The Pennsylvania Supreme Court this week missed an opportunity to protect the due process rights of companies facing litigation from the improper alliance of government officials and private contingency fee counsel.  See Commonwealth of Pennsylvania, Office of General Counsel v. Janssen Pharmaceutica, Inc., No. 24 EAP 2009 (Aug. 17, 2010).

Back in 2008, OGC filed a complaint against Janssen, raising various statutory and common law tort claims related to Risperdal, a prescription antipsychotic medication marketed by Janssen.
Instead of prosecuting the action itself, OGC had retained Bailey Perrin, a private law firm based in Houston, Texas, to prosecute the action on a contingent fee basis.  The Commonwealth’s retention of contingent fee private counsel in this matter raised significant issues including whether and when state law authorizes the Office of General Counsel to enter into a contingent fee contract with outside counsel; whether the Commonwealth’s hiring of outside litigation counsel on a contingent fee basis violates the state constitution, including the separation-of-powers mandate of the Pennsylvania Constitution; and whether the Commonwealth’s hiring of outside litigation counsel on a contingent fee basis violates the due process rights of the defendant company.

This case was an appeal of the trial court’s order denying the motion of appellant Janssen to disqualify contingent fee counsel retained by appellee, the Commonwealth’s Office of General Counsel (“OGC”). The Court took the case on a grant of extraordinary relief pursuant to 42 Pa.C.S.§ 726.

(Note: Just last month the California supreme court took a major step backward by modifying a 1985 decision that had properly limited the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation.)

The majority never reached the merits, finding no standing and narrowly construing some of Janssen’s arguments to get to that result. The Court focused on the threshold question of whether Janssen had standing to challenge Bailey Perrin’s representation of the OGC. The Court acknowledged that the OGC did not even argue statutory standing to the trial court, but then concluded that Janssen didn’t argue that the standing issue was thereby waived.

Thus free to inquire, the Court found no standing, and then made “clear that the standing question we are asked to decide is one of statutory interpretation” only, under the Commonwealth’s Attorneys Act, which allegedly gave the OGC authority to retain outside counsel. But Janssen argued that it also had standing to move to disqualify Bailey Perrin because nothing in the Attorneys Act prevents a litigant from challenging OGC’s unconstitutional usurpation of the General Assembly’s spending powers, or from litigating due process claims deriving from the Commonwealth’s retention of private contingent fee counsel.

Indeed, Justice Saylor stated in his Dissenting Opinion that he would apply traditional standing principles; that the Constitution is obviously the supreme law of the land that cannot be trumped by a statute; and that, therefore, Janssen’s constitutional claims may not be barred by the standing limitations of the statute.

The majority dismissed that by asserting that, under the theory Justice Saylor proposed, application of the standing restriction in the Commonwealth Attorneys Act to limit standing here would be unconstitutional. But Janssen never argued that traditional standing analysis should apply, says the majority. So, while Justice Saylor has formed “a cogent argument concerning traditional standing and the constitutionality” of the act, it is not the argument the majority perceived to be advanced by Janssen. The majority refused to read Janssen’s challenge as involving a constitutional challenge to the statutory standing limitation, with a consequent resort to traditional standing principles.

That may leave the door open for defendants in a future case who are victims of the unchecked alliance of elected officials and private contingency fee plaintiff lawyers, who are not elected and have their own separate interests.

The legal policy of many states strongly favors open, competitive bidding for contracts involving state funds. Such requirements, included in some state Constitutions and various statutes, are designed to prevent fraud, eliminate bias and favoritism, and thus protect vital public interests. Those same goals of open and good government reside in the requirement that state officials give their undivided loyalty to the people of a state.  Many of the contingent fee contracts used by state officials to bring mass tort actions violate the core principle that attorneys pursuing actions on behalf of the state represent a sovereign whose obligation to govern impartially is essential to its right to govern. Government attorneys must exercise independent judgment as a ministers of justice and not act simply as advocates. The impartiality required of government lawyers cannot be met where the private pecuniary interest inherent in the contingent fee is the primary motive force behind the bringing of the action. By turning over sovereign prosecutorial-like power to contingency counsel, a state effectively creates a new branch of government – motivated by the prospect of private gain rather than the pursuit of justice or the public welfare.

This subversion of neutrality does more than implicate the due process rights of those confronting such tainted prosecutions. Direction of state prosecutions by financially interested surrogates also damages the very public interest that such litigation is supposed to advance. Here, the allegations of the complaint were crafted more for the pecuniary goals of counsel than for the needs of the patients served by the allegedly affected state programs.

[Your faithful blogger was able to contribute to the amicus brief of the Washington Legal Foundation, the public interest law and policy center, in this matter.]