Meredith v. IeyoubMeredith v. Ieyoub
Michael G. Durand, Daniel G. Founerat, Onebane, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, for respondent.
Hal J. Broussard, Lafayette, for amicus curiae Louisiana Oilfield Contractors.
James C. Gulotta, Jr., Barry W. Ashe, New Orleans, for amicus curiae W.R. Grace & Co.
VICTORY, Justice.
The issue presented in this case is whether the Attorney General of the State of Louisiana has the authority to enter into contingency fee contracts with private attorneys to represent the State in enforcing the State‘s environmental laws. We find that absent legislative authorization, such contracts violate state law and are illegal.
FACTS AND PROCEDURAL HISTORY
The Attorney General entered into a “Contract for Professional Legal Services” (the “Contract“) with two law firms, Domengeaux, Wright, Moroux and Roy, A Professional Law Corporation, and John D. Bernhardt, A Professional Law Corporation (collectively, “Intervenors“). Under the terms of the Contract, Intervenors are appointed as “Special Assistant Attorneys General” to investigate and prosecute state environmental damage claims on a contingency fee basis. Specifically, the Contract provides that if damages are recovered, Intervenors are entitled to “an amount equal to twenty-five percent (25%) of Gross Recovery,1 if any ...” subject to a cap of “$10 million per claim to each of the two firms signing this Contract and $10 million each per claim to Approved Subcontractors listed in Paragraph 13.2, total claims not to exceed 1,000 claims,” plus reimbursement of Qualifying Expenses. In addition, the Contract provides that outside counsel and the Attorney General will direct any person making a payment “constituting Gross Recovery” to pay the attorney fees payable under the Contract directly to outside counsel. To date, Intervenors have filed no state environmental damage claims pursuant to the Contract.
The Louisiana Independent Oil & Gas Association, Inc. (“LIOGA“) and several of its individual members (collectively, “Plaintiffs“) filed suit seeking a judicial declaration that the Contract was invalid under the Louisiana Constitution and statutory law and an injunction prohibiting the implementation
We granted a writ to consider the Attorney General‘s assignments of error that the court of appeal erred (1) by not finding that the respondents lacked standing and that therefore the trial court lacked subject matter jurisdiction to decide the matters at issue; (2) in finding that the Contract violates state law. Meredith v. Ieyoub, 96-1110 (La.6/21/96), 675 So.2d 1094.
DISCUSSION
A. Standing
The Attorney General and Intervenors claim that the Plaintiffs lack standing to bring this suit because no suit has been instituted against them pursuant to the Contract. Plaintiffs assert that they have standing as taxpayers and as members of the industry that is the target of the Contract. The court of appeal found that, although the Plaintiffs “failed to offer proof that the actions of the Attorney General would, with certainty, increase their tax burdens,” because they were seeking to restrain a public body from alleged unlawful action, other methods of proof were available. 672 So.2d at 378. The court of appeal found standing based on Plaintiffs’ “fear they may be called upon to defend potentially groundless claims as targets of an environmental `witch-hunt‘.” Id.
We explained the requirements for standing when a party seeks to restrain a public body from alleged unlawful action in Alliance For Affordable Energy v. Council of City of New Orleans, 96-0700 (La.7/2/96), 677 So.2d 424. In that case, the Alliance for Affordable Energy sought to restrain the New Orleans City Council from entering into professional service contracts with certain utility consultants in violation of the New Orleans City Charter. We held that “because plaintiffs seek to restrain the City Council from entering into certain contracts allegedly through an illegal process, plaintiffs are not required under League of Women Voters [v. City of New Orleans, 381 So.2d 441 (La.1980)] and its progeny to demonstrate a special or particular interest” which is distinct from the public at large. 677 So.2d at 429. “Rather, plaintiffs are afforded a right of action upon a mere showing of an interest, however small and indeterminable.” Id. Although in that case we found that the plaintiffs had proven that the action constituted a burden on their tax base, we also held that plaintiffs’ interest in the health and welfare of the residents of Orleans Parish was sufficient for standing purposes. Id.
Here, the individual members of LIOGA, who would be subject to law suits filed by Intervenors under the Contract, clearly have an interest and therefore have standing to institute this action to restrain the Attorney General from entering into the Contract allegedly in violation of the Constitution and statutory law.
In addition, LIOGA has standing under the requirements for organizational or associational standing set forth in La. Associated General Contractors, Inc. v. State Through Division of Admin., Office of State Purchasing, 95-2105 (La.3/8/96), 669 So.2d 1185, 1190-1191. “An association will have standing to bring a suit solely on behalf of its members and in the absence of injury to itself when:
(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization‘s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members of the lawsuit.
669 So.2d at 1190 (citing Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). We have already stated that the individual members have standing to sue in their own right. In addition, LIOGA claims it is seeking to protect against lawsuits motivated
Accordingly, all Plaintiffs have standing to bring this action.
B. Validity of the Contract under State Law
The separation of powers doctrine, enunciated in
“It is elementary that the `fiscal affairs of the state, the possession, control, administration, and disposition of the property, funds, and revenues of the state, are matters appertaining exclusively to the legislative department.’ ” State v. Duhe, 201 La. 192, 9 So.2d 517, 521 (1942) (citing Carter v. State, 42 La.Ann. 927, 933, 8 So. 836, 837 (1890)). This long-standing principle also applies under the 1974 Constitution, as we have more recently held that “[t]he legislature has control over the finances of the state, except as limited by constitutional provisions.” Louisiana Ass‘n of Educators v. Edwards, 521 So.2d 390, 394 (La.1988). There, we further elaborated on the separation of powers doctrine, holding that “[e]xcept as expressly provided by the constitution, no other branch of government, nor any person holding office in one of them, may exercise the legislative function.” Id. (Emphasis added).
It is also fundamental that “[t]he legislative power of the state is vested in the Legislature.” Board of Commissioners, supra at p. 286 (citing
Thus, under the separation of powers doctrine, unless the Attorney General has been expressly granted the power in the constitution to pay outside counsel contingency fees from state funds, or the Legislature has enacted such a statute, then he has no such power. The question is not, as the Attorney General and Intervenors argue, whether any law prohibits the Attorney General from entering into such contracts because, as we have seen, our constitution vests the power over state finances in the legislative branch as part of its plenary power, a power the Attorney General can obtain only by the constitution or other law.
Thus, we first look for express authority for the Attorney General to enter into the Contract in the constitution. The authority of the Attorney General, part of the executive branch of government, is set out in
There shall be a Department of Justice, headed by the attorney general, who shall be the chief legal officer of the state. The attorney general shall be elected for a term of four years at the state general election. The assistant attorneys shall be appointed by the attorney general to serve at his pleasure.
As necessary for the assertion or protection of any right or interest of the state, the attorney general shall have authority (1) to institute, prosecute, or intervene in any civil action or proceeding; (2) upon the written request of a district attorney, to advise and assist in the prosecution of any criminal case; and (3) for cause, when authorized by the court which would have original jurisdiction and subject to judicial
review, (a) to institute, prosecute, or intervene in any criminal action or proceeding, or (b) to supersede any attorney representing the state in any civil or criminal action. The attorney general shall exercise other powers and perform other duties authorized by this constitution or by law.
The Attorney General and Intervenors argue that the Attorney General‘s powers to institute civil proceedings and to appoint assistant attorneys includes the inherent authority to hire outside attorneys on a contingency fee basis to prosecute these claims. We disagree. Paying outside attorneys to prosecute legal claims on behalf of the state is a financial matter. As our prior jurisprudence indicates, the power over finances must be expressly granted by the constitution to another branch of government or else that power remains with the Legislature. We find nothing in
As the constitution does not expressly give the Attorney General the financial power to hire and pay outside attorneys on a contingency fee basis, we now look to statutory law to see if the Legislature has granted him this power under the Legislature‘s legislative power. When the Legislature has intended to allow the Attorney General to enter into contingency fee contracts in certain types of cases, it has done so by statute. See
However, in environmental cases, the Legislature has stated just the opposite.
A(1) All sums recovered through judgments, settlements, assessments of civil or criminal penalties, funds recovered by suit or settlement from potentially responsible parties for active or abandoned site remediation or cleanup, or otherwise under this Subtitle, or other applicable law, each fiscal year for violation of this Subtitle, shall be paid into the state treasury and shall be credited to the Bond Security and Redemption Fund. After a sufficient amount is allocated from that fund to pay all obligations secured by the full faith and credit of the state which become due and payable with any fiscal year, the treasurer, prior to placing such remaining funds in the state general fund, shall pay into a special fund, which is hereby created in the state treasury and designated as the “Hazardous Waste Site Cleanup Fund,“... the sums recovered through all judgments, settlements, assessments of civil or criminal penalties, fees and oversight costs received....
As noted by the lower courts, this provision expressly mandates that all recoveries in cases involving environmental legislation must be paid into the state treasury. The language of the statute is clear and unambiguous: “[a]ll sums recovered through judgments” means all sums, not all sums remaining after the Attorney General has paid his contingency fee lawyers. If the Legislature had intended to allow the Attorney General the right to deduct the fees of contingency fee lawyers from judgments or settlements in environmental cases before paying the remainder into the state treasury, surely it would not have clearly directed that “all sums recovered” be paid into the state treasury.2
Next, the Attorney General and Intervenors point to
“Contract” means every type of state agreement, including orders and documents purporting to represent grants, which are for the purchase or disposal of supplies, services, construction, or any other item. It includes awards and notices of award; contracts of a fixed price, cost, cost-plus-a-fixed-fee, or incentive type; contracts providing for the issuance of job or task orders, and letter contracts. It also includes contract modifications with respect to any of the foregoing.
Clearly,
Finally, the Attorney General and Intervenors argue that
It is within the power of the Legislature to authorize contingency fee contracts and it has not done so in this case. Until the Legislature enacts a statute authorizing the Attorney General to enter into contingency fee contracts, the Contract is invalid and may not be implemented or enforced.
DECREE
For the foregoing reasons, the judgment of the court of appeal is affirmed.5 AFFIRMED.
KNOLL, J., not on panel.
KIMBALL, J., concurs in result and assigns reasons..
CALOGERO, C.J., and LEMMON, J., dissent and reasons.
JOHNSON, J., dissents.
KIMBALL, Justice, Concurring in result.
I am concurring in the result only of the majority opinion because I disagree with the content and necessity of the majority‘s discussion of the budget process, specifically footnote 4. I do not believe it is necessary for an agency to submit specific terms and conditions of specific contracts to the Legislature for approval where the contracting for professional services is involved.
I firmly agree with the result reached in this case, however. The provisions contained in our state‘s constitution are not grants of power but are instead limitations on the otherwise plenary power of the people as exercised through its Legislature. Thus, it is the Legislature which has the plenary power to do all things which are not otherwise delegated to another branch of government by the constitution and which are not otherwise prohibited by the constitution. See Board of Commissioners of Orleans Levee District v. Department of Natural Resources, 496 So.2d 281, 286 (La.1986). This legislative power obviously includes the control of state finances, which, by its very definition would include the power to dispose of, disburse, or alienate state property. Thus, unless the state constitution explicitly gives this power to another branch of the government, then such power cannot be exercised by anyone other than the Legislature. Therefore, the sole issues to be resolved are whether the execution of a contingency fee contract by the Attorney General would result in the disposition or alienation of state funds and, if so, whether our constitution gives the Attorney General the authority to hire attorneys on a contingency fee basis.
The disputed legal claim which the Attorney General seeks to enforce by hiring attorneys on a contingency fee basis is a cause of action which is owned by the State of Louisiana. A cause of action has intrinsic value even before settlement or final judgment as illustrated by the fact that it can be sold or inherited. Therefore, when the Attorney General signs a contingency fee agreement, he is alienating the state‘s property, a power which resides solely in the Legislature. Unless the constitution or the Legislature specifically grants this power to the Attorney General, such an action is prohibited. I find no express grant of such authority in our constitution or statutory law. This is especially clear in light of the fact that the Legislature knows how to authorize the Attorney General to enter into contingency fee contracts and, in fact, has done so for specific limited types of cases as listed by the majority.
The Attorney General may be correct that it is in the State‘s best interests to allow him to hire private attorneys to pursue these claims under a contingency fee contract because it provides the State with a vehicle for obtaining recovery which does not expose the State to having to pay attorneys’ fees up front. If such is the case, however, it is up to the Legislature to authorize the Attorney General to do so.
CALOGERO, Chief Justice, dissenting.
In my opinion, the majority is incorrect in concluding that the contingency contracts at issue violate the separation of powers doctrine. I do not agree that “[p]aying outside attorneys to prosecute legal claims on behalf
There is nothing inherently suspect or illegal about the use of contingency contracts. Contingency contracts have long been utilized in Louisiana, both in the private and public sector. They serve an important societal function in ensuring representation is available where a litigant cannot afford legal fees. Likewise, the utility of contingency contracts in the public sector is great, for their usage optimally results in an award to the state without any diminution of state funds and prevents the draining of the public fisc by attorney‘s fees in the event of an unsuccessful claim.
I also believe the majority interprets
The majority bases its conclusion that the contingency contracts are prohibited by statute, in part, upon a very narrow interpretation of the word “recovered“. I disagree with that conclusion. The majority‘s interpretation is contradicted by the fact that there is no express constitutional prohibition on contingency fee contracts, that contingency fee contracts are customarily used and in some instances are mandated, that the Attorney General has broad powers to protect the rights and interests of the State, and that the intent of
There is no express constitutional prohibition against the use of contingency contracts.
Accordingly, I dissent.
LEMMON, Justice, dissenting.
The majority bases its decision, in part, on
The primary purpose of
Under
Since the Legislature clearly intended by
The more difficult issue is whether the contract infringes upon the Legislature‘s constitutional power of appropriation and thus violates the constitutionally required separation of powers. Plaintiffs argue that the Legislature must appropriate the money for payment of contractual attorney‘s fees included in the Attorney General‘s budget or must authorize in advance the Attorney General‘s commitment to future expenditures for attorney‘s fees from recovery made on the state‘s claim. Plaintiffs contend in effect that only the legislative branch can decide whether a portion of the state‘s claim can be committed to the attorney‘s fees and expenses associated with recovery on the claim. Thus, according to plaintiffs, legislative authorization is needed to pay attorney‘s fees under a contingency fee contract, just as a legislative appropriation would be needed to pay attorney‘s fees under an hourly fee contract. Amicus curiae further argues that enactment of a contingency fee statute constitutes an exercise of the Legislature‘s constitutional authority to appropriate public money by constructively appropriating, in anticipation of the state‘s recovery on the claim, the contingency fee to the payee designated in the statute.
The Attorney General argues that if he is denied the use of contingency fee contracts, many meritorious claims for environmental damages will go unprosecuted. He contends that the difficulties in the political process of obtaining legislative action against powerful special interest groups will ultimately result in the causation or continued existence of extensive environmental damage. He further argues that the contract at issue, rather than taking money out of the state treasury, will result in placing money into the treasury that would not otherwise be there.
The Legislature has plenary power to do all things not limited by the Constitution or otherwise delegated in the Constitution. Chamberlain v. State Through Dep‘t. of Transp. and Dev., 624 So.2d 874 (La.1993). The issue in this case, however, is not whether the Legislature has the power to enact a law prohibiting the use of contingency fee
I do not find any express or implied constitutional or legislative requirement for legislative approval of the Attorney General‘s contracting to pay attorney‘s fees and costs of recovery out of the funds created by successful litigation of the state‘s environmental damages claims. While plaintiffs argue that only the Legislature has the power to dispose of property belonging to the state, a disputed legal claim is a unique type of property in that its value can only be realized through a legal settlement or litigation.3 Once the value of the state‘s disputed claims is realized through settlement or judgment, the money or property ultimately recovered for the state by its constitutionally authorized officer, after deduction of the costs of recovery, is the property that the Legislature has the exclusive power to dispose of.
While there are persuasive arguments favoring the “no advance payment—no risk” contractual arrangements for attempting recovery through difficult and expensive litigation, there are also persuasive arguments against such contracts. The question is more one of policy than of legislative power. If the Legislature considers such contracts in this type of litigation to be imprudent policy, then a legislative enactment prohibiting such contracts may be appropriate, subject to possible challenges by the Attorney General. In the meantime, there is no constitutional or statutory barrier to the discretionary use of such contracts by the Attorney General.
Notes
(1) All sums recovered through judgments, settlements, assessments of civil or criminal penalties, funds recovered by suit or settlement from potentially responsible parties for active or abandoned site remediation or cleanup, or otherwise under this Subtitle, or other applicable law, each fiscal year for violation of this Subtitle, shall be paid into the state treasury and shall be credited to the bond Security and Redemption Fund. After a sufficient amount is allocated from that fund to pay all obligations secured by the full faith and credit of the state which become due and payable within any fiscal year, the treasurer, prior to placing such remaining funds in the state general fund, shall pay into a special fund, which is hereby created in the state treasury and designated as the “Hazardous Waste Site Cleanup Fund”, twenty-five percent of those funds generated by the hazardous waste tax under the provisions of Chapter 7-A of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950 and the sums recovered through all judgments, settlements, assessments of civil or criminal penalties, fees and oversight costs received from potentially responsible parties for the department‘s work in overseeing of assessment and remediation at inactive or abandoned sites, funds recovered by suit or settlement from potentially responsible parties for active or abandoned site remediation or cleanup, or otherwise, for violation of this Subtitle .... (emphasis added).
The monies in the Site Cleanup Fund shall be used to defray the cost of investigation, testing, containment, control, and cleanup of hazardous waste sites, to provide money or services as the state share of matching funds for federal grants, to defray the cost of securing and quarantining hazardous waste sites, including the acquisition of rights-of-way, easement, or title when necessary, and to pay the operating expenses of the inactive and abandoned sites divisions....
All money received by the state or by any state board, agency, or commission shall be deposited immediately upon receipt in the state treasury....
However, Section 9(B) goes on to provide:
Subject to contractual obligations existing on the effective date of this constitution, all state money deposited in the state treasury shall be credited to a special fund designated as the Bond Security and Redemption Fund, except money received as the result of grants or donations or other forms of assistance when the terms and conditions thereof or of agreements pertaining thereto require otherwise. In each fiscal year an amount is allocated from the bond security and redemption fund sufficient to pay all obligations which are secured by the full faith and credit of the state and which become due and payable within the current fiscal year, including principal, interest, premiums, sinking or reserve fund, and other requirements. Thereafter, except as otherwise provided by law, money remaining in the fund shall be credited to the state general fund.