An opinion has been requested concerning whether an instructor (the Instructor) of music at a State university may, through his private business, sell musical instruments, sheet music and other supplies to music students in his courses.
The Instructor is a regular part-time faculty member and visiting instructor in the Department of Music at a State university (the University). He has been employed there since 1977 as an instrumental instructor in the classical guitar. He teaches private guitar, guitar ensemble and masters class, and usually one non-instrumental course such as History of Literature in Guitar. He also directs student plays in the theatre department, and has administrative responsibilities regarding the classical guitar program, including auditioning new students and advising guitar majors. Instrumental students must meet minimum performance standards to be accepted to the program, and must show progress in performance proficiency based on performance before a faculty jury. The Instructor gives final grades to his students taking recommendations from the jury into account, but he is not bound by the jury's views.
The Instructor is the owner of a mail order business (the Business) from which he sells classical guitars, classical guitar sheet music, and related supplies (such as strings, stands and stools). He indicates that he may have ten sheet music transactions per week and possibly one guitar sale every other month. Though individual items are sold by the Business at a price in excess of wholesale cost, the overall business has, according to the Instructor, been operated at a loss over the past two years, apparently due to annual operating expenses that exceed the amount of mark-up on the goods sold. The Instructor indicates that his profit margin on sheet music varies substantially with the nature of and demand for the music. Domestically published and supplied sheet music is usually supplied to his business with a retail discount as high as forty percent (40%). The sheet music ranges in price from $1.00 to $18.75. Foreign published titles may have no retail discounts and he would sell those titles at the cost to him. The Business' mark-up on the sale of classical guitars is ten percent (10%), and the mark-up on the sale of strings and other supplies is estimated to be about fifteen percent (15%).
The Instructor estimates that approximately fifty percent (50%) of the Business' sales annually are to University students. He states that he views his activities as a professional service to his students, stating that the generally limited supply of classical guitars and sheet music makes his services advantageous to the student. He states he does not solicit business and only assists students in a positive faculty-student professional manner. He indicates, for example, that classical guitar sheet music is generally published in Europe and Japan and not widely available in commercial music stores or at the University's student store. He believes that the availability of music through the Business avoids the inconvenience that students would otherwise have of dealing with delays, money conversion, language problems and minimum order requirements that would be connected with direct purchase by them of these articles.
The Business also assists students in acquiring the better handmade guitars necessary for advanced serious study of the classical guitar. According to the Instructor, a student's progress in classical guitar may be limited by the quality of the guitar. As the student's instructor he must recommend at times that the student purchase a better quality instrument in order to further improve his abilities. The Instructor says that he tries to avoid recommending specific guitars, though he will supply a list of his current inventory to the student if requested. He states that generally, however, commercial music supply stores and distributors do not stock handmade classical guitars. The Instructor states that it generally takes three to six months to have a guitar made and the payment and return policy work to the disadvantage of the student. A quality classical guitar may cost in excess of $2,500.
The Department of Music at the University has approximately fifty-four faculty, who in the tutorial situation routinely exercise significant influence over the serious students by the nature of the teaching relationship. Students are expected to purchase their own music, though instructors in the Department may provide students with sheet music on loan, at no cost or on some other basis. Classical guitars and sheet music are described as at the "bottom end of availability." The University has a general policy that the University store is the retail outlet for students on campus, and therefore regulates commercial activities of groups and entities that wish to do business on campus. It is not clear whether sales of supplies by instructors are covered by this policy. At present the faculty contract is a standardized contract (adopted by the Board of Trustees) and does not address the sales of materials, textbooks or other supplies by faculty members to students. The Faculty Handbook references the American Association of University Professors Statement on Professional Ethics, which provides that professors should "...avoid any exploitation of students for private advantage...."
This request presents outside employment issues under §3-103(a) of the Public Ethics Law, as well as participation issues under §3-101 and use of prestige questions under §3-104 (Article 40A, §§3-101, 3-103(a), and 3-104, Annotated Code of Maryland, the Ethics Law). Section 3-103(a)(1)(i) bars the holding of outside employment or financial interests by officials or employees in any entity that contracts with or is under the authority of their agency, or under their direct authority. Subsection (a)(1)(ii) further prohibits any other employment that would impair an individual's impartiality or independence of judgment. While we have consistently viewed sole proprietorships as entities for purposes of §3-103(a), and have found that a sole proprietor has both an ownership and employment interest in his entity,1 we do not believe that the Business has an authority or contractual relationship with the University that would bring it within the strict prohibition of §3-103(a)(1)(i).
We do believe, however, that the Instructor has an employment relationship with the Business, and that this relationship raises inconsistent employment questions under §3-103(a)(1)(ii). We have interpreted this provision as a complement to subsection (a)(1)(i), intended to deal with situations where the technical contract and authority relationships do not exist, but where the relationships involved raise clear and serious concerns about an official's or employee's ability to carry out his State duties impartially and independently. (See our Opinions No. 83-4, No. 82-51, No. 82-37, and No. 82-28 for additional discussion of this provision.)
The facts as presented in this request suggest that the University's classical guitar program relies extensively on individual student lessons with an instructor. In this tutorial setting the individual student depends upon his instructor for advice, guidance, suggestion and assignment to improve his musical skills, as well as for his final grade. The Instructor directs the studies of the student and must regularly evaluate the student's performance in order to assign more difficult compositions to allow the student to progress in his abilities on the instrument. He has also indicated that a student's ability to play more difficult music may be limited by the quality of the guitar and that consequently, as an instructor, he may recommend to students that they should purchase a better quality guitar.
The Instructor's business has sold classical guitars, classical guitar sheet music, and related supplies to his students; apparently approximately fifty percent (50%) of its sales involve the Instructor's University students. In our view, this dual role as a State instructor of classical guitar and as sole proprietor of a classical guitar and music supply business that sells to students creates tensions which would tend to impair or give the appearance of impairing his impartiality and independence of judgment. The Instructor's sales to students are not casual, occasional events; rather his business seems to rely on students for a significant amount of its annual sales. Further, the Instructor's business needs and inventory decisions may impact upon his ability to be impartial in assisting his students. For example, the Business is a retailer for certain guitars, and as an instructor he may be asked by a student to evaluate another model guitar. Additionally his business stocks classical guitar sheet music, and there may be a tendency to assign music available from his business.
We are concerned that the present situation also creates an appearance of conflict as set forth in §1-102 of the Law. The Instructor is in a position to greatly influence his students' selection of music and guitars and to suggest when a better quality guitar is needed. This responsibility involves a judgmental decision by the Instructor. Should it result in the student's purchasing a new instrument from the Instructor, it would give the appearance of a self-serving transaction, regardless of the Instructor's intention or motives. Under these circumstances, we conclude that the Instructor's operation of the Business as described is inconsistent employment prohibited by §3-103(a)(1)(ii) of the Ethics Law.
Moreover, even if §3-103(a) did not apply here, we believe that significant issues are raised under other provisions of the Law. For example, §3-101 bars non-ministerial participation by a employee in matters in which he has an interest or which involve as a party entities with which he has certain relationships. The Instructor's provision of advice or recommendations regarding a student's need for music, supplies, or a new instrument would be the type of non-ministerial participation intended to be barred by §3-101. (See Opinions No. 82-24, No. 82-17, and No. 81-37 as examples of prior applications of this provision.) Also, he owns an entity that would be a party to the sales transactions, and would also himself stand to benefit financially from sales, at least of larger items. Though §3-101 is a nonparticipation provision rather than an absolute bar, it is unlikely that the Instructor could continue to sell supplies to students and effectively carry out his duties if he properly disqualified himself from participating in matters relating to student purchase of these items.
Additionally, §3-104 of the Ethics Law forbids a public official or employee from intentionally using the prestige of his office for his own gain or that of another. In this situation, the Instructor exercises considerable influence over his students. He evaluates a student's progress and directs future studies, and the student must look to him in order to improve his performance on the instrument. It is reasonable to assume that the student gives the Instructor's opinions significant weight, either because of genuine interest in the subject matter or respect for an instructor who determines his grade, or both. Regardless of motive, when an instructor recommends to a student that he needs to purchase a better instrument to improve performance, or new sheet music, and it is understood that he can supply the item to the student, then he places the student in a difficult position. The Instructor here has indicated that he marks up the price over his cost of the items sold by the mail order business. Thus, even if his business shows a net operating loss annually, the sales when viewed as individual transactions are profitmaking to the Instructor. Even sales below acquisition cost could be a benefit in some instances where the merchandise could not otherwise be sold. Thus, though application of §3-104 would depend on the circumstances of a particular situation, we believe that significant issues are raised under this section by the Instructor's sales activities.
In our review of this matter, we have consulted with the University and officials from other educational agencies. Though these officials expressed the view that there are many unique aspects in the academic environment that need to be considered, there was general agreement that commercial sales by faculty to their students raises substantial concerns that need to be addressed. We do not here impugn the Instructor's personal integrity or question his sincere interest in assisting his students. We believe, however, that the conduct of an ongoing commercial enterprise under which sales to students accrue to his own benefit creates problems that must be viewed as resulting in an impairment as contemplated in §3-103(a)(1)(ii), and could raise issues under other provisions of the Law.
Herbert J. Belgrad, Chairman
Jervis S. Finney
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: August 18, 1983
1 Opinions No. 83-3, No. 82-21, No. 82-8, No. 82-3, and No. 81-45. Except as expressly cited to the Maryland Register, Opinion citations are to Ethics Commission Opinions published in COMAR, Title 19A.