Disqualify Rendell's outside counsel, paint association argues

John O'Brien Aug. 20, 2009, 2:23pm


HARRISBURG, Pa. (Legal Newsline) - A trade association says government agencies that were lured by the "siren song" of plaintiffs attorneys seeking state contracts have jeopardized balanced government decision-making in parens patriae litigation.

The National Paint and Coatings Association on Aug. 11 submitted an amicus brief to the Pennsylvania Supreme Court in Janssen Pharmaceutica's challenge to Pennsylvania Gov. Ed Rendell hiring outside counsel on a contingency fee to sue the company.

Rendell hired Houston-based Bailey Perrin Bailey, a firm that donated $75,000 to his re-election campaign and another $16,000 in airplane travel. They filed the suit after state Attorney General Tom Corbett declined their contingency fee offer.

The paint industry has been a target of similar lawsuits filed over lead paint.

"The vast majority of state and local governments properly rejected these private attorney solicitations, continuing instead with their successful efforts to reduce blood lead levels through proper governmental actions, and those governments who did respond to the private attorneys' siren song have seen their lawsuits uniformly rejected by every court to finally address the issue," says the brief, posted on the Web site Law and More.

"But nonetheless, the costs imposed on NPCA members from the private attorneys' entrepreneurial litigation campaign have been significant. NPCA members have been compelled to expend millions of dollars in defense costs, and they have been improperly stigmatized for the historic sale of lawful products more than 30 years ago."

The state Supreme Court agreed to hear Janssen's challenge in July. Arguments are scheduled for Oct. 21.

The Court will rule on:

-Whether Janssen lacks standing to seek the disqualification of BPB on the basis of alleged violations of constitutional law;

-Whether Rendell's office is allowed to enter into a contingent fee agreement with BPB;

-Whether BPB should be disqualified because the General Assembly did not authorize the contingent fee contract; and

-Whether BPB should be disqualified because it has a direct financial interest in the outcome of the litigation.

NPCA wrote that it wanted to address a separate flaw in the State's argument than Janssen.

The State has failed "to recognize the distorting impacts of contingent fee agreements not only on the decision-making of the retained private attorneys, but also on the decision-making of the government attorneys who retained and on the proper balancing of governmental authority exercised by the legislative, executive and judicial branches in connection with its quasi-sovereign parens patriae interests."

The brief calls a lawsuit brought at no cost to the government a "moral hazard" and creates improper financial incentives for the outside counsel and government.

"The appearance of a pay-to-play scheme has led to significant controversy that in itself has inflicted significant injury to the public trust in the fair exercise of government authority in Pennsylvania, an injury that is exacerbated by the fact that the State has thus apparently contracted away one of its most core responsibilities of serving as parens patriae for its citizenry as a whole," the brief says.

"And the Commonwealth's contingent fee agreement inflicts and impermissible deprivation as well of the due process rights of the targets of the private plaintiff counsel's litigation business plan."

Attorneys for Janssen are not making the argument for BPB's disqualification based on the contributions given to Rendell, but have mentioned them in several briefs.

Bailey has contributed heavily in other states, also giving $75,000 to Mississippi Attorney General Jim Hood, who hired BPB to pursue a claim against Eli Lilly & Co.

In Louisiana, another state BPB is representing in litigation, Bailey gave $20,000 to the state's Democratic Party. In Arkansas, which hired BPB for a suit against Janssen, he gave $70,000 to the Democratic Party in 2006.

Attorneys for Janssen argue that counsel representing a government office should be motivated by justice, not money, and that BPB is controlling the decision-making instead of someone from the Office of General Counsel.

"There wasn't the slightest bit of pay-to-play here," Rendell told the Philadelphia Inquirer. "I never put a dime of state money in jeopardy for Ken Bailey."

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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