The UCL Practitioner

More on the Ninth Circuit's recent CAFA decision: Washington v. Chimei Innolux Corp.

A new blog sponsored by Thompson Reuters called On The Case has an interesting post on the ramifications of the Ninth Circuit's CAFA decision handed down last week, Washington v. Chimei Innolux Corp., ___ F.3d ___ (Oct. 3, 2011). 

Here's an excerpt:

What's important about the ruling isn't just that the Washington and California LCD [antitrust] cases will remain in state court. The Ninth Circuit panel's decision endorses the power of state AGs to bring their own cases even when private class actions cover the exact same conduct. AGs, in other words, can pre-empt private cases--which is just what plaintiffs lawyers in the municipal bond derivatives class action before Manhattan federal judge Victor Marrero assert has happened in their case. Many of the muni bond derivative defendants have reached settlements with state AGs, rather than settling in the class action. The plaintiffs lawyers assert that it's an easy out for defendants, whose regulatory settlements aren't subject to a federal judge's oversight, as real class actions are.

My post mentioned the ramifications for PAGA actions, but these further ramifications are worth considering as well if you are handling a case in which the state enforcement agencies have expressed interest. 

New Ninth Circuit CAFA decision: Washington v. Chimei Innolux Corp.

In Washington v. Chimei Innolux Corp., ___ F.3d ___ (Oct. 3, 2011), the Ninth Circuit held that parens patriae actions filed by the state are not "class actions" within the meaning of CAFA. 

Unlike private litigants, the Attorneys General have statutory authority to sue in parens patriae and need not demonstrate standing through a representative injury nor obtain certification of a class in order to recover on behalf of individuals. See Wash. Rev. Code § 19.86.080; Cal. Bus. & Prof. Code § 16760. ....  

....

Put another way, class actions are always representative actions, but representative actions are not necessarily class actions.

Slip op. at 9, 10.  A similar analysis likely applies to PAGA cases post-Arias.

[via]

Recent UCL public prosecutor decision: People ex rel. Harris v. Black Hawk Tobacco, Inc.

In People ex rel. Harris v. Black Hawk Tobacco, Inc., ___ Cal.App.4th ___ (Jul. 13, 2011; pub. ord. Aug. 8, 2011), the Attorney General office used the UCL to enforce several federal and state statutes regulating the sale of tobacco:

The superior court granted a preliminary injunction, prohibiting defendants and appellants Black Hawk Tobacco, Inc. (Black Hawk) and Frederick Allen McAllister (McAllister) from selling cigarettes to non-Indians in violation of state and federal laws.  Black Hawk and McAllister appeal from the order granting the injunction.  (Code Civ. Proc., § 904.1, subd. (a)(6).)

On appeal, defendants argue that the State of California cannot regulate defendants’ sale of cigarettes to non-Indians because defendants are operating stores located on trust lands held by the United States for the Agua Caliente Band of Cahuilla Indians (the Band), a federally-recognized tribe.  We reject this argument and hold the superior court did not abuse its discretion in granting the preliminary injunction against defendants.

....

The unfair competition law, proscribing any unlawful business practice, provides broad authority for an injunction.  (Bus. & Prof. Code, § 17200 et seq., § 17203; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.)  Express authority for injunctive relief is provided by the California Cigarette Fire Safety and Firefighter Protection Act.  (Health & Saf. Code, § 14955, subd. (f).)  Defendants admitted their cigarette sales did not comply with state and federal law.  As elaborated in the following analysis, it is reasonably probable that the People will prevail on the merits.

Slip op. at 1, 8.

Decisions of interest from April and May 2011

The Court of Appeal and Ninth Circuit handed down the following decisions in April and May (listed in reverse chronological order by publication date):

Folgelstrom v. Lamps Plus, Inc., 195 Cal.App.4th 986 (Apr. 29, 2011; pub. ord. May 20, 2011; mod. Jun. 7, 2011) (Second Appellate District, Division Five) (affirming dismissal of UCL claim for lack of Prop. 64 standing; reversing dismissal of Song-Beverly Act claim, following Pineda v. Williams-Sonoma)

Knapp v. AT & T Wireless Services, Inc., 195 Cal.App.4th 932 (Apr. 25, 2011; pub. ord. May 20, 2011) (Fourth Appellate District, Division Three) (affirming order denying class certification of UCL, CLRA and fraud claims, which suffered from Kaldenbach problems)

Archer v. United Rentals, Inc., 195 Cal.App.4th 807 (May 19, 2011; mod. Jun. 13, 2011) (Second Appellate District, Division One) (affirming dismissal of UCL claim for injunctive relief for lack of Prop. 64 standing; reversing order denying class certification of Song-Beverly Act claim, following Pineda v. Williams-Sonoma)

People ex rel. Harris v. Pac Anchor Transportation, Inc., 195 Cal.App.4th 765 (May 18, 2011) (Second Appellate District, Division Five) (reversing dismissal of public prosecutor action in which the Attorney General's office employed the UCL's "unlawful" prong to pursue the defendant for wage and hour violations, holding that the FAA Authorization Act did not preempt the claims)

Marlo v. United Parcel Service, Inc., 639 F.3d 942 (9th Cir. Apr. 28, 2011) (affirming order decertifying class in wage & hour misclassification case)

Starbucks Corp. v. Superior Court (Lords), 194 Cal.App.4th 820 (Apr. 25, 2011) (Fourth Appellate District, Division Three) (reversing order permitting discovery of class list by putative class representatives who lacked standing)

Supreme Court addresses contingency-fee arrangements in County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

The Supreme Court's opinion yesterday in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), ___ Cal.4th ___ (Jul. 26, 2010), is largely focused on contingency-fee agreements between public prosecutors and private counsel in public nuisance cases.  If the fee agreements include certain provisions, the Court held, they will be proper.  Slip op. at 28-30.  The decision narrowly interprets People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), holding:

[T]o the extent our decision in Clancy suggested that public-nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, our analysis was unnecessarily broad and failed to take into account the wide spectrum of cases that fall within the public-nuisance rubric. In the present case, both the types of remedies sought and the types of interests implicated differ significantly from those involved in Clancy and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors is unwarranted.

Slip op. at 17.

The opinion has this passage on contingency-fee arrangements in "ordinary civil cases":

As set forth above, neutrality is a critical concern in criminal prosecutions because of the important constitutional liberty interests at stake. On the other hand, in ordinary civil cases, we do not require neutrality when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests. Indeed, as discussed above, we specifically observed in Clancy that the government was not precluded from engaging private counsel on a contingent-fee basis in an ordinary civil case. Thus, for example, public entities may employ private counsel on such a basis to litigate a tort action involving damage to government property, or to prosecute other actions in which the governmental entity’s interests in the litigation are those of an ordinary party, rather than those of the public. (Clancy, supra, 39 Cal.3d at p. 748.)

The present case falls between these two extremes on the spectrum of neutrality required of a government attorney.

Id. at 17 (emphasis added).  Depending on the relief sought, a UCL public prosecutor action could conceivably be held to "fall between these two extremes on the spectrum."  But the opinion is carefully worded to focus on public nuisance cases.  While obviously of critical importance for those cases, the opinion is something less of a watershed than it might have been.

The Recorder reported yesterday afternoon that "Cities and Counties Can Use Contingency Lawyers, State Justices Rule" (subscription).  The San Francisco Chronicle also reports: "Court: Private lawyers can help governments sue."

BREAKING NEWS: Supreme Court to hand down County of Santa Clara v. Superior Court (ARCO) on Monday

The Supreme Court announced today that it will be handing down its opinion in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681, on Monday at 10:00 a.m.  This is the case addressing whether public entities may retain outside attorneys on a contingency-fee basis.  My report on the oral argument, which took place on May 5, 2010, is at this link.

When the opinion is posted, it will be available here:

• County of Santa Clara v. Superior Court (Atlantic Richfield Co.), ___ Cal.4th ___ (Jul. 26, 2010)

UPDATE: The broken link in the citation above has been fixed.

New UCL public prosecutor decision: People ex rel. City of Santa Monica v. Gabriel

The Court of Appeal's opinion in People ex rel. City of Santa Monica v. Gabriel, ___ Cal.App.4th ___ (Jul. 14, 2010) (Second Appellate District, Division One) has two holdings of note. 

First, sexual harassment of a residential tenant by her landlord constitutes a "business act or practice" remediable under the UCL.  Slip op. at 5-6.  Landlord-tenant sexual harassment violates several statutes and municipal ordinances, and the city attorney brought the case as a UCL "unlawful" prong claim.  See id. at 2.  (Of course, the city attorney need not worry about Prop. 64 standing or whether anyone "lost money or property" as a result of the defendant's conduct.  See Bus. & Prof. Code § 17204.) 

Second, attorneys' fees are not recoverable under the UCL, even if the "borrowed" law has a fee-shifting provision.  Slip op. at 7-10.  The Court of Appeal reached a similar conclusion last November in Davis v. Ford Motor Credit Co., 179 Cal.App.4th 581 (2009), affirming denial of a prevailing defendant's attorneys' fees motion in an "unlawful" prong case in which the "borrowed" law would have permitted fee-shifting if the action had been brought directly under that law.  Id. at 599-601.  The Gabriel opinion does not mention Davis. 

See this blog post for a discussion of the attorneys' fees holding in Davis.

Oral argument report: County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

On Wednesday, May 5, 2010, the Supreme Court heard oral argument in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681. 

Justices Baxter and Corrigan were both recused.  Justice Maria P. Rivera of the First Appellate District, Division Four, and Justice James A. Richman of the First Appellate District, Division Two, sat in their stead.

Philip Curtis of Arnold & Porter (representing Atlantic Richfield Co.) and Elwood Lui of Jones Day (representing Sherwin-Williams Co.) divided the defense argument time.  San Francisco Deputy City Attorney Owen Clements presented the public entities' position.  [Note:  Messrs. Curtis and Clements also argued this case in the Sixth District in 2008.  See this blog post for my report on that argument.] 

Mr. Curtis argued first.  The Court, he began, should reverse the Court of Appeal's judgment and reinstate the trial court's order disapproving the public entities' contingency-fee agreement with outside counsel.  He briefly summarized the basic background facts of these public nuisance actions, emphasizing that the actions sought a form of relief -- an order of abatement -- available only to government plaintiffs.  He then gave three reasons why the public entities should not be permitted to retain outside contingency-fee counsel to handle the case: (1) the need for prosecutorial neutrality, even-handedness, and balance; (2) the destructive effect of a contingency-fee arrangement on that neutrality; and (3) the incurability of the problem and the inefficacy of contract provisions purporting to limit the outside lawyers' control.

Chief Justice George then interrupted:  I assume you'll address the extent to which the government lawyers' control over the litigation is relevant and the extent to which the Clancy case applies.  [People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985).]  Mr. Curtis said he would address that now.  The payment of contingency fees would destroy neutrality.  Can some form of control by government lawyers restore neutrality? The answer is no for three reasons. First, control is not realistic.  As the lower court said, the lawyer is not a potted plant.  There are any number of acts that can affect the outcome of a case.  This Court has repeatedly pointed out that the need for neutrality goes to so many decisions such as which witnesses to call, trial strategy, and more.

Chief Justice George:  Aren't those akin to the tasks performed by a deputy city attorney?  Curtis:  It would be improper for a deputy city attorney to receive a contingency fee.  Chief Justice George:  But we're talking now about the ability to form independent judgments and the extent to which you have to be subject to control.  The same decisions would be subject to the control of one's supervisor in a public office.  Curtis:  They would be subject to the supervision or control of the superior or the client.  All attorneys are subject to the control of the client.  It doesn't eliminate the lawyer exercising influence over the outcome.  In part one of the Eubanks case, it said having an interest runs afoul of neutrality.  [People v. Eubanks, 14 Cal.4th 580 (1996).] 

Chief Justice George:  But Eubanks was a criminal case.  Are you equating these civil cases with that?  Curtis:  I am doing so and this court did in Clancy.  Public nuisance cases should require neutrality in the same way as criminal cases.

Justice Moreno:  Isn't the control here quite distinct from the lack of control in Clancy?  Curtis: It was not.  The facts are very much like the facts here.  We asked the Court to take judicial notice of the contract in that case.  

Justice Moreno:  You're saying it's virtually impossible to get sufficient control.  Curtis:  Yes, it's unrealistic and therefore impossible.  This is so for two other reasons.  Circumstances can arise during the course of the prosecution. It's inherent in the contingency-fee agreement.  It provides an opportunity to profit from a successful prosecution.

Chief Justice George:  But your position is that not all civil prosecutions are subject to the Clancy rule.  Curtis:  Not all are subject to the neutrality requirement, that's correct.

Chief Justice George:  I'm having trouble equating a criminal proceeding, where someone's freedom is at stake, with the proceeding here against a manufacturer of lead paint.  Curtis:  There are two sources for a neutrality requirement in civil matters.  First, Clancy talks about the prosecutor's need for weighing competing interests.  In a public nuisance case, the question is whether the conduct is a reasonable invasion of the public interest.  Second, in the first section of Eubanks, where it says the neutrality rule arises from the fact that the lawyer is representing the public as a whole.  That is especially so here.  Those are the origins of the application of the neutrality rule in a civil case.

Justice Richman:  The balance in a public nuisance case is between the public and the property owners who would be affected by the abatement order.  Are the defendants property owners?  Curtis:  That was true in Clancy.  The defendants aren't property owners but the question will be whether many members of the public who own property will be affected.  Justice Richman:  And your client has the right to assert those interests?  Curtis:  We have the right to assert a neutrality requirement.

Justice Chin:  You have asked for discovery on the question of control and you ran into the attorney-client privilege.  What problems does that raise?  Curtis:  This leads to my third point.  It's not possible to cure lack of neutrality through control.  It would have to get into the most sensitive strategy matters.  When we tried to get to this we were stopped. 

Chief Justice George:  The language of the declaration of the public officer says we have complete control of the litigation.  Isn't that pretty comprehensive or are you saying unless you're a fly on the wall you would not have the assurance you need?  Curtis:  We would not and the public and the court would not.  This is not about the integrity of the public officials.  This is about letting an outside actor in. 

Mr. Curtis then yielded the floor to Mr. Lui. 

First, Mr. Lui referenced Chief Justice George's initial question, and distinguished the control of a district attorney over his deputy.  That relationship is unaffected by any contingency-fee arrangement, he said.  One failing of the Sixth District's opinion was they accepted blindly that these statements in the contract and declarations mean what they say and that there can be this type of supervision.  What Clancy stands for -- and we think it's good law -- is ensuring the integrity of the judicial process.  So whether you strip aside the attorney-client privilege you still have a contingency.  There is an absolute bar to the court's reviewing the conversations about strategy and control.  The harm that can result is not worth the risk. 

He went on.  Clancy lays down a bright line, a prophylactic rule.  The government lawyer said you must trust us, have the trial court judge supervise.  But the trial court judge can't ask the questions that would be necessary.  Then he discussed a number of cases including Vasquez.  [People v. Vasquez, 39 Cal.4th 47 (2006).]

Justice Moreno:  But aren't those criminal cases?  Lui: Because the case involves the state's soveriegn powers it's the same as the criminal cases.  He then quoted language from Eubanks and other cases, and also mentioned the Rhode Island Supreme Court case.  [Rhode Island v. Lead Industries Ass'n, 951 A.2d 428 (R.I. 2008).]  Justice Moreno:  But these are all criminal cases.  You're saying that in this civil case we should import those principles.  Lui:  Yes. 

Chief Justice George:  The Rhode Island case seems in every respect the same as this one.  The Rhode Island case involved the control exception and said Clancy was not a bright-line rule, didn't it?  Lui:  Yes and that takes us back to the origins of Clancy.  This court is the best court to decide what Clancy means.

Justice Moreno:  It's evidence that public counsel does not have enough resources because they are asking private lawyers to come in.  Chief Justice George:  If we're comparing resources I have a hard time seeing this as a David and Goliath situation when you have Atlantic Richfield and Sherwin-Williams on one side and a cash-strapped government agency on the other.  It's not like you're facing a huge government power.  Lui: But the government agencies choose which cases to prioritize. 

Justice Rivera:  In Clancy, the issues of concern to the court were the delicate balance of harms.  The interest of the public vs. the landowner.  In this case where would that misalignment occur? Where could there be a misalignment between the plaintiffs' lawyers' interests and the public?  What outcome could create that? 

Lui:  Knowing what's happened in other states, these cases have not been successful.  Contingency lawyers are not going to want to dismiss because they want to protect their investment.  For six years the contingency lawyers have been litigating this case.  Justice Rivera:  What are the realistic potential outcomes?  Lui:  An abatement order directed to the defendants for injunctive relief, not monetary.  There could be a difference of opinion with the public prosecutors.

Chief Justice George:  Should we not presume such an agreement is valid and consider that these are attorneys, they are officers of the court, with ethical duties?  You seem to assume they're not telling the truth.  Lui:  The risk of harm is too high even if they are telling the truth.  And in Clancy you didn't accept the same types of clauses re control.  They should not be accepted now because of the risk. 

[Note:  I have to say that's a very good answer to that difficult question and a strong note on which to end his argument.]

Mr. Clements then argued for the public entities.  Defendants, he said, are arguing for an absolute rule where all public agencies would be precluded from hiring outside lawyers.  This would negatively impact our ability to bring such cases. 

Justice Chin: Don't you have to rely heavily on private counsel's judgment and recommendations?  And aren't you going to private counsel because of their expertise in those areas?  Clements:  That's one of the reasons.  Also, the amount of work was not sustainable by a public office.  Also these particular counsel had past experience and knowledge of these issues.  So yes we do.  Just as we would with hourly lawyers.  But that's not financially viable. 

Chief Justice George:  You yourself are a deputy and your boss directs how you handle this prosecution.  Clements:  Absolutely.  The public lawyers have appeared, taken a very active role, and they have veto power. 

Justice Werdegar: Contingency fee means monetarily something has to be awarded, doesn't it?  Clements:  Typically, yes.  Justice Werdegar:  So, so far there's no basis for fees?  Clements:  Yes.  Justice Werdegar:  You are now seeking an order of abatement.  Clements:  Yes.  Justice Werdegar:  What are the other remedies?  Clements:  That's not clear yet.  Justice Werdegar:  Would the attorneys be influenced in deciding what relief to argue for?  Clements:  Yes, and that's where we would exercise control. 

Justice Werdegar:  If the outside lawyers invested money, would not the city be influenced by loyalty to them?  Clements:  No, we understand our responsibility.  Werdegar:  But wouldn't it impact the remedies you decide to seek?  Clements: There could be many available remedies and the government attorneys would decide.  Werdegar:  Wouldn't you be influenced and like to see those attorneys compensated?  Clements:  Yes, there are always incentives even with hourly lawyers and we would monitor those as well.  In Clancy, a private attorney appeared instead of the public one.  That's improper under any fee arrangement.  It's an excessive delegation of public authority.

Justice Werdegar:  Your opponent argues for a bright-line rule.  What rule would you advance?  Clements:  One bright-line rule is the one in the Rhode Island case.  Contingency-fee contracts are allowed in civil cases and not criminal cases.  We've advocated a case-by-case analysis.  The court should look at the fee contract.  And it's not true that we gave no discovery.  We produced the agreements and the correspondence surrounding their formation. 

Justice Chin:  But discovery regarding strategy was withheld.  Clements:  In part.  Justice Chin:  So how do we monitor control?  Clements:  First, look at the contingency agreement and make sure there's no improper delegation.  Next, look at the declarations from the private and public attorneys on foundational facts regarding who exercises control.  For example, as in the Anaheim case involving Priceline.  [Priceline.com v. City of Anaheim, 180 Cal.App.4th 1130 (2010).]  [See this blog post for a discussion of that case.] 

Justice Rivera:  Are those the only things?  Clements:  You'd require the public attorney to appear in the case as counsel of record.  If defendants come forward with evidence of improper delegation then you go into case-by-case analysis.  Justice Rivera:  Under Clancy there's no element other than control?  Clements:  The contract and control.  Justice Rivera:  Anything else?  Clements:  Actual likelihood of a miscarriage of justice.  Overlap with criminal case ramifications.

Justice Rivera:  Regarding remedies, wouldn't use of the common fund or substantial benefit doctrine be an end-run around the cases saying that public entities aren't entitled to fees in a public nuisance case.  Clements:  No.  That's cost spreading vs. cost shifting.  Justice Rivera:  Where do you get a fund?  Clements:  There could be a fund created when property owners apply for a share of money to make repairs.  Justice Rivera:  Can you cite a case where such a fund was created?  Clements:  Not off the top of my head.

Justice Chin:  Why should this case be treated differently from Clancy?  Clements:  The main reason is the public attorneys appear as counsel of record.  Justice Chin:  How do we ensure that the public attorneys are appropriately monitoring the case?  What do we write in the opinion?  Clements:  You can do what the Court of Appeal did in the Priceline case.  The parties' declarations.  The public attorneys affirm they have maintained control and there's not an excess delegation of authority.  Justice Chin:  How does the other side show excess delegation of authority?  Clements:  From their observations during the course of the case as in any other case of prosecutorial misconduct.

Chief Justice George:  Would it help if there were guidelines as in the Rhode Island case, such as control, veto power by the public attorneys, public attorneys involved in all stages?  Perhaps adding public attorneys must be involved in all decisions to settle or dismiss?  This could be included in the opinion. 

[Note: So here, the Chief Justice simply answered Justice Chin's question himself.]

Clements:  Absolutely.  It would give private attorneys every incentive not to overstep the bounds or risk disqualification.  Justice Chin:  Do you have any other factors?  Clements:  Those are sufficient.  You're relying on the professional judgment and good faith of the public attorneys and the ethics of the outside lawyers not to let their interests trump those of the clients.  This is precisely what courts presume.  Absent a prima facie showing that the public attorneys are not exercising control, then the arrangement should be allowed.  That is how courts handle all cases of prosecutorial misconduct.  This is strictly a civil case and the attorneys have no power to seek warrants etc. 

He went on.  Authorities following Clancy have been unanimous in allowing these arrangements except in one nonpublished superior court order issued by Judge Ikola who later authored the Priceline decision as Justice Ikola. 

Justice Rivera:  But the facts were different.  Clements:  In the twenty years since Clancy you have an absence of authority for the rule defendants advance.  We are talking about a balancing vs. a per se test.  A per se test would assume the conduct in question is necessarily bad.  The Rhode Island case recognized that there are some cases that can only be brought with this arrangement.  A rule prohibiting it is unwarranted.

And Mr. Clements ended his argument there, although his time was not up.

Before Mr. Curtis began his rebuttal, Justice Chin made a request:  Please address whether the protections adopted in the Rhode Island case are adequate.  Curtis:  They are not adequate.  They are window-dressing.  They are explicit but they are not specific.  They don't come to grips with the reality that there are myriad instances in the prosecution of a case where an attorney with an interest can influence the case. 

Justice Werdegar:  In this case where would that come up?  Curtis:  What remedies to seek; what witnesses to call; how to question them.  Justice Werdegar:  How would those decisions be impacted?  Witnesses, I don't see that.  Curtis:  Whether the case should be dismissed.  Whether to proceed with the case at all.  Contingency fee lawyers would have a natural tendency to expand the litigation and interpret the law as broadly as possible.

[Note:  I have to disagree with that.  In deciding what cases to take, the strength of the legal arguments and the likelihood of success on the merits are critical considerations.  No contingency-fee lawyer is going to take a dud case.  It makes no sense to take on the risk.  The goal is to take cases with as little risk as possible, which means the strongest possible cases based on existing law, not the reverse.]  

Chief Justice George:  But if the public entity has veto power; and requiring a senior member of the public office to participate; allowing them to decide to settle without any input from the private attorney: those aren't specific?  Curtis:  They are not adequately specific.  Chief Justice George: Does your argument stand or fall with the analogy to criminal cases?  Curtis:  It does indeed.  We believe Clancy was correctly decided and properly put the facts of that case in the criminal column.

Justice Chin:  If we were to adopt the Rhode Island factors what would you change or add to them?  Curtis:  I don't know how to answer that.  Justice Chin: Answer quickly.  [The courtroom laughed.]  Curtis at this point reiterated that he couldn't say what should be changed or added because he did not think any protections were adequate. 

Justice Moreno asked the final question:  Can you describe the remedy from which attorneys' fees might come?  Curtis:  I cannot; we don't know yet.

And then Mr. Curtis, likewise, concluded before his time was up.

I think Chief Justice George agrees with the Rhode Island analysis and will follow it.  The question is whether his colleagues will go along.  Justice Chin obviously has serious concerns about how to monitor the attorneys.  On the other hand, the Chief Justice ends up in the majority in nearly every case.  They say that appellate judges use the questioning to communicate with each other as much as to gain information from the attorneys.  This argument exemplified that.  We'll find out what happens in 90 days. 

Two Supreme Court cases set for oral argument next week: Clayworth v. Pfizer and County of Santa Clara v. Superior Court (ARCO)

The Supreme Court has scheduled oral argument in two of the cases I've been following, Clayworth v. Pfizer and County of Santa Clara v. Superior Court (ARCO).  I'm going to try to attend both and provide reports here.

Monday, May 3, 2010, 1:30 p.m., San Francisco

Clayworth v. Pfizer, Inc., no. S166435 (review granted 11/19/08)

• Issues: (1) When plaintiffs pay overcharges on goods or services as a result of the anticompetitive conduct of defendant sellers but recover the overcharges through increased prices at which the goods or services are sold to end users, may defendants assert a "pass-on" defense and argue that plaintiffs were not injured because they did not suffer financial loss as a result of the anticompetitive conduct? (2) Is restitution available under the Unfair Competition Law (Bus. & Prof. Code, 17200 et seq.) to plaintiffs who recovered from third persons the overcharges paid to defendants? (3) When plaintiffs recover from third persons the overcharges paid to defendants, have they suffered actual injury and lost money or property for purposes of establishing standing under the Unfair Competition Law, as amended by Proposition 64?
• Court of Appeal Opinion: Clayworth v. Pfizer, Inc., 165 Cal.App.4th 209 (2008)

Wednesday, May 5, 2010, 9:00 a.m., San Francisco

County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681 (review granted 07/23/08)

• Issue: May a public entity retain private counsel to prosecute a public nuisance abatement action under a contingent fee agreement?
• Court of Appeal Opinion: County of Santa Clara v. Superior Court (Atlantic Richfield Co.), 161 Cal.App.4th 1140 (2008)
• Briefs: Some of the briefs are collected at this link

Orange County District Attorney's UCL action against Toyota

You've probably read about the UCL public prosecutor action filed by the Orange County District Attorney's office against Toyota.  Here is a copy of the complaint (also available at the OCDA's website).  The DA is jointly represented by his own office and by the Robinson Calcagnie firm. 

The complaint is a pure UCL action seeking statutory penalties under Business & Professions Code section 17206.  It separately pleads the "unlawful," "unfair," and "fraudulent" prong claims.  The DA will not have to worry about satisfying Prop. 64's standing requirements. Nor will he have to worry about class certification. There does not appear to be any basis for removal under CAFA because the case is not (and does not need to be) pleaded as a class action. (Page 2 of the complaint also cites cases in support of an independent reason why the case should not be removable.)

In calculating the penalty amount, the trial judge will have a lot of discretion to decide what “for each violation” means in section 17206(a). One very reasonable interpretation is that every car Toyota sold in California without disclosing the alleged safety hazards constitutes a UCL violation and triggers the $2,500 penalty.

As for where the money goes, Business & Professions Code section 17206(c) (second sentence) states: “If the action is brought by a district attorney or county counsel, the penalty collected shall be paid to the treasurer of the county in which the judgment was entered.”  The final sentence of section 17206(c) further specifies: “The aforementioned funds shall be for the exclusive use by the Attorney General, the district attorney, the county counsel, and the city attorney for the enforcement of consumer protection laws.” That final sentence was added by Prop. 64.

Needless to say, it will be interesting to see how this case proceeds.

Court of Appeal denies rehearing and modifies UCL public prosecutor opinion: Blue Cross v. Superior Court

On January 12, 2009, the Court of Appeal (Second Appellate District, Division One) issued an order modifying its opinion and denying rehearing in a UCL public prosecutor case, Blue Cross of California, Inc. v. Superior Court, ___ Cal.App.4th ___ (Dec. 15, 2009).  My post on the original opinion is available at this link. 

The modification order adds several paragraphs clarifying that the Department of Managed Health Care does not have exclusive jurisdiction to enforce the Knox-Keene Act, and that the City of Los Angeles may bring UCL claims predicated on violation of that Act. 

New decision approves contingency-fee relationships between public prosecutors and private lawyers: Priceline.com, Inc. v. City of Anaheim

I've been closely following the County of Santa Clara case now pending at the Supreme Court, which involves whether public agencies may appropriately hire private attorneys to represent them on a contingency-fee basis.  (See my public prosecutor category page for posts on the Santa Clara case.)  Yesterday, the Court of Appeal (Fourth Appellate District, Division Three) issued a new opinion holding that they may in most cases. 

In Priceline.com, Inc. v. City of Anaheim, ___ Cal.App.4th ___ (Jan. 6, 2010), the Court of Appeal closely considered the Supreme Court's Clancy decision (People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985)) (also central to the County of Santa Clara case), and approved a contingency-fee arrangement between the City of Anaheim and private lawyers in a case to recover unpaid city tax assessments. The opinion has this to say about Clancy:

First, Clancy does not bar the use of contingency fee lawyers in all civil litigation. This limitation is shown by Clancy’s: (1) concession that “[c]ertainly there are cases in which a government may hire an attorney on a contingent fee to try a civil case” (Clancy, supra, 39 Cal.3d at p. 748); (2) its statement that the duty of absolute neutrality applies only to “a class of civil actions,” not to all civil actions (ibid.); and (3) its comparison of public nuisance actions with eminent domain actions, which involve “‘“a sober inquiry into values,”’” “a balancing of interests” and “a delicate weighing of values” (id. at p. 749).

Second, even in that class of actions where Clancy otherwise applies, it does not bar contingency fee lawyers from assisting government lawyers as cocounsel. This limitation is shown by: (1) the starting point of Clancy’s analysis — the focus on a criminal prosecutor’s “considerable discretionary power to decide what crimes are to be charged and how they are to be prosecuted” (Clancy, supra, 39 Cal.3d at p. 746); (2) the reminder that the prosecutor’s discretionary functions continue past the filing decision and into the trial tactics (id. at p. 749, fn. 4); and (3) the footnote distinguishing the Sedelbauer case on the ground the “private attorney . . . appeared ‘not in place of the State’s duly authorized counsel.’” (Clancy, at p. 749, fn. 3.) When contingency fee lawyers assist government lawyers as cocounsel, the “considerable discretionary power” that Clancy seeks to protect remains vested in the government lawyers. The government lawyers check the contingency fee lawyer’s financial interests.

Slip op. at 14-15.  In other words, so long as the public prosecutors exercise appropriate discretionary and supervisory controls, the contingency-fee arrangement will be proper.  The opinion goes on to approve the specific contingency-fee relationship in the case before it (id. at 17-20), concluding:

In 24 years, no California appellate court has extended Clancy’s reach to civil actions generally — or to any action other than one for public nuisance. No sound reason exists why Clancy would bar government lawyers from receiving assistance from contingency fee lawyers as cocounsel in this case.

Id. at 20 (footnote omitted). 

The opinion concludes with an interesting "Final Thought" on some of the assumptions that may underlie arguments against participation of contingency-fee counsel in public prosecutor actions: 

Although we have shaped our analysis to conform to Clancy and the parties’ arguments, we are troubled by the notion that lawyers are more apt to treat defendants unfairly if they are paid pursuant to a contingency fee agreement, rather than an hourly fee agreement. Clancy identifies the contingency fee lawyers’ financial interest in the outcome of a case as a factor that may interfere with the duty of neutrality. But it is just as easily argued that a contingency fee lawyer is less likely to pursue meritless litigation, whereas an hourly fee lawyer may have a financial motivation to continue prosecuting litigation discovered to lack merit. In short, we question the unstated assumption upon which Clancy is based. But we are constrained to analyze this case under the rationale stated therein. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)

Id. at 23. 

New UCL public prosecutor decision: Blue Cross of California, Inc. v. Superior Court

Blue Cross of California, Inc. v. Superior Court, ___ Cal.App.4th ___ (Dec. 15, 2009), is a public prosecutor UCL action brought by the City of Los Angeles against a health insurer "concerning coverage rescission practices," also known as postclaims underwriting.  Slip op. at 2-6.  The Court of Appeal (Second Appellate District, Division One), held that the trial court (Judge Mohr) correctly overruled the defendant's demurrer to the complaint. 

The opinion includes an interesting discussion of the equitable abstension and primary jurisdiction doctrines.  Slip op. at 21-25.  The analysis should be relevant to cases involving public prosecutors and private litigants alike. 

If you happen to be handling a case against a defendant regulated by the Department of Managed Health Care ("DMHC") (such as a "health care service plan" as defined in the Knox-Keene Act), the opinion's holding that the DMHC does not enjoy exclusive regulatory authority over such defendants will also be of interest: 

[A]lthough the Knox-Keene Act expressly authorizes the DMHC to enforce the statute and does not include a parallel authorization for suits by private individuals, private individuals can bring suit under the UCL for violations of the Knox-Keene Act. (Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 216-217 (hereafter Bell).)

As applied in this case, the foregoing authorities point unambiguously to the conclusion that the city attorney has authority to sue under the UCL for violation of Health and Safety Code section 1389.3 (i.e., the Knox-Keene Act’s prohibition of postclaims underwriting) unless there is a statute that expressly precludes the city attorney from doing so. Defendants do not cite any such statute. Indeed, the DMHC effectively concedes in its amicus brief that no such statute exists.  ....

Id. at 13. 

The defendant and the DMHC (which participated in the case an amicus curiae) contended that while private litigants could bring such UCL claims, public prosecutors could not, for a variety of reasons.  Id. at 20.  The Court of Appeal disagreed with each argument advanced in support of that contention.  See id. at 13-21.

New UCL public prosecutor decision: People v. iMergent, Inc.

In People v. iMergent, Inc., ___ Cal.App.4th ___ (Jan. 20, 2009), the Court of Appeal (Second Appellate District, Division Six) upheld a preliminary injunction prohibiting the defendants from violating the UCL and the Seller Assisted Marketing Plan ("SAMP") Act (Civ. Code §§1812.200 et seq.). The injunction "prohibits defendants from selling their products and services without first complying with the disclosure provisions of the SAMP Act" and Bus. & Prof. Code section 17537.1.  Slip op. at 2.  After devoting several pages of analysis to the argument that certain language in the SAMP Act was unconstitutionally vague, the court concluded:

Defendants assert that the SAMP Act's phrase "will earn, is likely to earn, or can earn" is vague.  Their position brings to mind the response of Senator Sam Ervin, Jr., during the Watergate Hearings of 1973.  When asked how he was sure of the meaning of certain words, Ervin replied, "Because I can understand the English language.  It's my mother tongue."  We can do no better.  We believe that "affirmed" has equal clarity.

Id. at 10 (footnote omitted).

San Diego City Attorney files UCL action against Washington Mutual

On October 8, 2008, the City Attorney of San Diego filed a UCL action against Washington Mutual on behalf of not just San Diego residents but all California consumers.  A copy of the complaint is available at this link, and here is the City Attorney's press release.  The action alleges "predatory real estate lending practices" and seeks various forms of injunctive relief, including an order requiring WaMu to "formulate a loan modification program" for certain borrowers. 

Yesterday's Daily Journal reported that "S.D. City Attorney Sues WaMu, Alleging Unfair Lending Practices" (subscription).

"L.A. Targets Insurers With Unlikely Law"

Today's Daily Journal has an article, "L.A. Targets Insurers With Unlikely Law" (subscription) reporting on a group of UCL actions recently filed by the City Attorney of Los Angeles against a number of insurers for cancelling their customers' health insurance policies after a signficant claim is made:

Criminal probes, injunctions and misdemeanor charges - if these are the bread and butter of any big city prosecutor looking for career-propelling headlines, Los Angeles City Attorney Rocky Delgadillo has certainly gobbled his fair share.

But behind the scenes, the Los Angeles city attorney's office has increasingly replaced flashier criminal charges with less common civil litigation aimed at nailing companies for unfair business practices.

Nowhere has this unusual legal strategy played a more crucial role than in Delgadillo's widespread investigation of the health insurance industry. Recent lawsuits against the state's top insurers all rely on a broad and controversial law that gives prosecutors statewide powers to sue companies for perceived abuses, exposing them to hundreds of millions of dollars in penalties.

Invoking the lesser known statute instead of criminal charges holds appeal because a wide range of sanctions can be sought in cases which might not meet the high burden of proof required in criminal complaints, according to prosecutors.

Some of the recently-filed complaints can be accessed at this link. The complaint against Blue Shield was particularly well done.

Statement of issue on review in County of Santa Clara v. Superior Court (ARCO)

The Supreme Court has posted its statement of the issue on review in County of Santa Clara v. Superior Court (ARCO), no. S163681. It is short and to the point:

This case presents the following issue: May a public entity retain private counsel to prosecute a public nuisance abatement action under a contingent fee agreement?

It is interesting that the issue is specifically stated in terms of the public nuisance cause of action. I've been following this case because of its potential to impact public prosecutor UCL actions. We'll just have to wait (for about two years) and see how broadly the opinion ends up being worded.

This case has been added to my list of pending Supreme Court cases.

California AG files UCL/FAL action against Countrywide

On June 24, 2008, California Attorney General Jerry Brown filed a UCL and FAL action against Countrywide Home Loans. People v. Countrywide Financial Corp., No. LC081846 (L.A. Super. Ct., filed June 25, 2008). Here is a copy of the complaint. The UCL and FAL are the sole causes of action. The complaint seeks injunctive relief, restitution to consumers, and civil penalties of $2,500 per violation. In late June, the Daily Journal reported that "AG Seeks Restitution for Consumers from Countrywide" (subscription).

BREAKING NEWS: Review granted in County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

Yesterday, the Supreme Court granted review in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681. This is the case in which the Court of Appeal held that public entities may hire outside attorneys to handle "ordinary civil cases" on a contingency-fee basis. County of Santa Clara v. Superior Court (Atlantic Richfield Co.), 161 Cal.App.4th 1140 (2008). The petition for review and other briefs can be found here.

This morning's Daily Journal reports that "High Court to Review Lead Paint Attorney Issue" (subscription). The Recorder reports that "Contingency-Fee Issue Heads to High Court" (subscription). From the Recorder article:

Attorneys on both sides of the battle expressed relief at the court's decision, saying they welcome a ruling deciding the issue once and for all.

"It is a significant issue nationwide and has not been settled," said Santa Clara County Counsel Ann Ravel, whose office originally filed the suit eight years ago. "So it's definitely ripe for the Supreme Court to weigh in with [its] analysis and views."

....

The case ... is heavily lawyered. Forty-two attorneys are listed on the government agencies' side, while the manufacturers show 29 lawyers from 16 law firms nationwide.

Review was granted by five of the seven Supreme Court justices, with Justices Marvin Baxter and Carol Corrigan recusing themselves. Neither said why, but statements filed with the secretary of state reveal that Baxter owns stock in BP Amoco and Corrigan in E.I. duPont de Nemours.

Extension of time and more briefs in County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

Last week, the Supreme Court gave itself an extension of time, through August 15, 2008, to grant or deny review in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681. This is the case that addresses whether public entities may hire outside attorneys to handle "ordinary civil cases" on a contingency-fee basis. [Hat tip: Wage Law]

In a related development, on July 1, the Rhode Island Supreme Court handed down an opinion addressing the contingency fee issue raised in this case and citing the Court of Appeal's opinion (which is no longer citable in California courts). State of Rhode Island v. Lead Indus. Assn., ___ A.2d ___ (R.I. July 1, 2008) (slip op. at 71-75).

Last but not least, I have received copies of more briefs from the case. Here is a complete list of what I have:

• Petition for Review (filed 05/19/08)

• Motion for Judicial Notice (filed 05/19/08)

• Public Entity Plaintiffs' Joint Answer to Petition for Review (filed 06/09/08)

• Reply in Support of Petition for Review (filed 06/19/08)

Again, my sincere thanks to the office of Santa Clara County Counsel Ann Ravel for providing copies of these briefs.

San Francisco City Attorney files antitrust and UCL action against prescription drug wholesaler

From a press release issued by San Francisco City Attorney Dennis Herrera on May 20, 2008:

City Attorney Dennis Herrera and the San Francisco Health Plan, the City-sponsored program that provides health insurance to more than 50,000 low-income San Franciscans, today filed suit against McKesson Corporation for illegally conspiring to manipulate pharmaceutical drug prices beginning as far back as 2001. The 88-page complaint filed in U.S. District Court in Boston this morning alleges an elaborate scheme to increase the markup on more than four hundred brand-name prescription drugs in violation of federal and state laws, forcing consumers and health coverage plans “to make hundreds of millions of dollars of excess payments.”

A copy of the complaint is available at this link. The plaintiffs are the San Francisco Health Plan, "individually and on behalf of the State of California and on behalf of a class of political subdivisions of the State of California," and the People of the State of California, "acting by and through San Francisco City Attorney Dennis Herrera."

The UCL claim appears on pp. 80-82 and is pleaded in a relatively plain-vanilla way. The meat of the allegations appears in the earlier sections of the complaint. The prayer, however, seeks $2,500 per violation in statutory penalties, which the UCL authorizes in public prosecutor actions. See Bus. & Prof. Code § 17206(a). The plaintiffs are represented by a well-known plaintiffs' class action firm, Hagens Berman Sobol Shapiro LLP, in addition to the city attorney's office. [Via SFBG Politics Blog]

Incidentially, last summer, S.B. 376 was signed into law. The bill amended Business and Professions Code sections 17204 and 17206(a) to ensure that the City and County of San Francisco could still pursue UCL claims even if its population dropped below 750,000 (which it did, slightly, according to the latest federal census). The Assembly Floor Analysis explains:

According to the author, [Senator Carole Migden,] the consolidated City and County of San Francisco has a population that hovers around 750,000. As a result, it continually has to prove standing whenever it seeks to bring an unfair competition action. This bill would appear to avoid this potential confusion by reconfirming standing to the City and County of San Francisco regardless of minor fluctuations in its population.

The Senate Committee Analysis further explained:

A federal census has recently put San Francisco's population at under 750,000. This has prompted defendants in unfair competition actions to argue, albeit unsuccessfully, that San Francisco no longer has standing to bring these actions. The San Francisco City Attorney's office is concerned that it will continuously need to defend attacks on its standing, which will consume scarce public resources unless the issue is clarified in the statute.

This bill would remove the population requirement pertaining to a city and county, and instead authorize the city attorney of any city and county to bring an action for unfair competition and recover a civil penalty from the defendant in those actions.

Here is Senator Migden's press release on the bill's passage last June. The amendments went into effect on January 1, 2008.

Petition for review filed in County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

Yesterday, a petition for review was filed in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), no. S163681. Many thanks to the blog reader who notified me of this and forwarded copies of the petition for review and the accompanying motion for judicial notice.

In County of Santa Clara v. Superior Court (Atlantic Richfield Co.), 161 Cal.App.4th 1140 (2008), the Court of Appeal (Sixth Appellate District) held that public entities may hire outside counsel to represent them on a contingency-fee basis in "ordinary civil cases," so long as the contingency-fee agreements do not purport to delegate the public entities' discretionary decision-making power to private attorneys with a financial stake. For a more detailed discussion of the Santa Clara decision, see this blog post.

Thoughts on County of Santa Clara v. Superior Court (ARCO)

Several things stand out in yesterday's opinion in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), ___ Cal.App.4th ___ (Apr. 8, 2008) (Sixth Appellate District) ("Santa Clara").

As an initial matter, the Court of Appeal explained that under People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985) ("Clancy"), there is a "class of civil cases in which the government's representative must be absolutely neutral. ... [O]rdinary civil cases brought by the government do not fall within this class of cases, and therefore contingent fee arrangments in ordinary civil cases are permitted." Slip op. at 7 (citing Clancy, 39 Cal.3d at 748) (footnote omitted) (emphasis added). Both Clancy and Santa Clara were public nuisance abatement actions. Under Clancy, public nuisance abatement actions "fall within the class of civil cases in which the government's representative must be absolutely neutral" because they entail discretionary decisionmaking involving "'a delicate weighing of values' and 'balancing of interests.'" Id. at 7 (quoting Clancy, 39 Cal.3d at 748).

The Santa Clara opinion does not go on to address whether other types of cases (such as UCL public prosecutor actions) constitute "ordinary civil cases" in which contingent fee arrangments are permitted under Clancy, or whether they fall within that "class of civil cases" in which the prosecutor must have "absolute neutrality." As will be seen, it may not matter, because the Santa Clara Court holds that even in cases demanding "absolute neutrality," contingency-fee agreements are still permissible so long as they do not purport to delegate the public entities' discretionary decision-making power to private attorneys with a financial stake.

The Court in Santa Clara held that contingency fee agreements with private lawyers can be appropriate even in cases (such as public nuisance abatement cases) in which "absolute neutrality" is required. The public entities established through declarations "that their private counsel serve in a subordinate role in which private counsel merely assist in-house counsel and lack any authority to control the litigation." Id. at 10. Under such circumstances, the principle of "absolute neutrality" is not undermined:

[W]here private counsel are merely assisting government attorneys in the litigation of a public nuisance abatement action and are explicitly serving in a subordinate role, in which private counsel lack any decision-making authority or control, private counsel are not themselves acting “in the name of the government” and have no role in the “balancing of interests” that triggers the absolute neutrality requirement. Private counsel serving in such a subordinate role do not supplant the public entities’ in-house attorneys, who must be absolutely neutral, and are not in a position where their interest in maximizing their contingent fee can influence the balancing of interests or any of the other decisions that are made exclusively by the public entities’ in-house attorneys. Because Clancy’s holding is limited to the facts that were before the California Supreme Court in Clancy, a private attorney serving as the sole representative of the government in a public nuisance abatement action and completely controlling the litigation, Clancy does not justify the superior court’s order barring the public entities from compensating, by means of a contingent fee agreement, their private counsel, who are merely assisting in-house counsel and lack any control over the litigation.

Id. at 11-12 (emphasis in original) (footnote omitted). "[T]here is a critical distinction between a private attorney who supplants the public entity's 'duly authorized counsel' and a private attorney who serves only in a subordinate role as 'co-counsel' to the public entity's in-house counsel." Id. at 14 (citing Sedelbauer v. State, 455 N.E.2d 1159 (Ind. App. 1983)) (emphasis in original).

The Court of Appeal reversed the trial court's contrary order as a matter of law, with no other directions:

Clancy itself does not bar the public entities from engaging private counsel under a contingent fee arrangement to assist in this litigation, so long as the public entities’ in house counsel retain control over all decision-making. The record before us contains absolutely no evidence that private counsel have ever engaged in any conduct that invaded the sphere of control exercised by the public entities’ in-house counsel. No authority supports barring private counsel from assisting the public entities under a contingent fee arrangement in this litigation. Therefore, the superior court’s order is unjustified, and we will direct the court to set it aside.

Id. at 16 (footnote omitted). During the oral argument, much time was spent discussing whether the trial court should make factual findings at the end of the case about whether the public entities' in-house counsel did, in fact, exercise appropriate discretionary control throughout the litigation. The opinion does not require any such findings or any further action by the trial court at all, absent a renewed motion by the defense: "No doubt the companies will seek disqualification of the public entities’ private attorneys if they acquire evidence that the private attorneys are improperly exercising control over this action." Id. at 16 n.11.

Justice Bamattre-Manoukian filed a concurring opinion in which she agreed with the result but expressed the view that courts must engage in a broader consideration of the factual circumstances surrounding the specific contingency-fee agreements. Slip op., concurrence at 7, 11-15. "[T]he propriety of a contingency fee agreement in a public nuisance action must be evaluated by caferul consideration of the many important factors in each case, including the factual circumstances, the terms of the contingency fee agreement, and the conduct of plaintiff's counsel ...." Id. at 14. The concurrence concludes by "respectfully invit[ing] the California Supreme Court to review this issue and to provide guidance ot the courts and public entities in this important and developing area of the law." Id. at 15.

I would be very surprised if a petition for review were not filed. Copies of many of the appellate briefs from the case are available at this link.

"Sixth District Lets Counties Pay on Contingency"

In today's Recorder, Mike McKee reports that "Sixth District Lets Counties Pay on Contingency" (subscription):

The ruling is great news for local governments, which claim they would have a hard time prosecuting nuisance abatement suits — such as oil spill or toxic landfill cases — without outside lawyers.

"It's important to counties and cities throughout the state," said Santa Clara County Counsel Ann Ravel, whose office was leading the lead-paint litigation at the center of the ruling, "because, due to financial issues and the size of a lot of counties' and cities' offices … [they] can't pursue cases of this sort without the aid of contingency counsel." Government agencies, she said, simply can't afford to pay hourly fees.

BREAKING NEWS: Court of Appeal holds public entities may retain private counsel on contingency-fee basis: County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

This afternoon, the Court of Appeal (Sixth Appellate District) handed down its eagerly-anticipated opinion in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), ___ Cal.App.4th ___ (Apr. 8, 2008). The Court held that the public entities' contingency-fee agreements with their private counsel were valid and directed the trial court to vacate its order holding otherwise. I will post more on the decision tomorrow.

New UCL public prosecutor decision: People ex rel. Gallegos v. Pacific Lumber Company

The Court's opinion in People ex rel. Gallegos v. Pacific Lumber Company, ___ Cal.App.4th ___ (Jan. 10, 2008) (First Appellate District, Division Three) contains a very interesting discussion of the interplay between the UCL and the litigation privilege of Civil Code section 47(b). The leading case on that issue is Rubin v. Green, 4 Cal.4th 1187 (1993), in which the Supreme Court held that section 47(b) created a safe harbor for litigants against private UCL claims. In Pacific Lumber, the Court of Appeal held that the safe harbor should also apply to UCL claims brought by public prosecutors. Slip op. at 5-13.

Here is the opinion, courtesy of Docstoc, which is an interesting new free service I heard about from Legal Blog Watch:

Oral argument report: County of Santa Clara v. Superior Court (ARCO)

Yesterday, in County of Santa Clara v. Superior Court (ARCO), the Court of Appeal for the Sixth Appellate District heard oral argument on whether public entities may hire private attorneys to represent them on a contingency-fee basis. The panel consisted of Acting Presiding Justice Patricia Bamattre-Manoukian, Justice Nathan D. Mihara, and Justice Richard J. McAdams. They are the same justices who issued a prior opinion in this case, County of Santa Clara v. Atlantic Richfield Co., 137 Cal.App.4th 292 (2006).

Owen J. Clements of the San Francisco City Attorney's office presented the County's argument. Philip H. Curtis of Arnold & Porter argued on behalf of ARCO. Both of them were extremely well prepared and presented excellent arguments.

Mr. Clements began his argument by pointing out the importance of the legal question and the fact that the issue is of very great importance to public entities across the state (as borne out by his participation in the case). He characterized the question as whether public attorneys can ever retain private attorneys on a contingency-fee basis in a public nuisance case. The trial court held that there is an absolute bar, relying on Clancy (People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985)). But Clancy is distinguishable. The private attorney in Clancy appeared in place of the government attorneys, rather than to assist them.

Justice Bamattre-Manoukian then broke in, saying that many helpful briefs had been filed, and that there are strong policy arguments on both sides and language in Clancy that supports both sides. She pointed out that the trial court was concerned about a number of things. First, what recovery was being sought and where the money for the contingency fee would come from. Second, even if you assume there's assistance by private counsel, the briefs say that the public attorneys are going to exercise complete control over the case. The trial court said how can you ensure this? Third, even if you can ensure this, the issue in Clancy is neutrality. Shouldn't this determination be made at the end of the case? Isn't this premature?

Turning to the first issue, Justice Bamattre-Manoukian then asked what is the recovery being sought? Is the case limited to abatement [of the public nuisance]? Mr. Clements replied that no damages are being sought, but abatement can take several forms. Until abatement has actually been awarded, it's hard to say what the contingency fee might look like. He referred to a similar case pending in Rhode Island, and said that abatement was being sought there, and that there are many possibilities for what abatement might look like here. [The Rhode Island Supreme Court case cited in the briefs is State of Rhode Island v. Lead Industries Ass'n, 898 A.2d 1234 (R.I. 2006).] The common fund doctrine and the substantial benefit doctrine may also be asserted as a possible basis for fees. One possible remedy would be for this Court to send the case back to the trial court with instructions to monitor the proceedings. But don't ban at the outset an arrangement that's very helpful to the public attorneys.

Justice Bamattre-Manoukian pointed out the County's argument that they are being deprived of counsel of their choice. The law seems clear, maybe, that you can hire outside lawyers on an hourly basis. Mr. Clements said yes, that's conceded in this case, and it's an absolute necessity because not all public entities have in-house lawyers. [An aside: For a number of years in the 1980s, my dad was City Attorney of the City of Porterville. The City of Porterville had no attorneys on staff. My dad stayed with his private firm throughout his tenure as City Attorney.]

Justice Bamattre-Manoukian said that Clancy requires "absolute neutrality," and then she read a lengthy quotation from the case. Mr. Clements said that Clancy requires neutrality of the decision-maker. Justice Bamattre-Manoukian said that may or may not be "complete" or "absolute" control; it may be "what's necessary," for example, if private counsel is in court handling a hearing, making objections, etc., they're in control. Mr. Clements said yes, as they would be if they were paid by the hour. Justice Bamattre-Manoukian said, so "complete" or "absolute" control is not necessary. Clements said the concern is whether the power of the government is being used by the private attorney for private gain.

Justice McAdams pointed out what appeared to him to be an inconsistency in the County's position. The public attorneys are saying they don't have the resources or expertise to handle some of this litigation, yet on the other hand you say you're exercising complete control over the outside attorneys. Clements said that absolute control is not possible, but control that involves making strategic decisions, deciding what motions to file, what experts to retain, approving settlement terms, is possible. Those are the concerns that Clancy addresses. It's not necessary under Clancy to have "absolute" control.

Justice Bamattre-Manoukian asked, "Do you have to be present at every deposition and every hearing? What does 'control' mean?" Clements said we don't have to be omnipresent, looking over the shoulder of the outside attorneys. But we'll oversee to make sure there's no overreaching. This is all Clancy requires. It's the same thing we do with our hourly co-counsel. Our contract with the outside lawyers says so.

Justice Bamattre-Manoukian then said: You're asking us to make this statement. How do we know whether you're in compliance with Clancy until the trial court looks at the proceeding. Don't we wait until the end of the case to determine whether the public entity has exercised neutrality (and here she quoted more language from Clancy) and then let the trial court determine, if there is any recovery, whether a contingency fee would be appropriate, the amount of the fee, and whether the award is in the public interest? Clements said that's what happening in Rhode Island. That's one way to do it. This Court could overturn the trial court's ruling and say there's no absolute bar. The trial court should not assume that there will be misconduct. The rules say you don't presume that attorneys will act unethically. You wait for evidence of misconduct.

Justice Bamattre-Manoukian broke in to say we're an intermediate court. We have to follow the Supreme Court. We have one case before us. Other states are struggling with the issue of neutrality. She then quoted some more language from Clancy, saying that certain language suggested that contingency-fee arrangements are antithetical to the principle of neutrality, but that footnotes 4 and 5 suggest otherwise. Shouldn't a pronouncement on this come from the Supreme Court? Isn't it sufficient to say a determination should be made at the end of the case as to whether there's been neutrality? Shouldn't we take an intermediate position at this point?

Clements replied that he understands that might improve judicial economy and provide a better record for the Supreme Court. But he wants to argue for a higher ruling (by which he meant that the Court should go ahead and rule that there is no per se bar to contingency-fee arrangements). Later cases interpreting Clancy say that the issue is the degree of control and this is what ensures neutrality. He cited Philip Morris, Inc. v. Glendening, 709 A.2d 1230 (Md. 1988) and City and County of San Francisco v. Philip Morris, 957 F.Supp. 1130 (N.D. Cal. 1997). Justice Bamattre-Manoukian said the second one is a tort action. She said this Court can make that ruling as a matter of law, because we can't really tell right now. Clements said the trial court will always have jurisdiction to deal with it if there's evidence of misconduct. He said in the most recent case, Grass Valley [2007 U.S. Dist. LEXIS 8917], the court said look at the fee contract and see if there's any provision that constitutes an improper delegation of public power. For example, a contract that gave the private attorney the power to veto a settlement. Such a pronouncement from this Court would not preclude the trial court from keeping an eye on what's happening.

Justice Bamattre-Manoukian: Is there any statutory authority for recovery of attorneys' fees in public nuisance abatement cases? Clements: No, except equitable theories such as common fund or substantial benefit theories. Bamattre-Manoukian: There are no criminal proceedings associated with this enforcement case? Clements: No. That's a second basis on which to distinguish Clancy.

Justice McAdams then pointed out that there were First Amendment issues in Clancy. Clements said yes. The City of Corona was trying to shut down a bookstore. There was no question in that case that the city sought a prior restraint on speech. That's another way to distinguish that case from this one. Also, this case will involve no ongoing supervision of business conduct, as in Clancy. The conduct in this case has been banned by law since 1978.

Justice Mihara then spoke for the first time. You'd like us to focus on the holding of Clancy vs. other language in Clancy suggesting a broader approach. The fact that attorney James Clancy was in total control. How does that affect neutrality? This case is different, wouldn't you say? Clements caught the softball: I would say. Clancy was the only attorney who appeared. There was an undertone of vendetta against the bookstore owners. Here, we have city attorneys who are very involved. He then pointed out footnote 3 in Clancy, where the Court distinguished Sedelbauer [v. State, 455 N.E.2d 1159 (Ind. App. 1983)] on that basis.

Justice Mihara then said, reviewing the fee agreement, the facts show that the private attorneys have a subordinate role and that the public attorneys have total control, and your argument is that's perfectly acceptable because it protects neutrality. Clements: That's correct. Mihara: Looking at this case from an analytical point of view -- how the court should tackle this -- the issue in the main is the validity of the fee agreement. Clements: Yes, that's what this case is all about. The agreements have been modified to make the issue of control clearer. If there's a problem, the remedy is to modify the fee agreement rather than disqualify counsel.

Justice Mihara went on: Is there any evidence that would suggest a conflict of interest that would impede neutrality? Clements: Only the suggestion that contingency-fee arrangements inherently undermine neutrality. However, private outside counsel are ethically bound to subordinate their interests to those of their clients, the People, just like hourly attorneys. Justice Mihara: You're saying we control this case, we have outside counsel assisting us, let us try this case. If any problem comes up, opposing counsel will bring it to the court's attention. But as far as the fee agreements are concerned, there is no difficulty, and the trial court would have the opportunity to ferret out any improper exercise of control?

Clements: Yes. We have had 7 years of litigation and there is no specific evidence of bias or misconduct. There is no need to categorically bar the contingency-fee arrangement. The approach this Court is suggesting is much wiser.

Justice McAdams: What is the practical effect on the hiring of counsel if we leave this to the end of the case? Clements: That's the reason why I'm arguing for what I called a "higher ruling" -- that there's nothing wrong with this arrangement absent evidence of wrongdoing. Leaving it to the end creates more risk for the outside attorney. Of course, the outside attorney is already bearing a lot of risk, including the risk that the case will not succeed.

Justice Bamattre-Manoukian: Hourly work also creates problems. There is self-interest inherent in hourly fee relationships as well. Clements: Yes. Bamattre-Manoukian: How do you interpret footnote 3 of Clancy? Clements: It's the control that any client has to say I want you to file this suit. In Clancy the public attorney wasn't involved in those decisions. In this case we have a much higher level of control than in other cases -- strategic decisions regarding the exercise of government power are made by the public attorneys.

And that was the end of Clements' argument.

Mr. Curtis pulled no punches. The first words he said were, "The poison is already in the system. It's been in the system since those agreements were signed." He said he was pleased to hear the Court quote Clancy (and he repeated part of the quotation). There's a lot at stake here about the system. We've repeatedly heard about "private attorneys," "private attorneys," "private attorneys." The attorneys with power to bring this case are public attorneys. I disagree with the idea that Clancy contains language supporting both sides.

Justice Bamattre-Manoukian broke in with another quotation from Clancy: "Nothing we say herein should be construed as preventing the government, under appropriate circumstances, from engaging private counsel. Certainly there are cases in which a government may hire an attorney on a contingent fee to try a civil case." [Clancy, 39 Cal.3d at 748.] Curtis: I agree with that completely. The distinction is between a proprietary action vs. a representative action. [This public nuisance case is considered a "representative" action.] The rule that Clancy laid down applies to a public representative action. There are no exceptions.

Justice Bamattre-Manoukian then asked if neutrality is preserved, why should a contingency-fee agreement be precluded if the trial court addresses it at the end of the case and the trial court finds that the public attorneys retained control so as to preserve neutrality, that the interests of the public have been served, and there has been no misuse of public funds? How does it offend the sense of neutrality? There is no criminal prosecution in this case. Many counties lack resources. Some have very few staff attorneys. How does that offend Clancy?

Curtis: Clancy answered that question. The attorney argued I'm an independent contractor. The Court said "a lawyer cannot escape the heightened ethical requirements of one who performs governmental functions merely by declaring he is not a public official. The responsibility follows the job: if Clancy is performing tasks on behalf of and in the name of the government to which greater standards of neutrality apply, he must adhere to those standards." [Clancy, 39 Cal.3d at 747.] There's no "control exception" in that language. Clancy recognized the big issues in play regarding public confidence -- if the public prosecutor is tainted by personal gain that undermines public confidence. It's the agreement itself that's the problem. Clancy sets down a categorical rule that a government lawyer (and these private attorneys are government lawyers) -- if they have a financial stake in the outcome we have a very serious problem. There's no control exception.

Curtis went on: There are two foundations to Clancy. One is constitutional and the other is ethical. The constitutional foundation is in the language that's been read into the record today at pages 746-747 ("When a government attorney has a personal interest in the litigation, the neutrality so essential to the system is violated." [Clancy, 39 Cal.3d at 746]) and also in the four cases the Clancy Court cited. All four are constitutional authorities.

Justice Bamattre-Manoukian interjected: All of those cases have facts distinguishable from the facts we have here. Curtis: Clancy says those cases are not to be distinguished. Clancy is the controlling authority and says those distinctions don't matter. Toomey [phonetic] makes clear that the United States Supreme Court recognizes that there's a difference between some types of biases and the government officer having a personal financial stake in the outcome. Clancy says the first type of bias might be tinkered with by the Legislature but the other can't be. "The responsibility follows the job." [Clancy, 39 Cal.3d at 747.]

Justice McAdams: How is this different from any other contingency-fee contract? Curtis: The difference is who the client is. That's a good way to turn to the ethical strain in Clancy. The client is the sovereign; it has a duty to ensure justice is done. This means its agents can't have a personal financial stake in one side or another. Not even twelve dollars or twenty-five dollars. In Rhode Island, the plaintiffs are seeking billions of dollars in relief and they're going to try to get their fees out of it. The issue is going to the court right now. Briefing is about to be submitted [he might have said already submitted; can't recall].

Curtis continued: There is no "supervision exception" in Clancy. It's been made from whole cloth in these other cases, which were either not public nuisance cases or wrongly decided. The question came up of what use Clancy made of Sedelbauer. He said the issue the Court was addressing was how the case should be styled under the Code of Civil Procedure. They were saying it should be brought in the name of the District Attorney. In footnote 3, the Sedelbauer footnote, the Court was grasping at straws. It cited an Indiana case. It's inconceivable that the Court was articulating a "supervision exception" in footnote 3 because on page 750 the Court says that on remand the case must be styled "People ex. rel [District Attorney] Dallas Holmes" -- it's okay for Holmes to hire Mr. Clancy. [The language from Clancy reads: "Thus on remand the action herein should be brought in the name of Dallas Holmes, the Corona City Attorney. The City may hire Clancy to represent Holmes. (Gov. Code, § 37103.)." Clancy, 39 Cal.3d at 750 n.5.]

Curtis went on: The Court understood perfectly well what a towering principle it was dealing with. We will have a neutral judge and neutral public lawyers. This does not mean the lawyers can have a profit stake without running afoul of the ethics rules.

Justice McAdams then referred to some of the language in ARCO's brief: "incentive to maximize the monetary award by any means possible." You argue that the mere existence of the contingency-fee agreement creates this incentive. How would the private attorney do this if their actions are being controlled by the public attorney? [An aside: I thought it was interesting at this point that Justice McAdams continued to refer to the outside lawyer as a "private attorney," despite Curtis' argument that a private attorney acting on behalf of a government entity becomes a "public attorney."] How does it play out as a practical matter?

Curtis said that no court will ever be in the conference room where strategy decisions are made. We're never going to know where there's an impact. The attorneys with billions of dollars at stake are not going to be potted plants. For example, there has been some success in cases dealing with childhood lead exposure. [This case involves "the public nuisance created by lead paint." County of Santa Clara, 137 Cal.App.4th at 298.] A neutral might not think it's a good idea to hire thousands of workers to abate every single one. There are lots of different ways that influence can be brought to bear. In the Louis Vuitton case, the court rejected a "harmless error" argument. It said we're dealing with a fundamental, systemic problem. We don't look at harmless error. In the federal system, for a public prosecutor to have a financial interest in a prosecution is "a go-to-jail offense." Those exercising the government's discretion may not have a financial interest in the outcome.

Justice McAdams said but couldn't the same argument be made by the hourly attorney -- who's no shrinking violet -- saying to the meek public attorney, let's not settle this case; let's go all the way. Curtis said of course. Hourly retentions have conceivably some issue. But what's so troublesome about the contingency-fee arrangement is that it depends on the outcome as to the defendant. Clancy and other authorities say it's so erosive to our system of law and government that we're not going there. We understand that the risk of influence, and the public perception of the risk of influence, is too overwhelmingly great.

Justice Bamattre-Manoukian then asked Curtis the same question she asked Clements: Is there any statutory authority for fees in a public nuisance case? Curtis said what they're asking for is common fund -- it's mentioned in the agreements. These attorneys are not in the business of working for free. That's why this is not premature. You're entitled to neutrality from the beginning of the case.

Justice Bamattre-Manoukian then said: What about the Rhode Island case where they decided to wait? (And she read a quotation from the Rhode Island case.) Curtis said: I think the Rhode Island Supreme Court got it wrong. I think the United States Supreme Court and the California Supreme Court got it right. Rhode Island chose not to recognize the principle. Go back to Clancy and look at how the court dealt with Sedelbauer.

At this point, Mr. Curtis spent quite a while parsing the County's writ petition (specifically, pages 29-31) and basically arguing that the petition misrepresented the holding of Clancy. He concluded that part of his argument by emphasizing "the principles upon which the Clancy opinion was based -- constitutional and ethical principles. If you're acting on behalf of the government, you must act with neutrality. Clancy controls. The trial court got it right. This is a problem that has to be nipped in the bud."

From the tone of his voice, that sounded like the end of his argument. But no, there were more questions. (The same thing happened near the end of Clements' argument.)

Justice Bamattre-Manoukian said what about cases where small counties have no funds to pursue these cases? Pursuing the case is in the public interest, but the only way they can pursue it is if private lawyers step up. You would say to them that Clancy precludes that? Curtis replied, We've got to decide the case before us. This case involves ten counties. They have hundreds of employees and budgets that add up to billions. But even in your more extreme case, the constitution and ethics cannot give way there. When an attorney exercises government power, that government attorney cannot have a financial stake in the outcome against the defendant.

Justice Bamattre-Manoukian then summarized the Court's three options for disposing of the case. First, the Court could affirm, which would likely lead to further review before the Supreme Court. Second, the Court could remand for the issue to be resolved by the trial court at the end of the case. Mr. Curtis jumped in to say that that is contrary to Clancy and "the federal constitutional authorities I've cited." Justice Bamattre-Manoukian then said that the Court's third option is to hold that the trial court didn't get it right, and instruct that court to monitor the case. Curtis objected to that proposal by saying that if there are exceptions to Clancy (which is what such a holding would imply), it's for the California Supreme Court to identify them.

And that was the end of his argument.

On rebuttal, Mr. Clements said Mr. Curtis was advancing a reading of Clancy as an absolute, categorical rule. That's not the holding of Clancy. It's the job of courts to look at cases and distinguish them. Clancy is distinguishable.

Justice Bamattre-Manoukian said that footnote 5 of Clancy says you can hire Mr. Clancy back, but presumably on an hourly basis. Mr. Clements replied that you'd still have an issue regarding delegating authority on an hourly basis. They're inferring a lot from footnote 5. Footnote 5 relates to how the case should be captioned. Bamattre-Manoukian: But it does seem a little inconsistent with their holding, which was to disqualify Mr. Clancy. Justice Bamattre-Manoukian and Mr. Clements then talked back and forth about the fact that the footnote doesn't specify hourly vs. contingency nor does it specify whether Mr. Clancy could be hired as the sole attorney for the DA, as opposed to working in a co-counsel capacity with the DA. Mr. Clements said that no court has extended Clancy as an absolute rule that applies when private attorneys are co-counseling and assisting public attorneys and when the public attorneys retain control.

Justice Bamattre-Manoukian said that there were no California cases that address the issue at all. Clements said that the Grass Valley case, which is the opinion of a federal district court in California, did. He also cited the "interest of justice" provision in Code of Civil Procedure section 128 [which relates to the trial court's power to control the proceedings before it] and a case called People of Santa Monica, which recognized a balancing test.

Responding to Curtis' argument that the Court should decide just the case before it, Clements said this is a case that will make a rule for all. It will affect all public entities including those who don't have an in-house attorney. There's a public interest in deciding issues on the merits, especially in a case like this.

Clements went on: You need actual evidence of improper bias or violation of ethical duties, and there's none of that in this case after seven years. The order should be that the trial court got it wrong and the rule should be that contingency-fee agreements are acceptable if the agreement preserves the government attorney's control. Justice Bamattre-Manoukian broke in: It's not really "misconduct," is it? Rather, it's neutrality and control. Clements replied that "excessive delegation" might be a better way to put it. There are five lines of defense here. The first line of defense is the ethical duty of all attorneys. Courts do not assume that attorneys are going to breach their ethical duties. The second line of defense is the public officials who will be supervising the private lawyers. The law presumes that public officials discharge their duties. Third, the fee contracts have been approved by the public entities, here, the Board of Supervisors. Fourth, able defense counsel are on the watch. And fifth, the trial court will take action if any evidence of excessive delegation arises.

That was the end of the argument. As I mentioned early this morning, my sense at the conclusion of the argument was that the justices were leaning in favor of the County's position. I think they will either adopt the County's legal argument, or remand for the trial court to consider, at the end of the case, whether the government attorneys exercised sufficient control throughout the litigation so as to make an award of contingency fees proper. Either result would be a victory for the County. An opinion will be due by mid-April.

Yesterday's oral argument: County of Santa Clara v. Superior Court (ARCO)

I attended yesterday's argument in County of Santa Clara v. Superior Court (ARCO) and will put up my report later today. For now, suffice it to say that the presentations were excellent and that the justices' comments suggest that they are leaning in favor of the County's position.

Oral argument preview: County of Santa Clara v. Superior Court (ARCO)

This morning at 9:30, the Court of Appeal for the Sixth Appellate District will hear oral argument in County of Santa Clara v. Superior Court (ARCO), no. H031540. In this case, the issue is whether a public prosecutor may hire private outside counsel to represent it on a contingency-fee basis. Barry Barnett of Blawgletter has an interesting post on some of the practical ramifications of the case.

I'm planning to attend the argument and will provide a report most likely tomorrow. Meanwhile, here are the trial court's order and some of the appellate briefs:

• Petition for Writ of Mandate (filed 05/11/07)
  

• Return by Real Parties in Interest to Petition for Writ of Mandate (filed 07/30/07)
  

• Petitioners' Reply to Real Parties' Return (filed 08/20/07)
  

• Amici Curiae Brief of the California State Association of Counties and the League of California Cities (filed 08/29/07)
  

• Amicus Curiae Brief of the Association of California Water Agencies (filed 08/29/07)
  

• Amici Curiae Brief of Public Justice, P.C., Healthy Children Organizing Project, and Western Center for Law and Poverty (filed 08/29/07)
  

• Amici Curiae Brief of the Chamber of Commerce of the United States and the American Tort Reform Association (filed 08/29/07)
  

• Amicus Curiae Brief of American Chemistry Council (filed 09/10/07)
  

• Real Parties' Response to Amici Curiae Briefs of (a) Association of California Water Agencies and (b) Public Justice, P.C., Healthy Children Organizing Project, and Western Center for Law and Poverty (filed 09/13/07)
  

• Petitioners' Response to Amicus Curiae Brief of American Chemistry Council (filed 09/25/07)
  

Many thanks, again, to Santa Clara County Counsel Ann Miller Ravel for providing copies of these briefs.

Oral argument set for January 17, 2008 in public prosecutor/contingency-fee case: County of Santa Clara v. Superior Court (ARCO)

Yesterday, in County of Santa Clara v. Superior Court (ARCO), no. H031540, the Court of Appeal (Sixth Appellate District) scheduled oral argument for Thursday, January 17, 2008 at 9:30 a.m. in San Jose. The issue in this case is whether public entities may retain outside counsel to represent them on a contingency-fee basis. While this specific case is an action for nuisance, the reasoning and outcome may apply more broadly to other types of actions, such as UCL public prosecutor actions.

Copies of some of the appellate briefs in the case are available at these two posts. As I previously explained, at the trial-court level, Santa Clara County Superior Court Judge Jack Komar ruled that a public entity (specifically, the County of Santa Clara) may not hire private lawyers to represent it on a contingency-fee basis. County of Santa Clara v. Atlantic Richfield Co., Santa Clara County Superior Court case no. 1-00-CV-788657, Order Regarding Defendants' Motion to Bar Payment of Contingent Fees to Private Attorneys, April 4, 2007. A writ petition was promptly filed, and the Court of Appeal issued an OSC soon thereafter.