In recent years, some state attorneys general have used their offices to sponsor lawsuits that redistribute billions of dollars from businesses into the pockets of their trial lawyer cronies. CEI describes this in greater detail in The Nation’s Top Ten Worst State Attorneys General.
Now this problem has been criticized by reform-minded attorneys general as well. This subject (and CEI’s study of the worst state attorneys general) came up for repeated discussion in today’s Federalist Society forum, “Reaching Too Far: The Role of State Attorneys General,” which featured attorneys general Bob McDonnell of Virginia, John Suthers of Colorado, and J.B. Van Hollen of Wisconsin, as well as former attorney general Don Stenberg of Nebraska.
Suthers described how trial lawyers and lobbyists descend like vultures at attorney general conferences in the aftermath of the multibillion dollar tobacco Master Settlement Agreement, in which trial lawyers extracted billions of dollars from the tobacco industry through assistance from some state attorneys general.
Stenberg discussed how contingency-fee arrangements between state attorneys general and trial lawyers to bring lawsuits in the name of the state in exchange for a share of the money recovered breed conflicts of interest and prevent settlements in the public interest. He cited examples of trial lawyers who received millions of dollars under the tobacco settlement but then demanded and sued the states that hired them for even more money (as happened in Massachusetts).
J.B. Van Hollen described his efforts to revitalize law enforcement in Wisconsin, and undo the damage done by his predecessor Peg Lautenschlager, who was ranked number 9 on CEI’s list of the worst state attorneys general. Lautenschlager allowed big backlogs to develop in the state’s crime lab, resulting in violent criminals remaining free to commit more crimes and murders, even while she devoted her office’s scarce resources to ideological causes and nuisance lawsuits against businesses like cranberry growers.
McDonnell discussed how outmoded court rules can turn a meritless lawsuit into a dangerous weapon, such as state rules restricting summary judgment that make it much harder to dismiss lawsuits that have no genuine factual basis in state court than federal court.
Since the tobacco Master Settlement Agreement came up repeatedly in the discussion, it’s worth mentioning that the tobacco settlement imposes disproportionate burdens on certain states, like Colorado and Virginia. As Stanford’s Jeremy Bulow and others have observed, the tobacco settlement effectively redistributes money from states that have growing rapidly growing populations (like Colorado), or growing populations and high cigarette sales (like Virginia) to states with stagnant populations (like New York State, which has 7 percent of the country’s population but receives an eighth of the tobacco settlement). That’s because the MSA is financed by a flat assessment on every cigarette sold in the country by most cigarette companies, while the money is divided up between states based on an arbitrary, fixed formula that remains the same in perpetuity, regardless of how a state’s population (and share of national cigarette sales) changes over time.