Pfizer challenges agreement between Nev. AG, contingency fee attorneys

CARSON CITY, Nev. (Legal Newsline) - Pfizer, Inc., is asking the Nevada Supreme Court to hear its argument against the contingency fee agreement entered into by private attorneys who are representing the state Attorney General's Office in a lawsuit against it.

Pfizer and two of its companies filed a petition Friday in the Nevada Supreme Court, challenging Nevada Attorney General Catherine Cortez Masto's use of private law firms White & Wetherall and Littlepage Booth in a case against Pfizer over its marketing and sale of certain hormone therapy medicines.

Nevada Attorney General Catherine Cortez Masto authorized private attorneys to bring the action against Pfizer in the name of the State pursuant to a contingent fee contract that gave both the private attorneys and the AG's office a "direct financial interest in the outcome of this suit by obligating the state to pay private attorneys 14% of any recover received 'by settlement or judgment,' while keeping 1% for the office," according to the petition.

The contract listed Littlepage Booth as affiliated counsel and authorized White & Wetherall to make payments and share compensation with it.

On Jan. 17, 2013, Pfizer filed a motion to disallow Masto's retention of private counsel in violation of Nevada law, or, in the alternative, motion to stay. On Feb. 5, 2013, the State filed its opposition brief and on Feb. 14, 2013, Pfizer filed its reply brief in support of their motion.

Oral arguments were held on Feb. 20, 2013, and the district court acknowledged that a similar challenge to the AG's retention of private attorneys to prosecute the state's cases was pending before the court, according to the writ.

The district court deferred ruling on the motion until the court issued a decision and order in the case pending before the court, which was by Lender Processing Services. On Feb. 24, the parties in the LPS case filed a stipulation to dismiss the proceeding before the court could issue a decision on the challenge to the AG's retention of private attorneys in the LPS case.

"Since the district court’s decision to defer ruling, [the] petitioners have faced abusive discovery practices from the state's private attorneys, necessitating the filing of four motions to compel... all of which were granted... and a motion for sanctions based on the state's spoliation of evidence and discovery abuses..." the writ states.

"Petitioners were forced to file these motions because in its discovery responses, the state had initially objected to every request, refused to answer the vast majority of them and initially only produced two documents: the state's contract retaining private attorneys and an email from that counsel."

Additional motions to compel were required because the state refused to produce a privilege log, would not produce documents from other state agencies and refused, and continues to refuse, to identify with particularity each statement and act for which the state seeks a discrete civil penalty, Pfizer says.

"[E]ven if this court were to find that the retention of private attorneys could legally comply with due process, the state's conduct in this case has clearly fallen constitutionally short of that standard," the writ states.

Pfizer is asking the court to decide if Masto violated state law by hiring private attorneys without authorization from the state Legislature and if the use of private attorneys with a direct financial interest in the outcome of the State's criminal and civil claims compromise the State's impartiality and neutrality.

Other challenges to similar agreements were undertaken by the former manufacturers of lead paint that were sued in several jurisdictions.

In 1985, the California Supreme Court decided that a state or locality should not be able to hire private attorneys on a contingency fee basis to pursue public enforcement claims.

In the paint companies' challenge in 2010, the California Supreme Court amended its 1985 decision, concluding that, to the extent Clancy, the 1985 case, suggested that public nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, that analysis was "unnecessarily broad" and failed to take into account the wide spectrum of cases that fall within the public nuisance rubric.

The court found that both the types of remedies sought and the types of interests implicated differed significantly from those involved in Clancy, and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors was unwarranted.

In Rhode Island, the paint defendants challenged the State's arrangement with outside contingency fee counsel on the grounds that retention unlawfully delegated the AG's authority to private, self-interested parties, violated public policy and unconstitutionally appropriated state funds to pay outside attorneys without legislative review and approval.

The Rhode Island Supreme Court declined to recognize a per se prohibition on the AG's use of contingency-fee counsel and ruled that the AG must exercise absolute and total control over all critical decision-making throughout the course of litigation.

Nine states - Alabama, Arizona, Florida, Indiana, Iowa, Louisiana, Mississippi, Missouri and Wisconsin - have passed "sunshine" legislation to create an open process of hiring outside contingency fee counsel.

These measures require state attorneys general to disclose their contingency fee contracts, ensure that they maintain control of the litigation and impose limitations on fee awards to private attorneys.

Supreme Court of the State of Nevada case number: 66155

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.