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O'Connor v. City of Philadelphia Board of Ethics

Commonwealth Court of Pennsylvania

June 18, 2013

Cozen O'Connor, Appellant
v.
City of Philadelphia Board of Ethics and City of Philadelphia and The Honorable Robert A. Brady and Friends of Bob Brady

Argued: May 14, 2013

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION

P. KEVIN BROBSON, Judge.

In this appeal, Appellant Cozen O'Connor (Firm) contends that the Court of Common Pleas of Philadelphia County (trial court) erred when it determined that the campaign finance provisions of Philadelphia Code Chapter 20-1000 (Philadelphia Campaign Finance Law) limited the manner by which the Firm could forgive $448, 468.09 in legal debt incurred by the Friends of Bob Brady (Committee) in defending a ballot challenge to the candidacy of U.S. Congressman Bob Brady in the 2007 Philadelphia Democratic mayoral primary. The Firm also argues that the trial court erred when it refused to also consider the question of whether the Committee could fundraise to retire the legal debt without regard to the contribution limits of the Philadelphia Campaign Finance Law. For the reasons set forth below, we affirm the trial court's decision to deny the Firm's request for judgment on the pleadings and to grant, in part, judgment on the pleadings in favor of the City of Philadelphia Board of Ethics (Ethics Board).[1]

BACKGROUND

In 2007, Congressman Brady was one of several candidates in the Philadelphia mayoral primary for the Democratic nomination. After formally announcing his candidacy, he formed the Committee to handle his campaign contributions and expenditures. (Reproduced Record (R.R.) at 42a.) Thomas Knox (Knox), another candidate in the 2007 Democratic mayoral primary, filed a legal challenge to Congressman Brady's candidacy, contending that Congressman Brady filed a legally deficient Statement of Financial Interests with the Philadelphia Board of Elections ("Ballot Challenge"). The Committee engaged the Firm to defend the challenge. The Firm did so successfully before the trial court and through appeal to this Court, but at a cost to the Committee of $448, 468.09. Neither Knox nor Congressman Brady secured the Democratic nomination that year.

On July 27, 2007, and after the certification of the primary election results, the Firm, on behalf of the Committee, sought an advisory opinion from the Ethics Board as to whether the receipt of funds by the Committee would be subject to the contribution limitations set forth in Section 20-1002(1) and (2) of the Philadelphia Campaign Finance Law[2] if the Committee received the funds after the election and the receipts were intended for the purpose of retiring the pre-election legal debt incurred by the Committee. (Id. at 79a.) The Ethics Board issued its advisory opinion on September 14, 2007, indicating that such payments would be subject to the contribution limits provided in the Philadelphia Campaign Finance Law. (Id. at 97a.)

On March 6, 2008, the Firm, as the named plaintiff, commenced a declaratory judgment action in the trial court, seeking a declaration that the legal fee debt incurred by the Committee to defend the Ballot Challenge was not an "expenditure" and that any post-election receipts intended to satisfy that pre-election debt were not "contributions" under the Philadelphia Campaign Finance Law.[3] (Id. at 58a-59a.) On April 14, 2008, the Ethics Board filed preliminary objections, arguing, inter alia, that the Firm lacked standing to pursue the action. (Id. at 110a-11a.) By order dated June 10, 2008, the trial court sustained the Ethics Board's preliminary objections and dismissed the Firm's complaint with prejudice. (Id. at 204a-05a.)

On July 15, 2008, the Firm appealed the trial court's order to this Court. We affirmed, opining:

At the core of the Firm's argument is that the Board's interpretation of the Philadelphia Campaign Finance Law frustrates the Committee's efforts to raise funds to retire campaign debt, particularly its legal fees. The question then simply becomes whether a creditor of a campaign committee has the direct, substantial interest necessary for standing.

Cozen O'Connor v. City of Phila. Bd. of Ethics, 970 A.2d 504, 507 (Pa. Cmwlth. 2009), rev'd, 608 Pa. 570, 13 A.3d 464 (2011). In holding that the Firm lacked standing, we concluded that "the Firm is not aggrieved because it does not have a direct, immediate and substantial interest in the outcome of the appeal, " because the Philadelphia Campaign Finance Law governs contribution amounts received by candidates and their committees and "does not mention unpaid creditors. . . . [T]he Firm's claim is a collateral concern that does not satisfy the traditional standing requirement." Id.

The Pennsylvania Supreme Court granted allocatur on the following issue:

Did [the Firm] have standing to obtain a declaratory judgment where [the Firm] alleged in its complaint that it intended to forgive the outstanding debt of the . . . Committee at one time and in toto, thereby exposing itself to potential civil penalties and other sanctions under [the Philadelphia Campaign Finance Law]?

Cozen O'Connor v. City of Phila. Bd. of Ethics, 605 Pa. 129, 987 A.2d 715 (2009) (order granting allocatur in part). The Supreme Court denied allocatur "as to all remaining issues." Id.

Before the Supreme Court, the Firm argued that this Court "improperly viewed its claim as one based solely on its desire to determine whether, and how, the Committee could raise funds post-election so that it could be paid, " but that it also sought clarification of the Philadelphia Campaign Finance Law to determine whether "it could, in its own right, forgive the debt at issue." Cozen O'Connor v. City of Phila. Bd. of Ethics, 608 Pa. 570, 575-76, 13 A.3d 464, 467 (2011) (Cozen I). After determining that "the Firm sufficiently pled as a basis for relief in its declaratory judgment action its own inability to forgive the total outstanding debt without potentially violating" the Philadelphia Campaign Finance Law as interpreted by the Ethics Board, the Supreme Court concluded "that the Firm possesses standing in this regard in that it has a substantial, direct, and immediate interest in knowing whether it may, in its own right, forgive the total outstanding debt owed to it by the Committee without" violating the Philadelphia Campaign Finance Law as interpreted by the Ethics Board. Id. at 583, 13 A.3d at 472. The Supreme Court, therefore, reversed this Court's decision and remanded the matter to this Court for further proceedings. By order dated May 16, 2011, this Court remanded the matter to the trial court upon consideration of the Firm's motion to remand. (R.R. at 224a.)

Now back in the trial court, the Ethics Board filed renewed preliminary objections, which the trial court struck by order dated October 18, 2011. (Id. at 508a.) The Ethics Board then filed an answer with new matter to the complaint, arguing, inter alia, that the matter was moot because the City of Philadelphia (City) had amended the Philadelphia Campaign Finance Law and accompanying regulations in 2010 to address the very issues raised by the Firm in its declaratory judgment action. (Id. at 548a-50a.) Both parties subsequently moved for judgment on the pleadings. (Id. at 631a-61a, 668a-74a.)

After hearing oral argument on the matter, the trial court issued two orders, the first denying the Firm's motion for judgment on the pleadings and the second granting the Ethics Board's motion for judgment on the pleadings in part. (Id. at 761a-66a.) In so doing, the trial court determined that the Philadelphia Campaign Finance Law as it existed prior to the 2010 amendments was controlling, as the amendments were not retroactive. (Id. at 761a, 764a.) The trial court also concluded that the legal fees incurred by the Committee were regulated "expenditures" under the Philadelphia Campaign Finance Law, because they were incurred for the purpose of influencing the outcome of the 2007 Democratic mayoral primary election. (Id. at 762a, 764a.) Furthermore, the trial court determined that the Firm's post-election forgiveness of the debt at one time and in toto would constitute a regulated "contribution" and would, therefore, be subject to the contribution limits set forth in the Philadelphia Campaign Finance Law. (Id. at 762a, 765a.) The trial court reasoned that the legal fees were incurred by the Committee for the purpose of ensuring that Congressman Brady could remain on the ballot in the 2007 Democratic mayoral primary, which, in turn, influenced the outcome of the election. (Id.) The trial court further explained that the Firm's forgiveness of the pre-election legal fee debt relates back to the expenditures that influenced the election. (Id.)

Finally, the trial court declined to rule on the question of how the Philadelphia Campaign Finance Law would impact the Committee's ability to engage in fundraising to pay the legal fee debt owed to the Firm. (Id. at 762a-63a, 766a.) The trial court reasoned that the issue was not properly before it, as the Pennsylvania Supreme Court declined allocatur to examine the issue, which left final this Court's holding that the Firm lacked standing to seek a legal determination of that question. (Id.)

DISCUSSION

A. Scope of Pennsylvania Supreme Court ...


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