State ex rel. Nixon, Att. General v. American Tobacco Company

• Decision Date: 12 December 2000
• Citation: 34 S.W.3d 122
• Parties: (Mo.banc 2000) . Supreme Court of Missouri State of Missouri, ex rel. Jeremiah W. (Jay) Nixon, Attorney General, Respondent v. American Tobacco Company, Inc., et al., Respondents, and the City of St. Louis, et al., Proposed Intervenors/Appellants. (consolidated with) State Senator Peter Kinder and Rickey Jamerson, Appellants v. Jeremiah W. (Jay) Nixon, Attorney General, and Thomas Strong, Respondents. Case Number: SC82392 & SC82898 Handdown Date:
• Court: Missouri Supreme Court

34 S.W.3d 122 (Mo.banc 2000)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Supreme Court of Missouri

State of Missouri, ex rel. Jeremiah W. (Jay) Nixon, Attorney General, Respondent v. American Tobacco Company, Inc., et al., Respondents, and the City of St. Louis, et al., Proposed Intervenors/Appellants. (consolidated with) State Senator Peter Kinder and Rickey Jamerson, Appellants v. Jeremiah W. (Jay) Nixon, Attorney General, and Thomas Strong, Respondents.

Case Number: SC82392 & SC82898

Handdown Date: 12/12/2000

Appeal From: Circuit Court of the City of St. Louis, Hon. Jimmie M. Edwards, Judge and the Circuit Court of Cole County, Hon. Thomas J. Brown III, Judge

Counsel for Appellant: Kenneth Brostron, W. Bevis Schock, Larry D. Coleman, Derald L. Gab,

Counsel for Respondent: Paul C. Wilson, Thomas G. Strong, Edward D. Robertson, Jr., J. William Newbold, Thomas F. Gardner, Robert McDermott, Alan Kohn, Dan K. Webb, Frank N. Gundlach, Andrew McGaan, John Nyhan, Arthur L. Smith, Adam Stein, Steven Klugman, Kenneth Mallin, Rodney Ott, Michael C. Lasky, Robert Hoemeke, Larry E. Hepler, Richard E. Boyle, Gene Voigts, Charles Joley and Michael Fay

Opinion Summary:

The State of Missouri filed suit against several manufacturers of tobacco products seeking to obtain damages, restitution, civil penalties, punitive damages, declaratory and injunctive relief, and various other forms of relief in connection with the tobacco defendants' marketing and sales of products in Missouri. The attorney general appointed a special assistant attorney general for the tobacco litigation. Under their contract the special assistant was to provide all necessary financial and personnel resources to bring the case to trial. No reimbursement was due the special assistant for expenses and costs beyond the compensation amounts under the contract. The tobacco defendants and the state reached a settlement of the state's claims.

Several political subdivisions and not-for-profit agencies sought to intervene in the original action. The trial court denied their requests.

In a separate action, state Senator Peter Kinder and Mr. Rickey Jamerson filed suit contesting the contract between the attorney general and the special assistant attorney general. Summary judgment was entered for the attorney general and the special assistant attorney general on the contract.

AFFIRMED.

Court en banc holds:

(1) The City of St. Louis has the power to litigate claims in its own right where its own financial interests have been affected. There is no statutory or constitutional provision that allows the attorney general to control or compromise the City's claims. However, the City's motion to intervene lacks a showing that the City's interests in the future may be impaired or impeded by this settlement to support intervention as a matter of right because the attorney general does not have the power to extinguish the City's claim by this settlement. Accordingly, the trial court's denial of the City's motion to intervene is affirmed. (2) (A) Individual Coleman contends she is entitled to intervene in this suit pursuant to Rule 52.12(a)(1) because "a statute of this state confers an unconditional right to intervene." Coleman asserts that section 537.080, the wrongful death statute, confers such a right. She raised this issue for the first time on appeal. An issue that was never presented to or decided by the trial court is not preserved for appellate review. In any event, the wrongful death statute does not provide her with an unconditional right to intervene. The State never asserted a cause of action against the tobacco defendants for wrongful death; thus, section 537.080 does not apply.

(B) Coleman is not entitled to intervene under permissive intervention. Since nothing in the master settlement agreement (MSA) would impair or impede her individual cause of action, she fails to show an inability to protect her interest in the wrongful death action. Such a showing is required to obtain permissive intervention.

(3) (A) Two consumers sought intervention alleging they will not receive funds under the settlement that they otherwise would have received under the Missouri Merchandising Practices Act, specifically section 407.100. By the terms of the statute, it is within the attorney general's discretion whether to seek injunctive relief or restitution on behalf of the citizens of Missouri. In this case, the parties to the litigation entered into a settlement that did not reach the MMPA claims. Absent a finding or admission of a violation of the MMPA, the trial court was without jurisdiction to order restitution from the settlement funds. The consumers lack any interest in the settlement sufficient to justify intervention under Rule 52.12(a).

(B) The consumers claimed they are situated such that disposition of the matter between the tobacco defendants and the State impairs or impedes their ability to protect their interests. They may protect their interest by bringing a private action pursuant to section 407.025.

(C) The Consumers contended their claims will be impeded under the MSA because it permits tobacco defendants to claim a credit for amounts paid under the MSA against any judgment rendered against the tobacco defendants in a section 407.025 proceeding. This is not the case. Because the consumers would be seeking individual relief for separate and distinct injuries, an exception explicitly provided in the MSA, there would be no offset. Even if the tobacco defendants were entitled to a credit under the MSA, the credit would be from the amounts to be paid to the State, not from Consumers.

(D) Given the availability of alternative relief and the possibility of undue delay and prejudice to the original parties in the action, this Court cannot find that the denial was so unreasonable as to require permissive intervention.

(4) To the extent that taxpayer and smoker Neel has any interest in the settlement, that interest is clearly neither impaired nor impeded. Neel could file a separate lawsuit to address her allegations. She "would not be bound by any possible judgment in [the] case -- as that case now stand."

(5) In order to have standing, a taxpayer must demonstrate either: (a) a direct expenditure of funds generated through taxation, (b) an increased levy in taxes, or (c) a pecuniary loss attributable to the challenged transaction of a municipality. Kinder and Jamerson's petition makes sufficient allegations to support taxpayer standing to challenge the legality of the fee contract.

(6) For purposes of justiciability, it suffices to point out that the tobacco companies would owe the special assistant attorney general nothing if he were not representing the State of Missouri, and if there is a claim for attorneys' fees from these tobacco defendants, the claim exists because of the underlying claims of the State of Missouri as to the merits of the controversy between the State and the tobacco defendants. Under these facts, justiciability is established.

(7) While the payment provisions to special assistant attorney general in this case are atypical, they are not necessarily improper. Rule 4-1.8 provides that a lawyer shall not accept compensation for representing a client from one other than the client unless the client consents after consultation. Similarly, the comments following Rule 4-1.7 with regard to the interest of a person paying for a lawyer's service provide:

A lawyer may be paid from a source other than the client, if the client is informed of that fact and consents and the arrangement does not compromise the lawyer's duty of loyalty to the client.

So long as the client, the State of Missouri, is informed of the fee arrangement between tobacco defendants and the special assistant attorney general, consents to the arrangement, and the arrangement does not compromise the lawyer's duty of loyalty to the State, the fee arrangement is permissible.

(8) The statute that allows for the attorney general to hire assistants and to pay them from appropriations does not prohibit the attorney general in the exercise of his common law power from entering into contingency fee arrangements or agreements that otherwise provide for civil defendants sued by the State to pay attorney fees directly to the State's outside counsel. But the General Assembly in this case can revoke that power and withhold its consent as the client by enacting legislation that forbids the attorney general from entering into the fee arrangement or otherwise provide an alternative mechanism for compensating the special assistant attorneys general.

(9) Thatcher v. City of St. Louis involves a charitable trust and is not applicable to this case.

(10) Despite the contention that the judgment is inconsistent, it is clear that the trial court granted the attorney general and special attorney general's motion for judgment on the pleadings and denied Kinder and Jamerson's motion. The remaining language regarding dismissal of plaintiffs' petition with prejudice is mere surplusage and is disregarded.

(11) The claim for attorney fees is moot.

(12) The MSA achieves state-specific finality upon this opinion becoming final. To the extent the opinion adjusts the attorney fees provision of the MSA to allow legislative disapproval or change, those provisions regarding attorney fees and any separate agreements with regard to fees made directly between the special assistant attorneys general and the tobacco defendants have no bearing on Missouri reaching state-specific finality as provided in the MSA.

(13) The parties negotiated a deadline of December 31, 2001, for achieving state specific finality. The Court adopts the parties' deadline as the deadline for the legislature to take action upon this fee arrangement. If the General Assembly does not enact legislation by December 31, 2001, the settlement provisions as to attorneys fees as...