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«OPINION NO. 2010-01 LEGISLATIVE COUNSEL BUREAU; SEX OFFENDERS; STATUTES: The sex offender registration laws that were in effect prior to the passage ...»

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STATE OF NEVADA

OFFICE OF THE ATTORNEY GENERAL

100 North Carson Street

Carson City, Nevada 89701-4717

CATHERINE CORTEZ MASTO KEITH G. MUNRO

Attorney General Assistant Attorney General

JIM SPENCER

Chief of Staff April 8, 2010 OPINION NO. 2010-01 LEGISLATIVE COUNSEL BUREAU; SEX OFFENDERS; STATUTES: The sex offender registration laws that were in effect prior to the passage of A.B. 579 and S.B. 471 remain in effect during the pendency of the litigation.

Jearld Hafen, Director State of Nevada Department of Public Safety 555 Wright Way Carson City, Nevada 89711-0525

Dear Mr. Hafen:

You asked for an opinion from this office regarding whether or not the sex offender registration and notification laws that existed in Nevada on June 30, 2008, are still in effect or whether the Nevada Department of Public Safety (DPS) should be following the laws enacted by Assembly Bill 579 (A.B. 579), even though there is a permanent injunction.

QUESTION

This letter is in response to the request for an opinion from the Nevada Attorney General’s Office regarding the status of Nevada’s sex offender registration laws.

ANALYSIS

In 2006, the United States Congress authored new registration requirements for convicted sex offenders; the common name of those enactments is the Adam Walsh Act (AWA). 42 U.S.C.A. § 16901 et. seq. The Sex Offender Registration Notification Act Telephone 775-684-1100 Fax 775-684-1108 www.ag.state.nv.us E-mail aginfo@ag.state.nv.us

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(SORNA), which is Title I of the AWA, calls for each jurisdiction to adopt SORNA and provides that failure to comply within three years of the passing of the SORNA will lead to a 10 percent deduction in funds from the Edward Byrne Memorial Justice Assistance Grant. 42 U.S.C.A. § 16925.

In response to the federal government passing the AWA, the Attorney General’s Office drafted what came to be known as A.B. 579. A.B. 579 was passed unanimously by the Legislature, and was then signed into law by the Nevada Governor and was subsequently codified in NRS 179D. These new sex offender registry requirements were to go into effect on July 1, 2008. Additionally, the Legislature enacted Senate Bill 471 (2007) (S.B. 471), which imposed on certain sex offenders additional conditions of probation, parole, suspended sentence or lifetime supervision.

On October 7, 2008, the United States District Court District of Nevada permanently enjoined the State of Nevada from enforcing the requirements of A.B. 579 and S.B. 471 in ACLU of Nevada v. Masto et al., Case No. 2:08-cv-00822-JCM-PAL.

The permanent injunction has been appealed to the Ninth Circuit Court of Appeals and a decision has not been rendered.

The Attorney General’s Office does not issue written opinions on matters in which there is pending litigation. Op. Nev. Att’y Gen. 195 (March 27, 1945); Op. Nev.

Att’y Gen. 123 (March 27, 1924). However, your request seeks the status of the law and not a legal opinion.

On March 30, 2009, the Legislative Counsel Bureau rendered a decision regarding the status of sex offender registration laws, using the reasoning under Finger v. State, 117 Nev. 548 (2001) and Johnson v. Goldman, 94 Nev. 6 (1978). The

Legislative Counsel Bureau determined that:

–  –  –

The Legislative Counsel Bureau’s March 30, 2009 Opinion sets forth the current status of Nevada’s sex offender laws.

Jearld Hafen April 8, 2010 Page 3

–  –  –

Therefore, the sex offender registration laws that were in effect prior to the passage of A.B. 579 and S.B. 471 remain in effect during the pendency of the litigation.

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The Retirement Board of the Public Employees’ Retirement System of Nevada (Board) seeks guidance from the Office of the Attorney General (Office) on the

following questions of law:

1. Whether a Board member can set aside fiduciary obligations to the trust when acting in a different capacity.

2. Whether section 7 of the Board Legislative Policy is unconstitutional as a violation of the first amendment of the United States Constitution, as it potentially compels disclosure of information obtained while the Board member is acting in other than a trust capacity.

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The Public Employees’ Retirement System of Nevada (PERS or the System) is a constitutionally created trust fund administered by a board of trustees for the

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NEV. CONST. art. 9, § 2(2) and § (4).

The Board is comprised of seven members, each of whom is appointed by the Governor. See NRS 286.120(1). The Board unanimously adopted a “Legislative Policy” to “define clearly the obligations of the Board and Staff related to the conduct of a Board-approved legislative program responsive to the majority interest of members, benefit recipients and public employers, while protecting PERS’ financial integrity.” Public Employees’ Retirement System, § 1. The Board’s Legislative Policy at issue





states:

–  –  –

Public Employees’ Retirement System Legislative Policy, § 7.

Dana K. Bilyeu January 14, 2010 Page 3 PERS Board members have clear fiduciary obligations and responsibilities to the System’s trust fund. “Under principles of equity, a trustee bears an unwavering duty of complete loyalty to the beneficiary of the trust, to the exclusion of the interests of all other parties.” Nat’l Labor Relations Bd. v. Amax Coal Co., 453 U.S. 322, 329 (1981), citing Restatement (Second) of Trust § 170(1) (1957); 2 A. Scott, The Law of Trusts § 170 (1967). Administering the trust solely in the interest of the beneficiaries has been described as “[t]he most fundamental duty owed... the duty of a trustee to administer the trust solely in the interest of the beneficiaries.” In re Baylis, 313 F.3d 9, 20 (1st Cir. 2002), citing 2A A. Scott, The Law of Trusts §170 (W.F. Fratcher ed., 4th ed. 2001).

Moreover, a trustee should not act in his or her own interests. See Bruch v.

Firestone Tire & Rubber Co., 828 F.2d 134 (3rd Cir. 1987), decision affirmed in part,

reversed in part on other grounds, 489 U.S. 101 (1989). The court in Bruch stated:

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Bruch, 828 F.2d at 145.

More recently, the United States Supreme Court, in Concrete Pipe & Products

of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602 (1993) stated:

–  –  –

Concrete Pipe, 508 U.S. at 616 (citation omitted).

The Nat’l Labor Relations Bd. v. Amax Coal Co. case addresses facts that are pertinent to the legal question raised about § 7 of the Board’s Legislative Policy, Dana K. Bilyeu January 14, 2010 Page 4 concerning a Board member’s right to “free speech” versus their fiduciary duty to the trust fund. In Nat’l Labor Relations Bd., the Supreme Court held that employerselected trustees of employee benefit trust funds established under the Labor Management Relations Act were not “representatives” of the employer for the purposes of collective bargaining or the adjustment of grievances within the meaning of the National Labor Relations Act (the LMRA or Act) making it an unfair labor practice for the union to restrain or coerce an employer in the selection of his representative. The Act mandates that the trust funds are administered by three trustees, one selected by the union, one by members of the employer and third selected by the first two. See Nat’l Labor Relations Bd., 453 U.S. at 322.

The Supreme Court reviewed the legislative history and considered the strict fiduciary standards that the trustee must meet. Id. at 332. The Supreme Court stated

that:

–  –  –

Id. at 334.

Therefore, pursuant to the holding of the Nat’l Labor Relations Bd. case, a PERS Board member is precluded from setting aside his fiduciary duties and must be loyal to the interest of the trust fund, without exception. The duty of loyalty to the trust fund is paramount and no other interest or concern trumps this duty. As the Nat’l Labor Relations Bd. case makes clear, a Board member of a trust fund cannot set aside or curtail his fiduciary obligations to the trust fund even when acting in a capacity unrelated to the trust fund.

With respect to a Board member’s assertion of First Amendment rights, the United States Supreme Court has held that public employees may not be compelled to abandon all of their constitutional rights as a prerequisite to obtaining or continuing their employment. See Keyishian v. Bd. of Regents of Univ. of State of N.Y., 385 U.S.

589, 605–06 (1967). Among the rights retained by public employees is that of freedom of expression as guaranteed by the First Amendment to the Constitution. Id.; U.S. v.

Nat’l Treasury Employees Union, 513 U.S. 454, 465 (1995). Moreover, the First Dana K. Bilyeu January 14, 2010 Page 5 Amendment protects the right to refrain from speaking just as surely as it protects the right to speak. See Wooley v. Maynard, 430 U.S. 705, 714 (1977).

In determining whether a public employer has violated the First Amendment by restricting or compelling speech, courts have traditionally used a “balance between the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.” Pickering v. Bd. of Educ., 391 U.S. 563, 568 (1968).

However, there is ample case law that distinguishes the First Amendment rights of an “employee” from the “free speech” rights of a high level employee, a “policy making” employee, or a member of a board of trustees. In Phelan v. Laramie County Cmty. Coll. Bd. of Trs., 235 F.3d 1243 (10th Cir. 2000), a member of the county community college’s board of trustees sued the board alleging that the board abridged her First Amendment rights when it censured her for violating the board’s ethics policy.

Id. at 1245. The court stated:

–  –  –

Id. at 1248.

As a board member, Ms. Phelan took a general public service oath by which the Board members pledge to “faithfully honestly and impartially discharge the duties of trustee.” Id. The court noted that “because the oath signed by Ms. Phelan does not contain a penalty, such as perjury, for failure to follow the ethics policy, it also does not restrict her free speech rights.” Id. at 1249.

Similarly, in the case of the Board’s Legislative Policy in general and § 7, there is no “penalty.” The Board member must report to the Board any issues relating to PERS or the legislative program for the System, which is an act consistent with the Dana K. Bilyeu January 14, 2010 Page 6 fiduciary duties required of all Board members. As in the Phelan case, the Legislative Policy does not prevent the Board member from performing his official duties, restrict his right to vote, or impair his right to speak before the Board or to the public. Section 7 of the Legislative Policy is designed to promote the duty of loyalty of each Board member. It does not impair or restrict any First Amendment or “freedom of speech” rights.

Another relevant First Amendment case involving a senior policymaking employee is Lewis v. Cowen, 165 F.3d 154 (2nd Cir. 1999). In Lewis, the terminated chief of the state lottery unit brought an action against state officials alleging violations of the First Amendment and state law. The Court found that the state’s interest in effective and efficient operation of the lottery division outweighed Mr. Lewis’s First Amendment interest in refusing to present changes to the board. Id. at 166. The court

stated:

–  –  –

Id.

The court in Lewis further stated “after weighing Lewis’s significant interest in speaking (or not speaking) on a matter of public concern against the defendants’ interest in the efficient and effective fulfillment of the Division’s mission, we conclude that the latter outweighs the former.” Id. Additionally, the court noted that, “[a] highranking policy-making employee does not have, and never has had, a First Amendment right to refuse his employer’s directive to promote agency policy.” Id. at

167. Similarly, a PERS Board member, who has chosen to accept an appointment and serve as a high level policy-making member of the Board, cannot assert a First Amendment right to refuse to comply with a Board-approved Legislative Policy which promotes the interests of the PERS System and trust fund.

Dana K. Bilyeu January 14, 2010 Page 7

CONCLUSION

The fiduciary duty of the Board members to the PERS trust fund is absolute and unwavering. A Board member is precluded from setting aside his fiduciary duties to the PERS trust fund for any reason. Balancing the Board member’s duty of complete loyalty to the PERS trust fund and the First Amendment, the balance completely weighs in favor of the Board’s interest in encouraging Board members to inform the Board and PERS staff about possible legislative issues that may affect the System. A Board member must never set aside his fiduciary obligations to the PERS trust fund when acting in a different capacity.

The reports that must be submitted by Board members, pursuant to Legislative Policy § 7, do not contain a penalty for failing to follow the Board’s legislative program.

Moreover, the First Amendment cannot be used as a justification for failing to exercise the fiduciary duty of loyalty to the PERS trust fund at all times. Therefore, § 7 of the Retirement Board’s Legislative Policy does not violate the First Amendment.

–  –  –

Adriana Fralick, Esq.

General Counsel Office of the Governor 101 N. Carson Street Carson City, Nevada 89701

Dear Ms. Fralick:



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