Milberg, Weiss, Bershad, Hynes, & Lerach, LLP v. State

28 S.W.3d 842, 342 Ark. 303, 2000 Ark. LEXIS 472
CourtSupreme Court of Arkansas
DecidedOctober 12, 2000
Docket99-1458
StatusPublished
Cited by25 cases

This text of 28 S.W.3d 842 (Milberg, Weiss, Bershad, Hynes, & Lerach, LLP v. State) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Milberg, Weiss, Bershad, Hynes, & Lerach, LLP v. State, 28 S.W.3d 842, 342 Ark. 303, 2000 Ark. LEXIS 472 (Ark. 2000).

Opinions

Donald L. Corbin, Justice.

The issues in this case are (1) whether an attorney may intervene in a client’s settlement, after the entry of final decree, for the purpose of affecting the terms of that settlement, and (2) whether an attorney has standing to set aside a consent decree approving a client’s settlement. Appellants in this case are three law firms: Milberg, Weiss, Bershad, Hynes, and Lerach, LLP, from San Diego (Milberg-Weiss); the Niblock Law Firm, from Fayetteville; and the Law Offices of Steven E. Cauley, P.A., from Little Rock. Appellees are the State of Arkansas and the following tobacco manufacturers: Phillip Morris, Inc.; R.J. Reynolds Tobacco Company; Brown and Williamson Tobacco Corporation, individually, and as successor by merger to the American Tobacco Company; and Lorillard Tobacco Company (collectively, the “tobacco companies”). Appellants moved to intervene in the State’s tobacco settlement for the purpose of protecting their claimed interest in attorney’s fees, pursuant to an alleged contract to represent the State in that matter. Appellants also moved to set aside the consent decree approving the settlement for alleged fraud in obtaining the judgment. The Pulaski County Chancery Court denied both motions. Our jurisdiction of this case is pursuant to Ark. Sup. Ct. R. 1-2(b) (4) and (5), as it raises issues of substantial public interest needing further clarification or development of the law. We affirm.

The record reflects that on May 5, 1997, the State filed suit against the tobacco companies1 seeking monetary and equitable relief. Throughout 1997 and 1998, numerous orders were entered by the chancery court granting extensions of time for the tobacco companies to file their answers and other responsive pleadings. Eventually, a global setdement was reached between the tobacco companies and fifty-two states and other governmental units, including Arkansas. The terms of the settlement were memorialized in two different documents: (1) a Master Settlement Agreement (MSA), entered between the states and the major cigarette manufacturers, and (2) a Smokeless Tobacco Master Settlement Agreement (STMSA), entered between the states and the smokeless tobacco companies. Arkansas’s Attorney General signed the MSA and the STMSA on November 23, 1998. A stay in the proceedings was then granted on November 30, 1998, to give the parties an opportunity to effectuate the settlement. As a result of the numerous extensions of time and the ultimate settlement of the law suit, no answer was ever filed by any of the tobacco companies, and the parties never conducted any formal discovery. On December 10, 1998, the chancery court entered a consent decree, pursuant to the settlement agreements, that ended the litigation and obligated the tobacco companies to pay the State $1.62 billion over a twenty-year period.

Approximately three weeks later, on December 30, 1998, Appellants filed a motion to intervene in the settled lawsuit between the State and the tobacco companies. Attached to the motion was a notice of attorney’s lien for $243 million, an amount equal to fifteen percent of the State’s share under the MSA. Appellants asserted that a contract had been negotiated between the State and MilbergWeiss, wherein Milberg-Weiss would represent the State in the tobacco litigation. Appellants admitted, however, that the contract was never executed.2 Appellants sought intervention so that they could be hsted as designated outside counsel on Exhibit “S” of the MSA. Under the terms of the MSA, those private attorneys designated as outside counsel would be paid reasonable attorney’s fees through a pool of money funded by the tobacco companies. Thus, the various states’ shares of the settlement would not be diminished by the amount of attorney’s fees for private counsel. Conversely, private attorneys not Hsted on Exhibit “S” would not receive payment from the tobacco companies and would have to seek payment from the states or governmental units that hired them.

Appellants also filed a motion to set aside the December 10, 1998 consent decree pursuant to Ark. R. Civ. P. 60. AppeHants claimed that contrary to its terms, the settlement was not in the best interest of Arkansas’s citizens. Appellants asserted that because they were not designated as outside counsel in the MSA, any fees dues to them would be payable by the State from its share of the settlement, thus diminishing the benefit to the citizens. Appellants later argued that the consent decree was fraudulently obtained based on alleged misrepresentations made to the chancery court at the time the decree was signed. Much of Appellants’ argument regarding fraud stemmed from information contained in a January 1, 1999 article in the Arkansas Democrat-Gazette titled “ChanceHor cries foul about fees.” In the article, former Pulaski County Chancellor WH. “Sonny” Dillahunty reported that it was doubtful that he would have signed the setdement between the State and the tobacco companies had he known that the issue of outside attorney’s fees had not been resolved. He stated that when he signed the consent decree, both the State’s and the tobacco companies’ lawyers had stated that the tobacco companies would pay the private lawyers’ fees.

On January 1, 1999, Mackie Pierce replaced Chancellor Dillahunty as Pulaski County Chancellor for the Sixth Division and took over this case. Shortly thereafter, on January 11, 1999, the last day of his tenure in office, Attorney General Winston Bryant filed a motion to amend the consent decree to add the law firm of Mil-berg-Weiss to Exhibit “S” of the MSA. The tobacco companies objected to any such amendment on the grounds that (1) Appellants lacked standing to set aside the decree, and (2) there was no evidence that Appellants ever did any work in securing the settlement. The tobacco companies pointed to representations made by Bryant in a Democrat-Gazette article dated December 31, 1998, wherein Bryant explained that the reason Appellants were not originally designated as outside counsel on the MSA was because the Attorney General’s office had done all the work. Bryant stated: “I took the position that if the lawsuit was settled, we didn’t need outside counsel, so the contract was never executed.” The State eventually withdrew its motion to amend the consent decree on March 29, 1999.

On August 10, 1999, after considerable pleading from all participants, Appellants’ motions were heard by the chancery court. The parties stipulated that a valid contract existed between MilbergWeiss and the State, for the limited purpose of considering Appellants’ motions. Notwithstanding, the chancellor denied Appellants’ motion to intervene, either by right or permission, and also denied the motion to set aside the consent decree. Additionally, the chancellor found that the State was entitled to the defense of sovereign immunity. Appellants contest each of these three rulings on appeal. They also claim that the chancellor erred in failing to join them as necessary parties to the lawsuit under Ark. R. Civ. P. 19. We do not address this additional argument, as it is clear from the record that is was raised at the last minute and was never ruled on by the chancellor. It is well settled that the failure to obtain a ruling from the trial court is a procedural bar to our consideration of the issue on appeal. See Ross Explorations, Inc. v. Freedom Energy, Inc., 340 Ark. 74, 8 S.W.3d 511 (2000) (citing Vanderpool v. Fidelity & Cas. Ins. Co., 327 Ark.

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Bluebook (online)
28 S.W.3d 842, 342 Ark. 303, 2000 Ark. LEXIS 472, Counsel Stack Legal Research, https://law.counselstack.com/opinion/milberg-weiss-bershad-hynes-lerach-llp-v-state-ark-2000.