South Carolina Public Interest Foundation and John Crangle v. Alan Wilson, Attorney General for the State of South Carolina ( 2022 )

THE STATE OF SOUTH CAROLINA
In The Supreme Court
South Carolina Public Interest Foundation and John
Crangle, individually and on behalf of all others similarly
situated, Appellants,
v.
Alan Wilson, Attorney General for the State of South
Carolina; Willoughby & Hoefer, P.A.; and Davidson,
Wren & DeMasters, P.A., Respondents.
Appellate Case No. 2021-000343
Appeal from Richland County
R. Kirk Griffin, Circuit Court Judge
Opinion No. 28112
Heard April 6, 2022 – Filed September 14, 2022
REVERSED AND REMANDED
James Mixon Griffin, Badge Humphries, and Margaret
Nicole Fox, all of Griffin Humphries LLC, of Columbia,
and James G. Carpenter, of The Carpenter Law Firm, of
Greenville, for Appellants.
John S. Simmons, of Simmons Law Firm, LLC, of
Columbia, Gerald Malloy, of Malloy Law Firm, of
Hartsville, and James Todd Rutherford, of Rutherford Law
Firm, LLC, of Columbia, for Respondent Willoughby &
Hoefer, P.A.; William H. Davidson II and Kenneth P.
Woodington, both of Davidson, Wren & DeMasters, P.A.,
of Columbia, for Respondent Davidson, Wren &
DeMasters, P.A.; Attorney General Alan McCrory
Wilson, Solicitor General Robert D. Cook, and Deputy
Solicitor General J. Emory Smith Jr., all of Columbia, for
Respondent Alan Wilson.
JUSTICE JAMES: South Carolina Attorney General Alan Wilson retained
Respondents Willoughby & Hoefer, P.A., and Davidson, Wren & DeMasters, P.A.,
(collectively, the Law Firms) to represent the State in litigation against the United
States Department of Energy (DOE). Wilson and the Law Firms executed a
litigation retention agreement, which provided that the Law Firms were hired on a
contingent fee basis. When the State settled its claims with the DOE for $600
million, Wilson transferred $75 million in attorneys' fees to the Law Firms.
Appellants challenged the transfer, claiming it was unconstitutional and
unreasonable. The circuit court dismissed Appellants' claims for lack of standing,
and we certified the case for review of the standing issue. The merits of the
underlying case are not before us.
Background
In 2002, the State brokered an agreement with the DOE concerning the storage
of weapons-grade plutonium at the Savannah River Site in Aiken, South Carolina.
See 50 U.S.C. § 2566. The agreement required the DOE to achieve a certain mixed-
oxide fuel production objective by January 1, 2016. § 2566(d)(1). When the DOE
failed to meet this objective, Wilson retained the Law Firms to pursue recovery of
statutory damages.
Wilson's litigation retention agreement (Fee Agreement) with the Law Firms
contains three provisions relevant to this appeal. The first provision states the Law
Firms will be reimbursed for certain costs and expenses. The second provision sets
forth varied contingency percentages based on the State's gross recovery, the type of
representation provided, and the court in which the matter was heard. The third
provision requires Wilson to seek judicial approval of attorneys' fees and costs
"[w]hen possible[.]"
The Law Firms continued to litigate on the State's behalf for more than four
years. On August 28, 2020, litigation ended with the execution of a settlement
agreement (the Settlement Agreement). The Settlement Agreement required the
DOE to immediately pay the State $600 million, "inclusive of interest, with each
party to bear its own costs, attorney fees, and expenses." Three days later, Wilson
announced he would pay the Law Firms $75 million in attorneys' fees pursuant to
the Fee Agreement. This amount included costs and expenses and represented
12.5% of the State's gross recovery.
Seeking to enjoin payment to the Law Firms, Appellants filed a complaint and
motion for preliminary injunction against Wilson. Appellants alleged that because
attorneys' fees were not awarded by court order or settlement, South Carolina Code
subsection 1-7-150(B) 1 requires the entire $600 million settlement to be deposited
in the State's General Fund. Appellants also argued the attorneys' fee amount was
patently unreasonable and, therefore, requires court approval. When Appellants
learned Wilson had already disbursed the $75 million,2 they amended their
complaint to name the Law Firms as defendants and filed another motion for
preliminary injunction.
Judge Alison Lee denied Appellants' motion and found they lacked public
importance standing. Specifically, Judge Lee concluded the critical element of a
"need for future guidance" was absent:
Any judicial ruling on this matter would be entirely limited to the [Fee
Agreement] and payment for services performed pursuant to this single
contract. . . . Public importance standing is inappropriate here because
there is no ruling the Court might make that would assist other courts
resolving future arguments regarding outside litigation.
Judge Lee also found Appellants lacked so-called "derivative standing" because
unlike Wilson, who has authority to represent the State as its chief legal officer,
Appellants "have no authority to represent the State['s] interests in this proceeding."
Respondents promptly moved to dismiss Appellants' complaint for lack of
standing. Judge Kirk Griffin granted the motion, ruling "Judge Lee's findings [as to
standing] are dispositive and require dismissal. . . . Nonetheless and in the
1
Subsection (B) provides, "All monies, except investigative costs or costs of
litigation awarded by court order or settlement, awarded the State of South Carolina
by judgment or settlement in actions or claims brought by the Attorney General on
behalf of the State or one of its agencies or departments must be deposited in the
general fund of the State[.]" (2005).
2
The fact that the fee has already been paid is irrelevant to the issues on appeal.
Likewise, the amount of the fee has no bearing on our analysis.
alternative, this Court . . . concurs with and adopts Judge Lee's well-reasoned
analysis and findings." Appellants appealed, and we certified the case for review.
We previously declined to exercise original jurisdiction over the merits of
Appellants' claims. Therefore, our review is limited to (1) whether Judge Lee's
finding that Appellants lack standing constitutes the law of the case and (2) whether
Appellants have standing. We express no view as to the merits of Appellants' claims.
Standard of Review
A motion to dismiss for lack of standing challenges the court's subject matter
jurisdiction. See Capital City Ins. Co. v. BP Staff, Inc., 382 S.C. 92, 99, 674 S.E.2d
524, 528 (Ct. App. 2009). Whether subject matter jurisdiction exists is a question
of law, which this Court is free to decide with no particular deference to the circuit
court. Id. (quoting Chew v. Newsome Chevrolet, Inc., 315 S.C. 102, 104, 431 S.E.2d
631, 631 (Ct. App. 1993)); Catawba Indian Tribe of S.C. v. State, 372 S.C. 519, 524,
642 S.E.2d 751, 753 (2007). Therefore, on appeal, we review the circuit court's
findings de novo. See Capital City, 382 S.C. at 99, 674 S.E.2d at 528; Catawba
Indian Tribe, 372 S.C. at 524, 642 S.E.2d at 753.
Discussion
I. Law of the Case
"The doctrine of the law of the case applies to an order or ruling which finally
determines a substantial right." Shirley's Iron Works, Inc. v. City of Union, 403 S.C.
560, 573, 743 S.E.2d 778, 785 (2013) (quoting Weil v. Weil, 299 S.C. 84, 89, 382
S.E.2d 471, 473 (Ct. App. 1989)). The doctrine does not, however, generally apply
to "an interlocutory order which merely decides some point or matter essential to the
progress of the cause, collateral to the issues in the case[.]" Id. (quoting Weil, 299
S.C. at 89, 382 S.E.2d at 473). Therefore, despite the "long-standing rule in this
State that one judge of the same court cannot overrule another[,]" Charleston Cnty.
Dep't of Social Servs. v. Father, 317 S.C. 283, 288, 454 S.E.2d 307, 310 (1995),
interlocutory orders "may be reconsidered and corrected by the court before entering
a final order on the merits." Shirley's Iron Works, 403 S.C. at 573, 743 S.E.2d at
785 (quoting Weil, 299 S.C. at 89, 382 S.E.2d at 473).
If a plaintiff lacks standing, he does not have the right to proceed to the merits
of his claim against the defendant. Therefore, when a circuit court finds that a party
lacks standing and includes that finding in an order, the order determines a
substantial right. In this regard, Judge Lee's order does more than "merely decide[]
some point or matter essential to the progress of the cause, collateral to the issues in
the case[.]" Id. at 573, 743 S.E.2d at 785. However, because an order denying a
motion for preliminary injunction is interlocutory, see S.C. Code Ann. § 14-3-330(4)
(2017), Judge Lee's order did not finally determine a substantial right of Appellants.
Id.; see Rule 54(b), SCRCP; cf. Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981)
("[T]he findings of fact and conclusions of law made by a court granting a
preliminary injunction are not binding at trial on the merits."). Therefore, we decline
to invoke the law of the case doctrine. See State v. Hewins, 409 S.C. 93, 113 n.5,
760 S.E.2d 814, 824 n.5 (2014) (stating the law of the case doctrine "is a
discretionary appellate doctrine with no preclusive effect on successive trial
proceedings").
II. Standing
This Court has consistently acknowledged that even without an allegation of
particularized injury, "standing may be conferred upon a party when an issue is of
such public importance as to require its resolution for future guidance." Sloan v.
Sanford, 357 S.C. 431, 434, 593 S.E.2d 470, 472 (2004); see S.C. Pub. Interest
Found. v. S.C. Transp. Infrastructure Bank, 403 S.C. 640, 645, 744 S.E.2d 521, 524
(2013); ATC S., Inc. v. Charleston Cnty., 380 S.C. 191, 199, 669 S.E.2d 337, 341
(2008); Baird v. Charleston Cnty., 333 S.C. 519, 531, 511 S.E.2d 69, 75 (1999);
Davis v. Richland Cnty. Council, 372 S.C. 497, 500, 642 S.E.2d 740, 741-42 (2007);
S.C. Pub. Interest Found. v. S.C. Dep't of Transp. (SCDOT), 421 S.C. 110, 118-19,
804 S.E.2d 854, 859 (2017).
"The key to the public importance analysis is whether a resolution is needed
for future guidance." ATC S., 380 S.C. at 199, 669 S.E.2d at 341; see SCDOT, 421
S.C. at 119, 804 S.E.2d at 859; Vicary v. Town of Awendaw, 425 S.C. 350, 359, 822
S.E.2d 600, 604 (2018). Courts must cautiously balance competing interests—the
citizenry's need to hold public officials accountable for alleged injustices and "the
concomitant integrity of government action"—to determine whether the issue
presented is "inextricably connected to the public need for court resolution for future
guidance." SCDOT, 421 S.C. at 118-19, 804 S.E.2d at 858 (quoting Sloan v.
Greenville Cnty., 356 S.C. 531, 551, 590 S.E.2d 338, 349 (Ct. App. 2003)); ATC S.,
380 S.C. at 199, 669 S.E.2d at 341; see Sanford, 357 S.C. at 434, 593 S.E.2d at 472.
Only then can the issue "transcend[] a purely private matter and rise[] to the level of
public importance." ATC S., 380 S.C. at 199, 669 S.E.2d at 341.
By claiming Wilson improperly disbursed state settlement funds, Appellants
indisputably allege an issue of public importance. See, e.g., SCDOT, 421 S.C. at
119, 804 S.E.2d at 859; Sloan v. Sch. Dist. of Greenville Cnty., 342 S.C. 515, 524,
537 S.E.2d 299, 303 (Ct. App. 2000). Therefore, the linchpin of our analysis is
whether a need for future guidance exists.
Appellants' complaint presents a threshold issue of the Attorney General's
statutory authority to enter contingency fee agreements with private law firms. This
issue will inevitably arise again in the future because Wilson has seven other
litigation retention agreements with private attorneys. These agreements are
currently listed on the Attorney General's website, and five contain contingency fee
provisions. 3 Although the agreements differ in some respects, all contingency fee
provisions persist. For example, Wilson recently announced a $300 million
settlement with opioid distributors.4 The litigation retention agreement in that case
contains a contingency fee provision identical to the one here. There is a need for
future guidance as to whether subsection 1-7-150(B) authorizes the Attorney
General to enter into contingency fee agreements. We therefore hold Appellants
have public importance standing. 5
Conclusion
We reverse the circuit court's finding that Appellants lack public importance
standing and remand for the circuit court to consider the merits of Appellants' claims.
We reiterate that nothing in this opinion should be construed as a comment or
conclusion on the merits.
REVERSED AND REMANDED.
BEATTY, C.J., KITTREDGE, HEARN and FEW, JJ., concur.
3
Litigation Retention Agreements, S.C. Att'y Gen., https://www.scag.gov/litigation-
retention-agreements/ (last visited July 28, 2022) (listing contingency fee
agreements for Opioid Manufacturers, Pharmacy Benefit Managers, Opioid
Distributors, Insulin Pricing, and Google Advertising Technology).
4
See Attorney General Alan Wilson: Drug Distributors and Johnson & Johnson
Commit to $26 Billion Opioid Agreement, S.C. Att'y Gen. (Feb. 25, 2022),
https://www.scag.gov/about-the-office/news/attorney-general-alan-wilson-drug-
distributors-and-johnson-johnson-commit-to-26-billion-opioid-agreement/.
5
Because we decide this appeal on public importance grounds, we need not address
derivative standing. See Futch v. McCallister Towing of Georgetown, Inc., 335 S.C.
598, 613, 518 S.E.2d 591, 598 (1999).