Ex Rel. State of Miss. Tobacco Litigation


<- Return to Search Results


Docket Number: 2006-SA-01088-SCT
Linked Case(s): 2006-SA-01088-SCT2006-TS-01088
Oral Argument: 03-26-2007
 

 

* This video is best viewed in the most current version of Google Chrome, Internet Explorer with Windows Media Player plug-in, or Safari (Mac Users).

Supreme Court: Opinion Link
Opinion Date: 06-14-2007
Opinion Author: CARLSON, J.
Holding: ON DIRECT APPEAL: AFFIRMED. ON CROSS-APPEAL: REVERSED AND RENDERED
Additional Case Information: Topic: Tobacco settlement funds - Right to intervene - Section 7-1-5 - Section 43-13-409(6) - M.R.C.P. 24(a)(2) - Validity of order - Section 43-13-405 - Transfer of funds
Judge(s) Concurring: SMITH, C.J., WALLER, P.J., EASLEY, DICKINSON AND RANDOLPH, JJ.
Non Participating Judge(s): GRAVES AND LAMAR, JJ.
Dissenting Author : DIAZ, P.J.
Procedural History: Admin or Agency Judgment
Nature of the Case: CIVIL - STATE BOARDS AND AGENCIES
Trial Court: Date of Trial Judgment: 05-30-2006
Appealed from: Jackson County Chancery Court
Judge: Jaye A. Bradley, Sr.
Disposition: Court vacated previously entered order
  Party Name: Attorney Name:  
Appellant: IN RE: JIM HOOD, ATTORNEY GENERAL, EX REL., STATE OF MISSISSIPPI TOBACCO LITIGATION: THE PARTNERSHIP FOR A HEALTHY MISSISSIPPI, INTERVENOR




 JAMES W. CRAIG FRED L. BANKS, JR. JAMES W. SHELSON ROBERT GREGG MAYER MARY JO WOODS HAROLD E. PIZZETTA, III



  
Appellee: STATE OF MISSISSIPPI, BY AND THROUGH GOVERNOR HALEY BARBOUR, THE MISSISSIPPI DIVISION OF MEDICAID IN THE OFFICE OF THE GOVERNOR, AND THE MISSISSIPPI HEALTH CARE TRUST FUND JOHN G. CORLEW VIRGINIA T. MUNFORD JAMES H. HEIDELBERG STEPHEN WALKER BURROW BRADLEY S. CLANTON JOAN LEIGH LUCAS  
Synopsis provided by:

If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals
hand downs please contact Tammy Upton in the MLI Press office.
Topic: Tobacco settlement funds - Right to intervene - Section 7-1-5 - Section 43-13-409(6) - M.R.C.P. 24(a)(2) - Validity of order - Section 43-13-405 - Transfer of funds
Summary of the Facts: On May 30, 2006, the Jackson County Chancery Court entered an order vacating its previously-entered order of December 22, 2000, which had allocated $20 million annually out of the tobacco settlement funds to the Partnership for a Healthy Mississippi. Additionally, the order of May 30, 2006, required that the payment made to the Partnership in January, 2006, be deposited into the Mississippi Health Care Trust Fund. Attorney General Jim Hood, upon relation or information and on behalf of the State of Mississippi and the Partnership for a Healthy Mississippi, appealed. The Governor, Division of Medicaid, and Mississippi Health Care Trust Fund cross-appealed.
Summary of Opinion Analysis: Issue 1: Right to intervene The Partnership argues that the court erred by allowing the Governor, Division of Medicaid, and MHCTF to intervene and challenge the December 22, 2000, order allocating $20 million annually to the Partnership. The Partnership takes the position that the Governor, Division of Medicaid and MHCTF cannot intervene to challenge the chancery court order, because intervention is not a means to relitigate concluded matters. In addition, the Partnership contends that allowing intervention may possibly jeopardize the Settlement Agreement between the State of Mississippi and the various tobacco defendants. However, it is readily apparent that the Governor, Division of Medicaid and MHCTF are not attempting to relitigate issues already decided. The chancery court order of December 22, 2000, has never been litigated. While it is true that the Governor, Division of Medicaid and MHCTF could not now seek to vacate the Settlement Agreement entered into between the State of Mississippi and the various tobacco companies, they are not asking the Court to vacate the Settlement Agreement. In fact, the Governor, Division of Medicaid and MHCTF desire that the original Settlement Agreement be enforced according to its terms. The Partnership argues that the Governor, Division of Medicaid and MHCTF have no statutory or legal authority to intervene. Section 7-1-5(a) provides that the Governor is the supreme executive officer of the state and subsection (c) further provides that the Governor shall see that the laws are faithfully executed. These exact principles are also set out in article 5, sections 116, 123, of the Mississippi Constitution. Therefore, the Governor unquestionably has not only the statutory, but also the constitutional authority to intervene. The Division of Medicaid has a compelling interest to see that the annual payments of $20 million are placed in the Health Care Trust Fund. The Division had authority to intervene, especially, since the theory and purpose of the litigation was to replace money appropriated to and expended by the Division of Medicaid. This is a broad grant of statutory authority in section 43-13-409(6) that ultimately gives MHCTF the power to sue. The Partnership argues that the Governor, Division of Medicaid and MHCTF should not have been permitted to intervene because their intervention was untimely. M.R.C.P. 24(a)(2) sets forth certain prerequisites for intervention including timely application; an interest in the subject matter of the action; an applicant who is so situated that disposition of the action may as a practical matter impair or impede his ability to protect his interest; and an applicant’s interest is not already adequately represented by existing parties. The motions to intervene were filed more than four years after the chancery court’s entry of its order of December 22, 2000. While timeliness is not defined in M.R.C.P. 24, the Fifth Circuit has identified four factors which must be considered when determining whether a motion to intervene was timely filed including length of time during which the would-be intervenor actually knew or reasonably should have known of his interest in the case, extent of prejudice that the existing parties to the litigation may suffer as a result of the would-be intervenor’s failure to apply for intervention, extent of the prejudice that the would-be intervenor may suffer if his petition for leave to intervene is denied, and existence of unusual circumstances militating either for or against a determination that the application is timely. Since settlement monies were received on an annual basis by the Partnership, the State was continuing to suffer a loss each year because the payment of $20 million was disbursed, not to the state treasury, but to a private entity, namely the Partnership. The Partnership was not an original party to the tobacco settlement but was permitted to intervene at approximately the same time as the Governor, Division of Medicaid and MHCTF. Thus, the chancery court was eminently correct when it determined that the original parties to the tobacco litigation will not suffer prejudice by the intervention of the Governor, Division of Medicaid and MHCTF. The prejudice that would result if the Governor, Division of Medicaid and MHCTF are not allowed to intervene is great. Essentially, $20 million which arguably could only be properly and legally appropriated by the Legislature would continue to be diverted to the Partnership. The Partnership purportedly receives and spends state funds without any public accountability or oversight. The Attorney General, in December 2000, petitioned the chancery court ex parte to modify the settlement agreement. Because this modification may have been in violation of the applicable statutes and the Settlement Agreement, there are unusual circumstances militating for a determination that the application is timely. Thus, the chancellor did not abuse her discretion in finding that the application for intervention by the Governor, Division of Medicaid and MHCTF was timely. Issue 2: Validity of order The Governor, Division of Medicaid and MHCTF argue that the order of December, 2000, violated the Mississippi Constitution, the Mississippi Health Care Trust Fund statutes, court rules and procedures, and the Settlement Agreement. The Attorney General, for and on behalf of the citizens of this State, and the various tobacco defendants voluntarily entered into a Settlement Agreement which was approved by the chancery court. However, the Partnership was not a party at the time of the settlement because it did not even exist. The Partnership argues that the Mississippi Health Care Trust Fund Act authorizes the continued funding of the Partnership with settlement proceeds. A plain reading of section 43-13-405(1) states that all of the tobacco installment payments were to be made to the Health Care Trust Fund unless restricted by the terms of the Settlement Agreement. The Settlement Agreement never restricted $20 million of the tobacco installment payments for the program which is currently run by the Partnership. In fact, the granting of $20 million to the Partnership each year explicitly contradicts the Settlement Agreement, which directs that the annual installment payments are to be paid into a special account for the benefit of the State of Mississippi. Section 43-13-405(2)(d) does not grant any court authority to allocate such funds. The statute expressly states that the funds must come from the Health Care Trust Fund, not directly from the tobacco installment payments, and that the funds must be appropriated by the Legislature. Neither prerequisite is met by the chancery court’s order of December 22, 2000. Without question, the expenditure of public funds is appropriately a legislative function. The $20 million given annually to the Partnership has never been appropriated. However, the Partnership argues that the funds paid to the Partnership are not subject to the appropriations process. The Legislature did not take affirmative action to set aside $20 million each year specifically for the Partnership. Instead, the provisions of the Settlement Agreement set aside $61.8 million for a two-year pilot program for which the Partnership was thereafter established to control. Nowhere in the Settlement Agreement did the State of Mississippi or the various tobacco defendants address continued funding for the pilot program. The chancery court order of December 22, 2000, must be vacated since it was void ab initio because of being in violation of the applicable statutes and the Settlement Agreement. The May 30, 2006, order is affirmed insofar as it vacates the prior chancery court order of December 22, 2000. Issue 3: Transfer of funds The 1997 Settlement Agreement and the chancellor’s subsequent consent judgment approving the Settlement Agreement were a contract between the Attorney General, for and on behalf of Mississippi’s citizens, and the tobacco companies. Any effort to amend the 1997 consent judgment would have to comport with the provisions of the Settlement Agreement. Clearly, the December 22, 2000, ex parte order was contrary to the express provisions of the 1997 Settlement Agreement and the subsequent court order approving the Settlement Agreement; therefore, the December 22, 2000, order was void ab initio. Because the December 22, 2000, order was void ab initio, the subsequently-entered orders of January 17, 2002, November 20, 2003, and December 21, 2004, were likewise void and therefore, the Partnership has no right to the monies received under these orders. Therefore, the chancellor erred in failing to direct the Partnership to pay over all remaining funds derived from the December 22, 2000, order to the Health Care Trust Fund and subsequent orders.


Home | Terms of Use | About the JDP | Feedback | Using JDP | MC Law Library | Mississippi Supreme Court