Following adverse ruling, credit card company settles with AG's office

POINT PLEASANT – One of the eight credit card companies sued by former state Attorney General Darrell McGraw has reached a settlement with his successor.

On June 18, Mason County Circuit Court Judge David W. Nibert approved a settlement between First Premier Bank and Attorney General Patrick Morrisey. McGraw filed the lawsuit in 2011 against a group of credit card issuers over their payment protection plans.

The settlement is worth $112,500.

“This settlement is a success for West Virginia consumers,” Morrisey said.

“These consumers were enrolled and charged for a service if they expressed even an ‘interest’ in the program. Often they were not given an opportunity to review the terms or conditions, fee structure or how to collect benefits.”

The settlement came two weeks after a ruling by the state Supreme Court against the credit card companies. They were arguing the Attorney General’s Office should not be allowed to hire private attorneys to represent the State on a contingency fee.

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

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, Justice Robin Davis wrote for a unanimous majority that a private attorney appointed as a special assistant attorney general 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.

Morrisey says the Charleston law firm Bucci, Bailey & Javins will be paid $37,500 from the First Premier settlement.

The rest of the settlement will be used for future consumer protection services and will be handed over to the Legislature.

“During the 2013 regular legislative session, the Office of the Attorney General worked with the Governor and lawmakers to forge an agreement that would return excess Consumer Protection Recovery Fund monies to the Legislature, as long as the fund maintained a balance to cover three years of operating costs,” Morrisey said.

Remaining defendants in the case are Bank of America, JPMorgan Chase, Citibank, Discover Financial Services, GE Money Bank, World Financial Network Bank and HSBC Bank Nevada.

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