AG did not fully disclose campaign contributions from firm tapped to lead fight against JUUL

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When Minnesota Attorney General Keith Ellison decided to sue a giant e-cigarette manufacturer last year, he called it his duty to take on the legal fight. On Thursday, he expanded the lawsuit against JUUL Labs, Inc. by adding tobacco company Altria to the list of defendants in the case. Altria bought a 35% stake in JUUL in 2018.

Except, Ellison and his staff are not actually leading the court battle against those companies which are accused of deceptively advertising addictive products to youth.

Instead, the attorney general picked two Minneapolis-based law firms to handle a case that could potentially lead to millions of dollars in legal fees if the state wins or settles out of court.

Those contingency fee agreements with private firms have been controversial for years, according to legal scholars, because they can create an appearance of influence if the attorney general is personally or politically connected to the firms.

Yet, when Ellison asked lawmakers to review the contract last year, he did not disclose that one of the firms, Robins Kaplan, had been a longtime supporter of his career in public office.

The firm’s political action committee donated to his run for attorney general as well as his previous congressional campaigns, according to state and federal campaign finance records reviewed by 5 INVESTIGATES.

Ellison also did not tell lawmakers that a partner at the firm, Richard Allyn, led Ellison’s transition team after he won the election in November 2018.

Ellison declined to be interviewed for this story.

In a lengthy statement, he said it was disclosed that individual partners at the firms had supported his campaign and that the thousands of dollars in donations amounted to less than 1% of total campaign contributions.

He added that lawmakers could have looked up the information in publicly available campaign finance reports or old press releases.

But Richard Painter, an expert in legal ethics at the University of Minnesota, says Ellison’s failure to report even the appearance of a conflict raises serious ethical concerns.

"The decision-makers shouldn’t have to prowl around on the internet looking for campaign contributions," Painter said. "It should all be right there in the paperwork for the contract."

One of the Republican lawmakers who reviewed the contract before it was awarded to the two law firms, says Ellison "absolutely" should have been more transparent.

"We expect to see the connections, the whole conflict of interest issue, said Sen. Mary Kiffmeyer (R-Big Lake).

The Firms

This is not the first time Robins Kaplan has been hired by the state for high cost, high reward litigation.

The firm also led Minnesota’s fight against Big Tobacco companies in the 1990’s that netted the state a multi-billion dollar settlement, including nearly half a billion dollars in legal fees.

Ellison says he negotiated much more favorable terms this time. He added that firms like Robins Kaplan and Zimmerman Reed, which the AG also hired, have more resources and experience to take on giant companies such as JUUL.

"We needed help to hold JUUL accountable in what will likely be highly complex, years-long litigation," Ellison said.
But Minnesota is one of only two states relying on outside legal help in the fight against the company, and the only state willing to give up a percentage of any settlement or damages.

Attorneys General in seven of the nine states currently suing JUUL— New York, North Carolina, California, Colorado, Massachusetts, Illinois and Pennsylvania — told 5 INVESTIGATES that in-house attorneys are handling the litigation. The attorney general in Arizona hired outside counsel but not on a contingency fee basis, according to an office spokesperson.

Still, Ellison’s decision makes perfect sense, according to Kevin Burke, a recently retired Hennepin County Judge who presided over a similar case involving the attorney general’s office.

"I personally don’t see it as a major problem," Burke said. "The first question people would ask is, ‘why don’t they just do it in house?’ And the answer is, they really would not be capable of dealing with this."

Richard Painter, the expert in legal ethics at the U, agrees that hiring outside firms is justifiable, which is why he finds it even more perplexing that Ellison did not fully disclose the political connections and donations upfront.

"The campaign contributions, including the political action committee contributions, should be spelled out for anyone reviewing the contract," Painter said. "And then we don’t have news stories like this."

Painter added that Robins Kaplan and Zimmerman Reed should have also been more forthcoming with lawmakers about the extent of their political contributions.

While both firms acknowledged having partners that supported Ellison’s campaign for attorney general, they claimed that support did not present "any factual or potential conflicts of interest," according to a memo provided to the Legislative Advisory Committee, which reviewed the contract.

But in that memo, Robins Kaplan failed to mention a $1,500 donation from the firm’s political action committee. The memo also did not list contributions to a DFL organization that spent more than a million dollars on ads targeting Ellison’s opponent, Doug Wardlow.

Further complicating the issue, Robins Kaplan’s PAC also donated to Wardlow’s campaign.

A firm spokesperson declined to be interviewed but in a statement said, "contributions to both parties’ candidates are all a matter of public information, and not related in any manner whatsoever to the decision to retain our firm."

While Zimmerman Reed did not contribute directly to Ellison’s campaign, it has been a regular contributor to the Democratic Attorneys General Association (DAGA)–a national political organization that has been criticized for having significant influence on which cases attorneys general across the country decide to pursue.

Carolyn Anderson, a partner at Zimmerman Reed, said in an email that the $15,000 contribution to DAGA in May 2019 was a "membership fee" that allows the firm to stay informed about pending cases.

Zimmerman Reed was the only law firm in Minnesota that contributed to DAGA that year, according to federal tax filings reviewed by 5 INVESTIGATES.

A firm spokesperson previously confirmed that contribution was not disclosed to lawmakers, saying in an email, "our understanding is that the attorney general handled those communications."

Controversial Contingencies

Contingency fee agreements have been used by attorneys general across the country ever since the lawsuits against Big Tobacco resulted in huge financial windfalls for both the states and the firms they hired.

While such deals have been lauded as a cost-effective legal strategy, they have also been legally challenged in some states, restricted by legislatures and criticized as being ripe for abuse.

"There is great incentive for corruption in this whole process," said former state representative Kelly Fenton (R-Woodbury).

In Minnesota, private law firms have been appointed on a contingency fee basis only twice in the past 20 years, according to state records.

In 2010, then-Attorney General Lori Swanson received legislative approval to hire the firm Covington and Burling to help in a water contamination lawsuit against 3M.

Swanson says outside help was necessary in that case because her office did not have the expertise or the budget to conduct complex water testing.

In an email, Swanson said she is proud of the "groundbreaking lawsuit" that resulted in a nearly $900-million settlement with 3M in 2018.

But the deal was still criticized after it led to a $125-million payout to Covington and Burling.

Republican lawmakers introduced legislation that would have capped such agreements but it was quickly scrapped.

Fenton says she does not understand why the pending litigation against JUUL cannot be handled by Ellison’s staff, especially since the basis of that lawsuit is deceptive marketing, which falls into the attorney general’s main area of expertise.

"You’re also removing the government’s responsibility to protect the public’s interest and instead farming that out to private trial attorneys who are motivated by profit," Fenton said.

Fenton says those deals are even more concerning when political contributions are not disclosed.

"If you have to ask, ‘what came first? The political donation or the contract?’ There’s a huge conflict of interest."

Editor’s Note:

KSTP is owned by Hubbard Broadcasting. Members of the Hubbard family, including Stanley S. Hubbard, Chairman and CEO of Hubbard Broadcasting, made individual donations to Doug Wardlow’s campaign for attorney general in 2018. They had no role in the editorial process for this story.

Robins Kaplan is currently representing this station in pending litigation.