COURT REJECTS ATTORNEY FEES CHALLENGE

The Missouri attorney general's contract with private attorneys to handle the state's lawsuit against the tobacco industry is valid, a state appellate panel has ruled.

State Sen. Peter Kinder, R-Cape Girardeau had sued Attorney General Jay Nixon and the attorneys representing Missouri in the tobacco case, hoping to get the contract thrown out on legal and constitutional grounds. Kinder contends the attorneys, including some of Nixon's political supporters, stood to make millions of dollars from the case.

A three-judge panel of the Missouri Court of Appeals Western District in Kansas City unanimously upheld a lower court's ruling against Kinder. The appeals court opinion was handed down Tuesday.

"It was no surprise," Nixon said of the ruling. "The court upheld what has been Missouri law for almost 200 years." Nixon said a state law dating to the beginning of statehood in 1821 allows the attorney general to contract cases with private attorneys.

Kinder plans to appeal to the Missouri Supreme Court.

"I just don't believe it can be lawful in this state to allow the attorney general to flip through his Rolodex and hire his (campaign) contributors to make tens or hundreds of millions of dollars through litigation," he said.

Missouri eventually joined a number of states in a national settlement with the tobacco industry.

The state will get an estimated $6.7 billion over 25 years from the settlement. However, Missouri has yet to receive a dime in tobacco revenue. Missouri is one of only four participating states yet to financially benefit from the settlement. Pending litigation unrelated to Kinder's lawsuit is holding up Missouri's first payment, which is being held in an escrow account in New York.

Nixon said Kinder's planned appeal to the Supreme Court will have no impact on Missouri's participation in the settlement. "Peter Kinder has had no impact on how settlement shakes out except to criticize it," Nixon said.

Kinder originally filed his lawsuit in August 1998 in Cole County. Circuit Judge Thomas J. Brown ruled against the senator, prompting the appeal. Oral arguments before the Court of Appeals took place in September.

In its opinion, written by Judge Joseph M. Ellis, the court held that Nixon's contract with the attorneys did not violate state statutes. The court also held that the compensation for the attorneys is not subject to legislative approval through the budget appropriations process since the fees will be paid by the tobacco industry and not state revenue.

Nixon said the attorneys have yet to receive any compensation and won't until the litigation surrounding the settlement is resolved and the state gets its first payment. The tobacco industry will pay those fees in addition to the $6.7 billion the state expects to get from the settlement.

"The fees will be paid 100 percent by big tobacco," Nixon said. "The state does not have to pay one penny in fees and costs."

Once the settlement is resolved, the exact amount of the attorney fees will be determined through arbitration.