Merck Sharp & Dohme Corp. v. Conway
2013 U.S. Dist. LEXIS 73672
| E.D. Ky. | 2013Background
- Merck sued the Kentucky Attorney General under the Kentucky Consumer Protection Act in Franklin Circuit Court; the case was removed, MDL-linked in the Eastern District of Louisiana, remanded back to Kentucky, and Merck sought relief for due-process concerns tied to contingenc y-fee outside counsel.
- The AG retained Garmer & Prather, PLLC as contingency‑fee counsel beginning with the 2010 contract, later updated by a 2011/2012 Current Contract giving the AG final control over litigation.
- Current Contract provides that the AG must approve all aspects of the litigation, may appoint a designated assistant, coordinate with the AG’s office, and require the AG’s express prior written approval for settlements.
- Merck’s 2011 complaint alleges the contingency‑fee arrangement taints due process by creating private financial incentives for the outside counsel working with the AG.
- Merck moved for summary judgment; the AG moved for summary judgment; the court preliminarily denied injunctions and now grants judgment for the AG, finding safeguards present and control retained.
- The court also addressed mootness and concluded the case was not moot despite the Current Contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contingency-fee agreements violate due process? | Merck argues the arrangements lack neutrality safeguards. | AG contends contracts retain control and comply with neutrality. | No; contracts provide safeguards and AG retains control. |
| Was there actual control by the AG over Merck I? | Merck contends outside counsel controlled key decisions. | AG maintained control via oversight and directives. | AG retained decision-making authority; no abdication. |
| Did the AG abdicate settlement authority to outside counsel? | Letters and actions show external control over settlements. | Contingency contracts expressly keep AG settlement authority. | AG retained final settlement authority; no abandonment. |
| Appearance of control in MDL proceedings sufficient? | Lack of personal appearances undermines appearance of control. | MDL context justified limited appearances; control remained. | Appearance of control satisfied; not a basis for summary judgment against AG. |
Key Cases Cited
- State v. Lead Indus. Ass'n, 951 A.2d 428 (R.I. 2008) (contingency-fee contracts must ensure public entity retains control over key decisions)
- County v. Santa Clara v. Superior Court, 50 Cal.4th 35 (Cal. 2010) (contingent-fee agreements require explicit control provisions; public attorneys decide settlements)
- People ex rel. Clancy v. Superior Court of Riverside Cnty., 39 Cal.3d 740 (Cal. 1985) (neutrality may require a public attorney’s involvement; disqualification when private counsel has excess influence)
- State v. Lead Indus. Ass’n, 951 A.2d 480 (R.I. 2006) (specific safeguards and control by public attorney; case-by-case scrutiny)
- Philip Morris, Inc. v. Glendening, 349 Md. 660 (Md. Ct. App. 1998) (contingency-fee agreements constitutional if public entity retains control over critical decisions)