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City Council Meeting 11-12-85
Santa Monica, California
SUPPLEMENTAL STAFF REPORT
TO:
Mayor and City Council
FROM:
city Attorney
SUBJECT:
Revolving Door Ordinance
This Supplemental Staff Report responds to various comments
received from Councilmembers regarding the proposed Revolving
Door Ordinance.
Comments from Councilmember Alan Katz
1. Existinq restrictions on the conduct of current City
officials.
City Charter section 1302 prohibits members of the City
Council from having any direct or indirect financial interest in
any contract, sale, or transaction to which the City is a party.
Additionally, this provision forbids any City official or
employee from maintaining an interest in any contract, sale, or
transaction to which the city is a party and which comes before
the City official or employee or the Department of the city with
which he or she is connected, for official action. Any contract
or transaction which violates these prohibitions shall, at the
election of the city, become void when so declared by resolution
of the City Council. However, no City official shall be deemed
to be financially interested within the meaning of this
particular Charter provision in any contract made with a
corporation by reason of ownership of stock in such corporation,
unless such ownership consists of at least 3% of all of the stock
of such corporation issued and outstanding.
City Charter section 1302 also provides that a City
Councilmember or member of a city board or commission is
prohibi ted from voting on or participating in any contract or
transaction in which he or she is directly or indirectly
financially interested, whether as a stockholder of the
corporation or otherwise. Conviction of violation of such
prohibition shall result in forfeiture of office.
Of course City Councilmembers are also subject to conflict
of interest restrictions and regulations as set forth in the
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Government Code (the Fair Political Reform Act of 1974) and the
City's local Conflict of Interest Code.
2. The Concept of "Iron curtains" as Applied to Attorneys
Doinq Business before the City.
The California state Bar's Rules of Personal Conduct and
the ABA Model Rules of Professional Conduct must be examined to
determine the extent and nature of restrictions applicable to an
attorney who is a former city official and who then joins a firm
doing business before the City.
Rule 5 of the state Bar Rules of Professional Conduct
(Business and Professions Code section 6076) prohibits a member
of the state Bar "from accepting employment adverse to a client
or former client without the consent of such client or fonner
client, relating to any matter in reference to which he has
obtained confidential information by reason of or in the course
of his employment by such client or former client."
The main purpose of this rule is to assure protection of
the confidential relationship between an attorney and his client
or former cl ient . The City, as a former cl ient, would be
required to consent to the "adverse employment."
Some further guidance is shown in ABA
Professional Conduct 1.11. Such Model Rule
successive government and private employment.
sections of such rule are as follows:
Model Rule of
pertains to
The relevant
RULE 1.11 SUCCESSIVE GOVERNMENT AND
PRIVATE EMPLOYMENT
(a) Except as law may otherwise
expressly permit, a lawyer shall not
represent a private client in connection
wi th a matter in which the lawyer
participated personally and substantially
as a pUblic office or employee, unless the
appropriate government agency consents
after consultation. No lawyer in a firm
wi th which that lawyer is associated may
knowinqly undertake or continue
representation in such a matter unless
(emphasis added):
(1) the disqualified lawyer
is screened from any participation in the
matter and is apportioned no part of the
fee therefrom; and
(2) written notice is
promptly given to the appropriate
government agency to enable it to
ascertain compliance with the provisions
of this rule.
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(b) Except as law may otherwise
expressly permit, a lawyer havi~g
information that the lawyer knows 18
confidential government information about
a person acquired when the lawyer was a
public officer or employee, may not
represent a private client whose interests
are adverse to that person in a matter in
which the information could be used to the
material disadvantage of that person. A
firm with which that lawyer is associated
may undertake or continue representation
in the matter only if the disqualified
lawyer is screened from any participation
in the matter and is apportioned no part
of the fee therefrom. (Emphasis added.)
As this Rule indicates, appropriate screening, often
referred to as a Chinese Wall, may preclude disqualification of
an entire firm.
3. Creation of a "Iron curtain" for Directors of Nonprofit
Corporations.
A former City official's inclusion on the Board of
Directors of a nonprofit corporation maintaining a contract with
the City would not on its face be a violation of the Ordinance.
The restrictions set forth in Sections 2152 and 2153 of the
proposed Ordinance specifically prohibit the former city official
from representing others or assisting others, whether compensated
or not, when the matter is one in which the former City official
had direct involvement during the term of his or her office or
employment. Therefore, as long as the former City official
refrained from such prohibited activities, it would appear that
the contract between a nonprofit corporation and the city would
not be jeopardized. However, various precautions may be required
by the former City official in his position as a corporation
director, including forbearance from voting on any matter which
may have come before such former City official during his or her
term of office with the City.
4. Extension of ordinance to include Members of City
Commissions.
(a) It would be best to specifically reference each board
and commission which the Council desires to be subj ect to the
Revolving Door Ordinance. This can be done by expanding the
definition of "City official" in Section 2151(b).
(b) Both the pier Restoration Corporation and the Third
street Mall Corporation are pUblic benefit corporations of which
the city is the sole member. since the board of directors of
these corporations are not public officers or employees,
inclusion in this Ordinance may present problems.
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It should be pointed out that each and every city board and
commission is now subject to the requirements of the City's
Conflict of Interest Code requiring the annual filing of Economic
Disclosure statements. The City's Conflict of Interest Code was
not extended to cover either the pier Restoration Corporation or
the Third street Corporation. However, the Third Street Mall
Corporation does have its own internal conflict of interest code.
It is cautioned that expansion of the definition of "City
official" to include members of City boards and commissions or
noncompensated directors of the pier Restoration Corporation and
Third street Development Corporation may cause difficulties in
convincing members of the public to serve on these boards,
commissions, or corporations.
5. "How Restrictive are the Restrictions.1I (Hypothetical
involving request for advice from former City official.)
Section 2153 of the proposed Ordinance, which restricts a
former City official from assisting in the representation of
others must be read in conjunction with Section 2152 which sets
forth the guidelines for determining whether such representation
is prOhibited. The prohibitions on representing others before
the City, or assisting in such representation will only apply if
the two-tier test set forth in section 2152 is met:
a) The city of Santa Monica is a party or has a
direct and substantial interest~ and
b) The proceeding is one in which the former city
official participated. (Proceeding is specifically defined as
"[a]ny proceeding, application, request for ruling or other
determination, contract, claim, controversy, investigation,
charge, accusation, arrest, or other particular matter involving
a specific party or parties in which the City of Santa Monica is
a party or has a direct and substantial interest. II Section
2151 (c) .)
Each request for advice must be analyzed to determine if
the test prohibiting assistance to others will apply, thereby
barring a city official from rendering such advice.
(a) Request for Additional Fundinq from city.
The first half of the test would be met, since the City
would be a party or have a direct and substantial interest in any
request for City funding.
However, in this particular situation, the former City
official has not participated in any "proceeding" involving a
request for additional funds. Rather, the former Councilmember
participated in a proceeding involving the initial grant of
funding to the hypothetical non-profit corporation. It would
appear that the prohibition would not apply in this case.
However, an argument could be raised challenging the former City
official's rendering of advice on the additional funding if such
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additional funding was used for the same purposes as the original
grant approved by such former Councilmember. Some clarification
may be necessary when dealing with subsequent proceedings of a
similar nature to the one in which the official participated.
b) Request for advice concerninq extension of funds
already committed.
This particular request would appear on its face to satisfy
both elements of the test restricting activities by former city
officials. The advice requested directly concerns a matter
addressed at a proceeding in which the former City official
participated. The extension of funds originally approved by a
grant which the former City official approved also would involve
the city as a party with a direct and substantial interest.
c) Inquiry as to which Councilmembers miqht know a County
contact who could assist with problems facing the pro;ect.
This request/ inquiry does not violate the proposed
Ordinance's restrictions. The city is not a "party,1I although it
would have a direct and substantial interest in curing problems
facing the project. The former city Councilmember's
participation in a proceeding approving a grant of funds for the
project has no relation to problems facing the project at the
time the request for advice arises. Therefore, this request
would be construed as an entirely separate proceeding concerning
a matter in which the former city official did not participate.
6. .~~~on-Profit Aqency's request for advice.
The Ordinance does not distinguish between types of
organizations, agencies, or other entities. Rather, the explicit
language of the Ordinance bans or restricts ei ther the
representation of or the rendering of advice to "any other person
except City." ("Person" is defined in Municipal Code section
1314 to include any person, firm, association, organization,
partnership, business trust, company, or corporation.)
Comments from Councilmember David Epstein.
I. ~~clusion of City Boards and commissions.
As discussed in response to comment Number 4 from
Councilmember Alan Katz, the City council has the discretion to
expand the definition of "city Official" to include specific
boards and commissions such as the Planning Commission or the
Personnel Board.
If the Council desires, specific limits can be tailored for
former members of city boards and commissions relating to either
a prohibition on matters in which they directly participated or
an express time limit restricting their activities before the
city. We invite your suggestions and will prepare the
appropriate revisions or additions to the Ordinance.
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Comments from Councilmember Dennis Zane.
1. Public Advocate Role.
The Ordinance is drafted to prohibit former city
Councilmembers from "advocating" before the city "in connection
wi th any judicial, quasi-judicial, or other proceeding" only if
two elements are satisfied:
(1) The City is a party and has a direct and
substantial interest
and
(2) The "proceeding" is one in which the former city
official participated.
An examination of the definition of "judicial,
quasi-judicial, or other proceedingll (Section 2151(c)) indicates
that it must concern a particular matter involving a specific
party or parties in which the City is a party or has a direct and
substantial interest. Thus, the Ordinance should be interpreted
narrowly as a ban on specific matters in which the former city
official directly participated rather than as a gag order on an
entire subject or category of public interest (e.g., renter's
rights). This Ordinance is not intended to encompass whole
categories of speech, or infringe on constitutional rights of
expression. Rather, its purpose is to place restrictions on
specific rulings and decisions which came before the former City
official for decision.
2. Inclusion of Planninq Commission and Architectural
Review Board.
As discussed above, the City council can expand the
definition of "City official" to include specific City Boards and
Commissions.
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