In re Fraser
| Citation | 98 F.Supp.2d 788 |
| Decision Date | 16 May 2000 |
| Docket Number | No. 5:98-CV-45.,No. 5:98-CV-270.,5:98-CV-45.,5:98-CV-270. |
| Parties | In re Sen. Troy FRASER, Sen. Kenneth Armbrister, Sen. Jane Nelson, Rep. Tom Craddick, Rep. Dianne White Delisi, Rep. Kyle Janek, and Rep. Dan Kubiak. In re Private Counsel, Fee Agreement. |
| Court | U.S. District Court — Eastern District of Texas |
John J. McKetta, III, P.M. Schenkkan, Graves Dougherty Hearon & Moody, Austin, TX, for Petitioners.
William Andrew Taylor, Attorney General Office, Austin, TX, David Grant Kaiser Kaiser & Morrison PC, Houston, TX, Michael E. Tigar, Tigar Law Firm, Washington, DC, for Respondents.
Elizabeth Saunders, Austin, TX, pro se.
Before the Court is Private Counsel's "Election Concerning Attorney Fees, Motion Concerning Election[,] and Withdrawal of Motion," (Dkt. No. 89; 5:98-CV-270). Also before the Court is the State of Texas's, the Texas Attorney General's, and the Legislator's (hereinafter the "State") Joint Response to Private Counsel's Election, (Dkt. No. 92; 5:98-CV-270), and the State's Motion to Dismiss, (Dkt. No. 46; 5:98-CV-45). The Court, after considering the motions, the parties' briefs, and the applicable law, enters the following order.
Background.
The above-styled matters arise from a 1996 agreement between then-Texas attorney general Dan Morales and several private attorneys, hereinafter "Private Counsel."1 The agreement—titled the Outside Counsel Agreement or "OCA"—called for Private Counsel to represent the State in its suit against the tobacco industry (the "tobacco litigation"). Specifically, the OCA required, inter alia, that Private Counsel advance up to $10 million to cover the cost of prosecuting the suit. The OCA further provided that Private Counsel were entitled to a 15% share of the State's recovery plus reimbursement for expenses.
On March 26, 1996, Private Counsel, on behalf of the State, filed suit in this Court against the tobacco industry. See Texas v. American Tobacco Co., No. 5:96-CV-91 (E.D.Tex.). During the 22 months that followed the suit generated 1,856 docket entries, including thousands of pages of briefing. Approximately 23 million documents were produced, hundreds of depositions were taken, 50,000 exhibits were listed, and 1,500 witnesses were designated. Four hundred seventy-two motions were filed and 21 hearings were conducted. Four hundred fifty hours — or about six months — were allotted for trial of the case.
In late 1997, the week before jury selection was scheduled to begin, and with a nationwide tobacco settlement in the works that threatened to limit the State's recovery, the State and the industry achieved a settlement. The terms of the settlement were memorialized in the Comprehensive Settlement and Release ("CSA"), which on January 16, 1998 was submitted for Court approval. The same day, Private Counsel submitted a motion for approval of their attorneys' fees. On January 22, 1998, the Court approved the terms of the CSA and adopted it as an enforceable order. Also on January 22, the Court entered a memorandum opinion and order which concluded that the amount of attorneys' fees Private Counsel was due under the OCA — about $2.3 billion — was reasonable.
Shortly thereafter, on January 30, 1998, a mandamus action in the Texas Supreme Court filed by a group of Texas legislators was removed to this Court. See In re Fraser, No. 5:98-CV-45 (E.D.Tex.). The legislators had asked the Texas court to require Attorney General Morales to, inter alia, declare that the attorney general of Texas had no statutory or constitutional authority to bind the State to a contingent fee arrangement for legal services. The legislators argued that removal of the mandamus action to federal court would violate the Eleventh Amendment since the suit sought to compel a state officer to act according to state law. The legislators also argued that the OCA's contingent fee provision was unenforceable because the State, via the Eleventh Amendment, was immunized against being sued in federal court. The same legislators, on February 5, 1998, along with Governor George W. Bush, separately, moved to intervene in 5:96-CV-91. The intervenors, raising much the same issues as those raised in In re Fraser, asked for a separate resolution of the attorneys' fees questions and that the Court stay the disbursement of the settlement funds until the fee issue was resolved.
About the same time as the legislators and Governor were voicing concerns about Private Counsel's fees, a group of Texas counties and hospital districts also moved to intervene in the tobacco litigation. The counties and hospitals were concerned that the CSA would leave them uncompensated for the costs they alone incurred in treating smoking-related illness. For the tobacco industry, it was paramount that it be absolved from liability for cost of treating past smoking-related illness. Indeed, the CSA provided that the settlement was void if the industry was not so immunized. The counties' and hospital districts' suggestion that they were not bound by the CSA therefore threatened to kill the settlement. It was against this backdrop, and in light of the unresolved questions regarding Private Counsel's fees, the enforcement of the CSA was stayed.
At some point during the months that followed the counties and hospital districts and the State reached an agreement concerning the distribution of settlement proceeds. Then, on June 22, 1999, an agreement was achieved between the antagonists to the attorneys' fees issue (the "Agreement"). Under the Agreement, Private Counsel were presented with a choice: they could either attempt to enforce the contingent fee provision in the OCA, or they could elect to take an amount awarded by an arbitration panel. If they chose the latter, the tobacco industry would pay the panel award and Private Counsel would waive any claim they might have had against the State under the OCA. The Agreement also provided that all pending motions pertaining to the fee dispute would be stayed until Private Counsel made their election. The Agreement further provided that the fee dispute would be severed from the tobacco litigation. On July 24, 1998, the Court adopted the Agreement and separated the fee issues from the tobacco litigation. See In re Private Counsel Fee Agreement, No. 5:98-CV-270 (E.D.Tex.).
On December 15, 1998, the panel awarded Private Counsel $3.3 billion in fees. Under the Agreement, Private Counsel had until December 30 to make their election. On that day, Private Counsel filed a motion to extend the election deadline. The State opposed the motion and argued that the Court could not consider an extension until the Court first ruled on the State's challenges to the Court's jurisdiction. On November 5, 1999, the Court concluded that the State's jurisdictional arguments were without merit. The Court also gave Private Counsel until November 19 to make its election under the Agreement. On November 19, 1999, Private Counsel elected to take the panel award and to waive its right to sue under the OCA. The instant motions followed.
Mootness.
It is fundamental that federal courts lack jurisdiction to decide questions in moot cases "because their constitutional authority extends only to actual cases or controversies." See Iron Arrow Honor Soc. v. Heckler, 464 U.S. 67, 70, 104 S.Ct. 373, 78 L.Ed.2d 58 (1983). Generally, a settlement renders moot any case between the parties growing out of the settled dispute. See I.T.T. Rayonier, Inc. v. United States, 651 F.2d 343, 345 (5th Cir. Unit B 1981). This is true even if the parties remain at odds over the particular issues that they are litigating. See id.; see, e.g., Lake Coal Co., Inc. v. Roberts & Schaefer Co., 474 U.S. 120, 120, 106 S.Ct. 553, 88 L.Ed.2d 418 (1985)(declining to decide questions presented by motion of parties where underlying case settled).
The State and Private Counsel agree — and the Court concurs — that all pending motions of whatever character filed in 5:98-CV-45 and 5:98-CV-270 should be dismissed. In essence, both cases concerned Private Counsel's attorneys' fees under the OCA. As previously noted, Private Counsel elected to forgo the OCA's fee arrangement. Accordingly, the questions raised in those cases are moot, and all pending motions must be dismissed.
Vacatur.
The State asks the Court to vacate its November 5, 1999 interlocutory orders in 5:98-CV-45 and 5:98-CV-270. The State argues that vacatur is appropriate because the actions in which they were entered are now moot. Private Counsel oppose vacatur. Although not cited in their motion, Rule 60(b) of the Federal Rules of Civil Procedure, which provides that "upon motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding," is the appropriate provision under which to consider the State's request. See U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 29, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994).
As a preliminary matter, the Court notes that the State has taken an appeal on the interlocutory orders at issue. It is well-established that once an appeal is taken, the district court is divested of jurisdiction "except to take action in aid of the appeal until the case is remanded to it by the appellate court, or to correct clerical errors under Rule 60(a)." See Travelers Ins. Co. v. Liljeberg Enters., 38 F.3d 1404, 1407 n. 3 (5th Cir.1994); see generally Rutherford v. Harris County, 197 F.3d 173, 190 (5th Cir.1999) (citing Winchester v. U.S. Attorney for S. Dist. of Tex., 68 F.3d 947, 948 (5th Cir.1995)). Our circuit has recognized, however, that the district court is empowered "to consider on the merits and deny a Rule 60(b) motion filed after a notice of appeal, because the district court's action is in furtherance of the appeal." See Winchester, 68 F.3d at 949 (). Conversely, if a district...
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...to the Court to vacate its earlier orders is that the parties have entered into a settlement agreement."); see also In re Frasier, 98 F.Supp.2d 788, 792 (E.D. Tex. 2000) ("[T]he State is not entitled to vacatur since mootness was the product of an agreement between the State and Private Cou......