State v. Actavis Pharma, Inc. & a.
167 A.3d 1277
| N.H. | 2017Background
- In June and September 2015 the New Hampshire Attorney General’s Office (OAG) retained Cohen Milstein on a contingency-fee basis to assist in investigating and potentially litigating claims about fraudulent marketing of opioid drugs.
- In August 2015 the OAG issued administrative subpoenas under the Consumer Protection Act (RSA ch. 358-A) to several opioid manufacturers requesting documents about sales, marketing, and prescribing.
- Defendants initially agreed to comply but then refused, objecting that the OAG’s contingency-fee retention of Cohen Milstein was unlawful and created conflicts of interest.
- The OAG moved to enforce the subpoenas; defendants counterclaimed and sought a protective order declaring the contingency-fee agreement void and barring Cohen Milstein’s participation.
- The superior court granted the protective order, held the contingency-fee agreement ultra vires for failing to obtain required approvals, but rejected defendants’ Ethics Code and due process claims.
- The State appealed the standing ruling; defendants cross-appealed the Ethics Code and due process determinations. The Supreme Court reversed on standing and other grounds and remanded.
Issues
| Issue | State's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Do defendants have standing to challenge the OAG’s contingency-fee contract as ultra vires under RSA 7:12 and RSA 7:6-f? | Defendants lack standing because they failed to show actual, traceable harm from the OAG’s alleged failure to obtain approvals. | The contingency fee taints the investigation and creates a conflict of interest that personally injures subpoenaed defendants. | No standing: defendants failed to show their alleged bias injury was traceable to the statutory approval defect or that RSA 7:6-f injury was actual or imminent. |
| Does the Executive Branch Code of Ethics (RSA 21-G:21–27) create a private right of action for defendants to sue? | (State) Ethics Code does not create a private civil remedy; enforcement is for the ethics committee. | (Defendants) Ethics Code violations support their challenge and provide a basis to enjoin Cohen Milstein. | No private right of action under the Ethics Code; defendants lack standing to sue under it. |
| Does the contingency-fee agreement violate common-law or professional-ethics rules by making Cohen Milstein a public attorney or creating an impermissible conflict? | (State) The agreement expressly leaves the OAG in control; Cohen Milstein is not a public attorney and has no independent authority. | (Defendants) A private lawyer with a financial stake in outcomes cannot act for the State without compromising impartiality. | Agreement preserves OAG control and key decision-making; Cohen Milstein is not a substitute public attorney, so no common-law or ethics violation on this record. |
| Does the contingency-fee arrangement violate due process by creating an impermissible risk of bias in enforcement? | (State) OAG retained supervisory control, neutralizing any conflict; precedent does not categorically bar such arrangements in civil enforcement. | (Defendants) Supreme Court precedent prohibits arrangements that risk undermining a government lawyer’s duty to seek justice over private gain. | No reversible error: given the OAG’s retained control in the agreement, the court upheld the trial court’s due process conclusion. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (constitutional standing requires actual or imminent injury)
- Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787 (private counsel in criminal contempt must be as disinterested as public prosecutors)
- Marshall v. Jerrico, Inc., 446 U.S. 238 (neutrality requirements differ for prosecutorial/plaintiff-like functions)
- O’Brien v. New Hampshire Democratic Party, 166 N.H. 138 (standing focuses on legal injury law designed to protect)
- Duncan v. State, 166 N.H. 630 (standing requires an actual, not hypothetical, dispute capable of judicial redress)
- Berry v. Watchtower Bible & Tract Soc., 152 N.H. 407 (statute does not imply private right of action)
- Cross v. Brown, 148 N.H. 485 (statutory right does not necessarily create private cause of action)
- Gallo v. Traina, 166 N.H. 737 (appellant bears burden to demonstrate reversible error)