OPINION NUMBER - 167
ADOPTED - 1996/09/06
SUBJECT - Conflicts of Interest
REQUESTED BY: James S. Jansen, Douglas County Attorney
QUESTION: Does the county attorney have a potential conflict of interest if he represents the county in a lawsuit pertaining to a retirement plan in which he participates?
On June 14, 1996 a petition requesting a declaratory judgment and injunctive relief was filed against Douglas County and the Douglas County Board of Commissioners. The plaintiffs in this action are employees of Douglas County who participate in its employees' retirement system. The plaintiffs claim to be bringing the action on behalf of all Douglas County employees who contribute to the retirement plan. This class would include the Douglas County Attorney and his deputies.
In their petition, the plaintiffs allege that all county employees participating in the retirement system have been treated in the same manner since 1963. They further state that in February and March of 1996 the county board took action by which the members of two unions representing a segment of the Douglas County employees would receive benefits on a different basis. The net effect for this category of employees is that they would receive higher retirement benefits. The plaintiffs appear to take the position that these higher benefits will cause harm to the participants in the retirement plan who are not members of these two unions. They specifically allege that the resolutions result in the transfer of $3,241,000 in benefits from the plan as a whole to the members of the two unions. Douglas County appears to take the position that the increased benefits are funded by increased contributions from both the employees and the county and there is no detrimental effect on the other county employees.
The county attorney wishes to know if he has a potential conflict of interest in defending the county in this lawsuit.
Section 49-1499 of the Nebraska Political Accountability and Disclosure Act identifies a potential conflict of interests as a situation in which an official is faced with taking an action or making a decision which may cause a financial benefit or detriment to: a) the official; b) a member of his or her immediate family; or c) a business with which the official is associated. In addition, the benefit or detriment must be distinguishable from the effect experienced by the general public or a broad segment of it.
Section 49-1499 applies to "an individual designated in §49-1493 or an official or employee of the executive branch of state government . . ." Section 49-1493(10) refers to "an elected county official." Thus, a county attorney is subject to the provisions of §49-1499. The question thus becomes whether or not the county attorney's representation of the county in this lawsuit constitutes taking an action or making a decision which could result in a financial benefit to himself. It is our opinion that it does.
When considering the application of §49-1499, the Commission has used the "reasonably foreseeable" test. That is, any potential benefit or detriment must be reasonably foreseeable. See Advisory Opinion #79. In the lawsuit, the plaintiffs have alleged that $3,241,000 has been taken from a class of employees which includes the county attorney and his deputies and has been given to another class of county employees. This may or may not be the case. We express no opinion as to whether this has occurred. However, it is a matter at issue before the District Court of Douglas County. A judge may ultimately decide that the allegation is not true. However, a judge may find that the allegation is true in which case the county attorney would be taking actions or making decisions in a matter in which there may be a financial benefit or detriment to him.
As stated, the provisions of §49-1499 do not apply if the action or decision would have an effect which is indistinguishable from the effect on the general public or a broad segment of it. This raises the question as to whether the 1,300 Douglas County employees constitute a broad segment of the general public. It is our opinion that they do not and §49-1499 applies in this matter. We note that in Advisory Opinion #144 we took the position that the approximately 800 entities holding liquor licenses did not constitute a broad segment of the 335,000 people living in the City of Omaha. We find here that the 1,300 Douglas County employees do not constitute a broad segment of the approximately 400,000 people living in Douglas County.
It is our understanding that since the filing of the lawsuit the county's only response has been to file a demurrer. This demurrer has not been argued. Thus, the only steps thus far taken by the county attorney in connection with this lawsuit has been the filing of a pleading which preserves the rights of Douglas County. It is, however, the position of the Commission that the county attorney has a potential conflict of interest in this lawsuit and should cease his representation of all defendants in the matter.
A corollary question is whether the Deputy Douglas County Attorneys may represent the county in this lawsuit.
The Deputy Douglas County Attorneys participate in the retirement plan. However, because deputy county attorneys are not named within the provisions of §49-1493, they are not subject to the provisions of §49-1499. This fact, however, is not necessarily dispositive of the question.
Section 49-14,101(3) provides as follows:
No public official or public employee shall use that person's public office or any confidential information received through the holding of public office to obtain financial gain, other than compensation provided by law, for himself or herself, a member of his or her immediate family, or a business with which the individual is associated.
The Commission took the position in Advisory Opinion #137 that a conflict of interest or interest in a contract which results in a county attorney being disqualified from acting does not necessarily extend to the county attorney's deputies. In that matter, the county attorney had an interest in a contract with the county through his spouse. In connection with the contract being carried out it was contemplated that certain county officials would seek legal advice from the county attorney's office. We stated that while the deputy county attorneys were qualified to act, the county attorney was prohibited by the provisions of §49-14,101(3) from attempting to influence the advice of the deputy county attorneys to county officials in connection with the area in which the matter in which the county attorney was disqualified from acting.
The matter before us is different. Though not subject to the provisions of §49-1499, the deputies have the same interest in the litigation as the county attorney. If a deputy county attorney were defending the county board in this matter he or she would be required to occasionally give legal advice and legal opinions as to the litigation. He or she would be required to take other action in connection with the defense of the lawsuit. If the allegations of the plaintiffs are true, advice or actions in defense of the county board's actions of February and March of 1996 are contrary to the interests of individual deputy county attorneys. This would not constitute the use of public office for personal financial gain. It would be just the opposite. The danger here lies in the possibility that a deputy county attorney may, in good faith, give the county board advice or take action which ultimately favors the plaintiff's position. This could constitute evidence of a violation of §49-14,101(3). Stated more succinctly, the Nebraska Political Accountability and Disclosure Act does not bar a deputy county attorney from representing the county in the matter of the litigation described above. Such representation is not, in and of itself, a violation of §49-14,101(3). However, advice given or actions taken by a deputy county attorney in connection with the litigation could constitute evidence of a violation of §49-14,101(3) because the deputy county attorney would have an interest in the retirement fund at issue. We therefore advise, but do not require, deputy Douglas County Attorneys to refrain from providing legal representation to the defendants in this matter.
Finally, the concept of a conflict of interest as found in the Nebraska Political Accountability and Disclosure Act is not necessarily the same as the concept found in the Canons of Legal Ethics applicable to Nebraska Attorneys. The Commission has no jurisdiction to interpret the Canons of Legal Ethics and it is therefore recommended that the county attorney and the deputy county attorneys seek appropriate advice from the Nebraska State Bar Association.
The county attorney has a potential conflict of interest in the litigation involving a retirement fund in which he has an interest. He should not, therefore, represent the defendants in the suit. The Nebraska Accountability and Disclosure Act does not absolutely bar the deputy county attorneys from providing representation to the defendants in the suit. However, advice given or action taken by the deputy county attorneys in connection with the suit could constitute evidence of a violation of §49-14,101(3) because of their interest in the retirement fund.