ST ATE OF NEW HAMPSHIRE

SUPREME COURT

No. 2016-0199

STATE OF NEW HAMPSHIRE

v.

ACT A VIS PHARMA, INC; ENDO PHARMACEUTICALS, INC.;

JANSSEN PHARMACEUTICALS, INC.; PURDUE PHARMA, L.P.; and

TEVA PHARMACEUTICALS USA, INC.

APPEAL PURSUANT TO RULE 7 FROM A JUDGMENT OF THE MERRIMACK COUNTY SUPERIOR COURT

ANSWERING BRIEF FOR THE ST ATE OF NEW HAMPSHIRE

Date: September 26, 2016

JOSEPH A. FOSTER Attorney General

Lisa M. English, Bar No. 20166 Senior Assistant Attorney General Francis C. Fredericks, Bar No. 21161 Assistant Attorney General Attorney General's Office 33 Capitol Street Concord, NH 03301 Phone: (603) 271-3650 E-mail: lisa.english@doj.nh.gov

(15 minutes)

TABLE OF CONTENTS

TABLE OF AUTHORITIES .............................................................................................. ii

ISSUES PRESENTED ........................................................................................................ 1

STATEMENT OF THE CASE AND FACTS ................................................................... 1

SUMMARY OF THE ARGUMENT ................................................................................. 2

STANDARD OF REVIEW ................................................................................................ 3

ARGUMENT ...................................................................................................................... 3

I. THE COMPANIES DO NOT HAVE STANDING TO CHALLENGE THE CONTRACT BETWEEN THE OAG AND OUTSIDE COUNSEL .................. 3

A. The Companies are Required to Demonstrate Standing ........................... 3

B. The Companies Have Not Established Standing for Their Ultra Vires Claim ......................................................................................................... 6

II. THE OAG'S AGREEMENT WITH COHEN MILSTEIN IS NOT ULTRA VIRES ................................................................................................................. 11

A. RSA 7:12, I, Does Not Impact the OAG's Use of Contingency Fee Counsel. ................................................................................................... 12

C. RSA 7:6-f Also Does Not Pertain to Contingency Fee Counsel. ............ 18

III. THE STATE'S ETHICAL RULES DO NOT PROHIBIT CONTINGENCY FEE COUNSEL'S ASSISTANCE WITH CIVIL MATTERS ......................... 20

A. The Executive Branch Code of Ethics Does Not Apply to Cohen Milstein as the Firm is an Independent Contractor, Not a State Employee or Official. .................................................................................................... 20

B. The OAG's Agreement with Cohen Milstein Does Not Violate Rule 1.7 of the New Hampshire Rules of Professional Conduct ........................... 26

C. The OAG's Agreement Does Not Violate New Hampshire Common Law .......................................................................................................... 29

D. The Companies' Argument Regarding an "Appearance oflmpropriety" is Incorrect and Presents a Question for the Legislature, Not the Court ..... 30

IV. COHEN MILSTEIN'S ASSISTANCE WITH THE INVESTIGATION DOES NOT VIOLATE THE COMPANIES' DUE PROCESS RIGHTS .................... 31

CONCLUSION ................................................................................................................. 35

CERTIFICATION ............................................................................................................ 36

TABLE OF AUTHORITIES

Cases Allen v. Wright, 468 U.S. 737, 761 (1984) ....................................................................... 10 Appeal ofTHI of NH at Derry, LLC., 168 N.H. 504, 508 (2016) ..................................... 21 Asmussen v. Comm 'r, NH Dep't of Safety, 145 N.H. 578, 587 (2000) .............................. 5 Berger, 295 U.S. at 88 ...................................................................................................... 34 City of Chicago v. Purdue Pharma, LP, No. 14-cv-4361, 2015 U.S. Dist. LEXIS 24712 at

3 (N.D. Ill. Mar. 2, 2015) ........................................................................................ 30, 32 Conant v. Robins, Kaplan, Miller & Ciresi, L.L.P., 603 N.W.2d 143 (Minn. Ct. App.

1999) ............................................................................................................................. 30 County of Santa Clara v. Superior Court, 235 P.3d 21(Cal.2010) ........................... 32, 35 Deere & Co. v. State, i68 N.H. 460 (2015) ...................................................................... i3 Eames v. Rudman, 115 N.H. 91 (1975) ............................................................................ 11 Edgerly v. Hale, 71 N.H. 138 (1901) ................................................................................ 29 Fed. Deposit Ins. C01p. v. Main Hurdman, 655 F. Supp. 259, 268-69 (E.D. Cal. 1987) .. 4 Flaherty v. Dixey, 158 N.H. 385, 387 (2009) ..................................................................... 2 Guyotte v. O'Neill, 157 N.H. 616, 623 (2008) ............................................................ 27, 31 Home Gas Corp. v. Strafford Fuels, 130 N.H. 74, 82 (1987) ........................................... 22 Jn re President's Comm. on Organized Crime Subpoena of Scarfo, 783 F.2d 370, 371 (3d

Cir. 1986) ........................................................................................................................ 7 Iota Xi Chapter of Sigma Chi Fraternity v. Patterson, 566 F.3d 138 (4th Cir. 2009) ........ 8 King v. Thompson, 119 N.H. 219 (1979) .......................................................................... 15 Lynch v. Town of Pelham, 167 N.H. 14 (2014) .................................................................. 3 Main Hurd1nan, 655 F. Supp. at 269 .................................................................................. 5 Marshall v. Jerrica, 466 U.S. 238, 248 (1980) ................................................................. 33 Merck Sharp & Dahme C01p. v. Conway, 861 F. Supp. 2d 802, 815 (E.D. Ky. 2012) .... 32 Meredith v. Leyob, 700 So. 2d 4 78, 488 (La. 1997) ................................................... 17, 19 Muller Optical Co. v. E.E.O.C., 743 F.2d 380 (6th Cir. 1984) ..................................... 7, 10 NH Health Care Assoc. v. Gov., 161 N.H. 378, 393 (2011) ........................................... 13 New Hampshire Retirement System v. Sununu, 126 N.H. 104 (1985) .............................. 15 Opinion of the Justices, 11 7 N .H. 3 93 (1977) .................................................................. 11 Opinion of the Justices, 129 N.H. 714 (1987) .................................................................. 13 Opinion of the Justices, 129 N.H. at 718 .......................................................................... 13 Petition of Kalar, 162 N.H. 314 (2011) ............................................................................ 15 Philip Morris Inc. v. Glendening, 709 A.2d 1230, 1243 (Md. 1998) ............................... 33 Pickeringv. Hood, 95 So. 3d 611, 616 (Miss. 2012) ........................................................ 32 Rogowicz v. O'Connell, 147 N.H. 270 (2001) ............................................................ 27, 30 Sherwin-Williams Co. v. City of Columbus, 2007 U.S. Dist. LEXIS 51945 at 4 (S.D. Ohio

July 18, 2007) ................................................................................................................ 32 State ex rel. Discover Fin. Servs. v. Nibert, 744 S.E.2d 625, 636 (W. Va. 2013) 28, 30, 32 State v. Hagerty, 580 N.W. 2d 139, 147 (N.D. 1998) ....................................................... 19 State v. Lead Indus. Ass 'n, 951A.2d428, 476 ................................................................. 32 Sunapee Difference, LLC v. State, 164 NH at 791-92 (2013) ......................................... 14 Tumey v. Ohio, 273 U.S. 510 (1927) ................................................................................ 33 United States v. Dunifer, 997 F. Supp. 1235, 1239 (N.D. Cal. 1998) ................................ 6

11

United States v. Neset, 10 F. Supp. 2d 1113, 1116 (D.N.D. 1998) .................................... 6 United States v. Young, 470 U.S. 1 (1985) ....................................................................... 34 Utah v. Babbitt, 137 F.3d 1193, 1201 (10th Cir. 1998) ...................................................... 6 Valley Forge Christian College v. Ams. United for Separation of Church & State, Inc.,

454 U.S. 464, 473-74 (1982) .......................................................................................... 6 Wmih v. Seldin, 422 U.S. 490 (1975) ................................................................................. 8 Young v. United States ex rel. Vuitton Et Fils S. A., 481 U.S. 787 (1987) ....................... 30

Statutes 466 U.S. at 249-50 ............................................................................................................ 34 Part II, Article 38 of the New Hampshire constitution ..................................................... 23 RSA 15-B .......................................................................................................................... 23 RSA 15-B:2 ....................................................................................................................... 29 RSA 15-B:2, 11 .................................................................................................................. 21 RSA 15-B:2, III ................................................................................................................. 21 RSA 15-B:2, IX .................................................................................................... 20, 21, 22 RSA 15-B:5 ....................................................................................................................... 23 RSA 21-G:21 .................................................................................................................... 20 RSA 21-G:21, II ................................................................................................................ 21 RSA 21-G:21, II-a ................................................................................................. 21, 24, 29 RSA 21-G:21-:35 .............................................................................................................. 21 RSA 21-G:22 .................................................................................................................... 23 RSA 21-G:23 .................................................................................................................... 23 RSA 21-G:23, II-a ............................................................................................................. 21 RSA 21-G:25 .................................................................................................................... 22 RSA 21-G:25, I ................................................................................................................. 22 RSA 21-G:26 .................................................................................................................... 23 RSA 21-G:26-a ................................................................................................................. 23 RSA 21-G:29 .................................................................................................................... 23 RSA 21-G:31 .................................................................................................................... 23 RSA 21-G:31, III(d) .......................................................................................................... 23 RSA 21-M:3, III (b) .......................................................................................................... 16 RSA 21-M:5, VI ................................................................................................................ 18 RSA4:1 ............................................................................................................................. 23 RSA 7: 12, I ................................................................................................................ passim RSA 7:6-f; RSA 7:12 .......................................................................................................... 8 RSA chapters 21-G ........................................................................................................... 23 RSA 358-A .......................................................................................................................... 4

Other Authorities BLACK'S LAW DICTIONARY (6th ed. 1990) .......................................................................... 5

Rules Rule 1.7 ................................................................................................................. 27, 28, 29

lll

ISSUES PRESENTED

I. Whether the trial court erred in concluding that the defendants have standing to

assert that the Office of the Attorney General ("OAG") must seek approval from the joint

legislative fiscal committee ("fiscal committee") and the governor and executive council

("G&C") prior to retaining outside counsel on a contingency fee basis?

II. Whether the trial court erred in denying the OAG's petition to enforce

administrative subpoenas based on an e1rnneous interpretation that RSA 7: 12, I, and RSA 7:6-f

require the attorney general to seek approval from the G&C and the fiscal committee prior to

engaging outside legal counsel on a contingency fee basis?

III. Whether the trial court conectly held that Cohen Milstein is not a public

employee in relation to the Executive Code of Ethics, and that the OAG's agreement with Cohen

Milstein complies with the Rules of Professional Conduct and the common law?

IV. Whether the trial court correctly held that the OAG's agreement with Cohen

Milstein does not violate principles of due process?

STATEMENT OF THE CASE AND FACTS

Despite the Companies' characterization of the relationship of the OAG and Cohen

Milstein as an outsourcing of a public investigation, Defs' Br. at 1, the OAG retained Cohen

Milstein to assist in the investigation. See Supp 1-5. 1 The OAG opted to engage outside

assistance to ensure the State can fully investigate and potentially litigate against large, well-

funded corporate entities. See Tr. 12. The OAG has actively participated in each aspect of the

investigation and will continue to do so. See id. at 9-13. For example, the OAG reviews all key

1 In this brief"Ord." refers to the trial court's March 8, 2016 order; "Tr." refers to the transcript of the trial court's December 11, 2015 hearing; "App." refers to the State's Appendix; "Supp." refers to the State's Supplement; and "Defs' Br." refers to the Companies' opening brief.

1

documents and attends witness interviews. Id. The OAG has designated the Chief of its

Consumer Protection Bureau, James Boffetti, to supervise and participate in the investigation.

Id. And, as represented to the trial court, Attorney Boffetti has, in fact, been involved in "all

aspects" of the investigation. Tr. 13. Attorney Boffetti also serves as the point of contact with

the Companies. Id.

The Companies' factual statement begins with several pages that are replete with

quotations from and references to news articles from sources such as the New Yark Times, Legal

Newsline, and Philly.corn. Defs' Br. 1-3. Articles from other, similar publications, including

the Wall Street Journal and Legal Backgrounder, appear in other sections of the Companies'

brief. See, e.g, id. at 36. The articles, which, in a less than evenhanded manner, discuss

perceived problems with contingent fee counsel, were not presented in the matter below and thus

are not suitable to be set forth as "fact" in this brief. See Flaherty v. Dixey, 158 N.H. 385, 387

(2009) (explaining the Court does not consider "documents or evidence not presented to the trial

comi ... "). It is evident that popular journalists and legal commentators have debated both sides

of the topic of contingency fee counsel, but the Court is not called upon here to make a policy

determination regarding the OAG's use of contingency fee counsel. Policy balancing is the

province of the legislature, not this Court.

SUMMARY OF THE ARGUMENT

The Companies lack standing to argue that the OAG's noncompliance with an

inapplicable state contract approval process renders the relevant agreement void. The

Companies have not shown an actual injury that results from the fact that the OAG did not seek

fiscal committee or G&C approval prior to entering into a contingency agreement, or that the

claimed injury would be remedied by such approvals.

2

Further, there is no statutory barrier to the OAG's authority to independently retain

outside counsel on a contingency fee basis. The Companies' contentions that statutes, which do

not mention the OAG's use of contingent fee counsel, operate to silently curtail the attorney

general's statutory and common law powers to litigate on behalf of the state, are erroneous.

Additionally, Cohen Milstein is an independent contractor, not a public employee subject

to the state's Executive Branch Code of Ethics. Further, the OAG's agreement with Cohen

Milstein is proper under the Rules of Professional Conduct and common law because

disinterested OAG attorneys are in control of the investigation and any potential civil litigation.

Finally, consistent with the great weight oflegal authority on the topic, the OAG's

agreement satisfies due process as the neutral OAG attorneys control the investigation.

STANDARD OF REVIEW

This Court undertakes de nova review of legal issues, such as the existence of standing,

statutory interpretation, and questions of constitutionality. Lynch v. Town of Pelham, 167 N.H.

14, 20 (2014); State Employees' Assoc. ofN.H. v. State ofN.H., 161 N.H. 730, 738 (2011); State

v. Exxon Mobil Corp., 168 N.H. 211, 246 (2015).

ARGUMENT

I. THE COMPANIES DO NOT HA VE STANDING TO CHALLENGE THE CONTRACT BETWEEN THE OAG AND OUTSIDE COUNSEL

A. The Companies are Required to Demonstrate Standing.

The Companies contend that the doctrine of standing does not apply to them because the

OAG initiated the instant proceedings via its motion to enforce subpoenas, and the Companies,

as respondents to that motion, were "not seeking independent affirmative relief." Defs' Br. at

12. The Companies are incorrect. Although the superior court matter was initiated by the

3

OAG's motion, the Companies responded by counterclaiming and moving for a protective order,

thereby seeking affirmative judicial relief.

As the Companies have conceded, the issuance of the instant investigative subpoenas was

well within the OAG's authority. Yet, instead of promptly seeking judicial relief from their legal

obligation to respond to the subpoenas, the Companies simply refused to act. Their refusal to

comply was not based on a challenge to the validity of the subpoenas, but rather, on a challenge

to the OAG's contingency fee agreement. App. 002-5 at iii! 4-7, 9, 11, 15-16; App. 336. The

OAG, therefore, had no option but to file a motion to enforce. Id. Thus, although technically a

"plaintiff," the OAG was forced into that position by the Companies' lack of compliance with

the subpoenas. 2 Where a defendant seeks affirmative judicial relief against a plaintiff, the

defendant is not excused from showing standing to raise its claims simply because it forced the

plaintiff to file first. See Fed. Deposit Ins. Corp. v. Main Hurdman, 655 F. Supp. 259, 268-69

(E.D. Cal. 1987) ("It may well be that the party whose standing is questioned is 'almost

invariably the plaintiff.' That is not because standing is inherently a question limited to plaintiffs,

but rather a function of the way lawsuits are ordinarily conducted .... here defendant raises a true

affirmative defense seeking to litigate questions not encompassed by plaintiffs case-in-chief. In

such a configuration, defendant's posture is wholly analogous to that of a plaintiff .... ").3

2 As the OAG stated at the December 11, 2015 hearing: "under [RSA] 358-A ... Respondents were required to file their objection [to the subpoenas] within 21 days. That time was extended by agreement, I believe until September 15th, and to October I for good cause .... Nothing was heard from there." Tr. 41-42; see also Tr. 7 ("Respondents never moved to modify or set aside [the subpoenas] as the CPA requires. And instead they waited until months after the subpoenas were issued and until this action was actually filed.").

3 In Main Hurdman, the Federal Deposit Insurance Corporation ("FDIC") brought a fraud action against the accounting firm ofKMG Main Hurdman alleging that the firm provided false information to a bank to which the FDIC was an assignee. 655 F. Supp. at 251. As an affirmative defense, the firm alleged that in becoming an assignee of the bank, the FDIC exceeded its statutory authority-i.e. that it was ultra vires-and thus the assignment invalid. Id The court concluded that despite technically being a defendant, the firm needed to show standing to raise the ultra vires claim against the FDIC and, ultimately, could not demonstrate such standing. Id. at 268-<59.

4

Moreover, the Companies' assertion that they are not seeking "affirmative relief' is

contradicted by the facts. The Companies included a counterclaim in their response to the

OAG's motion to enforce, through which they expressly stated that they were "seek[ing] an

Order of this Court" that the OAG's agreement "is void and unlawful .... " App. 133.4 Thus, in

addition to defending against the OAG's request for enforcement of the subpoenas, the

Companies affirmatively sought a declaration as to the statutory and constitutional validity of the

OAG's contingency fee agreement. At a minimum, their arguments in favor of the requested

relief constitute an affirmative defense, i.e., one "which attacks the plaintiffs legal right to bring

an action." BLACK'S LA w DICTIONARY (61h ed. 1990). As the pleadings make clear, the pursuit

of this defense required the defendant to "affirmatively" assert facts and theories unrelated to the

substance of the OAG's subpoenas. Standing is required to obtain such relief and, consequently,

the Companies' argument that standing does not apply to them is misplaced. See Asmussen v.

Comm'r, NH. Dep't of Safety, 145 N.H. 578, 587 (2000) (explaining that a request for an

affirmative legal declaration "must be definite and concrete touching the legal relations of paiiies

having adverse interests. The action cannot be based on a hypothetical set of facts .... ").

Fmiher, the Companies' conclusory assertion that defendants to civil actions are never

required to demonstrate standing is simply wrong. See, e.g., Main Hurdman, 655 F. Supp. at 269

("There appears to be no reason in logic not to require a defendant who seeks to litigate the

lawfulness of the government's conduct in such a context to demonstrate its right to obtain a

judicial determination of its contention."); United States v. Neset, 10 F. Supp. 2d 1113, 1116

(D.N.D. 1998) ("In raising an affirmative defense, a defendant is seeking the jurisdiction of the

4 The Companies' second counterclaim specifically incorporated by reference their Complaint for Declaratory and Injunctive Relief, through which the Companies raised the arguments presently at issue. App. at 133; 137-64.

5

court to hear its claims as much as a plaintiff and, therefore, standing becomes an issue for the

defendant as well."); United States v. Dunifer, 997 F. Supp. 1235, 1239 (N.D. Cal. 1998).5

Here, the Companies asked the trial court, through counterclaims and the incorporation of

their declaratory judgment petition, to declare a government contract void because it allegedly

failed to comply with statutory processes-processes that the Companies have no greater interest

in seeing fulfilled than does the general public. Having raised the issue of the contingency fee

agreement's legality as a defense to their non-compliance with legally issued subpoenas, the

Companies must establish that they have a right to a judicial ruling on that claim.

In fact, there is a heightened need to establish standing in this case because the

Companies are attempting to invoke judicial intervention into the conduct of the executive

branch of government. In that circumstance, "the necessity of a case or controversy is of

pmiicular import." Utah v. Babbitt, 137 F.3d 1193, 1201 (10th Cir. 1998).

The warnings against unrestrained exercise of the power of judicial review over the conduct of the executive or congressional branches by relaxation of the standing requirements are numerous and dire. See, e.g., Valley Forge Christian College v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 473-74 (1982). Restraint in the exercise of judicial review preserves not only the power and vitality of the judiciary, but that of each of the other two coordinate branches of federal government as well.

Id. (some internal citation omitted).

B. The Companies Have Not Established Standing for Their Ultra Vires Claim.

In its Order, the trial court noted the "distinction between the alleged injury in the

[Companies'] separation of powers and ultra vires claims and the [Companies'] due process and

ethics claims." Ord. at 10. The comi then separately considered whether the Companies had

5 The Companies' citation to Bondv. United States, 564 U.S. 211 (2011) is unhelpful to the Companies' argument as the sentence quoted pertained to "Bond's challenge to her conviction and sentence" and merely states that "incarceration constitutes a concrete injury, caused by the conviction and redressable by invalidation of the conviction." Id. at 217 (ellipses omitted). The quotation referenced simply expresses that Article III generally does not prevent a federal criminal defendant from raising defenses to her criminal prosecution. See id.

6

standing under each set of claims. Id. at 10-15. The Companies fail to appreciate the distinction

between the two sets of claims as they relate to standing and instead conflate them in an attempt

to manufacture standing to challenge the formation of the contingency fee agreement.

Specifically, they point to the alleged injury underlying their due process and ethics claims-a

biased investigation-in arguing that they have standing to raise their ultra vires claim. See, e.g.,

Defs' Br. at 13 (quoting the trial court's analysis of standing as to the due process and ethics

claims, finding an "actual, immediate injury" based on the allegation that the State's

investigation is "inherently biased by Cohen Milstein's conflict of interest"). At the same time,

the Companies rely primarily on case law where courts found that the harm related to a subpoena

issued beyond the government body's authority was the act ofresponding to the subpoena. See

Defs' Br. at 14-15 (citing Muller Optical Co. v. E.E.O.C., 743 F.2d 380 (6th Cir. 1984) and In re

President's Comm. on Organized Crime Subpoena of Scarfo, 783 F.2d 370, 371 (3d Cir. 1986)).6

This instant case stands on entirely different footing. Unlike the plaintiffs in Muller and

Scarfo, the Companies are not challenging the OAG's authority to investigate their marketing

practices. They are not challenging the OAG's authority to issue the subpoena. Further, they are

not seeking relief from having to produce documents. Their claimed injury is not rooted in the

obligation to respond to an illegal subpoena; rather it is based on speculation about how the OAG

and its outside counsel, Cohen Milstein, may use those legally obtained documents in the future.

The alleged injury is speculative and temporally remote, and does not establish standing. See

Lujan, 504 U.S. at 560-61 (requiring the injury to be "fairly trace[ able] to the challenged action

6 In Muller, the plaintiffs sought a preliminary injunction prohibiting the EEOC from requiring them to appear for a deposition and produce documents in the context of an age discrimination investigation. They contended that the EEOC lacked authority to investigate such cases and thus the administrative subpoenas it had issued were unlawful. Id. at 382. The EEOC argued that the plaintiffs lacked standing because they failed to demonstrate an injury. Given the allegations that the plaintiffs were required to appear at a deposition and produce documents, the Sixth Circuit found that the plaintiffs had "alleged sufficient injury to meet the requirements for standing." Id. at 382.

7

of the defendant ... "). For these reasons, and for the reasons stated in the OAG's opening brief,

the Companies fail to allege actual harm for their ultra vires claim.

Even ifthe Companies could rely on the alleged due process injury-a biased

investigation-as the basis for their ultra vires claim, they failed to demonstrate a causal

relationship between that injury and the alleged violation-namely the allegation that the OAG is

required to have contingency fee agreements approved by the G&C and the fiscal committee.

See Iota Xi Chapter of Sigma Chi Fraternity v. Patterson, 566 F.3d 138, 148 (4th Cir. 2009)

("'Redressability' requires a plaintiff to allege that 'the asse1ied injury was the consequence of

the defendants' actions .... "') (quoting Warth v. Seldin, 422 U.S. 490, 505 (1975)).

The two statutes that the Companies relied on, RSA 7: 12, I, and 7:6-f, set fo1ih specified

governmental procedures that have no bearing on the manner in which the OAG and Cohen

Milstein conduct their investigation. The trial court found that RSA 7:6-f's requirement that

"any" monetary recovery under the Consumer Protection Act ("CPA") be placed in the consumer

protection escrow account necessarily includes that portion of the recovery that would go to pay

contingency fee counsel. Ord. at 20-21. The only way contingency fees could be exempted

from that mandate, the trial court concluded, was for the OAG to seek an additional legislative

appropriation under RSA 7: 12, I. Id. at 22. Thus, even under the trial court's analysis, the two

statutes at issue pe1iain solely to: 1) where funds derived from a completed CPA action are

deposited; and 2) what approval the OAG needs prior to expending funds in excess of its

appropriations. See RSA 7:6-f; RSA 7:12. The risk of a skewed investigation has no causal

connection to these statutory processes, which, like many statutes, simply pertain to the use of

state funds, and not the means or methods the OAG uses to conduct a CPA investigation.

8

The Companies' response to the OAG's argument illustrates the lack of any connection

between the alleged injury and the alleged violation. They make no attempt to argue that, had

the OAG followed the process outlined in RSA 7:12, I, in connection with RSA 7:6-f, that

process would have insulated them from any alleged improper financial motives on the part of

Cohen Milstein. Rather, the Companies staii from a position that the trial court flatly rejected­

that "the State is prohibited from retaining Cohen Milstein on a contingency-fee basis, regardless

of any approvals the AG seeks." Defs' Br. at 15. The Companies' silence on the issue serves as

an implicit concession that they cannot meet their burden to demonstrate that the alleged harm is

causally connected to the fact that the OAG did not follow the approval process outlined by the

trial court.

Although their silence speaks volumes, it should also be noted that there is no

conceivable circumstance in which the Companies could have a legitimate legal interest in the

OAG's compliance with RSA 7:6-f. That statute only comes into play-if at all-after a CPA

settlement or judgment. See RSA 7 :6-f. Herc, there is no CPA recovery at issue, and there may

never be. Even if there were, a determination of what account that recovery goes into, and

whether any of it ultimately is paid to contingency fee counsel, causes no legal injury to a CPA

defendant. The Companies cite no authority for the proposition that a defendant who receives a

monetary judgment against it has a legal interest in where the money goes next. Thus, the

Companies cannot plausibly claim to have a stake in the OAG's compliance with RSA 7:6-f.

The Companies' argument that "the State's position would effectively immunize the

State from challenge" is an overstatement and essentially asks the Comi to lessen or eliminate

standing requirements when a governmental entity is involved. Defs' Br. at 15. The Companies

provide no legal support for such a request. Nor should the Court consider such a dramatic

9

change to the elements required for standing. To the contrary, because the Companies seek

judicial intervention into "the conduct of the executive branch of government, the necessity of a

case or controversy is of particular import." Babbitt, 137 F.3d at 1201. This Court should

decline to find standing "in a case brought, not to enforce specific legal obligations whose

violation works a direct harm, but to seek a restructuring of the apparatus established by the

Executive Branch to fulfill its legal duties." Allen v. Wright, 468 U.S. 737, 761 (1984).

Finally, the Companies cite Scarfo and Muller to support their argument that they do not

need to link the alleged harm with the violation. Because each of those cases involved harm

arising directly from the issuance of an unauthorized, invalid subpoena, neither case is helpful to

the Companies' position. See lvluller, 743 F.2d at 382 (EEOC lacked power to investigate age

discrimination case and thus had no authority to issue subpoena); Scarfo, 783 F.2d at 371

(President's Commission was illegally constituted and thus could not issue valid subpoena).

Here, the Companies are not challenging the OAG's authority to conduct the

investigation, just Cohen Milstein's involvement in it. However, their standing, as it relates to

the ultra vires claims, does not hinge upon whether their perceived harm is linked to the

involvement of Cohen Milstein in the OAG's investigation. 7 Rather, the Companies must

establish a causal link between the hypothesized harm-a biased investigation-and the OAG's

alleged statutory noncompliance. In other words, the Companies must demonstrate that the

danger of a biased investigation stemming from Cohen Milstein's involvement arises because the

contingency fee agreement was not ratified by the fiscal committee and G&C. The logical

corollary would be that no injury would result if Cohen Milstein assisted the OAG under a

contingency agreement that was ratified by these bodies. The Companies cannot make such a

7 Such an argument is applicable to the Companies' failed due process arguments, but not to the Companies' attempt to invalidate a contract to which they are not a party to.

10

connection. In fact, the Companies have made clear that their challenge to any agreement

between the OAG and Cohen Milstein will not be resolved by fiscal committee and G&C

approval. As the Companies explained in their brief, they have continued to refuse to turn over

documents even after the OAG entered into a new flat fee agreement with Cohen Milstein, which

was approved by the fiscal committee and G&C. Defs' Br. at 7.

In sum, the Companies alleged injury is not only speculative and temporally remote, but

also relates solely to the alleged violation of their due process rights, not their ultra vires claim.

The Companies fail to identify any injury at all arising from alleged statutory noncompliance in

the formation of the contingency fee agreement.

Because the Companies fail to establish standing with respect to the ultra vires claims,

the Court need not reach the merits of those claims. Instead, the court may limit its review to the

Companies' due process and ethics claims, which must be rejected for the reasons stated below.

II. THE OAG'S AGREEMENT WITH COHEN MILSTEIN IS NOT ULTRA VIRES.

Assuming arguendo that the Court finds that the Companies have established standing

with respect to the ultra vires claim, it should vacate the trial court's ruling and find that the

contingency fee agreement is valid.

The attorney general is a constitutional officer who holds broad common law power to

direct the legal affairs of the State. Opinion of the Justices, 117 N.H. 393, 396 (1977); Eames v.

Rudman, 115 N.H. 91, 92 (1975). The Companies do not dispute that New Hampshire attorneys

general have, in the past, retained contingency fee counsel without seeking fiscal committee and

G&C approval. Nor do they dispute that the legislature had knowledge of the OAG's past

retention of contingency fee counsel. See Supp. 39, 41-42. It is fmiher undisputed that there is

no New Hampshire statute that mentions the attorney general's use of contingency fee counsel.

11

Nevertheless, the trial court held that RSA 7: 12, I, 7:6-e, and 7:6-f implicitly proscribed

the attorney general's authority to unilaterally retain contingency fee counsel. This conclusion is

not supported by the plain language of the statutes, the legislative history, or the long standing

practice of the OAG, the fiscal committee, and the G&C. Each of the above-referenced statutes

has an evident and straightforward purpose that does not involve constraining the attorney

general's judgment regarding which legal matters to pursue and how best to pursue them. To the

extent that the Court views RSA 7: 12, I, as ambiguous as applied to the unique issue of

contingency fee counsel, the longstanding and accepted interpretation of the statute by the OAG,

the G&C, and the fiscal committee is entitled to judicial deference.

A. RSA 7:12, I, Does Not Impact the OAG's Use of Contingency Fee Counsel.

RSA 7: 12, I, serves solely as a means for the OAG to access funds not previously

appropriated to it when these funds are needed to pay for outside professional assistance with an

OAG matter. In their brief the Companies contend, for the first time, that RSA 7: 12, I, sets forth

a "two-tiered approval process." Defs' Br. at 18. Specifically, the first "tier" requires the OAG

to secure the approval of the fiscal committee and the G&C to retain outside professional

services, such as an expert witness, consultant, or law firm, regardless of the source of funds to

be used for payment. Id. at 17. This first "tier" approval, the Companies say, is intended to

ensure that the service is a "reasonable necessity," including whether the service is obtained "on

reasonable financial and other terms." Id. The Companies' second "tier," which applies only if

the professional service is to be paid from funds "not otherwise appropriated," requires the

governor to "decide whether the private lawyers' compensation is a reasonable use of public

funds .... " Id. The Companies newly proposed interpretation is incorrect for several reasons.

12

First, the Companies' construal of RSA 7:12, I, is constitutionally infirm. It requires

fiscal committee approval for "tier one," which, under the Companies' interpretation, involves

approval to compensate outside professionals, even if they are paid from the OAG's existing

budget, but not "tier two," which involves actual access to funds not budgeted to the OAG. See

NH Health Care Assoc. v. Gov., 161 N.H. 378, 393 (2011) ("appropriation is a legislative

power and spending is an executive power.") (quotations omitted). If either of the Companies'

so-called "tiers" requires fiscal committee approval, it would be "tier two," not "tier one." In

Opinion of the Justices, 129 N.H. 714, 718 (1987), this Court explained that "once the legislature

has made an appropriation for the executive branch, the requirement of fiscal committee

approval of contracts made pursuant thereto by the executive branch is an unconstitutional

intrusion into the executive branch of the government." Id. Thus, the proposed "tier one" of the

new "two-tiered" construct would raise a separation of powers issue because it requires fiscal

committee approval of executive agency service contracts that do not require additional

appropriation. Id. On this basis alone the Companies' new interpretation cannot stand. Cf

Deere & Co. v. State, 168 N.H. 460, 471 (2015) ("[A] statute will not be construed to be

unconstitutional when it is susceptible of a construction rendering it constitutional.").

As the above demonstrates, the Companies' misguided "two-tiered" interpretation serves

only to draw further attention to the fact that RSA 7: 12, I, solely contemplates oversight of the

OAG's access to money not otherwise appropriated as this is the only determination the fiscal

committee can constitutionally govern. See Opinion of the Justices, 129 N.H. at 718.

Second, the Companies' interpretation of RSA 7: 12, I, is inconect because it openly calls

for the unauthorized redundancy of having the fiscal committee and G&C approve the financial

reasonableness of the professional services, and then requiring the governor to re-evaluate this in

13

deciding whether to issue a warrant. The interpretation ignores established G&C procedure. In

Sunapee Difference, LLC v. State, this Court explained that the governor retains sole discretion

over what items to present to the executive council for approval. 164 N.H. 778, 791 (2013). The

Court held that it was permissible for the then governor to refuse to put an item, which he did not

approve of, before the council. Id. Thus, in effect, the governor's act of placing an item on the

G&C agenda serves as her approval of that item. See id.

However, under the Companies' proposed second tier, the governor would be required to

take additional action-approving a warrant-after already having approved the OAG's RSA

7: 12 request by placing the item on the G&C agenda and the councilors approving the item. See

Sunapee Difference, 164 N.H. at 791-92. This apparently would require the OAG to make some

second, post-G&C approval showing to the governor, and would allow the governor to override

the G&C's previous RSA 7:12, I, decision by declining to draw on the warrant. Such a process

does not make sense. See id. at 791 ("we are of opinion that the responsibility rests primarily

upon the Governor to determine ... whether any action is called for, and what action, if any, is

desirable; and that the provision for advice of the council is a requirement that their approval and

concurrence shall accompany the affirmative act .... ")(citation omitted). Moreover, it is

directly contrary to the current and longstanding actual practice of the fiscal committee, G&C,

and the OAG under RSA 7:12, I.

The Companies' citation to NH Health Care Association does not aid their "two-tiered"

interpretation. The executive branch action in NH Health Care did not pertain to G&C

approval of an agency contract, but rather, involved an executive order by the then governor that

"directed a reduction in executive branch expenditures." 161 N.H. at 384. It does not stand for

the proposition that the governor's warrant on the treasury constitutes some sort of discretionary

14

secondary determination following the G&C's and the fiscal committee's determination that the

professional service is, as the Companies put it, "being retained on reasonable financial and other

terms." Defs' Br. at 17.8

Both the trial court's and Companies' interpretations are based, not on a plain reading of

RSA 7: 12, I, but rather, on the overthought implications that result from trying to apply a statute

to a circumstance for which it was never intended. To the extent that the contingency fee

counsel question casts doubt on RSA 7: 12' s meaning, "the long-standing practical and plausible

interpretation applied by the agency responsible for its implementation, without any interference

by the legislature, is evidence that the administrative construction conforms to the legislative

intent." New Hampshire Retirement System v. Sununu, 126 N.H. 104, 109 (1985).

The OAG's longstanding practice, which has been accepted by the fiscal committee and

G&C, is to seek approval for funds to pay expenses related to the retention of outside

professionals only when the OAG requires "money in the treasury not otherwise appropriated."

RSA 7: 12, I. 9 An example of such a request is found on the August 5, 2016 fiscal committee

agenda. There, the OAG sought "authorization to accept and expend a sum not to exceed

$1,352,300 from funds not otherwise appropriated for the purpose of covering projected

shortfalls in the general litigation expenses incuned in the defense of the State and the

8 The Companies also cite King v. Thompson, 119 N .H. 219 ( 1979) for the proposition that, in the past, the Attorney General has complied with RSA 7: 12, I's "two-tiered approval" process. Defs' Br. at 18. The assertion, however, is insufficient to establish that RSA 7: 12 is treated as a "two-tiered approval process." The case simply references the fact that the OAG compensated outside counsel under RSA 7: 12, I, in that instance. Thompson, 119 N.H. at 220. The OAG does not dispute that it must follow RSA 7: 12, I, when it seeks funds in excess of its litigation budget in order to compensate outside professional assistance.

9 The fiscal committee not only accepts, but actively engages in the practice. The participation by both G&C and the fiscal committee further supports the OAG's argument that its interpretation is entitled.to administrative gloss. See Petition of Kalar, 162 N.H. 314, 321 (2011).

15

prosecution of criminal law through June 30, 2017."10 Both the fiscal committee and the G&C

approved that RSA 7: 12, I, request, which included payments to outside counsel and expert

witnesses. 11 The G&C considered similar RSA 7: 12, I, requests on February 8, 2012, 12

December 4, 2013, 13 and April 22, 2015, 14 all of which had previously been approved by the

fiscal committee. Each request sought a monetary amount, not approval to retain specific

professionals. See, e.g., RSA 7:12, I, request of April 22, 2015, (seeking funds for, among other

matters, "six ongoing homicide cases for which we anticipate incurring costs in excess of

$120,000 for various lab tests, crime scene evaluations and consultations with experts."). The

practice, as described by the OAG, is firmly established.

OAG attorneys' strategic legal decisions to, for example, retain a medical expert in a

personal injury case or an attorney to advise the OAG on a nuanced issue of trademark law, do

not require fiscal committee and G&C approval. These strategic legal determinations are the

OAG's alone. Setting aside the potential separation of powers issues, it would be impractical for

the OAG to obtain fiscal committee and G&C approval of each and every outside professional

that it seeks to retain in the course of managing all of the state's criminal and civil litigation

matters. 15 It is only when the OAG needs additional funding to compensate such professionals

that it is required to seek those approvals. RSA 7: 12, I.

10 Available at http://www. gencourt.state.nh. us/LBA/budget/FiscalAgenda/FISCAL %20CO MMITTEE%20 Agenda%202016-08-05.pdf (August 5, 2016, fiscal committee approval under RSA 7:12, agenda item no. 7).

11 Available at http://sos.nh.gov/nhsos content.aspx?id=8589960757 (August 24, 2016 agenda item no. 64).

12 Available at http://sos.nh.gov/2012 Governor and Council Minutes.aspx (Feb. 8, 2012 minutes, item no. 20).

13 Available at http://sos.nh.gov/nhsos content.aspx?id=49290 (Item no. 23).

14 Available at, http://sos.nh.gov/nhsos content.aspx?id=8589946482 (Item no. 77).

15 The Companies' use of RSA 2 l -M:3, III (b ), which permits the OAG to designate Assistant County and United States Attorneys to assist the OAG-with permission of the County Attorney or United States Attorney-is not persuasive. The statute, which the OAG uses to gain assistance in cross-jurisdictional criminal matters (such as gun and drug crimes) is not an adequate parallel to the standard compensable services referenced in RSA 7:12, I and, therefore, does not help clarify RSA 7: 12, I.

16

The Companies do not contest that the OAG's interpretation is longstanding and that

G&C and the fiscal committee participate in the practice as outlined above. Rather, they contend

that the current application of RSA 7:12, I, is problematic because there is no legislative check

on the attorney general's ability to unilaterally retain outside counsel when payment is derived

from the OAG's budget or a contingency agreement. But this concern-belied by the

Constitution-is no reason to interpret the law in a manner never envisioned by the legislature.

As set forth in the OAG's opening brief, attorneys general have, on several occasions, retained

legal counsel on a contingency fee without seeking fiscal committee and G&C approval. The

legislature's knowledge of this practice is evidenced by the fiscal committee's 2013 approval of

the OAG's use of contingency fee counsel in the online travel litigation. Supp. 39, 41-42. 16

If the legislature viewed the OAG's ability to retain outside counsel as a concern, it could

have enacted legislation that expressly placed a check on the OAG's use of such counsel. See

Meredith v. Leyob, 700 So. 2d 478, 488 (La. 1997) (Lemmon, J. dissenting) ("If the legislature

considers such contracts in this type oflitigation 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."). It is undisputed, however, that

here, despite the legislature's knowledge of the OAG's past practice, there is no statute that

actually mentions the OAG's use of contingency fee counsel.

The Companies' policy assertions regarding the attorney general's ability to "not only

hire any private lawyer his office choses, but [to] agree to pay them well above market rates ... "

16 The fiscal committee's approval was not based on RSA 7: 12, I, but rather, on a 2011 session law that required such approval before the OAG retained counsel from out of state. See id. The fiscal committee approved the use of out-of-state counsel without any mention of the contingency fee aspect of the agreement.

17

is not something the legislature appears to have debated. And, like nearly all of the Companies'

arguments, it is premised on an unfounded presumption that the OAG will act in bad faith and

without regard for the broader interests of the State. The Companies' reliance on generalized

policy assertions further highlights the lack of any actual harm specific to the Companies that is

causally connected to RSA 7: 12, I. Fmiher, their contentions regarding a lack of oversight are

incorrect. Since 1992, the OAG has been required to submit a report to the fiscal committee

every six months detailing its RSA 7: 12 expenditures. RSA 21-M: 5, VI. Thus, the legislature

has full knowledge of the manner in which the money is spent, and could impose further

oversight if it so desired. Because the general court has not seen fit to place further restriction

upon the OAG despite its awareness of both the OAG's previous use of contingency fee counsel

and the details of the 0 AG' s past RSA 7: 12, I expenditures, this Court should not adopt the

Companies' strained interpretation of RSA 7: 12, I.

C. RSA 7:6-f Also Does Not Pertain to Contingency Fee Counsel.

The trial court refused to find that RSA 7:6-f constitutes a total prohibition on the OAG's

use of contingency fee counsel. Ord. 23. The ostensible reason for this is plain-the statute says

absolutely nothing about the OAG' s use of contingency fee counsel. Moreover, as explained in

the OAG's opening brief, the legislative histories of RSA 7:6-f and RSA 7:6-e reveal no mention

of the OAG's ability to retain contingency fee counsel despite extensive legislative discussion

regarding proceeds of the MTBE case-a matter in which the OAG retained outside counsel on a

contingency fee. That the legislature took no issue with the OAG's ability to utilize contingency

fee counsel, or the process used by the State to retain such assistance, undercuts not only the

Companies' interpretation of RSA 7:6-e and-f, but also its interpretation of RSA 7:12, I.

18

The Companies argue that RSA 7:6-f entirely bans the OAG's use of contingency fee

counsel in all CPA cases, and that the trial court erred in concluding that the use of such counsel

is permissible with RSA 7:12, I, approval. Defs' Br. at 20. First, the Companies have waived

this argument as it is not included in their notice of appeal. See NOA at 9. Further, it is

undisputed that the legislature was aware of the OAG's use of contingency fee counsel when it

enacted RSA 7:6-f. Thus, the Companies' assertion that RSA 7:6-f, although not mentioning

contingency fee counsel, was intended to create a total ban on this practice as to the CPA is

highly dubious.

In State v. Hagerty, 580 N.W. 2d 139, 147 (N.D. 1998) the Supreme Court ofNorth

Dakota declined to read a constitutional provision containing the language "[a]ll public moneys,

from whatever source derived" to include contingency fee counsel's portion of a recovery

because the "text and history" of the provision lacked "an intention to limit the Attorney

General's authority .... " Id. at 147. The comi concluded that "absent express constitutional or

statutory limitations, we see no reason for this court to accord a constitutional officer like the

Attorney General a nanower measure of discretion .... " Id. (emphasis added); see also

Meredith, 700 So. 2d at 487 (Lemmon, J. dissenting) ("[T]here also is no reasonable basis for

interpreting the phrase 'all sums recovered' as intended to preclude the deduction of contingency

fees from the gross recovery .... If the Legislature intended to enact Section 2205A(l) in order

to prohibit use of contingency fees in environmental damage cases, much clearer language was

certainly available to express that purpose."). 17

The same interpretation is appropriate here. RSA 7: 6-f acknowledged the existence of

the consumer protection escrow account, and mandated that recoveries be directed to that fund

17 The Hagerty court impliedly rejected the majority decision in Meredith v. Leyob, 700 So. 2d 478, 488 (La. 1997), as it noted that the case as contrary authority, but declined to follow it. 580 N.W. 2d at 144.

19

and, in the event of a surplus, to the general fund. RSA 7:6-f. As Justice Lemmon concluded,

because the statute "contains much more than the introductory sentence relied upon by the lower

courts as impliedly prohibiting such contingency fee contracts[,]" there is "no reasonable basis"

to argue that the intent of the statute was to silently prohibit all future use of contingency fee

counsel in consumer protection cases. 18 Id. Consequently, RSA 7:6-f cannot be fairly read to

constitute an implied ban on the OAG' s use of contingency fee counsel.

Even under the superior court's interpretation of RSA 7:6-f and :12-the subject of the

State's appeal- there is no total statutory ban on the OAG's existing practice of retention of

contingency fee counsel. Further, RSA 7:6-f s "any funds" language does not permit the court to

read into the statute an outright prohibition that there is no evidence that the legislature actually

considered when enacting the law. Even if the Court were to find that the Companies have

standing to challenge the agreement, the Court should conclude that RSA 7:6-f does not

implicate the OAG's ability to independently retain contingency fee counsel, and that the OAG' s

agreement with Cohen Milstein is not void as an ultra vires act.

III. THE STATE'S ETHICAL RULES DO NOT PROHIBIT CONTINGENCY FEE COUNSEL'S ASSISTANCE WITH CIVIL MATTERS.

A. The Executive Branch Code of Ethics Does Not Apply to Cohen Milstein as the Firm is an Independent Contractor, Not a State Employee or Official.

The trial court con-ectly found that "under the plain and unambiguous language of RSA

21-G:21 and RSA 15-B:2, IX Cohen Milstein is not a public employee and therefore is not

subject to the Ethics Code" applicable to executive branch officials. Ord. 28. On appeal, the

18 Justice Calogero ' s dissent contains similar reasoning: "the intent of La. R.S. 30:2205 is to generate funds for environmental protection purposes. Considering these factors, surely the Legislature would have been explicit if it had intended to prohibit the use of contingency contracts by the language of La. R.S . 30:2205 . I believe that in this case, a reasonable interpretation of the sum "recovered" by the client, as contemplated by La. R.S. 30:2205 , is the amount of the judgment or settlement less the contingency fee . . . . " Meredith, 700 So. 2d at 485 (emphasis added) .

20

Companies seek to extend the Ethics Code to any person or business entity conducting any sort

of business on behalf of the state. This Co mi should reject the Companies' interpretation as it is

not suppmied by the plain language of the statutes and leads to absurd results.

Whether or not Cohen Milstein constitutes an "executive branch official" subject to the

Ethics Code is a question of statutory interpretation. The Co mi "first look[ s] to the language of

the statute itself, and, if possible, construe[ s] that language according to its plain and ordinary

meaning." Appeal of THI of NH at Derry, LLC., 168 N.H. 504, 508 (2016). The Court

"construe[ s] all parts of a statute together to effectuate its overall purpose and avoid an absurd or

unjust result." Id. "Moreover, [the Court] do[ es] not consider words and phrases in isolation,

but rather within the context of the statute as a whole." Id. at 508-09. "This enables [the Court]

to better discern the legislature's intent and to interpret statutory language in light of the policy

or purpose sought to be advanced by the statutory scheme." Id.at 509.

The Executive Branch Code of Ethics ("Ethics Code" or "Code") applies to "executive

branch officials." See RSA 21-G:21-:35. The Code defines "executive branch official" as "every

elected official as defined by RSA 15-B:2, III, who holds an executive branch office, every

public official as defined by RSA 15-B :2, X, every constitutional official as defined by RSA 15-

B:2, II, and every public employee as defined by RSA 15-B:2, IX." RSA 21-G:21, II-a (2012)

(amended 2016). RSA 15-B:2, IX defines "public employee" as "any person, including but not

limited to a classified or non-classified employee or volunteer, who conducts state business on

behalf of the governor, any executive branch official, agency, or the general court." Id.

The plain language of RSA 21-G:21, II-a and RSA 15-B:2, IX does not support extending

the definition of "executive branch official" to independent contractors such as Cohen Milstein.

The terms "elected official," "public official," "constitutional official," and "public employee"

21

appearing in RSA 21-G:23, II-a, and the terms "classified" and "unclassified" employees and

"volunteers" appearing in RSA 15-B:2, IX are all specific terms. And although RSA 15-B:2, IX

contains the language "including, but not limited to," the Court should not interpret this to permit

the inclusion of independent contractors. See Home Gas Corp. v. Strafford Fuels, 130 N.H. 74,

82 ( 1987) ("the broader term itself takes on the more specialized character of its neighbors, under

the rule that applies as well to one term within a series as it does to an individual within a group,

noscitur a sociis."). The term independent contractor is a specific, known legal classification

that is wholly distinct from "employees" in general as well as from the other, more specific terms

contained in these statutory definitions. 19 Had the legislature intended to include independent

contractors in the definition of "executive branch official," it could have expressly done so.

In addition to the statutes' plain language, viewing the terms "executive branch official"

and "public employee" in the context of the whole statutory scheme demonstrates that the

Companies' interpretation would lead to absurd results. For instance, if outside counsel is

deemed a "public employee" under RSA 15-B:2, IX, then the OAG cannot retain legal services,

on an hourly basis or otherwise, from any law firm with a government relations practice. RSA

21-G:25, I ("No person shall serve as a public employee ... and simultaneously be a person who

... is employed by, or maintains an ownership interest in, any entity which employs a registered

lobbyist."). 20 Similarly, all independent contractors providing a service to the State would be

19 There is a fundamental legal distinction between employees/volunteers and independent contractors, one that the trial court acknowledged, Ord. at 29, and that is present in numerous statutes and legal doctrines, such as common law agency. See, e.g., RSA 281-A:2 (workers' compensation); RSA 282-A:9 (unemployment compensation); RSA 275:49 (requiring employers to post criteria for distinguishing employees from independent contractors). RSA 15-B:2, IX specifies as examples of"employees" classified and non-classified employees, as well as volunteers, but omits the obvious legal class of business entities and professionals that are considered independent contractors.

20 Interestingly, ifthe Companies' interpretation is con-ect, it would have precluded the OAG's recent retention of McLane Middleton because of that firm's lobbying practice. In 2014 and 2015, the OAG obtained legal assistance from one ofthe signatories to this brief. Tr. 12-13. According to the Secretary of State's website, a subsidiary of that firm employs at least two individuals that are registered as lobbyists. Id. Under the Companies' theory,

22

precluded from hiring, supervising, or setting compensation for a family member, RSA 21-

G:26-a, and the State could not contract with a family business for professional services.21

Viewing the Ethics Code as a whole demonstrates that it is geared toward establishing

basic ethical rules for individual state employees. It is not intended to govern the inner-workings

of private independent contractors that perform a service for the State. For example, the plain

language of the Code's prohibitions focus on the conduct of individuals, not business entities-

i.e. "no executive branch official shall ... ". See, e.g., RSA 21-G:23; RSA 21-G:26; RSA 21-

G:26-a; see also RSA 21-G:22 ("Executive branch officials shall avoid conflicts of interest.");

RSA 15-B:4 ("No public official or public employee shall ... ".).

Further, the executive branch ethics committee ("committee"), established by RSA 21-

G:29, is charged with addressing ethics complaints under the Code. RSA 21-G:3 l. This

complaint process, outlined in RSA 21-G:31, further demonstrates that the Code and RSA 15-B

have no applicability to independent contractors. For instance, the "formal action" that the

committee may take in response to a violation includes "disciplinary action by the executive

branch employee's supervisor[,]" "removal from office under RSA 4: 1," or "impeachment or

other appropriate action pursuant to Pmi II, Article 38 of the New Hampshire constitution."

RSA 2 l-G:31, III( d) (emphasis added). These employment-based forms of discipline are

meaningless when applied to a private independent contractor retained to perform a discrete task

previous outside counsel, a partner in the firm, would be a public employee. That partner maintains an ownership interest in an entity which employs a registered lobbyist. Under the Companies' interpretation, that attorney violated RSA 21-0:25.

21 Further, RSA chapter 15-B contains numerous travel and other expense reimbursement reporting requirements. RSA l 5-B:5, 6, 7. Thus, if an attorney or other independent contractor seeks to have their expenses paid by the State, then they need to follow the same expense reimbursement and reporting process as all state employees.

23

for the government.22 The absurdity of the application, when coupled with a plain reading of the

statutory definitions at issue, demonstrates that the State's executive branch ethics rules are

intended to apply to individual state employees, not private business entities.

In their brief, the Companies seize on RSA 21-G:21, II-a's use of the phrase "on behalf

of." Defs' Br. at 25. The Companies' fixation on this language is misplaced. The trial court

rightly deemed Cohen Milstein a "non-agent service provider" that does not "conduct[] business

on behalf' of the OAG for purposes of the State employees' ethics rules. Ord. 29-30, 33-34.

Although the OAG disagrees with the weight that the trial court accorded to whether Cohen

Milstein acted "on behalf of' the OAG for purposes of assessing the applicability of state

employee ethics rules to private independent contractors, even if this Court deems the inquiry

relevant, it is plain that the firm is not acting on behalf of the OAG.

Based on a detailed analysis of agency law and principles of delegation, the trial court

concluded that the OAG retains sufficient control over the investigation such that Cohen Milstein

cannot be considered a state employee or executive branch official. Id. at 34 ("Although it may

deal with third parties and gather information [Cohen Milstein] does not have delegated authority

to make controlling decisions in the administration of the OAG's CPA authority .... "). In

response to the trial court's comprehensive analysis, the Companies put forth the visibly artificial

syllogism that: because Cohen Milstein is a law firm, and, because lawyers act "on behalf of'

clients, Cohen Milstein must be acting "on behalf of' the OAG, for purposes of the ethics rules.

Defs' Br. at 30. The Companies' conclusion is incorrect.

22 Aside from revealing that the executive ethics chapters are not intended for private business entities and professionals, the existence of the committee to hear complaints demonstrates that the Companies have brought their executive branch ethics complaint to the wrong forum. RSA chapters 21-G and 15-B do not provide private rights of action for claimed violations, but instead create the committee to receive and investigate complaints and take corrective action. See RSA 21-0:31.

24

Although generally speaking lawyers act on behalf of their clients, the Companies' use of

this premise as a legal argument loses sight of all relevant context. For instance, the argument

ignores the fact that the entity retaining the services is the OAG, and, as the State's legal counsel,

OAG attorneys are actively supervising and controlling the investigation and potential litigation.

Supp. 3. Specifically, the agreement provides that OAG attorneys "will appear as lead counsel in

all pleadings and shall retain control over any litigation decisions and the settlement of the

State's claims." Id; see also Tr. 9 (explaining that James Boffetti of the OAG "has been

involved in all aspects of the investigation," including witness interviews, and will serve as the

OAG's "point of contact" with the Companies). The OAG's agreement makes clear that Cohen

Milstein is providing services "under the direction of the Attorney General." Id The OAG

directs Cohen Milstein's provision of this service (i.e. assistance with the investigation/potential

litigation) and is free to discontinue receipt of the service at will following the investigation.

Supp. 2-3. It is the disinterested OAG attorneys who control the investigation and any

subsequent litigation and have the final say in all substantive decisions. Id

Thus, the present facts differ from the typical lawyer-client relationship because here, as

the trial court aptly explained, the OAG has not actually delegated its CPA enforcement

authority to Cohen Milstein. Ord. 33-34. Instead, Cohen Milstein is "more akin to a non-agent

service provider ... [as] the OAG has expressly retained its authority to exercise its own

discretion on all key decisions." Ord. 33. Under any realistic reading of the state employee

ethics statutes, and consideration of the facts at hand, Cohen Milstein is not a state employee.

Unable to seriously dispute this, the Companies are forced to argue that the OAG cannot

exert meaningful control over the investigation because OAG's attorneys are incapable of

adequately supervising contingency fee counsel. Defs' Br. at 34. It is true that the OAG retained

25

Cohen Milstein to assist with the investigation due to the vast size of the five large

pharmaceutical companies and their extensive legal resources. But the Companies' conclusion

that the OAG cannot or will not effectively supervise this matter consistent with its agreement

with Cohen Milstein is pure conjecture. The OAG informed the trial court that meaningfully

supervising this investigation would be a priority, and that the attorney general's involvement,

and that of the chief of the Consumer Protection Bureau, would be significant. See Tr. 9 ("The

attorney general himself has been and will continue to be involved in all critical decisions. The

Chief of the ... Consumer Bureau has been involved in all aspects of the investigation .. . ");see

also Tr. 10-11.23 The Companies put forth no competent evidence to challenge these assertions.

Instead, they rely almost entirely on conclusions drawn from law review articles that were not

referenced before the trial court and that do not at all pertain to the New Hampshire OAG's use

of contingency fee counsel. Defs' Br. at 35.

The trial comi properly categorized Cohen Milstein as a service provider and not an

executive branch official conducting business on behalf of the OAG. Ord. 34. The Companies'

contention that outside counsel are "public employees" cont01is the term "employee" beyond

recognition. Cohen Milstein attorneys do not receive state pay; they do not accrue vacation or

sick time; they do not receive health or retirement benefits; and they do not hold themselves out

as employees of the government. The firm, like other law firms and fee-for-service providers

generally, is an independent contractor not subject to the Executive Branch Code of Ethics.

B. The OAG's Agreement with Cohen Milstein Does Not Violate Rule 1. 7 of the New Hampshire Rules of Professional Conduct.

The trial court properly found no violation of the New Hampshire Rules of Professional

Conduct ("Rules") because Cohen Milstein is not "a public attorney charged with serving the

23 The attorney general and the Consumer Bureau Chief were present at counsel table during this offer of proof.

26

public interest under the common law and the [Rules]." Ord. at 28, 35. The Companies argue

that the trial court erred in failing to find a Rule 1. 7 violation. Defs' Br. at 26.

Preliminarily, the Companies' notice of appeal does not present an alleged violation of

the Rules as an appellate issue, see Defs' NOA at 9, therefore, the Companies have waived all

arguments pertaining to the Rules. See Guyotte v. O'Neill, 157 N.H. 616, 623 (2008) ("We will

not review any issue that was not raised in the notice of appeal.").

Regardless, the trial court properly found no violation of the Rules. Rule 1.7 provides

that "a lawyer shall not represent a client if that representation involves a concurrent conflict of

interest." One example of a concurrent conflict is when "there is a significant risk that the

representation ... will be materially limited by ... a personal interest of the lawyer." Rule

l.7(a)(2). The Companies, relying solely on Rogowicz v. O'Connell, 147 N.H. 270 (2001), argue

that Rule 1. 7 prohibits the instant contingency fee agreement. But Rogowicz, although citing

Rule 1. 7, does not relate to the issues presently before this Court.

In Rogowicz, a private attorney, while representing a domestic abuse victim, was

simultaneously appointed to prosecute the victim's abuser for criminal contempt. Id. at 272-74.

The Court found that the potential for conflict was inherent in those circumstances, where the

attorney's duty to zealously represent her client may conflict with her duty as a prosecutor to

pursue justice. Id. at 275. It was not, contrary to the Companies' suggestion, a conflict arising

from the attorney's personal interest, Defs' Br. at 27, and therefore, does not support a

prohibition of government-supervised contingency fee counsel in a civil matter. In fact, the

Companies cannot point to any judicial opinion holding that contingency counsel's potential

recovery in a civil case in which they assist the government constitutes a "personal interest" that

"materially limits" the representation under Rule 1. 7.

27

Setting aside the lack of legal support for their position, the Companies have failed to

explain how the State's representation will be "materially limited" under Rule 1.7 due to the

existence of the contingency fee agreement. It is obvious that any attorney handling a case on a

contingency fee basis has a "personal interest" in recovering, but courts have not concluded that

this materially limits the representation of the client in a civil matter. And the Companies do not

put forth any real argument that illuminates how the contingency will affect "the representation"

at issue. As discussed, the OAG, not Cohen Milstein, controls the investigation and, if the OAG

decides to pursue legal action, the OAG will serve as lead counsel. Thus, it is the OAG, through

the attorney general and the Consumer Protection Bureau, that is representing the State, with

assistance from Cohen Milstein. This alone defeats the Companies' Rule 1. 7 argument.

One state's high court has addressed, and quickly disposed of, a Rule 1.7 challenge to an

attorney general's retention of outside counsel in a civil litigation matter. State ex rel. Discover

Fin. Servs. v. Nibert, 744 S.E.2d 625, 636 (W. Va. 2013). In Nibert, the plaintiffs claimed that

the state's act of seeking civil penalties constituted a quasi-criminal proceeding and, therefore,

the use of outside counsel violated Rule 1.7. Id. at 638. The court, assuming "for the sake of

argument" that the litigation was quasi-criminal, concluded that outside counsel's interest in the

outcome of the litigation did not violate Rule 1.7 because the attorney general's office retained

the authority to determine what forms of relief to seek, including civil penalties. Id.

Here, the Companies do not contend that the instant case is quasi-criminal, nor could

they. Again, there is no lawsuit filed against them, and there may never be one.24 Rather, the

Companies vaguely surmise that because Cohen Milstein has a personal interest in the

24 The OAG has made clear that ifthe investigation did reveal potential criminal conduct, Cohen Milstein would have no involvement in any decisions related to prosecution or in any further investigation related to any criminal prosecution. Tr. 43.

28

hypothetical contingency recovery, there must be a Rule 1. 7 conflict. As in Nibert, however, the

OAG's agreement with Cohen Milstein grants the attorney general control over the investigation

and "all key decisions, including whether and how to proceed with litigation." Supp. 3, ~ 15.

Because it is the neutral OAG attorneys who will determine whether or not to file a civil action

and what causes of action to bring, there is no Rule 1. 7 violation.

In light of the lack of any legal authority for the proposition that Rule 1. 7 bars the

government's use of contingency fee counsel in civil matters, or any evidence suggesting that the

OAG will not adequately control the instant investigation, the Court should affirm the trial

court's ruling that the OAG's contract with Cohen Milstein does not violate Rule 1.7.

C. The OAG's Agreement Does Not Violate New Hampshire Common Law.

The Companies also contend that Cohen Milstein are "public attorneys" with a

disqualifying conflict of interest under the common law. The argument, however, rests on

inapposite case law and the flawed premise that RSA 15-B :2, IX establishes outside counsel as

public employees for purposes outside of its statutory context. RSA 15-B:2 makes clear that its

definitions are only "for the purposes of' that chapter's ethics rules and is not a generally

applicable definition. See RSA 15-B:2. The definition is, therefore, irrelevant outside of chapter

15-B, and as incorporated into RSA 21-G:21, II-a, and has no bearing on the understanding of

who is a public employee, attorney, or official at common law. The Companies direct the Court

to no authority, and the OAG is aware of none, standing for the proposition that the State's

retained outside counsel are deemed to be public employees in this context.

The cases the Companies rely on are distinguishable. For example, in Edgerly v. Hale,

71 N .H. 13 8 ( 1901 ), a statute set rates that the county sheriffs charged attorneys to serve process

in their cases. One sheriff, however, had a side agreement to pay a certain attorney more than

29

the set rate for service of writs that resulted in collections. Id. at 142--43. While this Court

condemned that side agreement, the decision is entirely concerned with the conduct of the

sheriff, who was indisputably a public official. Id. at 144--45. Here, Cohen Milstein is not a

public official. It is a service provider whose work is expressly "under the direction of the

Attorney General." Supp. 3. Rogowicz, is also distinguishable. As discussed, Rogowicz does

not pertain to a conflict of interest that was based on the personal interests of the lawyer, but

rather, dealt with an attorney that held conflicting duties to the public as a criminal prosecutor

and to a private client. See 147 N.H. at 272-74. Neither case addresses circumstances analogous

to those at hand, where a neutral public official exercises control over an independent contractor.

Although it is true that the ethical duties of government lawyers differ slightly from those

representing private clients, none of the cases cited by the Companies establish that government-

supervised contingency fee counsel assisting with a civil investigation presents an ethical

conflict. To the contrary, courts have consistently rejected such contentions.25 The trial court

conectly found that Cohen Milstein is not a public employee under the common law.

D. The Companies' Argument Regarding an "Appearance of Impropriety" is Incorrect and Presents a Question for the Legislature, Not the Court.

Finally, the Companies contend that it is "widely recognized" that state's use of

contingency fee counsel in civil matters will "erode the public's trust in the integrity of

government enforcement proceedings." Defs' Br. at 35. However, their brief provides no record

support for this assertion, and the cases cited are not even remotely analogous to the

25 See, e.g., Nibert, 744 S.E.2d at 634; Conant v. Robins, Kaplan, Miller & Ciresi, L.L.P., 603 N.W.2d 143, 149

(Minn. Ct. App. 1999) (finding that because state's outside lawyers were neither state officers nor employees, they were not bound by state law requiring funds obtained in the course of state service to be paid to the state); City of Chicago v. Purdue Pharma, LP, No. 14-cv-4361, 2015 U.S. Dist. LEXIS 24712 at 3 (N.D. Ill. Mar. 2, 2015) (holding that Cohen Milstein lawyers were not employees for purposes of Chicago ethics ordinance.).

30

circumstances at hand.26 See id. at 35-37. The Companies simply cannot escape the fact that

although use of contingency fee counsel by attorneys general in civil cases is common, they can

point to no case law in which a judge has deemed this form of representation an ethical violation.

Consequently, the Companies flood their brief with references to periodical articles and

editorials that make policy arguments regarding perceived problems with a government's use of

contingency fee counsel. This, however, is not evidence that was before the trial court. And,

more importantly, the inclusion of these materials reveals that what the Companies are doing is

seeking to compel the justices of this Court to make a policy determination. The Companies are

in the wrong forum. The place to debate policy is the legislature, not this Court. And, in any

case, the Companies' contentions regarding a purported "appearance of impropriety" are not

raised in their notice of appeal and, therefore, are waived. Guyotte, 157 N.H. at 623.

IV. COHEN MILSTEIN'S ASSISTANCE WITH THE INVESTIGATION DOES NOT VIOLATE THE COMPANIES' DUE PROCESS RIGHTS.

The Companies argue that the OAG's agreement with Cohen Milstein violates due

process because Cohen Milstein has a financial interest in the outcome of the investigation and

any potential civil action. Defs' Br. 37-41. The trial court correctly rejected this argument,

ruling that contingency agreements are permissible where, as here, "the OAG supervises outside

counsel and retains control over all critical decisions such that the outside counsel's personal

interest is neutralized." Ord. at 41. The trial court's due process ruling is consistent with that of

26 The Companies' passing references to Young v. United States ex rel. Vuitton Et Fils S. A., 481 U.S. 787 (1987)

and Rogowicz, 147 N.H. 270 do not further their position. Young involved a challenge to criminal convictions that were prosecuted by private attorneys who, like the private prosecutor in Rogowicz, simultaneously represented a civil client affected by the criminal defendant's conduct. Young, 481 U.S. at 789. The alleged conflicts in Young and Rogowicz are wholly distinct from the claimed conflict in this case. Fmther, Rogowicz and Young both dealt with the rights of criminal defendants. The Companies quietly acknowledge that the criminal prosecutions in Young and Rogowicz distinguish them from the instant case by arguing that "[t]he same is true in civil enforcement actions .... " See Defs' Br. at 35. But, again, the Companies provide no citation in support of this assertion. Id

31

other courts that have directly addressed this issue and, contrary to the Companies' contentions,

does not conflict with United States Supreme Comi precedent.

Many courts have squarely addressed the issue of whether government-supervised

contingency counsel's interest in recovery impinges due process and have concluded that

contingent fees are permissible. The California Supreme Comi gave the issue thorough

consideration in County of Santa Clara v. Superior Court, 235 P.3d 21 (Cal. 2010). There,

California public entities hired outside counsel on a contingency fee to pursue a public nuisance

action against manufacturers oflead paint. Id. at 25. The court found that contingency fee

agreements are proper if: 1) "the public-entity attorneys will retain complete control over the

course and conduct of the case;" 2) "government attorneys retain a veto power over any

decisions made by outside counsel;" and 3) "a government attorney with supervisory authority

[is] personally involved in overseeing the litigation." Id. at 40.

Numerous other courts have reached the same conclusion. See City of Chicago, 2015

U.S. Dist. LEXIS 24712 at *6 ("Because the City retains control over the investigation and

litigation of this case, its retention of Cohen does not violate defendants' due process rights.");

Nibert, 744 S.E. 2d at 638 (finding contingency fee counsel permissible where "the Attorney

General retained the authority to decide strategy and tactics"); Pickering v. Hood, 95 So. 3d 611,

616 (Miss. 2012) (concluding attorney general has authority to enter into contingency fee

agreements); Merck Sharp & Dahme Corp. v. Conway, 861 F. Supp. 2d 802, 815 (E.D. Ky.

2012) (finding contingent fee lawyers are permissible when government "retain[s] the authority

to direct the course of the action"); State v. Lead Indus. Ass 'n, 951 A.2d 428, 4 76 (holding

government empowered to retain outside counsel when they serve in a "subordinate role");

Sherwin-Williams Co. v. City of Columbus, 2007 U.S. Dist. LEXIS 51945 at 4 (S.D. Ohio July

32

18, 2007) (finding contingency fee counsel permissible when government lawyers "retained

ultimate settlement authority and the authority to settle a case for nonmonetary relief from which

a contingency fee could not be payable"); PhUip Morris Inc. v. Glendening, 709 A.2d 1230, 1243

(Md. 1998) (concluding there is no due process concern where the attorney general retains "the

authority to control all aspects of [outside counsel's] handling of the litigation").

In response to this overwhelming weight of authority, the Companies do not cite a single

case directly addressing the issue that reached a contrary conclusion, nor do they attack the

reasoning of the courts that have addressed the issue. Defs' Br. 40--41. Instead, the Companies

argue that each state and federal judge in the above-referenced opinions permitting contingency

fee counsel was deceived by "reciprocal citation" to a 1997 federal court decision that, in the

Companies' view, lacked adequate legal support. Id. The Companies' sweeping assertion is

founded upon the objectively infirm assumption that each court blindly foIIowed an earlier case

rather than employing its own legal assessments. Courts across the country, including the trial

court here, have endorsed the conclusion that government control over contingency fee counsel

ameliorates due process concerns because that conclusion is sound-not by mistake.

The Companies' contention that the aforementioned cases conflict with United States

Supreme Court precedent also lacks merit. Although referring generally to notions of fairness,

the cases the Companies rely on are so factuaIIy distinct from the instant case that they do not

provide this Comi with meaningful guidance. For instance, Tumey v. Ohio, 273 U.S. 510 (1927)

and Ward v. Village of Monroeville, Ohio, 409 U.S. 57 (1972) are inapplicable because they

pertain to judges who had a financial interest in the criminal fines that they imposed. Moreover,

the Court has since expressly held that the concepts of neutrality outlined in Tumey and Ward

apply to judges only. Marshall v. Jerrica, 466 U.S. 238, 248 (1980) ("The rigid requirements of

33

Tumey and Ward, designed for officials performing judicial or quasi-judicial functions, are not

applicable to those acting in a prosecutorial or plaintiff-like capacity.") (emphasis added). Thus,

to the extent that the Companies assert that the principles expressed in Tumey and Ward are

applicable here, they are incorrect, as the Court has explicitly held that this is not the case.

The Companies' reliance on United States v. Young, 470 U.S. 1 (1985) and Berger v.

United States, 295 U.S. 78 (1935)) is also misplaced, as those cases dealt with prosecutorial

misconduct during criminal jury trials. Both cases briefly mention that a criminal prosecutor's

duty is not simply to convict, but to do so justly. See, e.g., Berger, 295 U.S. at 88 ("It is as much

his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to

use every legitimate means to bring about a just one."). As discussed, however, the instant case

pertains to an investigation and, potentially, civil litigation, not a criminal prosecution. Thus, the

Court's limited comments gauged toward prosecutorial misconduct are not on point.

Finally, the Companies isolate a sentence in Marshall in which the Court theorized that

"[a] scheme injecting a personal interest, financial or otherwise, into the enforcement process

may bring ... impermissible factors into the prosecutorial decision and in some contexts raise

serious constitutional questions." 466 U.S. at 249-50. But the Court did not elaborate on these

contexts. Id. And Marshall does not pertain to government-supervised contingency fee counsel.

Id. Thus, the Companies' use of this quotation to support their assertion that the OAG's

agreement is "directly contrary to the categorical rule established by the Supreme Court" is

wholly insufficient. Defs' Br. at 40. The Supreme Cami has established no such rule.

Here, the trial court properly followed the majority of jurisdictions in concluding that no

due process violation occurs when government attorneys supervise contingency fee counsel and

retain control over critical decisions. The OAG's agreement with Cohen Milstein satisfies all

34

three factors identified in Santa Clara. It provides that the "OAG will maintain control of the

investigation," "will review and approve all key documents," "will determine, in its sole

discretion, whether to move forward to litigation," "shall retain control over any litigation

decisions and settlement," and that Cohen Milstein will be "under the direction of the Attorney

General." Supp. 3, iii! 15, 17, 19, 20; Santa Clara, 235 P.3d at 40 (finding public attorneys must

retain control of the case). The agreement further provides that the "OAG will make all key

decisions, including whether and how to proceed with litigation, which claims to advance and

what relief to seek" and that "all work performed in the investigation stage will be under the

supervision of [the] OAG and in a manner satisfactory to [the] OAG." Supp. 1-3, iii! 1, 15;

Santa Clara, 235 P.3d at 40 (finding government attorneys must have veto power over outside

counsel's decisions). Finally, the OAG's agreement states that the "OAG will designate a point

of contact who will supervise the investigation and who will be available directly to other parties

in this Matter as needed." Supp. 3, if 18; Tr. 9 (explaining that Jam es Boff etti of the Consumer

Protection Bureau is the point of contact with the Companies); Santa Clara, 235 P.3d at 40 ("[A]

government attorney with supervisory authority must be personally involved in overseeing the

litigation."). These provisions establish clear limits on Cohen Milstein' s authority. The trial

court properly applied Santa Clara and conectly found that the OAG's agreement with Cohen

Milstein does not violate the Companies' due process rights.

CONCLUSION

For the foregoing reasons, the State of New Hampshire respectfully requests that this

Court affirm the trial court's determination that the OAG's agreement with Cohen Milstein does

not violate due process or any state ethics rules and reverse the trial court's finding that

agreement is void as an ultra vires act.

35

September 26, 2016

Respectfully submitted,

THE STATE OF NEW HAMPSHIRE

By its attorney,

JOSEPH A. FOSTER ATTORNEY GENERAL

Lisa M. English, NH Bar No. 20166 Senior Assistant Attorney General Francis C. Fredericks, NH Bar No. 21161 Assistant Attorney General Attorney General's Office 33 Capitol Street Concord, NH 03301-6397 (603) 271-3650

CERTIFICATION

I hereby certify that on this date two copies of the foregoing brief has been sent this 26th day of September 2016, postage prepaid, to each of the attorneys listed below:

Purdue Pharma LP

David A. Vicinanzo Nixon Peabody, LLP 900 Elm Street Manchester, NH 03101-2031 Tele: (603) 628-4000 Email: dvicinanzo@nixonpeabody.com

Gordon J. MacDonald Nixon Peabody, LLP 900 Elm Street Manchester, NH 03101-2031 Tele: (603) 628-4000 Email: gmacdonald@nixonpeabody.com

36

Holly J. Barcroft Nixon Peabody, LLP 900 Elm Street Manchester, NH 03101-2031 Tele: (603) 628-4000 Email: hbarcroft@nixonpeabody.com

Anthony J. Galdieri Nixon Peabody, LLP 900 Elm Street Manchester, NH 03101-2031 Tele: (603) 628-4000 Email: agaldieri@nixonpeabody.com

Janssen Pharmaceuticals, Inc.

Edmund J. Boutin Boutin & Altieri, PLLC PO Box 1107 Londondeny, NH 03053 Tele: (603) 432-9566 Email: eboutin@boutinlaw.com

Carolyn Kubota O'Melveny & Myers LLP 400 South Hope Street, 18th Floor Los Angeles, CA 90071 Tele: (323) 669-6000 Email: ckubota@omm.com

Charles Lifland O'Melveny & Myers LLP 400 South Hope Street, 18th Floor Los Angeles, CA 90071 Tele: (323) 669-6000 Email: clifland@omm.com

Teva Pharmaceuticals USA

Michael Connolly Hinckley Allen 11 South Main Street, Suite 400 Concord, NH 03301 Tele: (603) 225-4334 Email: mconnolly@haslaw.com

37

Christopher H.M. Carter Hinckley Allen 11 South Main Street, Suite 400 Concord, NH 03301 Tele: (603) 225-4334 Email: ccarter@haslaw.com

Kimberly M.R. Sullivan Hinckley Allen 11 South Main Street, Suite 400 Concord, NH 03301 Tele: (603) 225-4334 Email: ksullivan@haslaw.com

Tinos Diamantatos Morgan, Lewis & Bockius LLP 77 West Wacker Drive Chicago, IL 60601 Tele: (312) 324-1000 tdiamantatos@morganlewis.com

Endo Pharmaceuticals, Inc.

Wilbur A. Glahn, III McLane Middleton PO Box 326 Manchester, NH 03105-0326 Tele: (603) 625-6464 Email: wilbur.glahn@mclane.com

Michael A. Delaney McLane Middleton PO Box 326 Manchester, NH 03105-0326 Tele: (603) 625-6464 Email: Michael.delaney@mclane.com

Sean 0. Morris Arnold & Porter 777 South Figueroa Street, Suite 4400 Los Angeles, CA 90017-5844 Tele: (213) 243-4222 Email: Sean.Morris@APORTER.COM

38

Joshua M. Davis Arnold & Porter, LLP 601 Massachusetts A venue, NW Washington, DC 20001 Tele: (202) 942-5743 Email: Joshua.Davis@APORTER.COM

Jonathan L. Stern Arnold & Porter, LLP 601 Massachusetts A venue, NW Washington, DC 20001 Tele: (202) 942-5743 Email: Jonathan.Stern@APORTER.COM

Actavis Pharma, Inc.

Brian M. Quirk PretiFlaherty PO Box 1318 Concord, NH 03302-1318 Tele: (603) 410-1500 Email: bquirk@preti.com

Jam es W. Matthews Foley & Lardner, LLP 111 Huntington A venue Boston, MA 02199 Tele: (617) 342-4000 Email: JMatthews@foley.com

Joseph H. Jolly Foley & Lardner, LLP 111 Huntington A venue Boston, MA 02199 Tele: (617) 342-4000 Email: JJolly@foley.com

Francis C. Fredericks

39

JOSEPH A. FOS'rER ATTORNJ;;Y UENb:HAL

September 25, 2015

Linda Singer

ATTORNEY GENERAL

DEPARTMENT OF JUSTICE

33 CAPITOL STREET CONCORD, NEW HAMPSHIRE 03301-6397

Cohen Milstein Sellers & Toll PLLC 1100 New York Avenue, NW Suite 500 Washinglon, DC 20005

Dear Ms. Singer:

ANN M. RICE DEPU'l'Y ATTORNEY GENERAL

The New Hampshire Office of the Attorney General ("OAG"), by the undersigned, has retained Cohen Milstein Sellers & Toll PLLC C'Cohen Milstein" or "Firm") to assist it in an investigation and litigation of potential claims regarding fraudulent marketing of opioid drugs. The representation is on the terms and conditions below. This retainer agreement supersedes the initial retainer agreement, executed June 15, 2015, and is effective as of that date,

A. Scope of Representation

1. OAG engages Cohen Milstein to aid its investigation of potential claims in this Matter. This includes, but is not limited to, (1) drafting and negotiating compliance with civil investigative demands; (2) reviewing relevant documents and other information; and (3) interviewing witnesses. All work performed in the investigative stage will be under the supervision of OAG and in a manner satisfactory to OAG.

2, OAG will determine whether it wishes to proceed to litigation or other action in this Matter. If OAG decides to proceed, and Cohen Milstein has performed to the satisfaction of the OAG in the investigatory phase, OAG will not hire a law firm other than Cohen Milstein to represent it in any litigation or other resolution of the Matter (unless Cohen Milstein declines to continue to represent OAG, pursuant to Paragraph 18). If at any time following the initiation of litigation or other action in this Matter the OAG becomes dissatisfied with Cohen Milstein, the OAO shall notify Cohen Milstein and provide thirty (30) days to cure the deficiency that has led to the dissatisfaction. Consistent with the New Hampshire Rules of Professional Conduct, after providing notice to Cohen Milstein of the deficiency, the OAG may decide, at its sole discretion, to discharge Cohen Milstein. Jn the event of termination, Cohen Milstein 's reasonable fee shall be determined based on the totality of circumstances including (without limitation) whether the discharge by the OAG is with or without cause, the value of the OAG's ultimate recovery (if any), and whether the OAG dismisses pending litigation against advice of counsel.

2044809.2 ------ Telephone 603-271-3658 • FAX 603-271-2110 • TDD Access: Relay NI5tilftd~~np~pt::-.---1Qttt-1Qt""1'11---

Linda Singer Page 2 September 25, 2015

B. Fee and Expenses:

3. If OAG decides not to proceed, it will not be responsible for any of Cohen Milstein' s fees and expenses in the investigation. However, if OAG does proceed beyond the investigation in this Matter, Cohen Milstein will be paid on the terms laid out below.

4. Cohen Milstein shall perform all scope of work and services hereunder on a contingent fee basis. The parties understand and agree that ifthere is no recovery pursuant to a judgment or settlement in connection with this litigation matter, no fee shall be due to Cohen Milstein hereunder.

5. Upon final judgment, which shall include any post judgment proceedings and/or appeals, Cohen Milstein will be paid on a contingent fee basis equal to twenty-seven (27) percent of the net recovery, exclusive of the costs of litigation, with the balance of the net recovery being retained solely by and for the benefit of the State.

6. The net recovery is any settlement or judgment amount, not including any award of attorneys' fees and costs, and not including any penalties awarded to the State of New Hampshire.

7. Cohen Milstein is entitled to its actual attorney fees and costs awarded by any cou1t or paid by Defendants in this matter. If Cohen Milstein 's contingent fee exceeds its actual lodestar and expenses, any attorneys' fees or expenses paid by Defendants or awarded by a court will be distributed to Cohen Milstein and the OAG based on the contingent fee for the net recovery. In the event that the contingent fee is less than the Firm's actual lodestar and expenses, Cohen Milstein shall retain an amount of those attorney fees and expenses to fully compensate it for its lodestar and expenses, with any balance going to the State.

8. Cohen Milstein will advance all reasonable costs and expenses of the investigation and any litigation. OAG agrees that the Firm will be reimbursed for such expenses out of any recovery before the contingent fee applies. Reimbursement of expenses is not considered part of Cohen Milstein' s contingent fee.

9. OAG must approve any expense of $25,000 or more in advance. Cohen Milstein shall report to OAG on a quarterly basis all costs and expenses it has incurred in this matter.

10. Cohen Milstein will have no claim against OAG for its time or expenses except as otherwise laid out in this retainer, even if there is no recovery or the recovery is not sufficient to cover its time or expenses.

I l. Cohen Milstein is a firm of legal professionals retained for its expertise in complex investigations and litigation. Cohen Milstein will be an independent contractor, and not an employee, of OAG, under the criteria set fotth in R.S.A. § 281-A:2, and will not be entitled

t./ { State's Supp. 002

'(

Linda Singer Page 3 September 25, 2015

to wages, vacation time, or worker's compensation, health insurance, or retirement benefits. Cohen Milstein is not a public employee for purposes ofR.S.A. § 15-B:2 and R.S.A. § 21-0:21.

C. Authority and Responsibilities

12. Cohen Milstein is responsible for providing all legal services, including all associated support services, required in investigating and/or litigating this matter to a final judgment, including post judgment proceedings and/or appeals.

13. Cohen Milstein is authorized to retain or associate experts, investigators, and technical and legal assistants, and such additional counsel from Cohen Milstein as may be needed to investigate the matter. The expense related to the employment and utilization of such third parties will be reimbursed in the manner set fotih above and subject to approval by the OAG per paragraphs 6 and 7 above.

14. OAG is responsible for providing access to the personnel, information, and documents required to investigate its claims (including any personnel, information, and documents required by court order or in discovery).

15. OAG will maintain control of the investigation and will make all key decisions, including whether and how to proceed with litigation, which claims to a<lvan~t: <1nd what relief to seek.

16. Cohen Milstein will provide regular reports to OAG on the investigation, including summaries of documents and interviews.

17. OAG will review and approve all key documents (such as civil investigative demands), and Cohen Milstein is responsible for providing these documents with sufficient advance time to allow for OAG's review and approval.

18. OAG will designate a point of contact who will supervise the investigation and who will be available directly to other parties in this Matter as needed.

19. OAG will appear as lead counsel in all pleadings and shall retain control over any litigation decisions and settlement of the State's claims. Cohen Milstein shall prosecute and conduct the litigation under the direction of the Attorney General.

D. Termination

20. When the initial investigation has been completed, OAG will determine, in its sole discretion, whether to move forward to litigation. Consistentwith Paragraph 1 of this retainer, OAG will not be responsible for Cohen Milstein's costs if it terminates the retainer at the end of the investigation.

State's Supp. 003

Linda Singer Page 4 September 25, 2015

21. If OAG chooses to move forward, Cohen Milstein will decide whether it wishes to assist OAG in litigation. If Cohen Milstein decides not to proceed, it will provide all documents and work product related to the investigation to OAG, which will be entitled to seek other counsel.

22. If Cohen Milstein fails to meet its obligations under this retainer, it may be terminated for good cause, and OAG will have no obligations to pay its time or expenses or any portion of a recovery in this matter, even if OAG proceeds thereafter to litigate this matter using in-house or other counsel.

23. If OAG decides to proceed with this matter, the parties will enter into a further agreement that will provide in more specific terms for OAG's supervision of the matter in litigation.

Sincerely,

For Cohen Milstei~-Scllcrs & Toll PLLC

State's Supp. 004