CHARLESTON – The West Virginia Supreme Court on Wednesday refused to hear an appeal of an order involving the use of private counsel as Special Assistant Attorneys General.
In a 4-1 vote, the Justices turned down the request of Johnson & Johnson, Janssen Pharmaceutica Products and Janssen Pharmaceutica. The drug companies had appealed an order by Brooke Circuit Judge Martin Gaughan, who had dismissed their counterclaim against state Attorney General Darrell McGraw's office over the use of outside counsel.
Justice Brent Benjamin was the lone Justice to vote to hear the appeal.
"We're pleased, but you're never sure about how they're going to rule," Chief Deputy Attorney General Fran Hughes said Thursday of the Supreme Court ruling. "We thought we had the law on our side. Really, when you start analyzing their argument, it falls to the wayside."
Hughes also noted that the issue went before the state Supreme Court in the Capital One case in 2005 on a writ of prohibition. The Justices refused 5-0 to hear the case.
"We keep saying that we don't enter into contingency contracts," she said. "People have FOIA'd us, and we've never signed a contract. The lawyers have to petition the court to receive their money. They may not get money, but they usually do."
Hughes also reiterated that while outside counsel might be involved in a case, that doesn't mean those private attorneys are the ones in charge of the litigation.
"There's no doubt in anybody's mind that we're in the driver's seat," Hughes said. "And when it gets to trial or negotiations, somebody in our office steps up to the plate. We're an intricate part of the trial. We're front and center."
Janssen and Johnson & Johnson originally had filed the appeal in July in Brooke Circuit Court. The petition for appeal to the state Supreme Court stemmed from a March order by Gaughan granting McGraw's motion to dismiss their counterclaim against him.
The case (Brooke Circuit Court case number 04-C-156) was filed in 2004 by Wheeling attorneys Barry Hill and Teresa Clark Toriseva, who the two companies said "purport to represent the Attorney General in pursuing claims against petitioners under the West Virginia Consumer Credit and Protection Act."
The original suit filed by McGraw's office claims Janssen and Johnson & Johnson deceptively marketed two prescription drugs -- Risperdal and Duragesic -- to West Virginia residents and seeks statutory penalties under the WVCCPA for each prescription written in the state that allegedly was prompted by such deceptive marketing.
While the drug companies' appeal was refused by the Supreme Court, the state's original case against them continued in Brooke Circuit Court.
The companies' appeal mentioned that McGraw's office has "on several occasions in the past" retained private counsel to bring WVCCPA actions against companies doing business in the state "pursuant to contingency fee agreements." It also says that practice has been criticized as violating the WVCCPA, other state laws and constitutional requirements.
"Private counsel are not salaried government employees, but private plaintiffs' lawyers whose standard compensation method is contingency fee," the appeal states.
It also includes the language of the Aug. 16, 2004, engagement letters sent to Hill and Toriseva. Those letters state that counsel "will advance all expenses associated with maintenance of this action. Subject to the approval of the court, it is contemplated that (private counsel) should earn a proper, reasonable and customary fee."
"A number of lower court decisions have been entered concerning the propriety … of such retentions, and the issue has been the subject of comment by government officials and the press," the appeal also states.
McGraw has drawn criticism over the practice of hiring outside attorneys to work on cases for his office. Others have complained that these attorneys he's appointed to serve as Special Assistant AGs have made significant contributions to his political campaigns.
During last year's legislative session, a House of Delegates bill that would have tightened the belt on the state Attorney General office's contracts with outside attorneys died on the Rules Committee table.
And last April, McGraw's office terminated the January appointments of Weirton attorneys M. Eric Frankovitch and Michael Simon as special assistant Attorneys General in a case they already were working as private attorneys.
Their terminations came after Cooper Wiring Devices and Leviton Manufacturing both filed complaints in March stating that subpoenas issued by Frankovitch and Simon in February requesting safety testing records regarding an electrical outlet the companies produced were without power.
Cooper and Leviton said McGraw overstepped his constitutional boundaries with the appointment of outside attorneys. Frankovitch and Simon were working on a civil case in Marshall County, and they were appointed by McGraw to act on behalf of the Attorney General's office.
In their appeal, Janssen and Johnson & Johnson wrote that they filed their counterclaim because it appeared "that the Attorney General's delegation of authority and retention agreement with private counsel in this case was in violation of these statues and constitutional requirements."
The companies sought to enjoin the pursuit of the action by the special assistant AGs because the AG "unlawfully delegated to private counsel, via a contingency fee-based retention agreement, his constitutional and statutory authority to prosecute regulatory enforcement actions."
In particular, the companies said that action "violates the WVCCPA provision limiting enforcement actions to the Attorney General and his staff; violates the West Virginia Constitution and the body of statutes that establish the powers, duties and responsibilities of the Attorney General; violates the due process rights of the petitioners; confers an unlawful benefit to private counsel; and other wise violates the public policy of this state."
The counterclaim also alleged that the companies were suffering injuries "because this case is being prosecuted against them by unlawfully appointed private counsel with private pecuniary interests in this case rather than by publicly appointed and accountable employees of the Attorney General's office acting exclusively in the public interest."
The companies also said this contingency fee agreement "impedes the role of the state Legislature" and is contrary to state laws about how public officials spend state monies.
"By promising future state funds to private counsel in lieu of an appropriation by the Legislature for their payment, the Attorney General proposes to usurp the appropriations power of the Legislature and thus violate the separation of powers principle that is at the core of the West Virginia Constitution," the appeal states.
McGraw's office successfully moved to dismiss the counterclaim, arguing that the companies lack standing to assert their counterclaim and that "private counsel were validly appointed to represent the Attorney General in this action."
One example noted in the appeal is that the AG's office denied that the appointment letters were contingency fee agreements, even though the AG's office acknowledged the letters contained a "contingent element in the sense that the issue of determining a reasonable, customary fee will not arise unless there is a disposition in favor of the state."