Nearly a year ago in a Washington Legal Foundation Legal Backgrounder, Victor Schwartz and Christopher Appel of Shook, Hardy & Bacon L.L.P. exposed a number of instances where federal laws or proposals quietly included provisions empowering state attorneys general to bring actions in federal court to enforce a congressional act.
The latest, and perhaps most troubling instance of this to date, has largely evaded notice and public comment (we owe a thanks to Carter Wood at Shopfloor for first flagging it a few weeks ago). It appears on pages 1304 and 1305 in the main Senate proposal to recast financial services regulation. The provision would allow state AGs to file suit in state court against “any person” engaged in “any unfair, deceptive, or abusive act or practice,” and leaves it to the state attorney general to determine what those words mean. The “any person” language arguably applies the state AG enforcement provision to individuals and commercial enterprises beyond the financial services realm.
The provision does not address state attorneys general’s growing practice of hiring private plaintiffs’ lawyers on a contingent-fee basis to sue on behalf of the state. WLF has noted the problems this practice presents in several amicus briefs, most recently in a Pennsylvania case, and in numerous publications (such as this one by Colorado AG John Suthers). As Schwartz and Appel stated in the above-referenced WLF Legal Backgrounder:
in cases where state attorneys general hire contingency fee lawyers to pursue public litigation, the private attorneys’ incentive to maximize the ultimate award may not align with, or may even be in direct conflict with, the public’s interest.