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Amicus curiae brief of Colorado Ethics Watch in Gessler v. Grossman, et al., Colorado Court of Appeals Case No. 2014CA670 - appeal of fine for ethics violation
Amicus curiae brief of Colorado Ethics Watch in Gessler v. Grossman, et al., Colorado Court of Appeals Case No. 2014CA670 - appeal of fine for ethics violation
Amicus curiae brief of Colorado Ethics Watch in Gessler v. Grossman, et al., Colorado Court of Appeals Case No. 2014CA670 - appeal of fine for ethics violation
District Court for Denver County Honorable Herbert L. Stern, III Case No. 13cv0030421 ______________________________________ SCOTT GESSLER,
Plaintiff-Appellant,
v.
DAN GROSSMAN, SALLY H. HOPPER, BILL PINKHAM, MATT SMITH, and ROSEMARY MARSHALL, in their official capacities as members of the Independent Ethics Commission, and THE INDEPENDENT ETHICS COMMISSION,
Defendants-Appellees. _______________________________________ Attorneys for Proposed Amicus Curiae Colorado Ethics Watch: Luis Toro, #22093 Margaret Perl, #43106 1630 Welton Street, Suite 415 Denver, CO 80202 Telephone: 303-626-2100 Email: ltoro@coloradoforethics.org pperl@coloradoforethics.org
COURT USE ONLY ________________________
Case No. 2014CA670
BRIEF OF AMI CUS CURI AE COLORADO ETHICS WATCH IN SUPPORT OF DEFENDANTS-APPELLEES
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TABLE OF CONTENTS
I. STATEMENT OF IDENTITY OF AMICUS CURIAE ...................................... 1 II. ARGUMENT ....................................................................................................... 2 A. Colorados Citizens Enacted Ethics Reform and Created the IEC to Enforce Constitutional and Statutory Ethical Standards ...................................................... 2 B. The IEC Acted Well Within its Article XXIX Jurisdiction ............................. 6 C. There is No History of the IEC Improperly Expanding its Jurisdiction Beyond the Authority in Article XXIX ................................................................10 III. CONCLUSION .............................................................................................14 CERTIFICATE OF COMPLIANCE .......................................................................15 CERTIFICATE OF SERVICE ................................................................................16
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TABLE OF AUTHORITIES Cases City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013) ........................................... 7 Colorado State Civil Service Emp. Ass'n v. Love, 448 P.2d 624, 630 (1968) ........... 9 Developmental Pathways v. Ritter, 178 P.3d 524, 533 (Colo. 2008) .............. passim Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 492 (Colo. 1989) ......................... 8 McCool v. Sears, 186 P.3d 147, 150 (Colo. App. 2008) ........................................... 7 North Colo. Medical Ctr., Inc. v. Committee on Anticompetitive Conduct, 914 P.2d 902, 907 (Colo. 1996) ............................................................................................. 7 Sierra Club v. Billingsley, 166 P.3d 309, 312 (Colo. App. 2007). ............................ 7 Statutes C.R.S. 24-6-402 ....................................................................................................13 C.R.S. 24-9-105 ..................................................................................................6, 9 C.R.S. 24-18-101 .................................................................................................... 4 C.R.S. 24-18-103(1) ............................................................................................6, 8 C.R.S. 24-18-108 ..................................................................................................13 C.R.S. 24-50-117 ..................................................................................................13 Other Authorities IEC Position Statement 11-01 (2011) ........................................................................ 2 Regulations 1 C.C.R. 1-101 (2012) ............................................................................................. 9 8 C.C.R. 1510-1 (2011) ........................................................................................... 5 Constitutional Provisions Colo. Const. art. XXIX, 1 ...................................................................................2, 6 Colo. Const. art. XXIX, 2(6) .................................................................................12 Colo. Const. art. XXIX, 3 ...................................................................................2, 4 Colo. Const. art. XXIX, 4 ....................................................................................... 3 Colo. Const. art. XXIX, 5 ...................................................................................3, 6 Colo. Const. art. XXIX, 5(1) ................................................................................... 8 Colo. Const. art. XXIX, 5(3)(a) .............................................................................. 4 Colo. Const. art. XXIX, 5(3)(b) ............................................................................11 Colo. Const. art. XXIX, 5(3)(c) .............................................................................. 5 Colo. Const. art. XXIX, 6 ............................................................................ 5, 8, 14
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Colorado Ethics Watch, by its undersigned attorneys, respectfully submits its brief of amicus curiae: I. STATEMENT OF IDENTITY OF AMI CUS CURI AE Colorado Ethics Watch (Ethics Watch) is a state-level project and registered trade name of Citizens for Responsibility and Ethics in Washington, a nonprofit corporation. Since the doors of its Denver office opened in 2006, Ethics Watch has sought to improve ethics and transparency in Colorado government using legal tools. Among other things, Ethics Watch has filed five complaints with the Independent Ethics Commission (IEC) since its inception and submitted comments in both the 2008 and 2011 IEC rulemaking proceedings. Ethics Watch maintains a webpage, Eye on the IEC, chronicling the IECs actions since its inception. 1
Ethics Watch filed the complaint against Secretary of State Gessler that is the subject of this action, and was forced to act as prosecutor at its own expense against Gesslers publicly-funded defense team during an eleven-hour hearing on June 6, 2012. Ethics Watchs perspective as the complaining party and its years of experience watching IEC actions will assist the court in determining the questions presented in this review of the District Courts order upholding the IECs findings
1 Eye on the IEC, http://www.coloradoforethics.org/co-pages/eye-on-the-iec/ (last visited October 3, 2014). 2
and penalty. Specifically, this amicus brief focuses on the issue presented regarding the scope of the IECs jurisdiction. II. ARGUMENT Secretary Gessler raises the specter of a rogue agency ruthlessly expanding its jurisdiction without proper oversight through judicial review. In reality, the case under review is a garden-variety breach of public trust matter that falls squarely within the IECs jurisdiction. A. Colorados Citizens Enacted Ethics Reform and Created the IEC to Enforce Constitutional and Statutory Ethical Standards
In order to make certain that elected officials avoid conduct that is in violation of their public trust or that creates a justifiable impression among members of the public that such trust is being violated, Colorado citizens passed a comprehensive ethics reform ballot initiative with 62.5% of Colorado voters in support. 2 Colo. Const. art. XXIX 1. Amendment 41, now Article XXIX of the Colorado Constitution, had three major components: The gift ban, which prohibits lobbyists from giving gifts to public officials or employees and limits most other gifts to public officials to a value of $50 per year, adjusted for inflation. Colo. Const. art. XXIX, 3; see also IEC Position Statement 11-01 (2011) (adjusting gift limit to $53 for inflation).
2 Colorado Secretary of State, Colorado Cumulative Report, December 13, 2006, posted at http://www.sos.state.co.us/pubs/electionresults2006G/. 3
The gift ban was the subject of a constitutional challenge that was dismissed by the Colorado Supreme Court as unripe. Developmental Pathways v. Ritter, 178 P.3d 524, 533 (Colo. 2008); The revolving door prohibition, which bans members of the General Assembly from working as state lobbyists for two years after the expiration of their terms. Colo. Const. art. XXIX, 4; and The creation of the IEC as an independent agency empowered to issue advisory opinions and hear complaints regarding ethics issues arising under this article and under any other standards of conduct and reporting requirements as provided by law. Colo. Const. art. XXIX, 5. This case centers on the third of these pillars of Article XXIX: the scope of the IECs jurisdiction when hearing complaints. Based on the plain language of Article XXIX, the IEC has jurisdiction to consider both advisory opinion requests and complaints that raise ethical issues under the gift ban and revolving door provisions of Article XXIX, and under other standards of conduct and reporting requirements found elsewhere in Colorado law. Although Secretary Gesslers brief dismisses this half of the IECs jurisdiction as a little-noticed phrase (Opening Br. at 9), the inclusion of pre- existing standards of conduct known by (and binding upon) state and local officials was a centerpiece of the newly-created IECs jurisdiction. The Bluebook used by 4
voters to explain Amendment 41 in the 2006 election explicitly referred to the statutory Code of Ethics in C.R.S. 24-18-101 et seq. and stated that IEC jurisdiction included violation of the proposal [amendment] or any other standard of conduct or reporting requirement specified in law. See State of Colorado, Legislative Council, Colorado General Assembly, Analysis of the 2006 Ballot Proposals, at 9-10 (2006). Colorado voters intended the IEC to enforce (and provide advice regarding) the new gift ban, revolving door provisions, and existing statutory standards of conduct such as the state Code of Ethics. This interpretation of the IECs jurisdiction was the foundation of the Developmental Pathways challenge to the gift ban provisions of Article XXIX, 3. See 178 P.3d at 534 (Plaintiffs sought to have the gift bans of Amendment 41 rendered unconstitutional, leaving only the provision creating the Commission, which, in their view, would then enforce existing ethics laws.). Enforcement actions at the IEC are initiated when any person files a complaint asking whether a public officer, member of the general assembly, local government official, or government employee has failed to comply with this article or any other standards of conduct or reporting requirements as provided by law within the preceding twelve months. Colo. Const., art. XXIX, 5(3)(a). The amendment does not require that a complaining party be certain that a violation has 5
occurred. Rather, any person is entitled to file a complaint that asks the IEC to determine whether a violation has occurred. The IEC is mandated to conduct an investigation, hold a public hearing, and render findings on each non-frivolous complaint pursuant to written rules adopted by the commission. Id. 5(3)(c). The IEC may fine any covered person who breaches the public trust for private gain double the amount of the financial equivalent of any benefits obtained by such actions. Id. 6. Under the constitutional scheme, a citizen asks whether an ethical standard of conduct has been violated, and if not frivolous, the request is to be investigated by the IEC. Nothing in Article XXIX or the IEC Rules handcuffs the IEC by restricting its constitutionally-mandated investigation to legal theories specifically cited in a complaint. Such a limitation would be inconsistent with Article XXIXs command that the IEC investigate a complaint, not leave it to complaining parties to dictate the course and scope of the inquiry. Indeed, the IECs procedural rules sensibly leave it to the IEC to determine what ethics standards will be considered at a hearing: The scope of the hearing shall be determined by the IEC and may be limited to specific factual, ethical or legal issues. IEC Rule of Procedure 8.A.2., 8 C.C.R. 1510-1 (2011). This rule is well within the IECs constitutional authority to prescribe written rules to govern the investigation and hearing, Colo. Const. art. XXIX, 5(3)(c), and Secretary Gessler does not contend otherwise. 6
This was the process followed in this case when Ethics Watch submitted a copy of its letter to the Denver District Attorney as an attachment to a complaint asking the IEC to investigate and determine if ethical standards of conduct had been broken. Additional public documents, provided in a supplement to that complaint, were also considered in the IECs determination of whether the complaint was frivolous under Article XXIX. After determining that the complaint was not frivolous, the IEC spent months conducting an investigation into the law and the facts applicable to the issues raised in the complaint. The IEC also considered and decided a series of evidentiary and legal motions filed by Secretary Gessler in the months leading up to the June 2013 hearing that relied upon the same statutory standards of conduct as those argued at the final hearing. B. The IEC Acted Well Within its Article XXIX Jurisdiction
The IECs final decision applied two longstanding statutory ethical standards of conduct: the prohibition against breaching the public trust for private gain contained in the Colorado Code of Ethics, C.R.S. 24-18-103(1), and the statute creating discretionary funds for statewide elected officials, C.R.S. 24-9- 105. Despite Secretary Gesslers claims that these two statutes fall outside the IECs jurisdiction as outlined in Article XXIX 5, these matters constitute the type of conduct that is in violation of their public trust contemplated by Colorado voters in Colo. Const. art. XXIX, 1. 7
The Colorado Supreme Court has made it clear that the IEC is entitled to the deference normally accorded to administrative agencies when they interpret statutes or regulations, even in its interpretation of Article XXIX itself. See Developmental Pathways, 178 P.3d at 535. Agency interpretations of statutes they administer are entitled to judicial deference if they are based upon a permissible construction of the statute. North Colo. Medical Ctr., Inc. v. Committee on Anticompetitive Conduct, 914 P.2d 902, 907 (Colo. 1996). The principle of deference to administrative agencies fully applies when an agency acts in a judicial or quasi-judicial capacity. See Sierra Club v. Billingsley, 166 P.3d 309, 312 (Colo. App. 2007). Moreover, the principle of deference to administrative agency interpretations of its own statute applies to an agencys interpretation of the scope of its own authority. See City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013). The question whether a complaint addresses an ethics issue arising under a standard of conduct applicable to Article XXIX covered individuals is a quintessential example of an agency's interpretation of a statute within its expertise that is is entitled to deference if the statutes plain language is subject to different reasonable interpretations. McCool v. Sears, 186 P.3d 147, 150 (Colo. App. 2008). 8
Under any standard, the two statutes considered by the IEC fit within the definition of ethical issues arising any other standards of conduct . . . as provided by law. Colo. Const. art. XXIX, 5(1). C.R.S. 24-18-103(1) is part of the state Code of Ethics, which in turn is part of Article 18 of Title 24, C.R.S., entitled Standards of Conduct. This is the same Code of Ethics referred to in the Bluebook issued when voters adopted Article XXIX. The Code of Ethics mandates that a public officer carry out his duties for the benefit of the people of the state, C.R.S. 24-18-103(1), and provides a standard of conduct very similar to the private sector requirement that an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency. Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 492 (Colo. 1989). That this standard of conduct generally applies to every agent of the state in a wide variety of circumstances does not make it any less a standard of conduct under the IECs jurisdiction. It is not a surprise that ethics issues would arise from a breach of public trust under C.R.S. 24-18-103(1). Indeed, Article XXIX itself refers to enforcement matters alleging a breach of public trust as within IEC jurisdiction when it directs a specific penalty of double the amount at issue for an IEC finding of any breach of public trust for private gain. Colo. Const. art. XXIX, 6. Ethics Watchs complaint alleged, and the IEC found based on the evidence at the hearing, that Gessler breached the 9
public trust for private gain by converting public funds to personal and political use. If actions alleging a breach of the public trust were outside the scope of the IECs jurisdiction, the penalty provision of Article XXIX, 6 would be rendered superfluous. See Colorado State Civil Service Emp. Ass'n v. Love, 448 P.2d 624, 630 (1968) (Each clause and sentence of either a constitution or statute must be presumed to have purpose and use, which neither the courts nor the legislature may ignore.). The proper use of public funds is also the type of ethical issue arising under statutory standards of conduct contemplated by Colorado voters and within the plain language of Article XXIX. For almost 30 years, C.R.S. 24-9-105 has directed statewide elected officials use the allocated discretionary funds in pursuance of official business as each elected official sees fit. Contrary to the Secretarys argument, his discretion is not limitless: he could not, for example, use his discretionary fund to contribute to political candidates or to pay himself a personal bonus (as the evidence at the hearing proved he in fact did). He is directed to use the money for official business; diverting the public funds entrusted to him to political or personal use is a paradigm example of unethical conduct. The statute provides ethical standards comfortably within the IECs jurisdiction. Moreover, for additional specificity, the IEC correctly looked to the State Fiscal Rules, which by their terms and the testimony of the State Controller apply 10
to the Secretary of State. See 1 C.C.R. 1-101 (2012). Doubtless, in a different circumstance, a public official who complied with the Fiscal Rules would cry foul if the IEC nevertheless found that he or she had used state funds improperly. The question whether a violation of the State Fiscal Rules, without more, would be subject to IEC jurisdiction is not presented by this case. Rather, the State Fiscal Rules served here as a check on, and guidepost for, the IEC in fulfilling its role to flesh out how the ethical standards of conduct existing in Colorado law applied to Secretary Gesslers misuse of public funds entrusted to his care for personal and partisan purposes. It was a logical and permissible construction for the IEC to determine that a statutory provision in the Code of Ethics (a preexisting set of standards of conduct referred to in the Bluebook), or long-standing statutory provisions setting explicit standards for the Secretary to follow when using public funds, were within the agencys jurisdiction over ethical issues arising under standards of conduct applicable to covered individuals. The agencys construction is plainly correct, or at least, entitled to judicial deference. Developmental Pathways, 178 P.3d at 535. C. There is No History of the IEC Improperly Expanding its Jurisdiction Beyond the Authority in Article XXIX
As the Secretarys brief attempts to paint a picture of an out-of-control power-grabbing agency, it boldly asserts that [t]he IEC has, literally, never found a statute it did not find to be within its purview. (Opening Br. at 9). The actions of 11
the IEC over its seven-year history during which at all times it has been represented by the Department of Law tell a different story. As discussed above, enforcement matters proceed in two stages under Article XXIX: first a discussion and determination by the IEC as to whether or not the complaint is frivolous which is conducted in closed executive session, and then the public hearings, investigation, deliberation and findings in open session for complaints which pass that bar. Article XXIX mandates that complaints found to be frivolous must be maintained confidential by the IEC. See Colo. Const. art. XXIX, 5(3)(b). While the specific allegations and names of elected officials who were the subject of those complaints deemed frivolous are not released, the IEC act of finding a complaint frivolous is a matter of public record. The IEC chronicles on its website all complaints it has received since 2008. Contrary to the Secretarys assertions, a number of complaints have been dismissed on the grounds that the IEC lacked jurisdiction over the matter alleged: 14 such complaints in 2014 alone. 3
Nor is there a historical record of abusive assertions of IEC jurisdiction in the second category of complaints which are not found frivolous. Because the IECs procedural rules place enormous burdens on a complaining party in an ethics matter, few ethics complaints have survived to the hearing stage, much less a decision and order for sanctions. In fact, this case represents the first decision of
3 Independent Ethics Commission, Complaints, available at https://www.colorado.gov/pacific/iec/complaints (last accessed Oct. 23, 2014). 12
the IEC to impose penalties upon an elected official for ethics violations since the IEC began operations in 2008. In contrast to the Secretarys assertions, the IEC has repeatedly dismissed complaints for lack of jurisdiction. For example, the IEC dismissed Complaint 09- 04 against members of the Steamboat Springs School Board on the grounds that the IEC lacks jurisdiction over unpaid members of boards and commissions and employees of school boards. See April 8, 2009 letter in Complaint 09-04 (Attachment 1 hereto). The IEC reached this conclusion even though Colo. Const. art. XXIX, 2(6) could be read to support the exercise of jurisdiction over school board members by virtue of their status as elected officials. The constitutional provision is ambiguous; the IECs resolution of this ambiguity through its determination that it does not have jurisdiction over unpaid, elected school board officials is within the scope of its delegated authority as administrator and enforcer of Article XXIX. See Developmental Pathways, 178 P.3d at 535. The agency made no attempt to stretch the limits of its constitutional jurisdiction. Another example of the IEC recognizing limits on its jurisdiction is the Final Action in Complaint No. 09-08. After completing the investigation stage and holding a full hearing in March 2010, the IEC issued factual findings and an overall decision that there was no violation of Article XXIX or other applicable standards of conduct. See Summary of Final Action in Complaint No. 09-08 (Fry 13
v. Burns) (April 19, 2010) (Attachment 2 hereto). Most relevant here, the IEC specifically found that it did not have jurisdiction over alleged violations of Colorados Open Meetings Law, C.R.S. 24-6-402. Attachment 2 at 7. Thus, the Secretarys accusation that the IEC has never refused to claim jurisdiction over any statutory basis for allegations is simply false. This is not the first time the IEC has exercised jurisdiction over a complaint presenting ethics questions arising out of standards of conduct other than the gift ban and revolving door prohibition. Secretary Gesslers predecessor filed a complaint in his official capacity asking whether an employee of the department breached the public trust for private gain in violation of C.R.S. 24-18-108(2)(d) and 24-50-117. See Final Order in Complaint No. 10-06 (Buescher v. Whitfield) (Jan. 11, 2011) (Attachment 3 hereto). That matter was resolved with a stipulated agreement by the parties including an admission by the employee that his conduct violated these statutory standards of conduct. Contrary to the Secretarys allegations, the IEC has a history of carefully considering the scope of its jurisdiction under Article XXIX. The handling of this case continues that track record and did not exceed the IECs constitutional jurisdiction.
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III. CONCLUSION Considering the onerous burdens the IECs rules place on complaining parties, it took a case this egregious to produce a decision actually fining a state official for unethical conduct. Secretary Gesslers defiant use of state money to fund his personal trip to his political partys national convention and a conference of his partys lawyers, and his draining the year-end balance of his public funds account to supplement his salary, is the type of breach of fiduciary duty and public trust Colorado voters meant to stop through the passage of Amendment 41. The evidence at the hearing established that Secretary Gessler breached the public trust for private gain the sine qua non for the imposition of a penalty under Colo. Const. art. XXIX, 6. The standards of conduct enforced in this matter were well within the IECs jurisdiction. The Court should affirm the District Courts order upholding the IECs findings and penalty. DATED: October 27, 2014.
[Original Signature On File at Colorado Ethics Watch]
/s/ Margaret Perl Luis Toro, #22093 Margaret Perl, #43106
ATTORNEYS FOR AMICUS CURIAE COLORADO ETHICS WATCH
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CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with all requirements of C.A.R. 28 and C.A.R. 32, including all formatting requirements set forth in these rules. Specifically, the undersigned certifies that: The brief complies with C.A.R. 28(g). It contains 3,214 words in those portions subject to the Rule.
By:__/s Margaret Perl_______________ Luis Toro, #22093 Margaret Perl, #43106
Attorneys for Amicus Curiae COLORADO ETHICS WATCH
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CERTIFICATE OF SERVICE
I hereby certify that on October 27, 2014, I served a true and correct copy of the foregoing BRIEF OF AMICUS CURIAE IN SUPPORT OF DEFENDANTS- APPELLEES via ICCES to the following:
Michael Francisco, Assistant Solicitor General Kathryn A. Starnella, Assistant Attorney General Office of the Attorney General, State of Colorado 1300 Broadway, 10th Floor Denver, CO 80203 Counsel for Plaintiff-Appellant
Lisa Brenner Freimann, First Assistant Attorney General Russell B. Klein, First Assistant Attorney General Joel W. Kiesey, Assistant Attorney General Office of the Attorney General, State of Colorado 1300 Broadway, 8th Floor Denver, Colorado 80203 Counsel for Defendants-Appellees
[Original Signature On File at Colorado Ethics Watch]