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Santa Clara v. Superior Court



On April 26 and May 19, Walter noted the important 2007 Santa Clara v. Atlantic Richfield Superior Court decision barring government entities from using contingent-fee attorneys to prosecute governmental claims grounded in public-policy balancing of costs and benefits like public nuisance abatement. The decision was a natural consequence of People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), where the California Supreme Court noted the ethical conflict of interest stemming from contingent fee agreements:

"[T]he abatement of a public nuisance involves a balancing of interests. On the one hand is the interest of the people in ridding their city of an obnoxious or dangerous condition; on the other hand is the interest of the landowner in using his property as he wishes. And when an establishment such as an adult bookstore is the subject of the abatement action, something more is added to the balance: not only does the landowner have a First Amendment interest in selling protected material, but the public has a First Amendment interest in having such material available for purchase. Thus, as with an eminent domain action [to which the absolute neutrality requirement applies], the abatement of a public nuisance involves a delicate weighing of values. Any financial arrangement that would tempt the government attorney to tip the scale cannot be tolerated."

So the appellate court has ruled in a remarkably poorly-thought-out opinion that, well, financial arrangements that would tempt government attorneys to tip the scale can be tolerated, so long as "in-house counsel retain control over all decision-making."

We'll see if the California Supreme Court believes that Clancy only applies to attorneys named Clancy or has broader precedential value. If the reversal holds, however, all is not lost for defendants: "The record before us contains absolutely no evidence [sic] that private counsel have ever engaged in any conduct that invaded the sphere of control exercised by the public entities' in-house counsel. ... No doubt the companies will seek disqualification of the public entities' private attorneys if they acquire evidence that the private attorneys are improperly exercising control over this action."

1) That "no evidence" line is remarkably disingenuous: the city of Oakland's fee agreement states private counsel have "absolute discretion in the decision of who to sue and who not to sue, if anyone, and what theories to plead and what evidence to present." The appellate court, reached to find facts to override it in Oakland's assertion that the agreement did not actually reflect the deal it had with counsel. It's one thing (and bad enough) for an appellate court to find facts, but it's another to blatantly misrepresent the state of the record. And one wonders if Oakland's contingent-fee counsel will be so eager to ignore the parol evidence rule down the road if there is a later dispute over the size of the fee.

2) Meanwhile, it sure sounds to me like the California appellate court just opened to discovery the internal workings of the relationship between the in-house and outside contingent-fee counsel. Which is normally impermissible under the attorney work product doctrine. Every time a brief is filed, it's cause for additional discovery and scrutiny of whether the line has been crossed. Such are the knots that the court has tied itself in to avoid the bright-line statement of Clancy.

The same appellate court rescued the illegitimate public-nuisance claim from a lower court dismissal in County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292 (2006).

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.