TOBACCO-LAWSUIT LAWYERS' BILLS RAISE SUNSHINE LAW QUESTIONS

A discussion about public records is beginning to play out in Missouri and other states regarding the attorney fees paid in litigation between the states and the tobacco industry.

A number of states, Missouri included, hired private attorneys in filing litigation against certain tobacco companies seeking recovery of Medicaid expenses on sick smokers.

In 1997, the tobacco industry and about 45 states reached an agreement, called the Master Settlement Agreement, in which the industry agreed to pay $368.5 billion over 25 years in addition to certain terms.

Missouri's part in that agreement is still pending approval in the Eastern District Court of Appeals. Missouri Attorney General Jay Nixon subcontracted out this litigation to private firms under agreements, presumably written, with a private law firm.

The principal private attorney was Thomas Strong from Springfield. Strong's firm has also affiliated with other firms in the state to carry out this agreement.

The Master Settlement Agreement reportedly provides that the reasonable legal fees of the independent contractors hired by Jay Nixon will be paid by the tobacco companies. Apparently, those fees will be paid directly to the independent contractors by the tobacco companies.

This issue has become a point of contention in several states.

In Wisconsin, state officials began arguing over whether the contract with that state's private attorneys was authorized by the proper parties. According to one report, the independent-contractor attorneys were slated to received $75 million.

Another report says the attorneys representing the state of Washington are receiving $80 million.

These kinds of figures are creating questions over whether private lawyers are receiving a windfall as a political favor resulting from campaign contributions. An article in the Milwaukee Journal Sentinel reported that the Wisconsin law firm receiving the fees had done about 25,000 to 50,000 hours of work. The paper calculated the hourly rate for those lawyers at $1,500 to $3,000 per hour.

These kinds of fees leave one somewhat breathless.

Several Missouri Republican state senators are wondering what the facts are behind the Missouri settlement and have begun asking questions of Jay Nixon, a Democrat, regarding the Missouri stipulation. Sarah Steelman, Peter Kinder, David Klarich, Steve Ehlmann and Bill Kennedy penned a letter to Nixon on July 23 seeking copies of the bills from Thomas Strong or any of his subcontractors regarding the Missouri litigation, citing the Sunshine Law.

Attorney General Nixon responded on July 28 that Missouri's settlement will involve no state funds for attorneys' fees. Those expenses "will be borne by the tobacco companies."

Nixon stated that there are no bills from Thomas Strong or any of his affiliated firms in the attorney general's office. His response stated, "Strong has granted the state a release from any obligation for his fees or expenses."

Nixon said the contract with Strong was no longer in effect.

The Republican senators were unsatisfied with this response and asked the attorney general to confirm that his office is satisfied with the work by Strong, has no information regarding the fee Strong will request or if the fee is reasonable. They asked whether the attorney general's office would seek reimbursement for time spent on this litigation prior to the hiring of the independent contractors.

The issues are ripe for Sunshine Law analysis. Did Strong's office become a "public governmental body" or a "quasi-public body" when it signed this contract? Is it a committee appointed by or at the direction of a public governmental body which is authorized to report to a public governmental body? Or does it have as its primary purpose to engage primarily in activities carried out pursuant to an agreement or agreements with governmental bodies?

One questions whether this Master Settlement Agreement is not, in fact, covered under Section 610.021, which provides in subsection (1) that any "settlement agreement relating to legal actions ... involving a public governmental body or any agent or entity representing its interests or acting on its behalf or with its authority ... shall be made public upon final disposition of the matter ... or upon the signing by the parties of the settlement agreement."

That section goes on to emphatically note that "the amounts of any moneys paid ... on behalf of the public governmental body shall be disclosed."

Existing case law in this state makes it clear that the unprivileged information in the bills of attorneys representing public bodies (i.e., number of hours worked and value of services) is not a closed record. And, arguably, once the litigation settles, the portion of the statements relating to the work performed would no longer be closed.

Senator Kinder has filed litigation against the attorney general, claiming the hiring of independent counsel was illegal. His theory was denied at the circuit-court level, but he has filed an appeal.

Nixon's office notes that Kinder has indicated he may run for attorney general in the next election.

The bottom line appears to be that when someone doing business with the state attempts to cover up access to the money involved, the end result is that the public suspects (often with merit) that there is good reason some party doesn't want the information to see the light of day.

Jean Maneke, a Kansas City lawyer, is the Missouri Press Association's legal hotline counselor and frequently speaks and writes on Sunshine Law issues.