Multi-State Lawsuits Increase

Published October 1, 2005

State attorneys general have acknowledged a trend of increasing multi-state lawsuits. At a 2004 event hosted by the U.S. Chamber of Commerce, Michigan Attorney General Michael Cox reported his office receives a steady stream of “sign on requests” for multi-state suits from the National Association of Attorneys General (NAAG), the organization that coordinates enforcement of the tobacco settlement.

Incentive to Join

There’s an “implicit incentive to sign on” to multi-state lawsuits, Cox said, in case a suit wins money. Delaware Attorney General Jane Brady, speaking at a 2004 conference of the American Legislative Exchange Council, reported her office is regularly approached by trial lawyers pitching new ideas for state lawsuits.

Nearly two dozen attorneys general have sued pharmaceutical companies, for example, over the disparity between “average wholesale prices” that impact Medicaid and Medicare reimbursement costs and the prices charged to doctors and pharmacists.

Similarly, a group of eight attorneys general sued the nation’s five largest utility companies, demanding the utilities reduce carbon dioxide emissions. Once again pursuing a novel legal approach, the attorneys general claimed the non-toxic emissions contribute to global warming and thus constitute a public nuisance under federal common law. The case was rejected by a federal district court judge on July 15.

Activist Attorneys General

New York Attorney General Eliot Spitzer has targeted numerous companies and industries with investigations and lawsuits. In 2002, Spitzer announced an investigation of Merrill Lynch, which quickly yielded a $100 million, multi-state settlement. A new round of investigations of other investment firms followed, along with a $1.4 billion settlement and new, “voluntary” industry regulations.

Legal scholars and tort reformers have suggested a number of ways to curtail such activism. With its legal challenge to the tobacco Master Settlement Agreement, the Competitive Enterprise Institute has undertaken one such effort by citing the Compact Clause (Article I, Section 10) of the Constitution, which prohibits states from entering into any agreement or compact with another state without the consent of Congress.

— Christine Hall-Reis