American Bankers Management Co v. Eric Heryford, 885 F.3d 629

Background

Trinity County District Attorney Eric Heryford filed a consumer-protection action under California's Unfair Competition Law (UCL) seeking civil penalties, restitution, and injunctive relief against American Bankers Management Co., Inc.
Heryford retained three private law firms as “Special Assistant District Attorneys” on a contingency-fee basis: firms would advance costs and be reimbursed from any recovery and receive 30% of remaining recovery; no recovery = no payment.
American Bankers sued Heryford in federal court under 42 U.S.C. § 1983 seeking declaratory and injunctive relief, claiming the contingency-fee arrangement violated federal due process.
The district court dismissed American Bankers’ complaint; the DA’s office and private firms had refiled the UCL suit in federal court after briefly dismissing it in state court.
The Ninth Circuit considered whether contingent-fee representation by private counsel retained by a public prosecutor to pursue civil penalties violates federal due process and affirmed dismissal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a district attorney's contingency-fee retention of private counsel to pursue UCL civil penalties violates federal due process	The contingency arrangement creates a financial stake that compromises prosecutorial neutrality and the fairness of the process	Arrangement is comparable to qui tam relators and does not inject unconstitutional bias; DA retains ultimate authority and controls use of state powers	No due process violation; contingency-fee retention is permissible
Whether the court should decline to exercise declaratory jurisdiction under Brillhart/Wilton	N/A (sought relief in federal court)	DA invoked Brillhart discretion to decline declaratory relief	Court exercised jurisdiction because injunctive relief was also sought; Brillhart inapplicable
Whether private counsel here wield prosecutorial powers that differ materially from private qui tam relators	Private firms as Special ADAs could access state investigatory powers and thus create greater risk of abuse	Firms’ work is fund-funded; state powers (subpoenas, wiretaps) cannot be used unilaterally by firms and are constrained by federal/state law	No meaningful difference from qui tam relators; safeguards and limits prevent abuse
Whether Marshall/Young and related precedents bar financial incentives for prosecutorial actors	Contingent financial interest parallels disallowed appointment or conflicts and risks improper motivation	Marshall permits zealous prosecution and recognizes limits; Young governed criminal contempt appointment, not civil enforcement by interested private actors	Precedents do not establish a due process bar here; contingent incentives in civil enforcement are permissible

Key Cases Cited

United States ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir.) (qui tam contingent relator awards do not violate due process because relators act as private litigants)
Marshall v. Jerrico, Inc., 446 U.S. 238 (U.S. 1980) (prosecutors may be zealous; financial incentives for civil enforcement do not automatically raise due process problems)
Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787 (U.S. 1987) (appointment of counsel as prosecutor in criminal contempt creates conflict; grounded in supervisory power)
Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (U.S. 1942) (discretionary abstention under Declaratory Judgment Act)
Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (clarifies Brillhart discretion)
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (U.S. 2000) (False Claims Act penalties are punitive in nature)
Tumey v. Ohio, 273 U.S. 510 (U.S. 1927) (prohibition on judges with direct financial interest)
Ward v. Village of Monroeville, 409 U.S. 57 (U.S. 1972) (constitutional limits on biased adjudicators)
Villa v. Maricopa County, 865 F.3d 1224 (9th Cir.) (limitations on state authorization for electronic surveillance applications)