The National Attorneys General Training & Research Institute
Recent Powers and Duties Decisions
Emily Myers, NAAG Powers and Duties Chief Counsel and NAGTRI Chief Editor
This is another in our series reporting on recent decisions from across the country affecting the powers and duties of state and territory attorneys general.
Attorney General, Not Local Prosecutors, Represents State Citizens
The Orange County district attorney sued several pharmaceutical companies alleging violations of California’s Unfair Competition law (UCL), Cal. Bus. & Prof. Code § 17200 et seq. The District Attorney sought injunctive relief, penalties and restitution. Citing California caselaw, the defendants sought to dismiss portions of the complaint. They argued that “a district attorney's enforcement authority under the UCL was limited to the geographic boundaries of the county for which the district attorney was elected.” In this case, the district attorney was seeking recovery for overcharges paid by California users of the drug at issue, insurers and government payors. The court denied the defendants’ motion. The district court held that earlier California caselaw had addressed only whether the district attorney could bind the attorney general in a settlement relating to misconduct covering several counties. In this case, the court held that if there was a settlement, the attorney general would be permitted to appear and be heard. The defendants appealed.
The court of appeals held that the district attorney could not enforce the statutes outside the county in which he or she operated. The court first described the respective roles of the attorney general and the district attorneys. The court noted that the California Constitution makes the attorney general “the chief legal officer of the state.” The state constitution also provides that the attorney general has “direct supervision over every district attorney . . . in all matters pertaining to the duties of their respective offices.” The district attorney, on the other hand, represents the state when prosecuting criminal violations of state law, and acts as a state officer in those cases, but is designated by the state constitution as a county officer. The district attorney is elected by the county voters, has a salary set by the county board of supervisors, and the county has the authority to supervise the district attorney’s conduct and use of public funds. The court held, consistent with prior caselaw, that the “district attorney has no authority to prosecute civil actions absent specific legislative authorization.” The court held,
[I]n civil matters, as in criminal matters, a district attorney lacks authority to function outside his or her county jurisdiction absent the consent of the district attorney of the other county. Even when a district attorney acts in a matter within the jurisdiction of the superior court, he or she is subject to oversight and direct supervision by the Attorney General, the state's chief law enforcement officer obligated to ensure the uniform and adequate enforcement of state law.
The attorney general and the California District Attorneys Association filed amicus briefs arguing that prior caselaw specifically prohibits the right of the district attorney to surrender the powers of the attorney general and his fellow district attorneys to commence, when appropriate, actions in other counties under the UCL. The appellate court agreed, holding that, although the UCL expressly conferred standing on district attorneys to bring civil law enforcement action under UCL in the people’s name, “that grant of standing, as in criminal actions, cannot reasonably or constitutionally be interpreted as conferring statewide authority or jurisdiction to recover such monetary remedies beyond the county the district attorney serves, or restricting the attorney general's constitutional power to obtain relief on behalf of the entire state.” The court of appeals noted that such a grant of authority “would permit the Legislature to usurp the attorney general's constitutional authority as the state's chief law officer, and allow the district attorney of one county to impermissibly compromise and bind the attorney general and the district attorneys of other counties.”
The court of appeals also agreed with the attorney general that the structure of the UCL’s penalty provisions argues against statewide jurisdiction for the district attorneys. The statute provides that the attorney general must deposit half of any collected civil penalties in the state’s general fund and half in the county in which the judgment is entered. District attorneys, on the other hand, must deposit collected civil penalties in the county’s general fund. The court stated,
The Legislature has manifested its understanding that a district attorney's redress is restricted to local violations, benefitting the electorate to which the district attorney is accountable. There is no indication the Legislature sought to write the UCL so broadly as to permit county district attorneys to collect penalties from violations occurring outside their county boundaries for their own county treasurers.
In response to the district attorney’s argument that this result would allow defendants to escape full liability for illegal conduct, the court also noted that the district attorney could enter into agreements with the attorney general or with other district attorneys to engage in joint prosecution if the district attorney believes the public would benefit from action outside his or her jurisdiction. Finally, the court held that the district attorney’s interpretation would “incentivize public prosecutors, acting in their respective county’s financial self-interest, to withhold pertinent information from their sister agencies” then race to the courthouse “in hopes of obtaining all of the civil penalties that would otherwise be deposited in those other county treasuries.” Abbott Laboratories v. Superior Court of Orange County, No. 3072577 (Cal. Ct. App. 4th Dist. May 31, 2018).
Local Prosecutor Represents State For Purposes of Diversity Jurisdiction
In a decision directly contradicting Abbott Laboratories (above), a federal district court remanded an action brought against Facebook by an Illinois state’s attorney, concluding that she represented the state for purposes of diversity jurisdiction.
Facebook sought to remove a consumer protection case filed by the state’s attorney for Cook County on diversity grounds, arguing that the state of Illinois was not the real party in interest in the case because, among other reasons, the district attorney, rather than the attorney general, had brought the action. The district court held that “the overall test is whether the government official or entity’s lawsuit would primarily vindicate state interests and primarily obtain relief for the state, rather than serving primarily parochial interests and obtaining parochial relief.” Facebook then argued that this reasoning only applies when the case is brought by the state’s chief legal officer, not by a subordinate government official.
The court noted that Facebook is confusing two separate issues: 1) is the state the real party in interest, a question of federal law; and 2) who has the authority to represent the state in a lawsuit, a question of state law. The court held that if the subordinate state official is authorized to seek the relief for the state, then the entity bringing the case has no effect on whether the state is the real party in interest. Facebook “contends the Illinois Consumer Fraud Act should be construed as limiting the scope of actions by State’s Attorneys to the jurisdictions they represent, such that a lawsuit by a State’s Attorney may only target conduct that occurred within the county, and may only seek relief for the county or the people within it." The court held that the plain language of the state’s Consumer Fraud Act does not distinguish between the attorney general and the state’s attorney, providing that either may seek injunctive relief, penalties, and restitution in the name of the people of the state. The court described this as consistent with Illinois’ statutory scheme, because state’s attorneys are required by the statute to keep the attorney general apprised of any suit they file under the Consumer Fraud Act. It is the responsibility of the attorney general to oversee the state’s attorneys. “If a State’s Attorney brings a statewide action and the attorney general disagrees with its scope, its timing, the relief it seeks, or the way it’s being pursued, she can simply intervene and take over the case.”
The district court explicitly disagreed with the California appellate court decision in Abbott Labs (discussed above). Describing the Abbott decision as wrong, the federal district court viewed “a system of multiple prosecutors empowered to enforce civil fraud laws” as efficient and able to avoid duplication, as well as better protecting the rights of consumers. If a state’s attorney brings a case and is unsuccessful, other state’s attorneys and the attorney general will likely be barred by claim preclusion from bringing similar claims. On the other hand, the federal district court stated,
[I]magine that a county prosecutor brings an action against the wrongdoer and prevails. If the suit could cover only conduct within the county, or if relief were limited to the jurisdictional boundaries of the county, then only the residents of that county would be protected, and only the fraud that affected the county would be punished, despite the fraud’s effects being felt statewide. For people from the other 101 counties in Illinois, either their rights would not be vindicated or each county prosecutor would need to bring a copycat action. Such a system does not seem sensible from anyone’s standpoint, including the defendant’s.
The court next addressed Facebook’s argument that Illinois is not the real party in interest because civil penalties recovered by the state’s attorney will go to the county treasury rather than to the state. The court described the purpose of civil penalties as “not to compensate a victim but to punish the wrongdoer and deter future wrongdoing by others.” From the standpoint of punishment and deterrence, it does not matter where the penalties end up. The statute is designed to incentivize state’s attorneys to bring such actions.
The court concluded that the state was the real party in interest in the state’s attorney’s suit because it seeks civil penalties that private parties cannot obtain under the statute, and statewide injunctive relief to prevent future violations of the privacy rights of a large group of Illinois residents, a matter of statewide concern. The court held, “Overall, this is the embodiment of a state enforcement action brought in the public interest. Therefore, Illinois is the real party in interest for diversity purposes, which means there is no diversity jurisdiction and the action must be remanded. . .” In re: Facebook, Inc., Consumer Privacy User Profile Litigation, MDL No. 2843 (N.D.Cal. Jan. 1, 2019).
Attorney General Disqualification Standard
In one portion of a long-running dispute over the validity of gaming device regulations between the Attorney General of Guam and the Guam Department of Revenue & Taxation (DRT), the attorney general appealed a court order requiring her office to pay for DRT’s independent counsel in the litigation. DRT and the Governor of Guam cross-appealed the court’s denial of their motion to disqualify the attorney general’s office from the case.
In 2008, DRT issued licenses to gaming device owners, departing from a prior position developed after consultation with the attorney general. Two court cases were filed, one by the attorney general seeking that the court order DRT to revoke the licenses. A deputy attorney general appeared on the record as representing both the attorney general and DRT. Another case was brought by a private party, seeking a writ of mandamus directing issuance of the licenses. DRT was represented by the attorney general after executing a waiver of any conflicts. Appeals from both cases were heard in a consolidated proceeding, during which the attorney general and DRT had a unified position. The parties dismissed those proceedings and the attorney general filed a declaratory judgment action. In that action, DRT sought to disqualify the attorney general and to require the attorney general to appoint and pay for special counsel for DRT. The trial court did not disqualify the attorney general, but did require the attorney general to pay for DRT’s independent counsel because the attorney general has a duty to represent the executive branch. The parties appealed to the Guam Supreme Court.
DRT argued that the attorney general’s office should be disqualified because an assistant attorney general (now retired) represented DRT in a related action that was dismissed, and that representation creates an “appearance of impropriety” that requires removal of the entire attorney general’s office. The Supreme Court held that the appearance of impropriety standard no longer applies in Guam, since the adoption of new model rules of professional conduct in 2003. The current rules require disqualification only when the attorney’s representation violates or significantly risks violating the rules of professional conduct. This new standard precludes disqualification for potential conflict, rather than for “inevitable and material” conflicts.
Applying that standard, the Supreme Court found that the attorney general is not conflicted in this case. The court first rejected the attorney general’s argument that the Guam Rules of Professional Conduct should be applied flexibly to her office. The court stated, “We recognize that the Attorney General is in a unique position, but also read certain rules as deliberately providing flexibility for government attorneys.” The court then held that no conflict exists in this case as a matter of law, because the attorney general, using her broad common law powers to challenge laws which she believes are unconstitutional, is herself the party in this case. She is not representing a client or person, but suing on her own behalf. Even assuming that the assistant attorney general who represented DRT in the earlier proceeding obtained confidential information, he was permitted to reveal confidential information “to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client.” The court held that is the situation here, so there is no violation, and the attorney general should not be disqualified.
Turning to the question of whether the attorney general must pay for DRT’s independent counsel, the court rejected the attorney general’s argument that such a payment would violate the separation of powers doctrine by invading the executive branch’s internal decision-making. Instead, the court noted that Guam statutes provide that DRT must pay for its attorney of choice when it decides not to, or for whatever reason cannot, use the services of the Principal Guam Territorial Income Tax Attorney or the Attorney General. The attorney general is thus not required to pay for DRT’s independent counsel. Barrett-Anderson v. Camacho, 2018 Guam 20 (Guam 2018).
Attorney General Public Statements Are Not Attorney-Client Communications
The Kentucky legislature enacted a bill making changes to the state’s pension system for public employees. Several public employee unions and the attorney general of Kentucky challenged the legislation on the grounds that the legislature did not properly enact it in accordance with section 46 of the state constitution Section 46 requires that the bill be given a reading on three different days in each legislative chamber (the "three-readings" requirement), and requires that bills that appropriate money or create a debt obtain 51 votes in the House of Representatives. The lower court found that the legislature violated the constitution in enacting the bill and struck it down without analyzing other claims. The legislature appealed. The Supreme Court affirmed the lower court ruling on the three-readings rule and declared the legislation void without addressing the substantive claims of the parties.
The legislature also sought to disqualify the attorney general from the case. The legislature argued that the attorney general provided legal advice to the General Assembly specifically related to the legislation and therefore has a conflict of interest precluding him from suing the legislature, to whom he gave professional advice.
The attorney general sent two letters to the legislature during consideration of the legislation, in which he stated that the legislation would violate the “inviolable contract” between the legislature and state employees regarding their pensions. These letters were issued publicly at the same time they were sent to the legislature. The court held “These communications were plainly designated for public consumption and were not communications between a lawyer and a client. The communications in question expressing the attorney general’s “advice” on the constitutionality of the proposed pension legislation did not create an attorney-client relationship between the legislature and the attorney general. We accordingly conclude that the trial court did not err by failing to disqualify the attorney general from participating in the proceedings.” Bevin v. Beshear, No. 2018 SC 000419 (Ky. Dec. 13, 2018).
Attorney General Disqualification
The director of a public interest group challenged as unconstitutional legislation increasing salaries for state judges. The suit also challenged the creation of the Commission on Legislative, Judicial and Executive Compensation. The trial court dismissed all of the plaintiff’s claims and the plaintiff appealed. In the course of its ruling upholding the trial court’s decision, the appellate court addressed the plaintiff’s argument that the attorney general, who is a defendant in the case, should be disqualified from representing the attorney general’s co-defendants because of a conflict of interest. The appellate court held, “The Attorney General has a statutory duty to represent defendants in this action, who are united in interest . . .” On the other hand, the plaintiff argued that state statutes required the attorney general to represent the plaintiff or intervene on her behalf. The court held, “Executive Law § 63 (1) empowers the Attorney General to prosecute and defend all actions and proceedings in which the state is interested — it does not authorize the Attorney General to represent private citizens. Similarly, State Finance Law article 7-A contains no provision that requires the Attorney General to prosecute a citizen/taxpayer action commenced by a private citizen or that allows a citizen to compel the Attorney General to provide representation in such actions.” Center for Judicial Accountability, Inc. v. Cuomo, 2018 NY Slip Op 08996 (N.Y. App. Div. Dec. 27, 2018)
Attorney General Representation of State Employees
Plaintiffs were unhappy with the actions of an electric utility contractor who trimmed trees that they believed were on their property. They filed complaints against the contractor with the Arkansas State Board of Licensure for Professional Engineers and Professional Surveyors (ASBL). ASBL dismissed their complaints. Plaintiffs then filed suit against several state agencies, as well as employees of those agencies, members of ASBL, and the state attorney who advised the agencies, each in their individual capacity. The plaintiffs alleged a conspiracy to conceal fraud by the contractor. The district court dismissed their claims and plaintiffs appealed.
In the course of affirming the district court’s opinion, the court of appeals addressed the plaintiffs’ argument that the attorney general cannot represent the individual defendants because that representation would be the prohibited conduct of the private practice of law. The plaintiffs cited Ark. Code Ann. §25-16-701, which provides, “the Attorney General shall not engage in the private practice of law, which shall include, but not be limited to, acting as office counsel, participating in litigation, and accepting retainers." The appellate court pointed out that the following section of the Arkansas Code specifically authorizes the attorney general to represent individual defendants sued for actions taken in the scope of their employment. The statute states, “the Attorney General shall be the attorney for all state officials, departments, institutions, and agencies. Whenever any officer or department, institution, or agency of the state needs the services of an attorney, the matter shall be certified to the Attorney General for attention." Watkins v. Ark. Dept. of Agriculture, 2018 Ark. App. 460 (Ark. App. Oct. 3, 2018)