Does a Kentucky legislator have to abstain from a vote if a family member owns stock in a company the bill could affect?

Plain-English summary

House Speaker David Osborne asked whether Section 57 of the Kentucky Constitution required him to disclose a "personal or private interest" and abstain from voting on House Bill 137, the 2020 bill that would authorize sports wagering in Kentucky. The wrinkle was that his wife owned stock in Churchill Downs, a publicly traded company that held a racing license and could offer sports betting under the bill. The shares were worth more than $10,000 but less than $25,000.

The Attorney General concluded the Speaker did not have to abstain. Section 57 says a member with a "personal or private interest" in a pending bill must disclose it and not vote. But Kentucky case law, chiefly Stovall v. Gartrell, reads that clause narrowly: it restricts voting only where a member has a "peculiar special interest" that affects them differently from the public or from a proper classification of the public. Here, to the extent House Bill 137 affected the value of Churchill Downs stock, it would affect all of the company's shareholders the same way, and Speaker Osborne's wife held only a small fraction of roughly 39 million outstanding shares. So the Speaker had no special interest of the kind Section 57 targets. The opinion also stressed the deference owed to the legislative branch, noting that enforcement of Section 57 ultimately rests with the House itself.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Section 57 of the Kentucky Constitution provides that a member "who has a personal or private interest in any measure or bill proposed or pending before the General Assembly, shall disclose the fact to the House of which he is a member, and shall not vote thereon upon pain of expulsion." The Attorney General began by acknowledging Kentucky's separation of powers (Ky. Const. § 39) and that enforcement of Section 57 rests with the General Assembly, citing In re Appointment of Clerk of Court of Appeals; the opinion offered its analysis only because it was asked, as required by KRS 15.025(2). The controlling case was Stovall v. Gartrell, in which the Kentucky Court of Appeals (then the Commonwealth's highest court) held that Section 57 restricts voting only for members with a "peculiar special interest" affecting them differently from the public. The opinion surveyed analogous provisions in other states, discussing two Alabama Supreme Court advisory opinions (Opinion of the Justices No. 317 and No. 368) construing Alabama's Section 82, including its treatment of stock ownership. Applying Stovall, the opinion found Speaker Osborne lacked a peculiar interest: House Bill 137 (authorizing sports wagering after Murphy v. National Collegiate Athletic Association) would affect all Churchill Downs shareholders alike, and his wife held only a small share of about 39 million outstanding. The stock had been disclosed on the Speaker's financial disclosures under KRS 6.781 et seq.

Citations and references

Constitution and statutes:

• Ky. Const. § 57; Ky. Const. § 39; KRS 6.781 et seq.; KRS 15.025(2)

Cases:

• Stovall v. Gartrell, 332 S.W.2d 256 (Ky. 1960); In re Appointment of Clerk of Court of Appeals, 297 S.W.2d 764 (Ky. 1957); Murphy v. National Collegiate Athletic Association, 138 S. Ct. 1461 (2018); Opinion of the Justices No. 317, 474 So.2d 700 (Ala. 1985); Opinion of the Justices No. 368, 716 So.2d 1149 (Ala. 1998)

Source

• Landing page: https://www.ag.ky.gov/Opinions/Pages/default.aspx
• Original PDF: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG%2020-03.pdf

Original opinion text

The full opinion as issued by the Office of the Kentucky Attorney General:

Commonwealth of Kentucky
Office of the Attorney General
Daniel Cameron, Attorney General
Capitol Building, Suite 118, 700 Capital Avenue, Frankfort, Kentucky 40601

February 21, 2020

OAG 20-03

Subject: Whether Speaker David W. Osborne must abstain from voting upon House Bill 137 of the 2020 General Assembly under Section 57 of the Kentucky Constitution.

Requested by: David W. Osborne, Speaker, Kentucky House of Representatives

Written by: Carmine G. Iaccarino, Executive Director, Office of Civil & Environmental Law

Syllabus: Under the facts presented, Speaker Osborne is not required to abstain from voting upon House Bill 137 under Section 57 of the Kentucky Constitution.

Section construed: Section 57 of the Kentucky Constitution

Opinion of the Attorney General

As a member and Speaker of the House of Representatives, David W. Osborne asks for this Office's opinion on whether he must, under Section 57 of the Kentucky Constitution, disclose a "personal or private interest" and not vote on certain legislation currently pending before the House of Representatives. For the reasons that follow, while recognizing the deference due to the General Assembly on this matter, the Attorney General concludes that Speaker Osborne need not abstain from voting on House Bill 137.

Background. House Bill 137 of the 2020 General Assembly would authorize sports wagering in the Commonwealth following the United States Supreme Court's decision in Murphy v. National Collegiate Athletic Association, 138 S. Ct. 1461 (2018). Under the provisions of House Bill 137, any professional sports venue could offer sports wagering. In addition, the bill would authorize such wagering at an association licensed by the Kentucky Horse Racing Commission ("Commission") under KRS Chapter 230. 2020 House Bill 137, § 9(2), available at https://apps.legislature.ky.gov/recorddocuments/bill/20RS/hb137/orig_bill.pdf (last accessed Feb. 20, 2020). Churchill Downs holds a license issued by the Commission. Under House Bill 137, Churchill Downs would be authorized to offer sports wagering at one of its licensed locations.

Churchill Downs is a publicly traded corporation. Although Speaker Osborne does not own stock in Churchill Downs, his wife does. According to Speaker Osborne, "[t]he ownership of the stock has been disclosed on the Speaker's financial disclosures as required by KRS 6.781 et seq." He adds that "[t]he value of said shares is greater than $10,000 (but less than $25,000) as of the date of" his request. Speaker Osborne asks this Office whether his wife's stock ownership is a "personal or private interest" imposing certain obligations under Section 57 of the Kentucky Constitution—namely, to disclose "the fact" and abstain from voting on House Bill 137.

Analysis. Section 57 of the Kentucky Constitution provides that "[a] member who has a personal or private interest in any measure or bill proposed or pending before the General Assembly, shall disclose the fact to the House of which he is a member, and shall not vote thereon upon pain of expulsion."

In recognition of Kentucky's "double-barrel" separation of powers, this Office must begin its analysis by acknowledging that execution and enforcement of Section 57 of the Kentucky Constitution rests with the General Assembly and its members. See Ky. Const. § 39; see also In re Appointment of Clerk of Court of Appeals, 297 S.W.2d 764, 767 (Ky. 1957). Thus, this Office is mindful that the ultimate authority for determination of the Speaker's question rests with the House of Representatives. See generally Stovall v. Gartrell, 332 S.W.2d 256, 260 (Ky. 1960). For this reason and out of deference to the legislative branch, this Office is reluctant to answer the question, but, because it has been asked, cautiously offers its analysis as required by KRS 15.025(2).

There is little discussion of Section 57 in Kentucky case law—only one case deals with Section 57 in any depth. Despite the broad sweep of the text, the Court of Appeals has warned that "[t]he wheels of government would stop if legislators could not vote on matters in which they necessarily have a remote personal interest by reason of being a member of the public." Stovall, 332 S.W.2d at 260. In Stovall, the court considered whether members of the General Assembly who were military veterans violated Section 57 when they voted to require "a vote of the people on the propriety of incurring an indebtedness to pay a veterans' bonus," id. at 261, which the court described as a "proposal presented to the legislature involv[ing] a broad classification of a substantial segment of the public[.]" Id. at 260. In that context, the court rejected the alleged violation, explaining:

We believe, however, that section 57 must be construed as restricting the right to vote only to those members who have a peculiar special interest in legislation which will affect them in a menner [sic] differently from the public or a proper classification of members of the public.

Id. at 260. On this basis, the court found no violation of Section 57 and ordered that the relevant vote be certified. Id.

Certain other states have similar provisions in their constitutions. See, e.g., Ala. Const. § 82; La. Const. Ann. art. III, § 9; Pa. Const. art. III, § 13; Tex. Const. art. III, § 22; Wyo. Const. art. III, § 46. The Alabama Supreme Court, for example, has issued two opinions applying the provisions of Section 82 of the Alabama constitution, one of which relied on the Stovall case from the Kentucky Court of Appeals. Like Kentucky's Section 57, Section 82 of the Alabama constitution provides: "A member of the legislature who has a personal or private interest in any measure or bill proposed or pending before the legislature, shall disclose the fact to the house of which he is a member, and shall not vote thereon."

In Opinion of the Justices No. 317, the Alabama Supreme Court considered whether a legislator employed as a public school teacher would have a "personal or private" interest in a bill granting pay increases to public education employees. 474 So.2d 700, 701 (Ala. 1985). There, "[t]he Justices regarded the phrases 'conflict of interest' and "personal or private interest" as embodying the same principle, namely, the use of public office for private gain." Opinion of the Justices No. 368, 716 So.2d 1149, 1151 (Ala. 1998) (citing Opinion of the Justices No. 317, 474 So.2d at 703-04). Therefore, "the Justices construed § 82 as prohibiting a vote on any bill in which the legislator's personal interest conflicts with the interests of those he was elected to represent." Id. Relying on Stovall, the Court held that "[t]he conclusion is inescapable that the phrase 'personal or private interest' in Section 82 means an interest affecting the legislator individually or as a member of a small group." Opinion of the Justices No. 317, 474 So.2d at 703–04. Therefore, the Court concluded "that it is constitutional for an educator/legislator to vote on a pay raise for teachers, at least so long as the bill does not affect the legislator in a way different from the way it affects the other members of the class to which he belongs." Id. at 704.

In Opinion of the Justices No. 368, the Alabama Supreme Court again considered Section 82 of the Alabama Constitution. The Court more specifically addressed whether certain business interests—including stock ownership—were "personal or private interests" mandating recusal by constitutional necessity. Specifically, the Court was asked: "Does Section 82 prohibit a legislator from voting, as determined in question 1, on Senate Bill 574, if the legislator owns stock in the company eligible to receive industrial development inducements under the bill? … If the answer to [this question] is yes, is the prohibition dependent upon the ownership of any stock in the company or a particular amount of stock?" Opinion of the Justices No. 368, 716 So.2d at 1150. To answer these questions, the Court explicitly relied upon the Alabama Legislature's Ethics Act as a "reasonable construction" of Section 82 and as "one means by which a legislator may have a personal or private interest[.]" Id. at 1155. Referencing the definition of "conflict of interest" in Alabama's Ethics Act, the Justices opined that "[t]he prohibitions of § 82 apply, therefore, to the actions of legislators who have a 'substantial financial interest,' namely, 'ownership' or 'control' of an 'interest greater than five percent of the value of any ... business entity ... which is uniquely affected by proposed or pending legislation.'" Id. at 1153.

Here, the Legislative Ethics Commission's executive director has opined that "there is no provision in the … Code of Legislative Ethics that prohibits Speaker Osborne from participating in matters relating to or voting upon 2020 House Bill 137." Thus, we answer only the constitutional question presented: Whether Speaker David W. Osborne must abstain from voting upon House Bill 137 under Section 57 of the Kentucky Constitution. Under Stovall, the answer to that question turns on whether Speaker Osborne has a "peculiar interest" in House Bill 137 such that he will be affected in some way different from a proper classification of the members of the public. He does not. Speaker Osborne's wife appears to own a relatively small percentage of Churchill stock because Churchill Downs has almost 39 million shares outstanding. https://www.bloomberg.com/quote/CHDN:US (last accessed Feb. 21, 2020). To the extent House Bill 137 has any effect upon the value of Churchill stock, it will affect all stock owners in the same manner. For that reason, Speaker Osborne does not have a "peculiar special interest in [the] legislation which will affect [him] in a menner [sic] differently from the public or a proper classification of members of the public." Stovall, 332 S.W.2d at 260.

For these reasons, Speaker Osborne does not have "a personal or private interest" in House Bill 137 that requires he "disclose the fact to the House" and "not vote thereon." Ky. Const. § 57.

Daniel Cameron
ATTORNEY GENERAL

Carmine G. Iaccarino
Assistant Attorney General