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In consumer fraud cases, OC DA hires help to take on biggest opponents
Taryn Phaneuf Feb. 4, 2017
SANTA ANA, Calif. — In its quest to protect Orange County citizens from consumer fraud, the district attorney’s office has come up against some deep-pocketed opponents over the years.
To best these companies in court, the DA’s office turns to a private law firm, tapping into resources that match its opponent and bring on attorneys with expertise in civil litigation.
The practice of hiring private attorneys to help with public prosecutorial cases has been criticized by civil-justice reform groups but has stood up under legal challenge. Orange County has served as an oft-used example of this practice. In one example, in 2013, the district attorney's office achieved a $16 million settlement in a lawsuit against Toyota for allegedly concealing safety issues related to unintended acceleration in some vehicles, according to a report on Law 360. It hired private attorneys to help with the case.
But in just 15 years, they can count the number of times they’ve hired a private law firm on one hand, Joe D’Agostino, senior assistant district attorney in charge of the consumer-fraud unit, told the Northern California Record. Each time, the DA has hired Robinson Calcagnie Inc., a private law firm that specializes in representing plaintiffs in products liability cases, he said.
Susan Schroeder, chief of staff in the DA’s office, told the Northern California Record it is a necessary step to hold the biggest companies accountable.
“Usually, we’re the Goliath. But when you’re going up against oil companies, pharmaceutical companies, car companies … we’re the Davids,” she said. “All we’re trying to do is protect the Joe-average citizen consumer that’s in Orange County in California to make sure they are not taken advantage by these companies.”
Most recently, according to a news release on OrangeCountyDA.org, the DA’s office filed a civil-protection lawsuit against five pharmaceutical companies and two generic-drug manufacturers over an alleged pay-for-delay deal that kept generic versions of Niaspan off the market. The drug is prescribed to reduce bad cholesterol. The drug has been on the market since 1997. As of 2011, Niaspan generated more than $1.13 billion in annual sales. The lawsuit alleges that because the makers of Niaspan paid generic-drug manufacturers to delay selling a lower-priced version of the drug, Orange County residents paid more than they should have had to.
The complaint, filed in the Superior Court of the State of California in Orange County, accuses Abbott Laboratories, AbbVie Inc.,Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA Inc., Barr Pharmaceuticals Inc., Duramed Pharmaceuticals Inc., and Duramed Pharmaceuticals Sales Corp. of unlawful, unfair and fraudulent business practices. It seeks an injunction and asks that the companies be ordered to pay restitution to consumers, as well as civil penalties.
Such arrangements between private and public attorneys are criticized for using public funds to further the business of plaintiffs attorneys. But D’Agostino and Schroeder take issue with that characterization, saying the firm they work with isn’t getting rich off of their consumer cases.
For one, most consumer fraud cases are prosecuted by staff attorneys at the DA’s office. Secondly, the private firm has no decision-making power when it assists in a case, so it can’t push a profit-driven agenda. They are paid depending, in part, on the outcome of the case. If the case is dismissed, they don’t get anything, D’Agostino said. But if their side prevails or they reach a settlement, the amount the private firm receives is determined by the judge and District Attorney Tony Rackauckas.
Schroeder said consumer-fraud cases are prosecuted by a small corner of the district attorney’s office. When cases arise that require additional expertise, the DA finds it worthwhile to pay for it.
“It really comes down to either we get expert help … or they get away with unscrupulous business acts,” she said.
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