission to [PERB] of documents for review and approval by [PERB] constitutes 'appearances' prohibited by Public Officers Law § 73(8)" in that PERB's administration of the mediation/fact-finding and arbitration panels requires the exercise of substantive judgment and is not ministerial", and in so concluding, found that petitioner in the instant case in fact violated Public Officers Law § 73(8). The Commission directed that a hearing be held to determine whether the violation was knowing and intentional and the penalty, if any, to be assessed in relation to the violation; ²

B. Concluded that petitioner violated Public Officers Law § 74(3)(d) and (h) by submitting his application for appointment to the M/FF and GA panels prior to his termination from State service; however, the Commission conceded it has no jurisdiction over the petitioner in relation to such violation because petitioner was no longer a state employee;

C. Recommended that PERB revise its internal policy concerning designation of members of the M/FF and GA panels, "to eliminate both the favoritism given to former employees as opposed to other panel applicants and to conform [its criteria with the Public Officers Law], which bars such appointment or service of former Board officers or employees for two years after termination from State service or employment." ³ (See, Public Officers Law § 73(8).)

THE LAW

In evaluating petitioner's challenge to Advisory Opinion No. 91-9, the applicable standard is whether the Commission's determination has a rational basis. An agency determination cannot be considered arbitrary unless it is "... without sound basis and reason and is generally taken without regard to the facts." Matter of Pell v. Board of Education, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 (1974).

Petitioner's first cause of action alleges that the respondent Commission's conclusion that petitioner violated Public Officers Law § 73(8) by serving on PERB's M/FF and GA panels within two years of his termination from state service is arbitrary and capricious and is affected by an error of law. (CPLR, section 7803(3))

The first sentence of Public Officers Law § 73(8), known as the "revolving door" provision, provides as follows:

"No person who has served as a state officer or employee shall within a period of two years after the termination of such service or employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any person, firm, corporation or association in relation to any case, proceeding or application or other matter before such agency."

The next sentence of POL 73(8)--known as the "lifetime ban" provision--reads:

"No person who has served as a state officer or employee shall after the termination of such service or employment appear, practice, communicate or otherwise render services before any state agency or receive compensation for any such services rendered by such former officer or employee on behalf of any person, firm, corporation or other entity in relation to any case, proceeding, application or transaction with respect to which such person was directly concerned and in which he personally participated during the period of his service or employment, or which was under his or her consideration."

The lifetime ban provision, which restricts a broader range of activities than the revolving door provision, is not at issue herein since it is undisputed that petitioner was not rendering services in regard to any case or proceeding in which he was directly involved prior to his retirement from state service. However, petitioner contends that said provision is significant because it tends to show that petitioner's activities do not constitute an "appearance" before PERB prohibited by the revolving door provision but rather a "communication" or "other services rendered" which language is not found in the two-year revolving door provision of Public Officers Law § 73(8) and not prohibited therein. In that regard, the respondent Commission asked the respondent PERB the following questions and was given the following responses:

Q9. "Would a neutral appointed from the PERB mediation/fact finding panel or arbitration panel have any contact with PERB in a professional capacity during or subsequent to such appointment?"

A9. "During their assignment, members of either panel might inquire regarding procedural questions surrounding the assignment. Assigned mediators and fact finders provide the Director of Conciliation or members of his staff with periodic status reports. The director or member of his staff may initiate an inquiry in this regard. An assigned fact finder forwards copies of the fact-finding report and recommendation, if any, to PERB. The mediator or fact finder forwards a narrative describing pertinent aspects of his/her experience, along with a billing invoice. PERB does not, however, instruct the finder as to what the report should recommend regarding any substantive issues, i.e. salary, health insurance, etc."

"As regards grievance arbitration, the assigned panel member forwards a copy of the award rendered, if any, along with an arbitration report form. Pursuant to 207.9 of PERB's Rules of Procedure, 'after designation, the legal relationship of the arbitrator is with the parties rather than the Board ... the designated arbitrator shall not be considered an agent of the Board ... [and] the conduct of the arbitration proceeding shall be under the arbitrator's exclusive jurisdiction and control ...' Pursuant to 207.13(b) of PERB's Rules, the arbitrators must make periodic status reports to the Director of Conciliation in the event an award has not been rendered within 60 days after his/her designation."

Q16. "Is PERB responsible for reviewing any work product or administrative work product by the neutrals on the arbitration or mediation panels?"

A16. "PERB receives and reads all fact-finding reports for purposes of insuring clarity in the expression of recommendations and rationale. PERB receives and reviews billings submitted by mediators and fact finders to insure that they conform to the time limitations imposed by PERB for each assignment."

Inquiries regarding procedure, provision of status reports, submission of fact-finding reports and arbitration awards (after they are sent to the parties and thus not for substantive review or modification by PERB), and submission of billing invoices communicate information between the panel members and PERB for in-house review and payment. In addition, other inquiries by the Ethics Commission, and responses by PERB, establish a major and substantive role by PERB (indeed, by the very Office of Conciliation of which petitioner was Director for 12 years) in the appointment of members of the M/FF and GA panels and their assignment to specific impasses, and demonstrate further a gordian knot of intertangling relationships.

Petitioner contends that Public Officers Law § 73(8) requires one to act in an advocacy capacity before said section becomes applicable, and that, inasmuch as petitioner's role is that of a "neutral" and not an "advocate", the statute is not applicable to the position of mediator, fact finder, or arbitrator. Respondent Ethics Commission reads the statute more expansively, pointing to the fact that the statute recites...