Forti v. New York State Ethics Commission

OPINION OF THE COURT

In 1987, Governor Cuomo signed into law the Ethics in Government Act (Act) (L 1987, ch 813), a sweeping reform measure designed to "enhance public trust and confidence in our governmental institutions” (Governor’s Program Bill Mem, Bill Jacket, L 1987, ch 813). Among the key features of the Act were its strengthened "revolving door” provisions,

New York’s first conflict of interest law was enacted in 1954 (L 1954, ch 695) in response to the conclusions of the Special Legislative Committee on Integrity and Ethical Standards in Government (Mar. 9, 1954, reprinted in 1954 NY Legis Doc No. 39). This legislation was then considered to be a pioneering effort to address the abuse of public office for private financial gain (see, Note, Curbing Influence Peddling in Albany: The 1987 Ethics in Government Act, 53 Brooklyn L Rev 1051, 1056, n 12 [hereinafter Note, Curbing Influence Peddling]). Significant revisions were considered and made in subsequent years (see, L 1965, ch 1012; Special Committee on Ethics, Report to Legislature, Mar. 1964, reprinted in 1964 NY Legis Doc No. 42). However, by the 1980’s, New York had lost its position of leadership in the area of ethics-in-government legislation (see, State-City Commission on Integrity in Government, Staff Report on Conflict of Interest and Financial Disclosure Law in New York, at 1 [Oct. 8, 1986]). In the mid-1980’s, a series of corruption scandals involving New York City government focused public attention on the need for reform (see, Note, Curbing Influence Peddling, op. cit., at 1052-1053, & nn 2-4). The 1987 Ethics in Government Act represents the product of a two-year effort by the Governor and Legislature to reach an acceptable compromise among the important competing concerns, most notably the need to impose stricter controls while, at the same time, ensuring that government service does not become so unattractive that

On November 8, 1988, the Ethics Commission, in its first advisory opinion issued pursuant to Executive Law § 94 (15), construed these applicability provisions in response to requests by several affected individuals (Ethics Commission Advisory Opn 88-1). Relying in part on the existence of the special provision for former legislative employees, the Commission concluded that all others, most notably former executive branch employees, were to be covered by the new "revolving door” strictures imposed by Public Officers Law § 73 (8) regardless of whether they left State service before or after the Act’s effective date. The Commission noted, however, that the new restrictions would be applied "only to those post-employment activities engaged in on or after January 1, 1989” (id.).

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laintiff Forti had been employed as an attorney within the State Department of Environmental Conservation until September of 1988, when he accepted employment with a private law firm as the head of the firm’s newly created environmental law division. Following the announcement of Advisory Opinion 88-1, Forti commenced an action seeking a declaration that, contrary to that Opinion, Public Officers Law § 73 (8) applies only to those former executive branch employees who left State service on or after January 1, 1989 or, in the alternative, that the statute’s two-year ban on all practice before the severed executive branch employee’s former agency is unconstitutional under the Equal Protection and Due Process Clauses of the State and Federal Constitutions (US Const 5th, 14th Amends; NY Const, art I, §§ 6, 11). Forti also sought a declaration that, as applied to attorneys and all other "officers of the Courts of the State of New York,” Public Officers Law § 73 (8), in its entirety, violates the separation of powers doctrine and, for that reason, is unconstitutional.

On Forti’s motion for summary judgment, the Supreme

In Kuttner v Cuomo, the other action considered herein, the plaintiffs are all attorneys who were employed within State agencies but who left State service for private practice before January 1, 1989. Proceeding by order to show cause, the Kuttner plaintiffs sought declaratory relief similar to that sought in the Forti action. In addition to claiming that Public Officers Law § 73 (8) was not intended to be applied to them and was, as so applied, violative of their rights under the Due Process, Equal Protection and Ex Post Facto Clauses of the State and Federal Constitutions, the Kuttner plaintiffs complained that the statute constitutes an improper delegation of authority in that it fails to prohibit State agencies from adopting even more restrictive rules for its former employees. Further, they challenged the provisions of Public Officers Law §73 (14), which give the Ethics Commission the discretion to determine which violations of the "revolving door” rules should be prosecuted as class A misdemeanors.

On plaintiffs’ motion for a preliminary injunction against enforcement of the new statute, the Supreme Court, Albany County, concluded that they were likely to succeed on the merits of their claim that the new restrictions in section 73 (8) were inapplicable to them, since, despite Advisory Opinion 88-1, there was no "clear expression of a legislative intent to make [the statute] retroactive.” Further, noting its view that the new law "would be ex post facto” if applied to plaintiffs, the court found that they would be irreparably harmed if preliminary injunctive relief were not granted, because the

As in the Forti action, the Appellate Division concluded in the Kuttner appeal that section 73 (8) was properly deemed applicable to individuals in plaintiffs’ position and did not violate the constitutional Equal Protection or Due Process Clauses. The court further determined that plaintiffs were not likely to succeed either on their ex post facto claim or on their contention that the Legislature had improperly delegated rule-making authority. While it noted that plaintiffs might well succeed on their contention that the discretion afforded the Ethics Commission under section 73 (14) improperly infringed upon the authority vested in the State’s prosecutors, it held that preliminary injunctive relief was nonetheless not warranted on that claim, since no criminal prosecutions were threatened and, consequently, there was no imminent "irreparable harm” (see, 147 AD2d 215 ). Following the issuance of its order denying a preliminary injunction, the Appellate Division granted the Kuttner plaintiffs leave to appeal to this court, certifying the following question of law: "Did this court err as a matter of law in reversing the order of Supreme Court granting plaintiffs’ motion for a preliminary injunction restraining defendants from enforcing Advisory Opinion 88-1 of the State Ethics Commission and in denying such motion?”

V. Analysis

Applicability of Section 73 (8)

At the outset, we note our agreement with the Appellate Division’s conclusion (147 AD2d, at 275) that application of Public Officers Law § 73 (8) to former State employees who left State service before January 1, 1989 does not render that statute "retroactive” in any true sense of that term. As construed by Advisory Opinion 88-1, the statute merely prohibits a class of individuals from engaging in certain specified business and professional activities after the statute’s effective date. "A statute is not retroactive * * * when made to apply to future transactions merely because such transactions relate to and are founded upon antecedent events” (McKinney’s Cons Laws of NY, Book 1, Statutes § 51,

Equal Protection

Having concluded that Public Officers Law § 73 (8) was intended to apply to former executive branch employees in plaintiffs’ position, we must now consider plaintiffs’ contention that such application violates their rights under the State and Federal Constitutions. Plaintiffs’ principal argument rests on the disparate treatment that the new "revolving door” law accords to former executive, as distinguished from former legislative, employees. As previously noted, the latter are afforded certain advantages over the former, most notably, the rights to engage in most lobbying activities immediately after the termination of their service and to lobby even with respect to matters in which they were directly involved after the completion of the legislative term in which such termination occurred. Further, as a result of the special applicability provision, legislative employees, but not executive branch employees, had the opportunity to avoid the reach of the new "revolving door” provisions entirely by simply leaving their State positions before January 1, 1989 (see, L 1987, ch 813, §26 [a]). Plaintiffs argue that these disparities violate their rights to equal protection of the laws.x

Those same institutional safeguards are not present in the administrative agencies that employ most of the State’s executive branch workers. In contrast to the diffused decision-making process in the Legislature, many of the matters that come before State administrative agencies, such as license applications and the awarding of contracts, are resolved by one official or a small handful of officials, acting within their broad discretionary authority. Further, the tenure of administrative agency officials does not depend upon the approval of the electorate, many are protected by civil service laws and the myriad of routine decisions these officials make rarely draw the attention of the news media. Finally, the continuity of personnel that distinguishes administrative agencies from the legislative offices makes the former vulnerable to the evils inherent in cronyism and influence peddling.

For all of these reasons, a legislative decision to impose more stringent controls on the postemployment activities of former employees of State administrative agencies cannot be characterized as irrational. While the legislative branch is certainly not immune from many forms of influence peddling, there was adequate basis for the Legislature to conclude that administrative agencies are more susceptible to the ethical problems associated specifically with "revolving door” employment and was therefore in need of more restrictive "revolving door” rules. The Legislature is certainly entitled to consider that "[e]vils in the same field may be of different dimensions and proportions,” so that different remedies are required (Williamson v Lee Opt Co., 348 US 483 , 489). Additionally, in fashioning a remedy for a perceived evil, the Legislature may "take one step at a time, addressing itself to the phase of the problem which seems most acute” (id.).

In this instance, differential treatment was justifiable not only because of fundamental institutional differences, but also because of the unique practical situation in which many former legislative employees are placed. Unlike their executive branch counterparts, such employees are unprotected by civil service or tenure rules and face the possibility of sudden

Due Process

Plaintiffs also seek a judicial declaration that Public Officers Law § 73 (8) violates their constitutional due process rights. Plaintiffs’ primary contention in this regard is that the "revolving door” provisions prevent them from exercising their rights to pursue their professional careers. However, the new rules do not interfere with the ability of plaintiffs, all of whom are attorneys, to practice law. They merely forbid them from accepting employment in a limited class of cases that poses the greatest potential for the unfair exploitation of the contacts they made, and the knowledge they obtained, during their State service. Such a restriction, which is reasonably related to the legislative goal of restoring public confidence in government, does not violate any protected property or liberty interest (see, Hasenbein v Siebert, 56 NY2d 853 ), even if, as a practical matter, it may reduce plaintiffs’ professional marketability.

Plaintiff Forti’s alternative due process argument is equally unpersuasive. Forti contends that his vested rights have been impaired because, as applied to him pursuant to Advisory Opinion 88-1, Public Officers Law § 73 (8) alters a term or condition of his State employment, namely his right to pursue postemployment professional opportunities subject only to the restrictions imposed by the earlier version of the

Separation of Powers

Plaintiffs have also raised a number of arguments, all of which involve, in one way or another, the doctrine of separation of powers. The first two of these arguments are readily disposed of. Plaintiff Forti’s separation of powers claim rests on the erroneous assumption that only the judiciary may regulate the practice of law, so that any legislative attempt to impose restrictions on attorneys’ practices would be a usurpation of judicial power. In fact, the Legislature can — and does— regulate many aspects of the practice of law in this State (see, Judiciary Law art 15). Indeed, the very power of this court to prescribe rules for the admission of attorneys is derived from the Legislature (see, Judiciary Law § 53; see also, § 90 [authorizing the Appellate Divisions to administer character and fitness, as well as disciplinary, procedures]). Moreover, Public Officers Law § 73 (8) is not directed specifically at admitted attorneys but rather is aimed at all former executive branch employees. Its effect on the practice of law is, thus, merely incidental.

The separation of powers argument raised by the plaintiffs in the Kuttner appeal is based on the entirely different premise that the final sentence of Public Officers Law §73 (8), which permits State agencies to adopt even more restrictive "revolving door” rules to govern practice before them, represents an unconstitutional delegation of legislative authority. However, our decision in Matter of Nicholas v Kahn ( 47 NY2d 24 ) establishes the general proposition that the Legislature may constitutionally authorize administrative agencies to promulgate their own specialized conflict of inter

The final argument advanced by the Kuttner plaintiffs stands on somewhat stronger footing. The argument concerns the constitutional propriety of Public Officers Law § 73 (14), which provides for civil penalties for violations of several of the statute’s other subdivisions, including subdivision (8). In addition, section 73 (14) provides that, "in lieu of a civil penalty,” the Ethics Commission may "refer a violation of any [of the specified] subdivision^] to the appropriate prosecutor and upon such conviction, but only after such referral, such violation shall be punishable as a class A misdemeanor” (emphasis supplied).

The Appellate Division concluded in the Kuttner appeal, which involved only the question of preliminary injunctive relief, that the plaintiffs were likely to succeed on the merits of their claim that this provision was violative of the separation of powers doctrine. After determining initially that the question was justiciable because plaintiffs were potentially subject to criminal prosecution if they violated Public Officers Law § 73 (8), the court observed that the challenged provision, fairly read, gives the respective Ethics Commissions the exclusive power to decide, in the first instance, who shall be criminally prosecuted. As such, the Appellate Division concluded, the provision results in an encroachment on the power of the executive branch, as represented specifically by the State’s prosecutors, to ensure "that the laws are faithfully executed” (NY Const, art IV, § 3; see, People v Di Falco, 44 NY2d 482 , 486).

Like the court below, we conclude that section 73 (14)’s provisions for criminal prosecutions only upon referral by the Ethics Commission are highly troublesome. In addition to the constitutional criticism identified by the Appellate Division, there is an apparent inconsistency, which has already drawn some comment, between section 73 (14) and the constitutional directive that "[t]he power of grand juries to inquire into the wilful misconduct in office of public officers, and to find indictments or to direct the filing of informations in connec

The procedural posture in which the issue is presented prevents us from squarely deciding it in the context of the Kuttner appeal, which is based on a certified question, since, in any event, our resolution would not be "decisive” of the correctness of the nonfinal Appellate Division order before us (see generally, Patrician Plastic Corp. v Bernadel Realty Corp., 25 NY2d 599 ). As previously noted, the Appellate Division denied the Kuttner plaintiffs the preliminary injunctive relief they sought, not because it disagreed with them on the merits of their legal claim, but rather because it concluded that such relief was unnecessary in light of the absence of an imminent threat of prosecution. We find no error of law in this dispositive conclusion and, accordingly, can go no further (see, Brady v Ottaway Newspapers, 63 NY2d 1031 ; cf., Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536 , 540-541).

To summarize, we hold that the Ethics Commission correctly concluded that Public Officers Law § 73 (8) is applicable to former executive branch employees whose State service was terminated before January 1, 1989. We further hold that the more favorable treatment afforded under the statute to former legislators and legislative employees does not violate plaintiffs’ constitutional right to equal protection of the law. Similarly, the limited restrictions on plaintiffs’ rights to practice before State administrative agencies do not constitute violations of their due process rights or the rights afforded by the Ex Post Facto Clause of the United States Constitution (US Const, art I, § 10, cl [1]). Finally, while the Kuttner plaintiff’s claims with regard to the constitutionality of Public Officers Law § 73 (14)

Accordingly, in Forti v New York State Ethics Commn., the order of the Appellate Division should be affirmed, with costs.

In Kuttner v Cuomo, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the negative.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Hancock, Jr., and Bellacosa concur.

In Forti v New York State Ethics Commn.: Order affirmed, with costs.

In Kuttner v Cuomo: Order affirmed, etc.