NEW YORK -– West Virginia Attorney General Darrell McGraw's hiring practices are targeted in a new report by the Manhattan Institute.
The institute's latest edition of Trial Lawyers Inc., a series that explores the plaintiffs bar, focuses on state attorneys general who had or have close ties to those attorneys. One of those attorneys general, it claims, is McGraw.
It calls him a pioneer in suing pharmaceutical companies who often gives state work to law firms that contribute to his campaign.
"First elected in 1992, McGraw has actively courted an army of special assistant attorneys general, arguably in defiance of a West Virginia court's holding that the state's AG is unauthorized by either statute or the state constitution to make such agreements and a similar rebuke by the state's auditor," the report says.
It mentions McGraw's hiring of Cook, Hall & Lampros for lawsuits against Bank of America and Merck-Medco. The firm has given McGraw's campaign fund $20,000 since 2004 and is headed by the nephew by marriage of McGraw's brother Warren, a former state Supreme Court justice.
Also mentioned is the Charleston firm DiTrapano, Barrett & DiPiero. The firm has given McGraw $37,800 since 2004 and was hired for lawsuits against Abbott Laboratories, Geneva Pharmaceuticals, Warrick Pharmaceuticals, Dey Inc. and Purdue Pharma.
In the Purdue Pharma case, which resulted in a $10 million settlement in 2004, the firm was one of four to split more than $3 million in attorneys fees.
The report also puts President Barack Obama's pick to head the newly formed Consumer Financial Protection Bureau under the microscope. The Senate Banking Committee has approved the nomination of former Ohio Attorney General Richard Cordray with a party-line vote, and Democrats may have a hard time getting Cordray confirmed by the full Senate.
The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB.
"Dodd-Frank expressly gives state AGs power to enforce state laws against national banks, as well as to enforce federal laws against state and federally chartered banks alike," the report says.
"State AGs will be, in essence, the new federal law's enforcement arm – a role sure to be strengthened under the leadership of (Cordray), who regularly contracted with private law firms to file securities class action suits when he was Ohio AG."
The report says Cordray became a favorite for plaintiffs attorneys eager to be picked for securities lawsuits filed by Ohio pension funds after Marc Dann resigned during a sex scandal in 2007. Cordray was elected in 2008 to finish Dann's term and lost his re-election bid last year to Republican Mike DeWine.
The report says Dann's "sue-happy policies intensified" under Cordray.
"(P)laintiffs attorneys poured their money into the Democratic Party, which, in turn, backed Cordray's candidacy," the report says.
"In 2007 and 2008, out-of-state plaintiffs firms donated $830,000 to the Ohio Democratic Party, led by the New York firms Kaplan Fox & Kilsheimer and Bernstein Litowitz Berger & Grossmann -– both shareholder class action specialists -– which contributed $270,000 and $175,000, respectively."
Cordray hired those firms for a lawsuit against Bank of America, and they became lead counsel. Cordray has said that the lawsuit, which alleges that Bank of America agreed to let Merrill Lynch pay nearly $5.8 billion in year-end bonuses during negotiations, could possibly recover billions of dollars.
The American Tort Reform Association also expressed uneasiness about Cordray's nomination to the federal post.
"In addition to his reported alliances with private sector plaintiffs lawyers that have been criticized by some as bordering on 'pay-to-play, Mr. Cordray appears to share CFPB architect Elizabeth Warren's often voiced belief that litigation is a perfectly legitimate means by which to craft public policy, even though it sidesteps duly elected lawmakers and executives, and even though it lacks proper transparency," ATRA president Tiger Joyce said in July.
Cordray's 2009 lawsuit against the three major credit rating agencies was recently dismissed by a federal judge. The private firms hired by Cordray for the lawsuit were: Lieff, Cabraser, Heimann & Bernstein of New York; Entwistle & Capucci of New York; and Schottenstein Zox & Dunn of Columbus.
Employees of the Lieff firm gave $50,000 to the Ohio Democratic Party in 2008. The party gave Cordray more than $1.8 million for his campaign that year.
The Schottenstein firm gave $23,500 to Cordray from 2008-10.
Cordray is one of eight the report identified as the closest to the plaintiffs bar. The other seven are:
* Louisiana's Buddy Caldwell, who gave state lawsuits over the Gulf oil spill to firms that had collectively donated $145,000 to his campaign;
* Mississippi's Jim Hood, who hired lawyers who contributed to $75,000 to one of his campaigns for a lawsuit against Eli Lilly & Co. and, according to federal prosecutors, worked closely with now-imprisoned attorney Richard "Dickie" Scruggs during litigation against insurance companies after Hurricane Katrina;
* New Mexico's Gary King, who hired the same firm that Hood picked for the Eli Lilly case to sue Janssen Pharmaceutica after it gave him $50,000 for one of his campaigns;
* Iowa's Tom Miller, who is heading nationwide settlement talks with mortgage lenders and saw more than $170,000 in contributions from out-of-state plaintiffs and defense firms in the months surrounding his formal takeover of the negotiations;
* Utah's Mark Shurtleff, a Repubolican who hired Steele & Biggs to handle his lawsuit against Eli Lilly. The firm gave $58,000 to one of his campaigns and hired his daughter to work as a paralegal on the case; and
* Vermont's William Sorrell, who, the report says, pushed a bill through the legislature that retroactively changed state law to allow him to join the lawsuits against the tobacco industry that led to a $246 billion settlement in 1998.
"Sorrell has subsequently signed his state on to misguided suits like the one targeting energy companies for global warming," the report adds.