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American Bankers Management Company, Inc. v. Heryford

United States Court of Appeals, Ninth Circuit

March 15, 2018

American Bankers Management Company, Inc., Plaintiff-Appellant,
v.
Eric L. Heryford, District Attorney, Trinity County, Defendant-Appellee.

          Argued and Submitted November 17, 2017 San Francisco, California

         Appeal from the United States District Court for the Eastern District of California Troy L. Nunley, District Judge, Presiding D.C. No. 2:16-cv-00312-TLN-EFB

          Brian P. Perryman (argued), W. Glenn Merten, and Frank G. Burt, Carlton Fields Jorden Burt PA, Washington, D.C.; Valerie D. Escalante and Meredith M. Moss, Carlton Fields Jorden Burt LLP, Los Angeles, California; for Plaintiff-Appellant.

          Roland K. Tellis (argued) and Jonas P. Mann, Baron & Budd P.C., Encino, California; S. Ann Saucer, Baron & Budd P.C., Dallas, Texas; Eric L. Heryford, Trinity County District Attorney, Weaverville, California; for Defendant-Appellee.

          John H. Beisner, Geoffrey M. Wyatt, and Jordan M. Schwartz, Skadden Arps Slate Meagher & Flom LLP, Washington, D.C.; Kate Comerford Todd and Sheldon Gilbert, U.S. Chamber Litigation Center Inc., Washington, D.C.; James C. Stansel and Melissa B. Kimmel, The Pharmaceutical Research and Manufacturers of America, Washington, D.C.; for Amici Curiae Chamber of Commerce of the United States of America, and The Pharmaceutical Research and Manufacturers of America.

          Aileen M. McGrath, Deputy City Attorney; Dennis J. Herrera, City Attorney; Office of the City Attorney, San Francisco, California; Laura S. Trice, Deputy County Counsel; Danny Y. Chou, Assistant County Counsel; Greta S. Hansen, Chief Assistant County Counsel; James R. Williams, County Counsel; Office of the County Counsel, San Jose, California; for Amici Curiae City and County of San Francisco and County of Santa Clara.

          Before: Richard R. Clifton and Michelle T. Friedland, Circuit Judges, and Sharon L. Gleason, [*] District Judge.

         SUMMARY [**]

         Civil Rights

         The panel affirmed the district court's dismissal of a civil rights action brought by American Bankers Management Company seeking declaratory and injunctive relief to prevent the District Attorney of Trinity County, California, from retaining private counsel on a contingency-fee basis to litigate, in the District Attorney's name, an action against American Bankers under California's Unfair Competition Law.

         Citing United States ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir. 1993), the panel rejected American Bankers' contention that the District Attorney's retention of private counsel on a contingency-fee basis violated federal due process principles. The panel held that the District Attorney's retention of private counsel to pursue civil penalties under state law cannot be meaningfully distinguished from a private relator's pursuit of civil penalties under the qui tam provisions of the False Claim Act, an arrangement that this court already held, in Kelly, does not violate due process.

          OPINION

          FRIEDLAND, Circuit Judge:

         Plaintiff-Appellant American Bankers Management Company, Inc. filed this civil rights action seeking declaratory and injunctive relief to prevent Eric L. Heryford, the District Attorney of Trinity County, California, from retaining private counsel on a contingency-fee basis to litigate in Heryford's name an action against American Bankers under California's Unfair Competition Law. American Bankers argues that the arrangement violates federal due process principles. We disagree. Heryford's retention of private counsel to pursue civil penalties under state law cannot be meaningfully distinguished from a private relator's pursuit of civil penalties under the qui tam provisions of the False Claim Act, an arrangement that we have already held does not violate due process. We therefore affirm the district court's dismissal of American Bankers' civil rights action against Heryford.

         I.

         The story of this lawsuit starts with a different lawsuit, one that Heryford filed against American Bankers and several other companies on behalf of the people of California under California's Unfair Competition Law ("the UCL"), Cal. Bus. & Prof. Code § 17200 et seq. That lawsuit was filed by Heryford in Trinity County Superior Court on behalf of "the People of California, by and through the District Attorney for the County of Trinity." Heryford alleged that the defendants had "engaged in deceptive marketing and sales practices in connection with" services offered to California holders of certain credit cards. For these alleged violations, the complaint sought injunctive relief, restitution, attorney's fees, and-most relevant here-civil penalties.

          Although private parties may seek injunctive relief and restitution under the UCL, only a public prosecutor such as Heryford may pursue civil penalties. See California v. IntelliGender, LLC, 771 F.3d 1169, 1174 (9th Cir. 2014); see also Cal. Bus. & Prof. Code §§ 17204, 17206.

         Attorneys from the district attorney's office were not the only counsel listed on the complaint. Attorneys from Baron & Budd, P.C. and Carter Wolden Curtis, LLP were too. Heryford's office had retained these law firms along with Golomb & Honik, P.C. (collectively, "the Law Firms") under an agreement designating them as "Special Assistant District Attorneys." Under the agreement, the Law Firms were charged with "assist[ing] in the investigation, research, filing and prosecution" of the UCL suit against American Bankers and its co-defendants. More specifically, the agreement required the Law Firms to "provide all legal services that are reasonably necessary for such representation and assistance, including without limitation, the preparation and filing of all claims, pleadings, responses, motions, petitions, memoranda, brief[s], notices and other documents, " and to "conduct negotiations and provide representations at all hearings, depositions, trials, appeals, and other appearances as may be required." The agreement gave the Law Firms "the authority and responsibility to control and direct the performance and details of" their work.

         The agreement also stated, however, that the Law Firms would work "under the direction of the District Attorney, " and that his office did "not relinquish its constitutional or statutory authority or responsibility." Heryford retained "sole and final authority to initiate and settle" the UCL suit, along with "final authority over all aspects of the litigation." He also had "a general right to inspect work in progress to determine whether . . . the ...


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