Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED JANUARY 31, 2002
In re CERTIFIED QUESTION FROM
THE U.S. DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN
WAYNE COUNTY,
Plaintiff,
v No. 118261
PHILIP MORRIS INCORPORATED, et
al,
Defendants,
and
JENNIFER GRANHOLM, ATTORNEY
GENERAL, ex rel, THE STATE OF
MICHIGAN,
Intervening Defendant.
BEFORE THE ENTIRE BENCH
CAVANAGH, J.
The Michigan Attorney General brought suit against
numerous tobacco companies, alleging claims for damages
incurred in providing health care services to smokers. This
suit resulted in a master settlement agreement (MSA), in which
the state released its claims and its subdivisions’ claims, in
exchange for injunctive and monetary relief. Two years later,
Wayne County filed suit against the same tobacco companies,
also alleging claims for damages incurred in providing health
care services to smokers. Defendants filed a motion for
judgment on the pleadings, arguing that the county’s claims
had been released by the MSA or, alternatively, that they were
barred by the doctrine of res judicata. The United States
District Court for the Eastern District of Michigan, Judge
Paul Borman, stayed the proceedings and certified the
following question to this Court1:
Does the Michigan Attorney General have the
authority to bind/release claims of a Michigan
county as part of a settlement agreement in an
action that the Attorney General brought on behalf
of the State of Michigan?
Having heard oral argument, this Court answers that question
in the affirmative.
1
MCR 7.305(B)(1) provides:
When a federal court . . . considers a
question that Michigan law may resolve and that is
not controlled by Michigan Supreme Court precedent,
the court may on its own initiative or that of an
interested party certify the question to the
Michigan Supreme Court.
2
I. FACTS AND PROCEEDINGS
In 1996, the Attorney General, on behalf of the people of
Michigan, sued numerous tobacco companies, seeking injunctive
and monetary relief to redress harm to the public health
resulting from defendants’ conduct. See Attorney General v
Philip Morris, Inc, Ingham Cir Ct No 96-84281-CZ. The state
asserted five claims for relief: (1) violations of the
Michigan Consumer Protection Act, MCL 445.901 et seq.;
(2) violation of the Michigan Antitrust Reform Act, MCL
445.771 et seq.; (3) restitution based upon unjust enrichment;
(4) indemnity; and (5) breach of duty voluntarily undertaken.
In 1998, that case was settled without any of the state’s
claims being determined on the merits. Defendants and the
attorneys general of forty-six states, including Michigan,
entered into a master settlement agreement. Defendants agreed
to pay Michigan approximately $8.9 billion over a period of
twenty-five years and to enter into a consent decree
containing broad injunctive provisions. The MSA also provided
for a release and covenant not to sue defendants for a broad
range of claims. The release defined the “Releasing Parties”
as the settling states and their subdivisions, including
counties. Finally, the MSA contained an offset provision that
afforded defendants the right to offset any subsequent
3
recovery by a state subdivision against future payments to the
settling state. After concluding that the MSA was in the best
interests of Michigan, the circuit court approved the consent
decree and ordered that the state’s complaint be dismissed
with prejudice.
In 1999, Wayne County filed an action in the Wayne
Circuit Court against the same tobacco companies. The county
asserted five claims for relief: (1) unreasonable restraint of
trade, in violation of the Michigan Antitrust Reform Act, MCL
445.772; (2) public nuisance; (3) negligent entrustment;
(4) the undertaking of, and the wilful failure to perform, a
special duty; and (5) conspiracy. Defendants removed the case
to the United States District Court for the Eastern District
of Michigan on the basis of diversity of citizenship
jurisdiction, and filed a motion for judgment on the
pleadings. The federal district court determined that
defendants are “Released Parties” and that the claims brought
by Wayne County are “Released Claims” as defined by the MSA.2
2
The Master Settlement Agreement, § XII(a), provides:
(a) Release
(1) Upon the occurrence of State-Specific
Finality in a Settling State, such Settling State
shall absolutely and unconditionally release and
forever discharge all Released Parties from all
Released Claims that the Releasing Parties
directly, indirectly, derivatively or in any other
4
The remaining issue is whether Wayne County is a “Releasing
Party.”3 The federal district court stayed the proceedings
and certified the following question to this Court:
Does the Michigan Attorney General have the
authority to bind/release claims of a Michigan
county as part of a settlement agreement in an
action that the Attorney General brought on behalf
of the State of Michigan?
In order to assist this Court in deciding whether to answer
capacity ever had, now have, or hereafter can,
shall or may have.
* * *
(3) Each Settling State (for itself and for
the Releasing Parties) further covenants and agrees
that it (and the Releasing Parties) shall not after
the occurrence of State-Specific Finality sue or
seek to establish civil liability against any
Released Party based, in whole or in part, upon any
of the Released Claims, and further agrees that
such covenant and agreement shall be a complete
defense to any such civil action or proceeding.
3
The Master Settlement Agreement, § II, defines
“Releasing Parties” as
each Settling State and any of its past, present,
and future agents, officials acting in their
official capacities, legal representatives,
agencies, departments, commissions and divisions;
and also means, to the full extent of the power of
the signatories here to release past, present and
future claims, the following: (1) any Settling
State’s subdivisions (political or otherwise,
including but not limited to municipalities,
counties, parishes, villages, unincorporated
districts and hospital districts), public entities,
public instrumentalities and public educational
institutions . . . .
5
the certified question, we granted the Attorney General’s
motion to intervene, ordered the parties to file supplemental
briefs, and held oral argument. 622 NW2d 518 (Mich, 2001).
II. Analysis
A. THE AUTHORITY OF THE COUNTY
The 1963 Michigan Constitution at art 7, § 1,4 provides
for the creation of counties and endows the Legislature with
the authority to establish county powers and immunities.
Pursuant to art 7, § 1, the Michigan Legislature at MCL 45.3
has granted each of the state’s counties the power to sue and
to be sued.5 The Legislature has also granted to counties the
general authority to sue when injured by an act in violation
of the antitrust statute. MCL 445.778. Further, the Michigan
Constitution instructs “[t]he provisions of this constitution
and law concerning counties . . . shall be liberally construed
in their favor. Powers granted to counties . . . by this
constitution and by law shall include those fairly implied and
not prohibited by this constitution.” Const 1963, art 7,
§ 34.
4
“Each organized county shall be a body corporate with
powers and immunities provided by law.”
5
“Each organized county shall be a body politic and
corporate, for the following purposes, that is to say: To sue
and be sued . . . and to do all other necessary acts in
relation to the property and concerns of the county.”
6
B. THE AUTHORITY OF THE ATTORNEY GENERAL
We next turn to the powers of the Attorney General. The
most basic purpose of her office is to litigate matters on
behalf of the people of the state. Accordingly, it is widely
acknowledged that Michigan’s Attorney General has broad
authority to bring actions that are in the interest of the
state of Michigan. Michigan ex rel Kelley v CR Equipment
Sales, Inc, 898 F Supp 509, 513 (WD Mich, 1995); see Mundy v
McDonald, 216 Mich 444, 450-451; 185 NW 877 (1921).
Specifically, MCL 14.28 provides:
The attorney general shall prosecute and
defend all actions in the supreme court, in which
the state shall be interested, or a party . . . and
. . . may, when in his own judgment the interests
of the state require it, intervene in and appear
for the people of this state in any other court or
tribunal, in any cause or matter, civil or
criminal, in which the people of this state may be
a party or interested. [Emphasis added.]
This statute has been interpreted to allow the Attorney
General to initiate actions as well. CR Equipment Sales at
514. This Court has concluded:
While a distinction may be drawn between
intervening in a proceeding and instituting a
suit[,] there is merger of purpose, by reason of
public policy, when the interests of the State call
for action by its chief law officer and there is no
express legislative restriction to the contrary.
[In re Lewis Estate, 287 Mich 179, 184; 283 NW 21
(1938).]
Moreover, MCL 14.28 has been broadly construed to provide
7
authority for the Attorney General to litigate on behalf of
the people of the state. Mundy at 450-451. See also
Michigan State Chiropractic Ass’n v Kelley, 79 Mich App 789,
791; 262 NW2d 676 (1977). The Legislature also authorized the
Attorney General to intervene at any stage of a proceeding and
granted her the same rights possessed by other parties to a
suit.6 Accordingly, the Attorney General had the necessary
statutory authority to litigate on behalf of the people of the
state in the present case.
However, although the Attorney General has the authority
to intervene in and to initiate litigation on behalf of the
state, such authority is limited to matters of state interest.
Attorney General ex rel Lockwood v Moliter, 26 Mich 444, 447
(1873). Just as the authority of counties to sue in matters
of local interest cannot be used to undermine the authority of
6
MCL 14.101 provides:
The Attorney General of the State is hereby
authorized and empowered to intervene in any action
heretofore or hereafter commenced in any court of
the State whenever such intervention is necessary
in order to protect any right or interest of the
State, or of the people of the State. Such right
of intervention shall exist at any stage of the
proceeding, and the Attorney General shall have the
same right to prosecute an appeal, or to apply for
a re-hearing or to take any other action or step
whatsoever that is had or possessed by any of the
parties to such litigation.
8
the state to sue in matters of state interest, the authority
of the state to sue in matters of state interest cannot be
used to undermine the authority of political subdivisions to
sue in matters solely of local interest. As was stated so
well by Justice Cooley, “it is inconsistent with local
institutions, as they have always existed in this country,
that the local community should be coerced by the State in
matters of purely local convenience . . . .” Cooley,
Constitutional Law, p 345. This is even more true today, in
light of the grant of home rule authority to counties in the
Constitution of 1963.
Because the Attorney General possesses the authority to
sue on behalf of the state in matters of state interest, it
follows that the Attorney General necessarily has the
authority to sue on behalf of the state’s political
subdivisions in matters of state interest. CR Equipment Sales
at 514. In CR Equipment Sales, the United States District
Court for the Western District of Michigan concluded that the
Michigan Attorney General possessed the authority to bring an
action on behalf of several hundred school districts across
the state. The court reasoned that such an action was not an
action on behalf of a single unit of local government, but
rather involved the general state interest. We agree with
9
this reasoning. The Attorney General of Michigan possesses
the authority to represent the interests of the people of
Michigan, and thus the Attorney General has the authority as
part of this representation to represent the people of a
county who are a part of these same people. Thus, although
the Attorney General cannot sue on behalf of a county in a
matter solely of local interest, the Attorney General can sue
on behalf of a county in a matter of state interest.
Next, inherent in the Attorney General’s authority to sue
on behalf of a county in matters of state interest, is the
Attorney General’s authority to settle such a suit. Given
that the Attorney General has the authority to bring claims,
it inevitably follows that the Attorney General has the
authority to settle and release such claims.7 It is said that
the Attorney General “may control and manage all litigation in
behalf of the state and is empowered to make any disposition
of the state’s litigation which [the Attorney General] deems
7
As the Oklahoma Supreme Court has stated:
As an incident to the dominion the Attorney
General possesses over every suit instituted in his
official capacity, he has the power to dismiss,
abandon, discontinue, or compromise suits brought
by him either with or without a stipulation by the
other party and to make any disposition of such
suits as he deems best for the interest of the
state. [Oklahoma ex rel Derryberry v Kerr-McGee
Corp, 516 P2d 813, 818 (1973).]
10
for its best interests.” 7 Am Jur 2d, Attorney General § 27,
p 26. Accordingly, while counties have broad authority to sue
and settle with regard to matters of local interest, the
Attorney General has broad authority to sue and settle with
regard to matters of state interest, including the power to
settle such litigation with binding effect on Michigan’s
political subdivisions.
In determining what constitutes a state interest for the
purpose of deciding whether to initiate litigation, the
Attorney General has broad statutory discretion: MCL 14.28
explicitly provides that the Attorney General may become
involved in litigation “when in his own judgment the interests
of the state require it . . . .” See also MCL 14.101; Mundy
at 450-451. In sum, the Attorney General has the authority to
bring actions involving matters of state interest, and the
courts should accord substantial deference to the Attorney
General’s decision that a matter constitutes a state interest.
On the bases of these principles, we, therefore, conclude
that the Attorney General has the authority to bring suit on
behalf of political subdivisions where there is an issue of
state interest.
C. Balancing County and State Authority
The county’s argument that it has the exclusive authority
11
to bring suit must fail. We acknowledge that in some
instances, a county has the exclusive authority to sue, but
that issue is not presented where, as here, the claims
asserted by the county may be of state interest.
Further, the structure of the constitution requires an
acknowledgment that, in this case and others where the state
expresses its position on issues clearly of state interest,
subdivisions are subordinate to the state’s position. We note
that the constitution vested even more power in the counties
after the most recent revision in 1963, and the laws of this
state provide counties with extensive powers. However, the
structure of the sovereign state and the constitutional and
statutory powers granted to the Attorney General dictate that
the county is ultimately subordinate to the state where, as
here, the Attorney General acted to bind the state as a whole
in a matter clearly of state interest. Thus, the law
establishes that where the Attorney General has acted to limit
the power of the counties to sue where an issue is of state
interest, the county may not act to defeat the state’s clear
intentions.
III. CONCLUSION
For the foregoing reasons, we answer the certified
question in the affirmative. The Attorney General has the
authority to release potential claims of Michigan counties as
12
part of a settlement agreement in an action that the Attorney
General brings on behalf of the state of Michigan where that
action involves matters of state interest. Having answered
the certified question, we now return the matter to the United
States District Court for such further proceedings as that
court deems appropriate.
CORRIGAN , C.J., and WEAVER , KELLY , TAYLOR , YOUNG , and MARKMAN ,
JJ., concurred with CAVANAGH , J.
13