Opinion  EC-COI-87-1

Date:	01/12/1987
Organization:	State Ethics Commission

A selectman who is an officer of an organization which operates a private club may participate in the liquor license application of a restaurant which does not compete with the club.

Facts

You are a member of the Board of Selectmen (Board) of a Town.  The Board also acts as the licensing authority for the Town.  The Board held a public hearing on an application of a restaurant to change its license from a "common victualler/wines and malt beverage license" to an "all alcoholic beverages license. You abstained from the discussion and vote on that application because you are the paid president of a corporation which operates a private club located approximately 100 yards from the applicant and because you are the manager named on the club's liquor license.  Motions to grant the license application and to deny the application resulted in a tie vote, thereby resulting in the defeat of the motions and the denial of the application.  The applicant appealed the Board's decision to the Alcoholic Beverages Control Commission (ABCC) pursuant to G. L. c. 138, s. 67.  The ABCC remanded the matter to the Board because the denial of the application contained no statement of reasons.  The ABCC also recommended that if the Board were unable to obtain a majority decision without your participation, then you should participate in the matter under the rule of necessity.

You then sought an informal opinion from the Ethics Commission as to whether you could participate in future matters concerning the restaurant's license application.  The staff's informal opinion to you, based upon facts presented at that time, advised you to abstain in the matter pursuant to G. L. c. 268A, s.19 because you would be officially participating in a matter in which the corporation of which you are a paid officer has a financial interest. The opinion assumed the likelihood that the private club and the applicant-restaurant would be business competitors.

A second hearing was held on the restaurant's license application. You again abstained from participating and voting on the matter.  The result again was a tie vote and the application was denied.  The applicants re-appealed the denial to the ABCC, which heard the matter and issued a decision. In that decision, the ABCC concluded that you would not be prohibited from participating in the restaurant's license application because the private club holds a restricted liquor license whereas the applicant-restaurant is seeking a license for a commercial establishment.  Therefore, there would be no business competition between the restaurant and your private club.

On that basis, the ABCC remanded the matter to the Board for further consideration and requested you to obtain an opinion from the Ethics Commission as to whether you could participate in the matter.  You state that the private club would not be a likely business competitor of the applicant's restaurant for several reasons, despite the proximity of the locations of the two establishments.  First, your club serves liquor only to members and their guests and not to members of the general public.  Although the club rents its facilities, on occasion, to members and other private parties, and liquor may be served at those functions, there would not be any competition with the restaurant for that type of business.  The club accommodates a substantially greater number of persons than the restaurant and the club offers an entirely different line of food from the restaurant.  Further, the restaurant is open to the public, would only be serving alcohol with meals, and does not have a bar.

Question

Does G. L. c. 268A permit you to participate, as a Board member, in the restaurant's application?

Answer

Yes, subject to the limitations discussed below.

Discussion

As a member of the Board of Selectmen, you are a municipal employee for the purposes of G. L. c. 268A. Two sections of G. L. c. 268A are relevant to your question.

1. Section 19

As a municipal employee, you are prohibited under s.19 from officially participating¹ in any particular matter² in which a corporation in which you are serving as an officer, trustee, partner or employee has a financial interest.  Because you are the paid officer of a corporation which operates a private club and holds a liquor license, you are prohibited from participating in any matter which could foreseeably affect that corporation's financial interest.  The abstention requirements apply not only to matters filed by your club, but also to matters filed by businesses which compete with your club. See, EC-COI-86-13, 81-118. Therefore, the propriety of your voting on the restaurant's application turns on whether the restaurant is a competitor to your club.  Based upon the information which you and the ABCC have provided, we conclude that the restaurant does not compete with the club.

Notwithstanding the close proximity of the restaurant to the club, both you and the ABCC state that the restaurant and the club are not likely business competitors.  The club holds a restricted liquor license which permits service only to its members and their guests while the restaurant serves the general public.  The fact that the club rents its facilities for functions does not make it a competitor to the restaurant because the club has a substantially larger seating capacity than the restaurant and offers an entirely different menu.  In view of these differences, there is no reasonably foreseeable financial interest of the club which would be affected by the granting or denial of the restaurant's application.

2. Section 23

Aside from s.19, your official actions with respect to the application are subject to two related restrictions of s. 23(b).  Under s. 23(b), you may not use your official position to secure an unwarranted privilege of substantial value for the corporation, or act in a manner which would create a reasonable conclusion that you are likely to act as a result of your relationship with the corporation.  To avoid violating these restrictions, you must: 

(a) publicly disclose, prior to your participation in the application, your affiliation with the corporation, and 

(b) base your evaluation and vote on the merits of the application on the same objective standards which the Board applies to other applicants.

¹ "Participate" is defined as participate in agency action or in a particular matter personally and substantially as a state, country, and municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise. G. L. c. 268A, s.1(j).

² "Particular matter", is defined as any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation, arrest, decision, determination, finding, but excluding enactment of general legislation by the general court and petitions of cities, towns, counties and districts for special laws related to their governmental organizations, powers, duties, finances and property. G. L. c. 268A, s.1(k).