WV Supreme Court rules for AG in outside hiring cases - WOWK 13 Charleston, Huntington WV News, Weather, Sports

WV Supreme Court rules for AG in outside hiring cases

Posted: Updated:

The West Virginia attorney general has the authority to appoint special assistant attorneys general, the West Virginia Supreme Court recently decided.

Justices filed the opinion June 4 in a case that questioned if the state's previous attorney general had the authority to hire special outside counsel under the West Virginia Consumer Credit and Protection Act and if he could appoint such private counsel to prosecute government civil penalty actions on a contingent fee basis.

In one of the cases, the attorney general initiated an action in March 2012 against GlaxoSmithKline LLC asserting unfair and deceptive acts in its marketing of the diabetes drug Avandia.

The state maintained the petitioner spent "hundreds of millions of dollars" promoting the drug's benefits but say those who took the drug experienced serious effects.

According to court documents, the state sought a disgorgement of funds the company received as a result of West Virginia Medicaid and PEIA reimbursements for prescriptions of the drug.

The company made a motion to disqualify private counsel, but the circuit judge denied it, saying the West Virginia Consumer Credit and Protection Act does not limit the attorney general's authority to hire private counsel.

In the second case, former West Virginia attorney general Darrell McGraw filed the action against Discover Financial Services Inc., Discover Bank, DFS Services LLC, American Bankers Management Company, Bank of America Corp., FIA Card Services, Citigroup Inc, Citibank NA, GE Money Bank, World Financial Network National Bank, CSI Processing LLC, CPP North America LLC, HSBC Bank Nevada NA, HSBC Card Services Inc, JP Morgan Chase & Co and Chase Bank USA.

These credit card issuers were listed as defendants in seven consumer protection cases filed in August 2011.  The state asserted the companies violated the West Virginia Consumer Credit and Protection Act by deceiving West Virginians into paying for credit card service plans they didn't sign up for.

Justices denied both writs of prohibition.

In GSK's petition for writ of prohibition, the company maintains the attorney general did not have the authority to bring an action "based upon conduct that is ancillary to the general business of buying and selling securities."

And GSK continues, saying the Legislature prohibits the attorney general from using private counsel to prosecute such claims under this act.

In its brief, GSK asserts the lower court's order "ignores the plain language" of state code, which it says provides the attorney general to use "qualified personnel in his office," not outside counsel, to litigate disputes under the act.

Additionally, GSK says if the Legislature wanted the attorney general to use outside counsel in these actions, then "it knew how to do so." 

GSK also argued state code provided compensation for assistant attorneys general to be within the limits of Legislature-appropriated amounts.

In their June 4 opinion, justices said the definition of employee under the West Virginia Governmental Ethics Act holds that a private attorney appointed as special assistant attorney general is not an employee of that office.

Justices additionally held that the attorney general has common law authority to provide for compensation to be paid to these special assistant attorneys general through a court-approved award of attorneys fees taken from the losing opponent in the litigation.

In the credit card case, the companies contend the rules of professional conduct prohibits attorneys from representing clients when lawyers' personal interest conflicts with clients' interests.

As in the first case, the companies say the special assistants have an incentive to maximize civil penalties in order to increase their own fee.

"Because the special assistants are part-time ‘public employees' as defined in the ethics act, their engagement pursuant to a contingent fee arrangement violates this most basic command among other provisions," the petition for writ of prohibition states.

Companies also contend the Legislature limited the attorney general to paying assistants only from legislative appropriations.  

"We fail to see how recommending penalties to the attorney general, in and of itself, presents a conflict of interest by the special assistant attorneys general," the opinion states." "First, recommendations are mere suggestions that can be rejected.  Second, the complaints in this matter demonstrate that the attorney general determined and set out the penalties sought in these cases."

Justices additionally rejected the argument that special assistant attorneys general would maximize their own interest in attorneys' fees.

"First, the petitioners have failed to show how any attorney's fee recovered by the special assistant attorneys general is inextricably tied to the nature of the relief obtained, if they are successful," the opinion states. "In other words, there is nothing on the record, statutes, or case law which states that the actual amount of attorney's fees awarded is exclusively dependent on the nature of the relief obtained."

The opinion additionally said the petitioners failed to "acknowledge that the attorney general monitors the litigation in this case" and that special assistant attorneys general "do not have absolute control of the litigation."

In ruling that the attorney general has common law powers to hire special assistant attorneys general, justices overruled Manchin v. Browning.

This decision states that the attorney general did not have common law authority to appoint special assistant attorneys general.

"As a result of Virginia's office of attorney general being a part of the judiciary, the opinion in Manchin made an overly broad conclusion that Virginia's attorney general did not have common law powers," the opinion states.

A later case, Burton, decided that the Legislature did not have the discretion to nullify powers of the attorney general.

The extent of the powers will be determined on a case-by-case basis, the opinion states.

"Insofar as the decision in Manchin v. Browning … is inconsistent with this holding, it is expressly overruled," the opinion states.

In a released statement, West Virginia Attorney General Patrick Morrisey said he is pleased with the state Supreme Court's decision.

"It is arguably one of the most important decisions outlining the powers of the office of the attorney general in the past century," he states. "It reaffirms the role and common law powers of the office as guaranteed through the constitution and strikes down a bad decision written decades ago that unnecessarily limited the attorney general's ability to perform his job. This decision also reaffirms everything we have said publicly about our plans and goals for the office."