Their View: A political dispute within the NAAG

Kentucky AG Daniel Cameron laid out his concerns about these practices in a five-page May 24 letter to Chris Toth, who was then NAAG’s executive director. Mr. Cameron’s letter was joined by seven other GOP AGs from Alaska, Florida, Louisiana, Oklahoma, South Carolina, Utah and Virginia.

“There needs to be greater transparency prior to NAAG receiving, holding, and expending certain kinds of funds,” Mr. Cameron writes. He cites “some multi-state settlement agreements, including the McKinsey opioid settlement,” that provide money “directly to NAAG.”

He says NAAG received $15 million in the McKinsey settlement, which is nearly double what some states received “and nearly 40 percent more than Kentucky received.” Yet the residents of these states suffered from the opioid scourge, while NAAG has no electoral constituency. Mr. Cameron says “NAAG boasts more than $164 million in assets” and the number is more than $280 million if you include NAAG’s Mission Foundation.

This issue is about more than dividing the spoils of these settlements. Most states, including Kentucky, vest the power of the purse in their legislatures. Kentucky law requires that state receipts be deposited in state coffers and says they must be used for “public purposes only.” Yet NAAG funds are proceeds from state lawsuits that NAAG can use without the permission of the legislature or even all AGs. If NAAG invests that money in funds to gain a financial return, that could violate state law.

Mr. Cameron adds that NAAG’s “fund committees are now issuing grants that are more like loans than grants.” And loans have to be repaid. So this gives states an incentive to pursue litigation for a financial return no matter the merits of the issue.

“The result is NAAG’s promotion of ‘entrepreneurial litigation’ and ‘suing businesses for profit,’ all of which is ‘more in line with the plaintiffs’ bar’ than making whole those who have been harmed,” writes Mr. Cameron.

In other words, NAAG has become a business in its own right, taking money from lawsuit settlements and redistributing it to finance more lawsuits. It’s a perpetual lawsuit machine. This is very good for the trial lawyers who work the cases and for AGs who can get publicity from those cases.

But no one elected NAAG staff, and this independent lawsuit machine weakens political accountability. This is true regardless of party. But NAAG has been dominated by Democratic AGs, and the current president is Tom Miller of Iowa. “Consumer Protection 2.0: Tech Threats and Tools” is his “presidential initiative,” according to a NAAG press release.

Mr. Cameron raises important questions about governance and accountability that deserve to be answered. His May 24 letter asked for a response by June 6, but as far as we know there have been no detailed written answers and no agreement to reform NAAG’s procedures to create greater transparency over how its cash cache is used.

Al Lama, NAAG’s interim executive director, said in an email that Mr. Miller has “had several productive conversations with AG Cameron about his questions and recommendations.” He added that last week NAAG created a “select committee of NAAG members” to review Mr. Cameron’s recommendations and “consider reforms” in NAAG’s bylaws, structure, and procedures. The committee includes three Democratic and three Republican AGs.

Elizabeth Kuhn, spokeswoman for Mr. Cameron, emailed that “we have had productive conversations with NAAG and await a response from the executive committee.”

Kudos to Mr. Cameron for raising this issue after too many Republican AGs were asleep or complicit. We hope he and other AGs insist on specific policy and practice changes rather than words and promises. NAAG doesn’t deserve the blessing of their membership if it’s an unaccountable litigation shop for spending to enrich trial lawyers.

– The Wall Street Journal, July 15, 2022