American Bankers Management Co. v. Heryford, No. 16-16103 (9th Cir. 2018)
Annotate this CaseHeryford, Trinity County, California's District Attorney, sued American Bankers and others, on behalf of the people under California’s Unfair Competition Law (UCL), alleging they had “engaged in deceptive marketing and sales practices.” Private parties may seek injunctive relief and restitution under the UCL; only a public prosecutor may pursue civil penalties. The complaint listed private law firms as “Special Assistant District Attorneys.” An agreement required the Firms to “provide all legal services that are reasonably necessary,” and to “conduct negotiations and provide representations at all hearings, depositions, trials, appeals, and other appearances” with authority to control the performance of their work “under the direction of the District Attorney,” stating that Heryford’s office did “not relinquish its constitutional or statutory authority or responsibility” and retained “sole and final authority to initiate and settle.” Heryford retained the Firms on a contingency-fee basis. American Bankers challenged the contingency-fee agreement as a violation of its federal due process rights that gave the Firms “a direct and substantial financial stake in the imposition of civil penalties and restitution,” which “compromise[d] the integrity and fairness of the prosecutorial motive and the public’s faith in the judicial process.” The Ninth Circuit affirmed the dismissal of the suit. Heryford’s retention of private counsel to pursue civil penalties 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 does not violate due process.
Court Description: 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.
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