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Decisions Affecting the Powers and Duties of State Attorneys General
Emily Myers, Antitrust Counsel
This is another in our series reporting on recent decisions from across the country affecting the powers and duties of state Attorneys General.
Attorney General Can Dismiss Suit Brought by District Attorney
Ex parte King v. CVS Caremark Corporation, No. 1090388 (Ala. Sept. 23, 2010)A district attorney filed suit, in the name of the state, against a group of pharmacies, alleging violations of the state’s pharmacy and consumer laws. Before the parties filed answers, the Attorney General’s office filed a notice of dismissal of the complaints. After the district attorney filed a motion to strike the notice of dismissal, the Attorney General filed a notice of appearance and a motion for leave to represent the state. The trial court denied the motion on the grounds that the Attorney General lacked authority to dismiss a complaint filed by a district attorney on behalf of the state. After the trial court declined to certify the question, the Attorney General filed a writ of mandamus.
Alabama statutes provide, "All litigation concerning the interest of the state, or any department of the state, shall be under the direction and control of the Attorney General." Ala. Code 1975, § 36-15-21. "The Attorney General is authorized to institute and prosecute, in the name of the state, all civil actions and other proceedings necessary to protect the rights and interests of the state." Ala. Code 1975, § 36-15-12, and "[t]he attorney general shall give the district attorneys of the several circuits any opinion, instruction or advice necessary or proper to aid them in the discharge of their duties ...." Ala. Code 1975, § 36-15-15. The district attorney argued that the Attorney General has no authority to dismiss a civil action initiated by the district attorney.
The district attorney argued that Ala. Code 1975 §36-15-14 limited the Attorney General to controlling the district attorney in criminal actions. The statute provides, “The Attorney General, either in person or by one of his assistants, may at any time he sees proper, either before or after indictment, superintend and direct the prosecution of any criminal case in any of the courts of this state.” The court disagreed, noting that Ala. Code 1975 §36-15-1 provides that the Attorney General "shall ... attend to all cases other than criminal" that are pending in any of the courts of this state, "in which the state may be in any manner concerned." The district attorney also argued that the Attorney General’s authority only extends to cases involving agencies or departments of the state. The court, after analyzing the statutes governing the duties of both the Attorney General and the district attorney, stated,
In short, although district attorneys (as well as the attorney general) are charged with instituting and prosecuting criminal and civil actions on behalf of the State, the district attorney has pointed to no rule or statute that permits a district attorney, in the exercise of those duties, to disregard the direction, control, and instruction of the attorney general in such cases. Where, as here, the attorney general clearly directs and instructs that litigation on behalf of the State be dismissed, his instructions in that regard take precedence over a district attorney's desire to proceed with the action.
Because the court determined that the Attorney General had a right to dismiss the action and that the trial court had denied him that right, the petition for mandamus seeking to dismiss the case was appropriate and was granted.
Public Entities May Use Contingency-Fee Lawyers
County of Santa Clara v. Superior Court, No. S163681 (Cal. July 26, 2010)In the 1985 Clancy case, the California Supreme Court held that a public entity could not hire attorneys on a contingency fee basis to prosecute public nuisance cases, because attorneys pursuing such cases must be “absolutely neutral” and should not have a financial stake in cases brought on behalf of the public. Several California cities and counties brought public nuisance cases against manufacturers of lead paint, and hired outside counsel on a contingency fee basis. The manufacturers moved to dismiss on the grounds that Clancy precluded the payment of contingency fees. The trial court agreed. The appellate court held that “Clancy does not bar all contingent-fee agreements with private counsel in public-nuisance abatement actions, but only those in which private attorneys appear in place of, rather than with and under the supervision of, government attorneys.” The parties appealed to the state Supreme Court.
The California Supreme Court first analyzed its Clancy decision. In that case, the city of Corona wanted to shut down a bookstore that sold sexually oriented material. The city passed an ordinance defining a public nuisance to include any “place of business in the City . . . in which obscene publications constitute all of the stock in trade, or a principal part thereof.” The city also entered into an employment contract with Clancy, an attorney, to bring nuisance abatement actions pursuant to the statute. He was paid $60 per hour, but only $30 per hour for any case in which the City did not prevail or prevailed but was not awarded attorneys’ fees. Because the public nuisance suit in Clancy involved a delicate balancing of the interests of the landowner in use of his land, the city in protection of its citizens, and both the landowner and the public in the availability of the material at issue, the court held that the rules applicable to prosecutors should apply. The court concluded that anyone acting on behalf of a public entity in these circumstances must be absolutely neutral and that the difference in hourly rates would tip the balance for the attorney representing the public entity.
Turning to the present case, the court stated, “In the present case, both the types of remedies sought and the types of interests implicated differ significantly from those involved in Clancy and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors is unwarranted.” The court distinguished “ordinary civil cases, [where] we do not require neutrality when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests.” In this case, because neither a “liberty interest nor the right of an existing business to continued operation is threatened by the present prosecution,” the case is closer to an ordinary civil case. The court concluded, “retention of private counsel on a contingent-fee basis is permissible in such cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.” The court further explained the requirements in such cases:
[A]lthough the principles of heightened neutrality do not categorically bar the retention of contingent-fee counsel to assist public entities in the prosecution of public-nuisance abatement actions, those principles do mandate that all critical discretionary decisions ultimately must be made by the public entities’ government attorneys rather than by private counsel — in other words, neutral government attorneys must retain and exercise the requisite control and supervision over both the conduct of private attorneys and the overall prosecution of the case.
After providing specific examples of contractual language that would be sufficient to illustrate “control” by government attorneys, the court examined the specific contracts at issue and determined that they did not fully satisfy the standards set out by the court. The court reversed the court of appeals and remanded the case, noting that the public entities could cure the problem by entering into new contracts with their outside counsel.
Supreme Court Reverses Attorney General Disqualification
People v. Waterstone, No. 140775 (Mich., June 4, 2010)The Michigan Supreme Court addressed a case that has generated many opinions on the necessity for disqualification of the Attorney General in a criminal case. The facts were described in detail in the March 30, 2010 NAAGazette (http://www.naag.org/decisions-affecting-the-powers-and-duties-of-state-attorneys-general1.php). The district court did not disqualify the Attorney General from prosecuting the case; the court of appeals did disqualify the Attorney General. In a single page opinion, the Michigan Supreme Court held,
While recognizing that the Attorney General is subject to the rules of professional conduct, we hold that disqualification is not required in this case because accommodation of his unique constitutional and statutory status will not infringe on the defendant’s right to a fair prosecution . . . The Attorney General’s unique status “requires accommodation,” . . . , and such accommodation is particularly apt where no evidence has been presented of any prejudice that would be suffered by the defendant.
In dissent, Justice Young stated, “I am extraordinarily troubled by the majority’s decision merely to reverse the decision of the Court of Appeals without articulating a clear and definite rule of law. The bench and bar—not to mention current and future clients of the Attorney General—deserve to know what ethical principles apply when, as here, the Attorney General represents an individual in a matter and then chooses to prosecute that person concerning the very conduct involved in its initial representation.”
Attorney General Has Independent Authority to Pursue Breach of Fiduciary Duty Claim
Lifespan Corporation v. New England Medical Center, Inc., 2010 U.S. Dist. LEXIS 74659 (D.R.I. July 20, 2010)In a dispute between a healthcare system (Lifespan) and one of its former hospitals (New England Medical Center--NEMC) over the terms of their separation, NEMC alleged breach of fiduciary duty, unjust enrichment, and unfair business practices. The Massachusetts Attorney General intervened on the NEMC’s side and joined most of the counterclaims against Lifespan. In the course of granting summary judgment to NEMC on the breach of fiduciary duty claims, the court addressed Lifespan’s argument that the Attorney General did not have independent standing to assert the breach of fiduciary duty claim. The court stated, "[t]he Attorney General has both a common-law duty and a specific statutory mandate to protect the public interest and enforce public rights" in the administration of non-profit organizations. . . . "This special status as the representative of the public constitutes a supplement to, rather than a replacement for, the trustees acting in the name of the nonprofit corporation to vindicate its rights." Thus, the Attorney General has standing to assert her breach of fiduciary duty claim [even if NEMC released that claim].”
Attorney General Outside Counsel Contracts Are Valid
Pickering v. Langston Law Firm, No. 251-07-1258 (Chancery Ct., Hinds Cty, Miss., Feb. 11, 2010)In a pair of cases in state District Court, the Mississippi Attorney General’s ability to enter into employment and payment agreements with outside counsel was upheld. In Pickering v. Langston Law Firm, No. 251-07-1258 (Chancery Ct., Hinds Cty, Miss., Feb. 11, 2010), the court upheld the Attorney General’s arrangement with outside counsel whereby they would negotiate their attorneys’ fees with the defendant independently of the settlement. The state achieved a $107 million settlement, and the outside counsel then negotiated a payment of $14 million in attorneys’ fees directly from the defendants. The state auditor challenged the payment of the attorneys’ fees, and the Attorney General moved for summary judgment. The state auditor argued that Miss. Code §7-5-7 required that attorneys hired by the Attorney General must be paid “out of the attorney general's contingent fund, or out of any other funds appropriated to the attorney general's office.” The court held that because the money had never been in the state’s possession, but was rather a direct payment from the defendant to outside counsel, §7-5-7 was inapplicable.
Hood ex rel. Mississippi v. Microsoft, No. C2004-1542 (Chancery Ct. Hinds Cty., Miss., April 28, 2010)
In Hood ex rel. Mississippi v. Microsoft, , the Attorney General retained outside counsel on a contingency fee basis. The state reached a settlement for $40 million in cash, $60 million in product vouchers, and $10 million in attorneys’ fees and costs. The state auditor challenged the award of attorneys’ fees, on the grounds that such an award must come “out of the attorney general's contingent fund, or out of any other funds appropriated to the attorney general's office.” The court distinguished between appropriated funds and those from the “attorney general’s contingent fund,” which is not defined in the statute. Nor does the statute provide any standards for establishment of such a contingent fund. The state’s claims were brought pursuant to the state’s Consumer Protection Act, which allows recovery of “reasonable attorneys’ fees.” The court therefore concluded that the attorneys’ fees paid in this case formed a “contingent fund” as described by the statute. The statutes also authorize the Attorney General to hire outside counsel and to pay them “reasonable compensation” which is not to “exceed recognized bar rates for similar services.” After analyzing the work done by outside counsel, the court concluded that the fee award was reasonable and did not exceed recognized bar rates for similar services. The court dismissed the state auditor’s claim and awarded the attorneys’ fees to outside counsel.
Sovereign Immunity Applies to Attorney General in FOIA Claim
McBurney v. Cuccinelli, 616 F.3d 393 (4th Cir. 2010)Virginia’sFreedom of Information Act (VFOIA) provides “Except as otherwise specifically provided by law, all public records shall be open to inspection and copying by any citizens of the Commonwealth . . .” Three plaintiffs, who were not citizens of Virginia and had been denied information that they requested pursuant to the VFOIA, sued the Attorney General and the heads of the agencies who denied their requests, alleging violation of the dormant commerce clause. The federal district court held that the Attorney General was immune from suit under the Eleventh Amendment. The Court of Appeals for the Fourth Circuit affirmed the holding.
The Court of Appeals noted that Ex parte Young, 209 U.S. 123, (1908), permits a federal court to issue prospective, injunctive relief against a state officer to prevent ongoing violations of federal law, on the rationale that such a suit is not a suit against the state for purposes of the Eleventh Amendment. However, the court must find a "special relation" between the officer being sued and the challenged statute to apply Ex parte Young. The appellants argued that the "special relation" requirement was met, because “(1) the Attorney General has a specific statutory duty to enforce the VFOIA against state officials; and (2) even if he does not, his authority to issue official opinions and advice creates the requisite enforcement connection.” The Court of Appeals found that the Attorney General does not have a specific statutory duty to enforce the statute. Instead, the statute is to be enforced by the “Attorney for the Commonwealth,” which means the elected local prosecutor, known as the Commonwealth’s attorney. Nor did the court find that the Attorney General’s official opinions and advice created the required special relation. The court noted that the Attorney General “has not issued any advisory opinions specifically directing state agencies to deny VFOIA requests by non-citizens, nor has he participated in the decision-making process of those agencies.” (footnotes omitted). Finally, the court held that Ex parte Young does not apply because the Attorney General had not acted or threatened to act in a way that harmed the appellants, because he had not denied the VFOIA requests, nor had he advised the state agencies to do so.
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