Order No. 25239
Approval of Kerr County Joining the
State Association of Counties for
Tobacco Clai~u.
March 9, 1998
Vol V Page 589
ORDER N0. 25'c~9
AP'P'ROVAL OF NERR COUNTY JOINING THE
STATE AS50CIATION OF COUNTIES
FOR TOBACCO CLRIMS
On this day the 9th day of Nar•ch, 1998 upon motion made 6y
Commissioner' Oehler, seconded by Commissioner Letz, the Court
unanimously approved by a vote of 4-0-~D, N.er•r• County .joining
the State Rssociation of Counties for Tobacco Claims adding,
"with no charge to the County" after the word "notice."
OFFICERS:
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BETTY ARMSTRONG
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EXECUTIVE BOARD:
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SANDRA NODGES
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Pm~tlon5. $Omb Team We are monitoring the State of Texas Litigation and will forwazd a report
MELVDI NUM
COwmm~ww. Liba~ry COwry with recommendations to our participating counties after the court heazing on Mazch
Pm~4n+-We,=<... 19, 1998. Your county is not presently included in this effort. If you wish to
VAN YORK
,.Egn Batlen COwry participate and receive our future reports, please return the enclosed authorization.
MEMORANDUM
TO: County Judges p
FROM: James P. Allisonn, a , C ,
RE: COUNTY TOBAC/CO CLAIMS
DATE: FEBRUARY 27, 1998
You should have recently received a letter from Commissioner Betty
Armstrong, President of the State Association, concerning a joint review of county
tobacco claims. At the request of the State Association, our law firm has agreed to
conduct this initial review at no cost to participating counties. There aze presently 73
counties participating in this effort.
GENERAL COUNSEL:
LAMES P ALLCiON
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EDUCATION COMMITTEE:
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Cormuue MuMaa
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Rick 0.rym
COmmissww. Webb Cowry
IaEn Hmmmrk
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RicbvE COiwe
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Bill MLe
Commwoner. Rmb Co.
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ALLISON, BASS Rr ASSOCIATES, L.L.P.
c>a~uaaner~a aC
WAHRENBERCER HOUSE
208 WEST 14TH STREET
JAMES P. ALLISON AUSTIN, TEXAS 78701
(5121487-0701
ROBERT T. BASS Fez 15121480-0907
MEMORANDUM
TO: Participating Counties
FROM: James P. Allison ~, ~ ~ -
RE: COUNTY TOBACCO CLAIMS
DATE: FEBRUARY 27, 1998
C. REx HALL JR.
ANTHONY J. NELSON
The purpose of this memorandum is to provide a brief overview of the status of the State
of Texas lawsuit and to discuss counties' options with regazd to our claims. Presently 73
counties aze participating in the joint review project. We aze consulting with the Attorney
General and other state leaders. We will participate in the hearing in U. S. District Court in
Texarkana on March 19, 1998. Afrer that hearing, we expect to issue a full report with
recommendations.
There appear to be three potential avenues: 1) file a sepazate lawsuit seeking damages on
behalf of counties; 2) intervene in the state lawsuit, seek to have the judgment set aside and seek
additional compensation from the Defendants on behalf of our counties (either through a new
settlement or trial); and 3) do not challenge the settlement and seek to get a portion of the state's
settlement funds by legislative action.
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The settlement agreement provides for the payment of money in exchange for release of
claims. This agreement is in our file. For present purposes, there are two features worthy of
note. First, the agreement contains language by which the State purports to release the claims of
its subdivisions (political or otherwise), regazdless of whether they aze a named Plaintiff.
Second, the settlement agreement as approved by the court provides that the parties "anticipate
that funds due to the State of Texas under this Settlement Agreement, other than funds dedicated
for legal expense reimbursement, will be allocated as follows, or for such other purposes as the
State of Texas may determine:" The section that follows sets forth a proposed allocation of the
settlement funds. This section does not provide for any payment to counties, but does provide
for $100 million to M.D. Anderson for research and reimbursement for indigent health care costs
THE PENDING MOTIONS
There is a hearing scheduled before U.S. Judge Folsom on Mazch 19, 1998. The hearing
pertains to the following pending Motions: 1) Montgomery County Hospital District's Motion to
Intervene; 2) The Montgomery County Hospital District's Motion for Relief from Judgment, or
in the alternative, Motion to Alter or Amend Final Judgment; 3) Motion for Leave to Intervene
and for Stay (filed by various state legislators); 4) Motion to Vacate, or to Sever and to Alter or
Amend, the Portions of the Court's Order Approving and Awarding Attorney's Fees; and 5) the
State of Texas' Motion to Enforce the Judgment. We have obtained copies of these motions.
According to our file, at least one other motion has been filed. El Paso County and the El
Paso County Hospital District filed a Motion to Intervene to Obtain a Declazation of the Rights of
the Parties under the Court's Judgment, to Stay Dishursement of Sr-ttlPment Funds and to Amend
Judgment. In addition, Montgomery County (joined by Texas Municipal League) has filed an
amended Motion to Intervene. Rep. Junell and Sen. Ratliff have also filed a motion to intervene.
THE POSITIONS TAKEN BY THE INTERVENORS AND AMICI
1. Dallas County/Hospital District
These entities filed an amicus brief on 1/20/98. This brief asserts that the Attorney
General's proposal for allocating the settlement funds in a particulaz manner should not be
approved. These entities point out that the Attorney General appeazs to lack the authority to
allocate funds under state law. Their position is that, if "the Texas Attorney General claims the
right unilaterally to settle Dallas County's and the Hospital District's claims, then they clearly are
interested parties under this settlement and desire to be heazd in the disposition of the settlement
funds." Brief at p. 3. These entities do complain that the settlement was reached without their
input.
2. Montgomery County Hospital District/ TML
This complaint in intervention asks for party stains, and identifies these entities as "a
rcpressn'ative mcwber of a class of numerous political subdivisions, hospital districts,
counties...that have expended local taxes or fees to provide medical treatment ...because of the
use of tobacco. These entities are so numerous that joinder of all of them is impractical." They
adopt, with a couple of exceptions, the claims brought by the state.
These putative intervenors note that the settlement agreement purports to settle claims on
behalf of public entities and political subdivisions who were not parties to the lawsuit. They
further note that these entities suffered damages separate and distinct from the state's damages
and assert that the Attorney General lacked authority to settle on their behalf. They seek, under
Rule 60, to have the judgment declazed void as to them, or alternatively, under Rule 59, to
amend the judgment by striking all portions of the agreement which "purport to settle and release
claims of non-parties to this action, including claims of political subdivisions and governmental
entitles such as Intervenors, or to apportion the settlement recovery to those entitles whose claims
are being compromised" in proportion to the damages shown after trial.
El Paso County/ Hospital District
These entities seek to intervene, and adopt the Montgomery County/TML azguments in
this regard. i hese entities also point out that they had no indication that the Attotey General
was representing them, and further advise that they have received informal communications from
the A.G. that "it was not his intention to represent them or to settle their claims in this action."
These entities ask for alternative relief: 1) a declazation that their claims have not been settled; 2)
a declaration of the basis for the authority of the Attorney General to compromise and settle their
claims without having pleaded them and without having consulted with these entities; or 3) strike
the provisions of the judgment which provide for specific disposition of the settlement funds.
4. The Legislators
Senators Fraser, Armbrister, and Nelson, along with Representatives Craddick, Delisi,
Janek and Kubiak, have moved to intervene and to alter or amend the judgment. This group
challenges only the attorneys fees issue. The JunelURatliff pleading also challenges the specific
disposition of settlement funds provided in the settlement agreement.
CONCLUSION
The hearing on Mazch 19 will resolve several issues. It is our intention to file an Amicus
Brief requesting that the U.S. District Court either 1) modify the Settlement Agreement and
Jud˘tnent to exclude county claims. or 2) ret~ir. j~:risdictic^. over :he settleme. t proceeds urtu
county claims aze satisfied. Immediately upon entry of an order, we will prepaze a further
report.
The undersigned County hereby requesu that the County Judges and
Commissioners Association of Texas conduct a review of iu potential claims against
tobacco companies.
Our County is represented by the following attorney in this matter:
xx Our County authorizes the law firm of Allison, Bass, & Associates,
L.L.P., Austin, Texas, to represent the County in this matter until further notice, with
no charge to the County.
Cerr County
By: ~-
County J e
Please mail to: Jim Allison
general Counsel
208 Rest 14" Street
Austin, Texas 78701
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