Decisions Affecting the Powers and Duties of Attorneys General
The NAGTRI Journal is a new publication dedicated solely to the legal analysis and research of matters relevant to the attorney general community. The October issue marks the first of a quarterly publication circulated for free.
The Court is scheduled to hear at least six cases in the upcoming term that will undoubtedly shape the scope of federal and state relations and power. Dan Schweitzer, director and chief counsel of the NAAG Center for Supreme Court Advocacy, provides an overview of past decisions and key factors that could determine the outcome of these cases.
This article reports on recent decisions across the country affecting the powers and duties of state attorneys general.
NAGTRI held its annual International Fellows Program this summer hosting 23 attorneys from around the world. This year's theme of Innovative Prosecutorial and Crime Fighting Strategies allowed the participants to share ideas and experiences as they wrote joint papers addressing crime reduction. Their papers are now available.
Emily Myers, NAAG Antitrust Counsel and Powers and Duties Counsel
The following cases affecting the powers and duties of state attorneys general were decided in the last several months.
Representation of State Agencies by Attorney General
Garau v. Department of Industrial Relations, 2015 Ca. App. Unpub. LEXIS 3020 (Cal. Ct. App. April 30, 2015)
Plaintiff, an employee of the state Department of Industrial Relations (DIR), sued DIR for violations of the Fair Housing and Employment Act and breach of contract. Attorneys from the DIR Legal Unit answered the complaint. Plaintiff sought to disqualify the Legal Unit on the grounds that state statutes require that the attorney general represent DIR and that the Legal Unit had conflicts of interest precluding it from representing the defendants. The attorney general had authorized the Legal Unit to represent the defendants. The trial court denied plaintiff’s motion and plaintiff appealed.
California statutes provide that “the attorney general has charge, as attorney, of all legal matters in which the State is interested” and “shall … prosecute or defend all causes to which the State, or any State officer is a party in his or her official capacity.” Only a few specified agencies may employ legal counsel other than the attorney general “in any matter in which the agency is interested or is a party." Although this is the default rule, the court concluded that there is statutory authority for the attorney general to give delegate representation, in writing, to another person or entity. The attorney general did so in this case, and the Legal Unit’s representation of DIR was proper. The fact that the delegation did not occur at the outset of the case does not prevent the attorney general from delegating this authority.
The plaintiff alleged that the Legal Unit lawyers had a conflict of interest because she had been formerly employed at a unit within DIR. The court found that the Legal Unit’s attorneys “had no personal knowledge of any incidents involved in this case.” Therefore, the plaintiff did not have any “confidential or fiduciary relationship” with the Legal Unit, and, thus, no attorney-client relationship existed. Even if the plaintiff had standing to disqualify counsel, the court found that there were no grounds for such disqualification. The plaintiff noted that the attorney general has a conflict with DIR and the state because she has been adverse to them in other proceedings, but the court held that those proceedings had nothing to do with this case, and disqualification was not appropriate.
Authority of Attorney General in Qui Tam Action
People ex rel. Schad, Diamond and Shedden, P.C. v. QVC, Inc.2015 IL App (1st) 132999 (Ill. App. 1st Dist. 2015).
The Illinois Court of Appeals reaffirmed the common law powers of the attorney general in the context of a qui tam proceeding that the attorney general dismissed. A law firm filed a qui tam action against online retailer QVC, alleging that it had improperly failed to collect sales tax on shipping and handling charges. QVC began collecting sales tax on its shipping and handling charges, but did not collect taxes for sales made earlier. The state intervened in the case and moved to dismiss the case. The law firm alleged that the state had made a deal with QVC and sought discovery of communications between the state and QVC. The court allowed the deposition of the QVC executive responsible for the decision to start collecting taxes on the shipping and handling charges, who denied there was any communication with the state. The court dismissed the action and the law firm appealed.
The court of appeals described the attorney general’s role in qui tam proceedings. The state may intervene, but, if the state decides to dismiss the action, it may do so notwithstanding the objections of the initiator of the suit, provided that the initiator has an opportunity to be heard on the motion. Citing its earlier decision in State ex rel. Beeler, Schad & Diamond v. Burlington Coat Factory Warehouse Corp., 369 Ill. App. 3d 507, 860 N.E.2d 423, 307 Ill. Dec. 769 (2006), the court held:
At its core, the issue here is whether the decision to proceed with a qui tam action should be made by the executive branch or by the judicial branch. Only the Attorney General is empowered to represent the state in litigation in which it is the real party in interest. … Legislation can add to the powers of the Attorney General but it cannot reduce the Attorney General’s common law authority to direct the legal affairs of the state. … If we interpret section 4(c)(2)(A) of the Act to require judicial review of the Attorney General’s decision to dismiss an action, … we give the court veto power over the state’s decision to dismiss, essentially usurping the Attorney General’s power to direct the legal affairs of the state and putting that power into the hands of the court.
Relationship Between Governor and Attorney General With Regard to Representation of State Agencies.
Opinion of the Justices, 2015 Me 27 (Me. S. Ct., March 10, 2015).
The Maine Department of Health and Human Services (DHHS) applied for an amendment to the state’s Medicaid plan in 2012. The state submitted a request to the federal government and sought to speed the federal government’s action by filing an action in the Court of Appeals for the 1st Circuit. A new attorney general was then elected by the Maine legislature. The new attorney general refused to provide further representation to Maine DHHS in connection with its administrative proceeding before the federal government. Maine DHHS’s application for an amendment was denied and Maine DHHS requested legal representation from the attorney general in connection with an appeal of that decision. The attorney general refused representation but authorized retention of outside counsel, with a cap on legal fees. Maine DHHS filed an appeal, using outside counsel, and the attorney general intervened in the case to oppose Maine DHHS. The appeal was denied and Maine DHHS wished to petition for certiorari to the state Supreme Court. The attorney general sought billing records and an estimate of the cost of petitioning for certioriari. The attorney general then authorized outside counsel for that petition.
Maine law permits the governor to request an advisory opinion from the individual justices of Maine’s Supreme Judicial Court upon a “solemn occasion” presenting “important questions of law.” The governor sent a letter requesting an Opinion of the Justices on two questions: 1) “If the Attorney General refuses to represent a State agency . . . in a lawsuit, must the Executive Branch still obtain the Attorney General’s permission to hire outside counsel to represent the agency in the suit?” And 2) “If the Attorney General intervenes to oppose a State agency in a lawsuit, must the Executive Branch still allow the Attorney General to ‘direct’ that litigation by limiting the duration of representation or capping the fees that may be paid?”
The court first discussed whether the governor’s questions presented a “solemn occasion” which would allow the court to provide an advisory opinion. The court declined to answer the first question, concluding that it was no “solemn occasion” because there was no exigency in the circumstances. The court held:
[G]iven the current structure of Maine’s government, there is always the potential for differing positions in litigation. We are, however, unaware of any occasion upon which the Executive Branch—either the Governor or any state agency—has been denied approval to employ private counsel when the Attorney General declined to provide representation. Specifically, the information provided by the parties indicates that there has been no occasion on which this Attorney General has denied a request to obtain private counsel submitted by this Governor or the Executive Branch under his authority.
With respect to the second question, the court found that there was a solemn occasion appropriate for an advisory opinion. The court limited its review only to situations in which the attorney general intervenes to oppose a state agency in a lawsuit. The court found that this question was appropriate for an advisory opinion because the attorney general had sought information on billing and time estimates before approving outside counsel and that could have been understood by the executive branch as directing their litigation strategy.
Turning to that question, the court noted that there is no question as to whether the attorney general may oppose the executive branch in litigation. The court held, however, that “once the Attorney General approves the employment of private counsel for a state entity and opposes that entity in litigation, the Attorney General is no longer appearing for the state entity and therefore is no longer authorized to direct or manage that entity’s litigation or strategy.” Specifically, “Simply put, it is our opinion that the Attorney General cannot formally oppose the Executive Branch’s litigation position and, at the same time, direct the Executive Branch’s litigation through fiscal or other periodic review of the Executive Branch’s private counsel.”
Attorney General’s Authority Over Charities
Harvard Climate Justice Coalition et al. v. President and Fellows of Harvard College, 2015 Mass. Super. LEXIS 30 (Mass. Super. Mar. 17, 2015).
A group of students at Harvard University challenged the investment of Harvard’s endowment in stocks of companies that produce fossil fuels. The students alleged mismanagement of the funds given to the University to further its charitable purposes. The attorney general moved to dismiss the complaint on the grounds that plaintiffs did not have standing.
The court found that “authority to enforce the application of charitable funds in Massachusetts normally rests with the attorney general.” There is one exception to this rule, where private citizens can assert claims that a public charity is mismanaging assets, “but only where the plaintiff asserts interests in such organizations which are distinct from those of the general public.” The court described the case in which this right was recognized. In that case, a family who had donated land for a church sought to recover the land when the diocese decided to close the church. The court held that this interest was “specific and personal enough to give them standing” to challenge the church’s use of the assets. In the present case, however, the plaintiffs have no interests different from any other students at Harvard, and the plaintiffs’ status as Harvard students did not “endow them with personal rights specific to them that would give them standing to charge Harvard with mismanagement of its charitable assets.” In discussing the attorney general’s authority over charities, the court cited approvingly language from an early case: “Nor can it be doubted that such a duty can be more satisfactorily performed by one acting under official responsibility [that is, the Attorney General] than by individuals, however honorable their character and motives may be.”
Special Prosecutor May Be Appointed to Investigate Attorney General
In re: The Thirty-Fifth Statewide Investigating Grand Jury; Petition of Attorney General, Kathleen G. Kane, 2015 Pa. LEXIS 688 (Pa. Mar. 31, 2015)
The supervising judge of a statewide grand jury determined that an investigation was warranted into potential breaches of grand jury secrecy and appointed a special prosecutor to investigate and prosecute any violations. The grand jury eventually recommended filing of criminal charges against the attorney general. The attorney general filed a quo warranto action with the state Supreme Court seeking to quash the appointment of the special prosecutor. The attorney general argued that there is no Pennsylvania statute that authorizes appointment of a special prosecutor for an investigating grand jury, and, under the state’s Investigating Grand Jury Act, only local district attorneys, the attorney general or the attorney general’s designee are authorized to serve as “attorney for the commonwealth.” She also argued that, under the Commonwealth Attorneys Act, only the attorney general may convene and conduct a statewide investigating grand jury. Thus, the appointment of a special prosecutor by the judicial branch was a violation of separation of powers, and such appointments had been strongly disapproved in the past.
The special prosecutor argued that a grand jury supervising judge has plenary power to supervise the proceedings of the investigating grand jury and appoint a special prosecutor and pointed to Supreme Court decisions supporting a “strong judicial hand” supervising grand jury proceedings, particularly in situations where there is an alleged breach of grand jury secrecy.
The court concluded that the special prosecutor’s appointment was valid. First, the court noted that the attorney general’s appearance and testimony before the grand jury did not waive her right to challenge the special prosecutor’s authority. Government employees do not need to suffer contempt in order to preserve a challenge to a subpoena in a grand jury proceeding. Turning to the substance of the case, the court noted that the Investigating Grand Jury Act gives supervising judges the “substantial responsibility of maintaining the required confidentiality of grand jury proceedings, on pain of contempt sanctions.” In addition, supervising judges “enjoy general powers required for or incidental to the exercise of jurisdiction.” Based on these powers, the court concluded that the appointment of a special prosecutor in this situation was authorized. The court noted that the special prosecutor had submitted the grand jury presentment to the elected district attorney. However, since the question was not before the court on the ability of the special prosecutor to actually prosecute the criminal case, the court did not state an opinion on this issue.
With respect to separation of powers concerns, the court held that a court must have an independent role in defending its own authority, particularly with regard to contempt. The court stated, “although we recognize that there are legitimate concerns arising out of a judicial appointment of a special prosecutor, we follow the approach of the United States Supreme Court and the many other jurisdictions which have found such appointments proper as an essential means to vindicate the courts’ own authority.”
In dissent, Justice Todd expressed concern about the separation of powers in this case, stating that the majority’s opinion vests “the traditionally separate roles of advocate prosecutor and neutral supervising judge in one branch of government.” She would instead support appointment of a special master in this situation, which would “preserve and fully vindicate the integrity of the confidentiality of grand jury proceedings and accords respect to the enumerated powers of our sister branches of government.” She characterized the appointment of a special prosecutor, who not only may conduct an inquiry, but may use the grand jury to obtain a presentment and prosecute, as unprecedented.
Attorney General’s Authority Under Consumer Protection Law
South Carolina ex rel. Wilson v. Ortho McNeil Janssen Pharmaceuticals, Inc., 2015 S.C. LEXIS 83 (S.C. Feb. 25, 2015).
The South Carolina attorney general filed suit against Janssen, a pharmaceutical manufacturer, alleging that the company engaged in deceptive acts and practices in the marketing of its antipsychotic drug, Risperdal. The state argued that Janssen had failed to reveal that Risperdal had a higher risk of causing diabetes than some other anti-psychotic drugs. The jury held for the state, finding that Janssen’s actions were willful violations of the state’s Unfair Trade Practices Act (SCUTPA). The court issued an order assessing civil penalties of $327 million. Janssen appealed.
Among other issues, Janssen argued that the state failed to show that Janssen’s unfair and deceptive conduct had an adverse impact within South Carolina. The court rejected this argument, noting that there is no injury-in-fact showing required in an action brought by the attorney general. Instead, the law allows the attorney general to recover $5,000 per violation for willful acts. The state must prove only that the defendant’s actions had the tendency to deceive, not that there was actual deception or adverse impact on the marketplace.
Janssen also argued that the civil fine violated its First Amendment right to free speech. The court held that the jury had found Janssen’s speech unfair and deceptive. Because commercial speech is not protected by the First Amendment if it concerns unlawful activity or is misleading, Janssen’s speech here was not protected.
Janssen also challenged the $325 million in penalties. The SCUTPA allows the attorney general to recover $5,000 per violation of the statute. The attorney general argued that each sample box with a deceptive label, each deceptive letter to a doctor, and each follow-up sales call by a Janssen representative was a separate SCUTPA violation. Janssen argued that the penalty was excessive. The appellate court agreed with the state that Janssen’s deception was substantial and longstanding. However, because the medical community had been alerted to the risks of diabetes from anti-psychotic drugs in general, the court found that the deception had little impact on prescribing physicians. After reducing the time period and the penalty amount per occurrence (but agreeing with the trial court as to the number of occurrences), the court awarded a civil penalty of $136 million for the state’s claims. Addressing Janssen’s claims that the penalty was an excessive fine under the Eighth Amendment, the court stated, “the penalty awards per violation are within the range set by the legislature in enacting SCUTPA. Accordingly, the penalty award is not grossly disproportionate to Janssen’s pattern of unfair and deceptive behavior, and, thus, we hold that the award does not violate the Excessive Fines Clause of the South Carolina or the United States Constitution.”
Finally, the court specifically addressed an amicus brief from the South Carolina Chamber of Commerce which characterized the penalties as “Overt hostility toward business.” The court stated,
[T]he implication is that South Carolina stands alone in arbitrarily singling-out Janssen for what amounts to nothing more than an aggressive marketing strategy. That is simply not the case. Because of its deceptive conduct in the marketing of Risperdal, Janssen has been the subject of litigation throughout the country…. When viewed objectively, Janssen over the course of many years consciously engaged in lies and deception in the marketing of Risperdal. Thus, the suggestion that the Attorney General of South Carolina stands alone in pursuing amorphous and subjective claims against Janssen is without merit. Surely the Chamber desires a legal system that honors the rule of law and one which does not insulate businesses from liability for unfair and deceptive practices.
State Seeking Civil Penalties Is Not Claiming Damages Under State Medical Malpractice Statute
Texas v. Emeritus Corp. 2015 Tex. App. LEXIS 2822 (March 26, 2015).
A dementia patient at an assisted living facility run by the defendant was unsupervised and left the facility through a door whose alarm had been broken for a year. The patient was found dead shortly thereafter. The attorney general sued the defendant, seeking civil penalties, injunctive relief and attorneys’ fees under the state’s Deceptive Trade Practices Act (DTPA) (on the grounds that the defendant misrepresented the services being offered) and the Assisted Living Facility Licensing Act (ALFLA) (on the grounds that the defendant violated the minimum standards for assisted living facilities). The state sought penalties for up to $10,000 for each day a violation of ALFLA occurred and $20,000 per violation of DTPA. The defendant moved to dismiss the case on the grounds that it was a health care liability claim under the Texas Medical Liability Act (TMLA) and that the state had failed to file an expert report as required by that act. The trial court dismissed the case and the attorney general appealed.
After analyzing each of the applicable statutes, the court concluded that “the State, acting in its sovereign capacity seeking civil penalties, rather than damages, is not a claimant subject to the expert report requirement under the TMLA, and the TMLA does not apply to the case.” The court explained that its conclusion was supported by the different aims of the statutes at issue. The DTPA and the ALFLA are designed to protect consumers and residents of assisted living facilities, and “The police power is a grant of authority from the people to their governmental agents for the protection of the health, the safety, the comfort, and the welfare of the public.” The TMLA, on the other hand, was designed to “make health care in Texas more available and less expensive by reducing the cost of health care liability claims.” The court also noted that the substantive and procedural requirements of the statutes are very different, from the limitations period to causation. The court concluded, “Stated otherwise, the imposition of the TMLA’s requirements on the State acting in its sovereign capacity would significantly undermine the State’s legislatively imposed duties under other statutory schemes to protect its citizens.”
Representation of State Agencies
Burnett v. Department of Corrections, 2015 Wash. App. LEXIS 786 (Wash. Ct. App. Div. 3, Apr. 16, 2015).
An employee of a state college taught a class at the state penitentiary and was injured at the penitentiary when a guard accidentally hit her with a metal door. She was paid workers’ compensation benefits by the Washington Department of Labor and Industry (DLI). Washington statutes authorize actions against third person tortfeasors for one who receives workers’ compensation. The statutes provides, “If a third person, not in a worker’s same employ, is or may become liable to pay damages on account of a worker’s injury for which benefits and compensation are provided …the injured worker … may elect to seek damages from the third person.” If the worker does not seek damages, DLI may file a claim on the worker’s behalf. In this case, the worker did not pursue a claim and DLI hired an outside attorney and filed a claim against the Department of Corrections (DOC). DOC, represented by an assistant attorney general, moved for summary judgment on the grounds that the state college where the worker was employed and the DOC are branches of the same entity, so the DOC guard and the injured worker were employed by the same employer. The district court agreed and DLI and the injured worker appealed. An assistant attorney general appeared for DLI and moved to dismiss the appeal and to disqualify the private attorney retained by DLI. The injured worker objected and moved to disqualify the Attorney General’s Office based on a conflict.
The court of appeals first held that the attorney general had never claimed to represent the injured worker, but rather, only DLI. Turning to the potential conflict between representing DLI and DOC, the court found that the attorney general is authorized by numerous statutes to represent state agencies in litigation and stated,
A private law firm would be precluded from representing competing interests in the same lawsuit, such as the interests held here by DLI and DOC. … Ethical rules and case law treat the State Attorney General’s Office differently, however. To the extent that the attorney general is not a party to an action or personally interested in a private capacity, the attorney general may represent opposing state agencies in a dispute.
The court did not decide the case on this basis but, rather, on the grounds that the injured employee does not have standing to assert a conflict of interest that does not involve her. The conflict here, if any, is between the state agencies. Only a party who has been represented by the conflicted attorney has standing. The court dismissed the appeal.