CHARLESTON – The state Supreme Court has ruled against companies that challenged the Attorney General’s Office’s practice of hiring private attorneys to represent the State.

In an opinion released June 4 and authored by Justice Robin Davis, the unanimous court ruled the companies have not alleged any conduct that has resulted in an injury.

“The briefs set out a plethora of allegations that involve remotely possible harmful conduct,” Davis wrote.

“We have not and will not interfere with or disqualify a party’s counsel merely because of allegations of improper conduct that has not occurred.

“To allow a mere possibility of improper injurious conduct to be the standard for disqualification would result in parties constantly seeking to disqualify opposing counsel because of phantom injuries. The law of disqualification cannot rest on the imagination of opposing counsel.”

Defendants in former Attorney General Darrell McGraw’s lawsuit over credit card payment protection plans were appealing a ruling by Mason County Circuit Court Judge David W. Nibert.

In a related case, the pharmaceutical manufacturer GlaxoSmithKline, sued over the drug Avandia, was appealing a ruling by Wayne County Circuit Court Judge James H. Young Jr. It was challenging an agreement between McGraw and private lawyers that says the lawyers will be paid out of attorneys fees paid by the defendant.

Both cases are now being handled by new Attorney General Patrick Morrisey, who campaigned on reforming the way the State hires private attorneys. In March, Morrisey introduced a new policy that puts in place a competitive bidding process and a page on Morrisey’s website that will allow the public to view information regarding outside counsel agreements.

It was McGraw’s practice of hiring private attorneys who also contributed to his campaign that irked the businesses he filed lawsuits against.

Justice Menis Ketchum disqualified himself from the case. His former firm, Greene Ketchum of Huntington, is representing the State in the case against GSK, along with Baron & Budd of Dallas and Heard Robins Cloud & Black of Texas and New Mexico.

Held by the court were that the attorney general has common law authority to appoint special assistant attorneys general and common law authority to provide for compensation to be paid through a court-approved award of attorneys fees taken directly from the losing opponent in the litigation.

The credit card companies sued in Mason County - Bank of America, JPMorgan Chase, Citibank, Discover Financial Services, GE Money Bank, World Financial Network Bank and HSBC Bank Nevada – challenged the contingency fee agreement.

The credit card companies were arguing the agreements are illegal in three ways:

-They violated the West Virginia Government Ethics Act, which prohibits a public employee from “knowingly and intentionally using his or her office… for his or her own private gain”;

-The West Virginia Rules of Professional Conduct bar lawyers from representing clients when the lawyer’s own interests may conflict with the client’s interest; and

-The attorney general is exceeding his statutory authority because the Legislature has expressly limited him to paying assistants exclusively from legislative appropriations.

As to the first claim, Davis wrote that a private attorney appointed as an SAAG is not an “employee” of the Attorney General’s Office under the definition of “employee” under the Government Ethics Act.

“The language from the appointment letters does not require the Attorney General to pay the special assistant attorneys general wages or anything of value,” the opinion says.

“All that the letters provide is that the special assistant attorneys general must pay the cost of litigating the cases and that, if they prevail, a court may award them attorney’s fees.”

The appointment letter read, “It is contemplated that you will advance all expenses associated with the maintenance of this action. Subject to the approval of the court, it is anticipated that you should earn a proper, reasonable and customary fee.”

As to the second claim, which argued attorneys can’t have a financial interest in the outcome of litigation, Davis said no conflict exists under the current agreements.

“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,” she wrote.

“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.

“The complaints meticulously set out penalties ranging from monetary to injunctive relief. The complaints were styled in the name of the Attorney General, on behalf of the State, and were signed by the Chief Deputy Attorney General.

“Insofar as the evidence demonstrates that the Attorney General chose and approved of the penalties to be sought if liability was established, we find Petitioners’ arguments in this regard do not support a violation…”

The final issue – that the attorney general lacks the authority to appoint special assistant AGs, was also rejected. Davis wrote that state law, though it provides for the appointment of assistant AGs but not special assistant AGs, does not prohibit the attorney general from the agreements under the office’s common law authority.

“Supreme Court’s decision today fully backs up arguments we have made during the past year about AG office authority. 5-0 decision from Ct.,” Morrisey tweeted after the decision was released.

“WV Sup Ct decision also allows our office to effectively prosecute consumer protection cases. We fought for this and the Court agreed.”

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.

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