Tobacco Litigation: Constitutional Issues Raised by Proposed Federal Legislation to Cap Attorneysâ Fees (CRS Report for Congress)
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| Release Date |
April 8, 1998 |
| Report Number |
98-344 |
| Report Type |
Report |
| Authors |
Henry Cohen, Robert Meltz, and Johnny H. Killian, American Law Division |
| Source Agency |
Congressional Research Service |
Summary:
Proposals have been made for Congress to enact a law placing a cap on the fees that states could
pay
attorneys they have retained to pursue litigation against tobacco companies to recover tobacco-
related medicaid expenditures or other causes of action. Such caps would apply to existing contracts.
Consideration of a law imposing such caps has raised several constitutional issues, which we address
in this memorandum. The four issues involve: (1) Congress's commerce power, (2) due process,
(3) the takings clause, and (4) federalism.
When considering the constitutionality of any federal statute, one must initially determine
whether any power enumerated in the Constitution authorizes Congress to enact the statute. If the
answer is affirmative, then one must determine whether the statute violates any provision of the
Constitution. The enumerated power that would apparently give Congress the authority to cap
attorneys' fees in connection with the ongoing tobacco litigation is the Commerce Clause, which
gives Congress the power to "regulate Commerce with foreign Nations, and among the several
States" (Art. I, Section 8, cl. 2). The commerce power has been held to apply to
intra state activities
that substantially affect interstate commerce." United States v. Lopez , 115 S. Ct.
1624,
1630 (1995). There seems little possibility that a court would find that the ongoing tobacco litigation
does not substantially affect interstate commerce.
A statute capping fees would almost certainly not violate due process, as economic regulations
such as this, even if they have retroactive effect, violate due process only if it can be shown "that the
legislature has acted in an arbitrary and irrational way." National Railroad Passenger Corp.
v.
Atchison, Topeka & Santa Fe Railway Co. , 470 U.S. 451, 472 (1985). The "Takings
Clause" issue
is less certain. If the cap were to deprive an attorney of only a moderate portion of what he would
otherwise receive, the reduced amount was reasonable or "nonconfiscatory," and the legislative
purposes of the statute were compelling, it is likely that the fee cap would not violate the Takings
Clause. If, however, the reduction in a lawyer's compensation were severe and the legislative
purpose were seen as less than compelling, an unconstitutional taking might well be discerned.
As for the federalism issue, there is a series of vacillating Supreme Court decisions respecting
the power of Congress to regulate the states as states. These decisions, at least for the moment, are
apparently inconsistent with each other, so it is impossible to predict which ones the Court would
apply in deciding a challenge to a fee cap in this situation. It appears, however, that a cap imposed
on the states might successfully be challenged as unconstitutional on federalism grounds.
