Cozen O’Connor has standing to challenge a Philadelphia Board of Ethics advisory opinion that said the Friends of Bob Brady Campaign Committee would run afoul of city campaign finance rules if Cozen O’Connor forgave in toto nearly $450,000 in legal bills the campaign incurred in a ballot challenge to U.S. Rep. Bob Brady’s 2007 mayoral race, the state Supreme Court ruled.

The trial and Commonwealth courts had ruled the law firm was not directly enough affected by the advisory opinion to have standing to challenge it. The courts likened the firm to an unpaid vendor and said it was the campaign committee’s fight to fight in terms of how it could settle its debt.

In reversing the lower courts, Justice Max Baer said Cozen O’Connor sufficiently pled in its declaratory judgment action its own inability to forgive the total debt without violating campaign finance laws.

“[W]e, likewise, conclude 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 running afoul of the code’s campaign contribution limitations, as interpreted by the Ethics Board, and, thereby face significant fines and sanctions for such violations,” Baer said in Cozen O’Connor v. City of Philadelphia Board of Ethics .

He said that, unlike the lower courts, the Supreme Court concluded Cozen O’Connor was aggrieved by the Ethics Board’s interpretation of the code.

In finding the firm has standing, Baer remanded the case back to the lower courts to hear the merits of whether the board’s interpretation of the law was accurate.

Baer was joined in the opinion by Chief Justice Ronald D. Castille and Justices Thomas G. Saylor, J. Michael Eakin and Joan Orie Melvin. Justices Seamus P. McCaffery and Debra Todd did not participate in the consideration or decision in the case even though they sat through oral arguments. Stephen A. Cozen of Cozen O’Connor, who argued the case on his firm’s behalf, said he didn’t know why the justices didn’t participate and said none of the parties asked for their recusal.

Brady racked up $448,468 in legal bills in fighting opponent Tom Knox’s challenge to Brady’s ballot status. Brady and his campaign committee have not directly participated in the appeals by Cozen O’Connor.

Once Brady lost the primary, Cozen O’Connor advised Brady he could start raising funds to pay back the campaign debt without abiding by the limits.

Just to be sure, the firm sought the opinion of election law attorney Gregory Harvey of Montgomery McCracken Walker & Rhoads. According to Cozen’s argument to the Commonwealth Court, Harvey said that, in general, candidates who lost can raise money above the contribution limits because they are no longer candidates and, therefore, the definition of contribution as defined by the city’s ordinance no longer applies.

Brady sought the advice of the Ethics Board on the issue so that if the board agreed, Brady could raise the funds without limits and if it disagreed, the parties would have standing, Cozen had said.

The board’s attorney, Gregory P. Miller of Drinker Biddle & Reath, argued before the Supreme Court that Cozen O’Connor could forgive the debt up to the annual legal limits.

“You want [Cozen O'Connor] to do $10,000 a year for 45 years?” Baer asked at argument, to which Miller responded that the firm has that option.

Cozen said Thursday that the Supreme Court found his firm had standing on two grounds. First, that it had standing under the 1975 case Wm. Penn Parking Garage Inc. v. City of Pittsburgh , in which an aggrieved party has substantial, direct and immediate interest in the outcome of the litigation.

It also had standing, Cozen said the court found, under the court’s 2003 opinion in Shaulis v. Pennsylvania State Ethics Commission . In that case, a former assistant counsel with the department of revenue sought an advisory opinion from the state ethics commission as to whether she could practice law before the department when in private practice. The commission set forth a number of limitations to her practicing before the board and she appealed to the Commonwealth Court.

The Supreme Court ultimately ruled in Shaulis that the Ethics Act contemplated review of one of the commission’s decisions if an aggrieved party with a direct interest seeks that review. The Shaulis court said the attorney was aggrieved because if she went against the ruling, she would expose herself to the exact ethical investigation she was trying to avoid and potentially jeopardize her ethical rating, admission to practice law and her reputation.

“[Baer] concluded we did [have standing] and we had it for two reasons,” Cozen said. “One because we were in the same position as in Shaulis where we were at risk of doing the wrong thing and having fines, penalties and damage to our reputation and, secondly, because of the situation we were in, we had a substantial, direct or immediate interest of knowing whether or not we could, in our own right, decide to forgive the debt without running afoul of the limits or alternatively arrange for our client to pay it in some way without violating the limits.”

In the midst of oral argument, Miller raised the point that the whole issue might be moot because the Ethics Board was that day voting on new regulations that would allow campaigns to have debt forgiven in toto after an election if they met certain criteria. He said that would apply to this case.

In a post-submission communication filed with the Supreme Court, Cozen O’Connor said it didn’t think any new regulations would retroactively apply to the firm and said it didn’t want the case deemed moot because the eight criteria under the new regulations for forgiving the debt would bar the firm from immediately forgiving it.

Cozen said Thursday that the Ethics Board “blindsided” him and the court with that argument and he was glad to see the court “slapped them down pretty hard.”

In a lengthy footnote to Baer’s opinion, he said the firm had no opportunity to respond to the board’s new claim, so the court accepted Cozen O’Connor’s post-submission communication.

“Regardless of whether the newly enacted code provisions and Ethics Board regulations moot the underlying merits of the case, such does not affect the discrete and only question pending before us regarding the firm’s standing,” Baer said in the footnote.

He said the parties are free to move forward on the merits of the case as to whether they are obligated to follow the campaign finance laws that existed when the debt was incurred or as they are today.

“We decline to address this new issue injected into the case after our grant of allocatur, briefing and argument,” Baer said.

Miller did not return a call for comment by press time.

(Copies of the 14-page opinion in Cozen O’Connor v. City of Philadelphia Board of Ethics , PICS No. 11-0347, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.) •