Last Friday, U.S. District Judge David Folsom ruled that the five tort lawyers who represented Texas in its lawsuit against the tobacco companies have to decide by Nov. 19 whether to accept their fees from the tobacco companies directly or press their claim against the state for their 15% fee. The ruling is the latest development in the Byzantine standoff between the Big Five and state GOP officeholders, led by Attorney General John Cornyn. At issue is the legality of the contract that the five tort lawyers got from former AG Dan Morales, as well as the amount of money the contract allows them to collect.
The lawyers have begun collecting the first installments on the $3.3 billion awarded by a national arbitration panel, all of which will be paid directly by the tobacco companies. So far, they’ve already collected a reported $364 million in fees. But meanwhile, the legal team hasn’t relinquished its claim to the 15% fee award granted to them by Folsom early last year, shortly after the state declared victory and announced that it would get some $17.3 billion from the cigarette makers. That 15% claim amounts to at least $2.3 billion and would come out of the state’s award.
In response to Folsom’s ruling, Cornyn issued a statement saying, “I have always contended that these trial lawyers should not receive a single penny of taxpayer money. By today’s ruling they have until Nov. 19 to do the right thing and release the taxpayers from an unjustified fee of $2.3 billion.”
Although Cornyn sounds happy in his statement, he didn’t win much. Folsom denied his request to remand the case to state court and tossed aside Cornyn’s argument that the Big Five violated the 11th Amendment by asking for fees from the state. In addition to setting the deadline for the five lawyers to make their decision on the fees, Folsom ruled that seven legislators as well as Gov. George W. Bush are now official parties to the fee fight litigation, a move that allows Bush to stand shoulder to shoulder with Cornyn in their attack on the tort lawyers.
However, that move could cause trouble for the presidential candidate. Now that he’s a party to the litigation, the Big Five can put him under oath and ask him about the money he has gotten from Big Tobacco. Given the Bush campaign’s ultra-tight policy when it comes to media access, and its vaunted “message discipline,” it seems certain that the governor will do all he can to stay away from any potential depositions.
Cornyn has claimed that the five attorneys breached their fiduciary duties to the state of Texas. But so far, he hasn’t come up with any proof of that. Regardless of what the Big Five decide to do with regard to the fees, Cornyn could still sue them in state court to pursue his claim that the lawyers have acted in bad faith. Meanwhile, a source close to the Big Five says “We are encouraged by Folsom’s ruling.” Stay tuned.
This article appears in November 12 • 1999.