Landrum v. Commonwealth ex rel. Beshear, 2018-SC-000122-TG

CourtUnited States State Supreme Court (Kentucky)
Writing for the CourtOPINION OF THE COURT BY CHIEF JUSTICE MINTON
Citation599 S.W.3d 781
Parties William M. LANDRUM III, in His Official Capacity as Secretary of the Finance and Administration Cabinet, Appellant v. COMMONWEALTH of Kentucky EX REL. Andy BESHEAR, Attorney General and Andy Beshear in His Official Capacity as Attorney General for the Commonwealth of Kentucky, Appellee
Decision Date29 August 2019
Docket Number2018-SC-000122-TG

599 S.W.3d 781

William M. LANDRUM III, in His Official Capacity as Secretary of the Finance and Administration Cabinet, Appellant
v.
COMMONWEALTH of Kentucky EX REL.
Andy BESHEAR, Attorney General and Andy Beshear in His Official Capacity as Attorney General for the Commonwealth of Kentucky, Appellee

2018-SC-000122-TG

Supreme Court of Kentucky.

AUGUST 29, 2019


COUNSEL FOR APPELLANT: Mark Stephen Pitt, Stephen Chad Meredith, Berry Lee Dunn, Matthew Kuhn, Office of the Governor, Brett Nolan, Office of the General Counsel.

COUNSEL FOR APPELLEE: Andy Beshear, Attorney General of Kentucky, John Michael Brown, La Tasha Arnae Buckner, Steven Travis Mayo, Laura Tipton, Taylor Allen Payne, Marc Farris, Office of the Attorney General.

OPINION OF THE COURT BY CHIEF JUSTICE MINTON

599 S.W.3d 784

The Office of the Attorney General ("OAG") contracted on a contingency-fee basis with a team of law firms led by Morgan & Morgan to conduct investigation into and commence litigation on potential statutory violations arising out of the manufacturing, distribution, and dispensing of prescription opioid products within the Commonwealth. The Government Contract Review Committee ("Committee") of the Legislative Research Commission ("LRC") recommended that Secretary of the Finance and Administration Cabinet ("Cabinet") William Landrum disapprove and cancel the contract. And Secretary Landrum ultimately did as the Committee recommended.

Asserting the right—free of the Committee's and Secretary Landrum's interference—to contract with outside counsel on a contingency-fee basis, the OAG brought this declaratory-judgment action in Franklin Circuit Court to vindicate this asserted right. Finding that the OAG is subject to the contracting-oversight requirements of the Model Procurement Code ("MPC")1 and that the Committee and Secretary Landrum did not act inappropriately by disapproving and ultimately canceling the contract, we find in favor of Secretary Landrum. Accordingly, we reverse the judgment of the Franklin Circuit Court and remand this case to that court with direction to enter judgment in favor of Secretary Landrum.

I. BACKGROUND.

In June 2017, the OAG sought to contract with outside counsel on a contingency-fee basis to investigate and litigate potential violations of state consumer-protection, Medicaid, antitrust, and other statutes in the manufacturing, distribution, and dispensing of prescription opioid products within the Commonwealth. Out of the seventeen law firms submitting proposals, the OAG review panel decided to contract with a team of law firms and attorneys led by Morgan & Morgan.2

The OAG prepared its contract with the Morgan & Morgan team and submitted it to the Cabinet on September 21, 2017. On October 31, 2017, the Cabinet responded, rejecting the proposed contract. The Cabinet explained that the contract should include additional language requiring that any funds produced under the contract must first be paid in full to the State Treasurer before the contingent fee would be distributed to counsel. On November 2, 2017, the Cabinet proposed language to address these concerns. The OAG added this language and submitted the revised contract on November 14, 2017. On December 13, 2017, the Cabinet notified the OAG that it disapproved the added language and rejected the revised contract. The OAG revised the contract again and submitted a third version. The Cabinet ultimately approved the contract on December 21, 2017.

599 S.W.3d 785

The Cabinet then submitted the contract to the Committee. The Committee held a meeting to review it on January 9, 2018. The Committee voted to disapprove the contract and informed Secretary Landrum of this decision in a letter dated January 10, 2018. In the letter, the LRC explained the reason for its recommended disapproval of the contract: "The committee is concerned, in consideration of the enormity of the potential financial settlement resulting from litigation, a more favorable contingency fee schedule has not been extended to the Commonwealth and there is no cap on the total amount of fees to be paid to the contractor." The letter then explained, "By disapproving this contract, the committee was merely exercising its statutory oversight duties in an attempt to protect taxpayer dollars."

On January 16, 2018, before Secretary Landrum took any action regarding the letter, the OAG filed this declaratory judgment action in Franklin Circuit Court. The OAG sought the following relief, as specified in its complaint:

I. That this Court issue a declaration and order that:

A. the Attorney General's contracts for legal services are exempt from review by the Finance and Administration Cabinet and Government Contract Review Committee, pursuant to KRS 15.100(3), KRS 45A.700(1), and the Kentucky Constitution;

B. the Government Contract Review Committee's disapproval of the Contract is null and void;

C. any attempt by Secretary Landrum to cancel or otherwise interfere with the Contract is null and void; and

D. in the alternative, the review of the Contract was clearly erroneous, arbitrary and capricious, and contrary to law, in violation of the Model Procurement Code.

The OAG also sought a permanent injunction, essentially preventing the LRC and the Secretary from "interfering" with this contract with the Morgan & Morgan team and any future contract for outside representation the OAG may make.

On January 18, 2018, Secretary Landrum notified the OAG, the LRC, the Committee, and the Morgan & Morgan team that he "will not overrule the decision to disapprove the contract." He also stated, "for all of the reasons raised by the Committee, I have determined that the contract is canceled pursuant to KRS 45A.705(6)(b)."

Both parties filed motions for summary judgment in the declaratory-judgment action. The trial court granted the OAG basically all the relief it sought. Secretary Landrum then filed a Notice of Appeal and Motion for Emergency Relief in the Court of Appeals. After the Court of Appeals denied Secretary Landrum's Motion for Emergency Relief, Secretary Landrum sought to transfer the case to this Court, which we granted.

II. ANALYSIS.

A. The constitutional authority of the Attorney General to enter into a contingency-fee contract with outside counsel is subject to the overriding authority of the General Assembly.

The Kentucky Constitution names the Attorney General as a constitutional state officer and prescribes his or her powers. Section 91 of the Kentucky Constitution states: "A[n] ... Attorney-General[ ] shall be elected by the qualified voters of the State[.] ... The duties of [the Attorney General] shall be such as may be

599 S.W.3d 786

prescribed by law [.]"3 Section 93 of the Kentucky Constitution provides further guidance on the power of the Attorney General: "The duties and responsibilities of [the Attorney General] shall be prescribed by law [.]"4 Sections 91 and 93 make clear that the Attorney General's power extends only so far as what the law prescribes. And since "[t]he Legislature makes the laws,"5 the General Assembly is the body that outlines the power of the Attorney General.

That the Attorney General's power is essentially completely governed by the General Assembly is a concept made clear by former Chief Justice Palmore in Brown v. Barkley : "The officers named in Const. Sec. 91 [e.g., the Attorney General] have no powers or duties not assigned to them by statute, except for ... the common-law prerogatives of the Attorney-General that have not been removed or diminished by statute."6 This Court expounded further on this principle in Johnson v. Commonwealth ex rel. Meredith:

In conclusion, we are of opinion that, while the Attorney General possesses all the power and authority appertaining to the office under common law and naturally and traditionally belonging to it, nevertheless the General Assembly may withdraw those powers and assign them to others or may authorize the employment of other counsel for the departments and officers of the state to perform them. This, however, is subject to the limitation that the office may not be stripped of all duties and rights so as to leave it an empty shell, for, obviously, as the legislature cannot abolish the office directly, it cannot do so indirectly by depriving the incumbent of all his substantial prerogatives or by practically preventing him from discharging the substantial things appertaining to the office.7

What we can definitively say as it pertains to the present case: Whatever the breadth of the constitutional power of the Attorney General to enter into a contingency-fee contract with outside counsel may be, that power gives way to the overriding authority of the General Assembly.

Other jurisdictions honor this principle, as well. "An attorney general has the authority to appoint special private counsel in actions or proceedings instituted in the attorney general's name, including the authority to hire private counsel in a civil action on a contingency fee basis, in the absence of a statutory prohibition. "8 Moreover,

599 S.W.3d 787

"When a statute governs the...

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3 practice notes
  • Overstreet v. Mayberry, 2019-SC-000041-TG
    • United States
    • Kentucky Supreme Court
    • 9 d4 Julho d4 2020
    ...and should properly be taken and what penalties should be sought.") (citations omitted).99 See Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 787-90 (Ky. 2019) (holding that any possible recovery from lawsuit in which the Office of Attorney General had hired outside counsel to pu......
  • Bloyer v. Commonwealth, 2020-SC-0473-DG
    • United States
    • United States State Supreme Court (Kentucky)
    • 16 d4 Junho d4 2022
    ...not contain the "shield" phrase "notwithstanding other provisions of applicable law ...." See Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 791 (Ky. 2019). "[N ]otwithstanding is a fail-safe way of ensuring that the clause it introduces will absolutely, positively prevail." A. S......
  • Dolt v. Commonwealth ex rel. Landrum, 2019-SC-0197-DG
    • United States
    • United States State Supreme Court (Kentucky)
    • 24 d4 Setembro d4 2020
    ...lens of this de novo standard of review that we examine this case.B. Model Procurement Code In Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 789 (Ky. 2019), we unequivocally held the Model Procurement Code, KRS Chapter 45A, applies to contracts entered into by the OAG. All contr......
3 cases
  • Overstreet v. Mayberry, 2019-SC-000041-TG
    • United States
    • Kentucky Supreme Court
    • 9 d4 Julho d4 2020
    ...should properly be taken and what penalties should be sought.") (citations omitted).99 See Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 787-90 (Ky. 2019) (holding that any possible recovery from lawsuit in which the Office of Attorney General had hired outside counsel to p......
  • Bloyer v. Commonwealth, 2020-SC-0473-DG
    • United States
    • United States State Supreme Court (Kentucky)
    • 16 d4 Junho d4 2022
    ...phrase "notwithstanding other provisions of applicable law ...." See Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 791 (Ky. 2019). "[N ]otwithstanding is a fail-safe way of ensuring that the clause it introduces will absolutely, positively prevail." A. Scalia......
  • Dolt v. Commonwealth ex rel. Landrum, 2019-SC-0197-DG
    • United States
    • United States State Supreme Court (Kentucky)
    • 24 d4 Setembro d4 2020
    ...lens of this de novo standard of review that we examine this case.B. Model Procurement Code In Landrum v. Commonwealth ex rel. Beshear , 599 S.W.3d 781, 789 (Ky. 2019), we unequivocally held the Model Procurement Code, KRS Chapter 45A, applies to contracts entered into by the OAG. All contr......

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