In this five-part podcast series, I consider the use of monitors by state Attorneys General. I am joined in this podcast series by Jerry Coyne, the Managing Director of State Monitoring Services at Affiliated Monitors, Inc. who is the sponsor of this podcast series. In this series we introduce the role of state Attorneys Generals as enforcers of state law and bringers of civil litigation; the reaction to the big-tobacco settlement and the criticism of state Attorney Generals over that process; multi-state settlements in the post-tobacco era; challenges in multi-state litigation and the road ahead. Today, in this concluding Part 5, we consider the road ahead and the use of monitors by state Attorney Generals.

The current state of multi-state litigation may be summed up by acknowledging the extraordinary talents of AG staff in litigating multi-state actions,  while recognizing the extraordinary challenge of making sure that the conditions imposed as a part of virtually every settlement are carried out. Fortunately, there is a road ahead that offers a solution to the states at no cost.

In 2012, Coyne was asked to represent the National Association of Attorneys General on a task force being formed by the American Bar Association (ABA) to update its “Standards for Corporate Monitors.” At the time, most states made little use of corporate monitors. The ABA wanted to ensure that the updated standards would be acceptable to the state AGs, or at least to ensure that no standards would prevent the use of a corporate monitor should a state wish to do so.

The task force met several times over the next two years, and at each meeting Coyne noted “my eyes were opened to the value that a corporate monitor could bring to the work of AGs”.  It was clear to Coyne that corporate monitors were used extensively at the federal level, but almost never by the states. In this effort he “also learned about the existence of “Independent Private Sector Inspector Generals” which performed a role similar to, though distinct from, a corporate monitor” and the use of corporate monitors in Foreign Corrupt Practices Act (FCPA) enforcement actions and even to contracting actions.

Usually, a corporate monitor was used as part of a Deferred Prosecution Agreement (DPA). This allowed a defendant to remain in operation if certain conditions were met. The reality, however, was that state AGs prosecuted few of the type of cases that most often led to a corporate monitor at the federal level.  Yet Coyne believed to limit consideration of the use of monitors to criminal cases overlooked their obvious potential.

While he was on this task force, the Rhode Island state AG’s office had recently resolved two very complex and highly publicized regulatory actions, both of which included the imposition of numerous complex conditions. Though neither action was an enforcement action, and neither of the parties had been involved in any wrongdoing, there remained an extraordinary level of public interest in each action, and the failure of either party to follow a condition would inevitably become a public concern. Coyne realized that the state AG’s office “lacked the long-term capacity to monitor whether the conditions were being followed.” It retained an independent monitor “to present periodic reports of their observations.” Coyne believes this approach “well-served the Rhode Island state AG’s office, since the conditions we had imposed were now being independently verified. But more importantly, the public was well served.”

On a larger scale, Coyne sees that the use of an independent monitor could be brought to multi-state litigation, or to virtually any type of enforcement actions engaged in by a state AG. Further, Coyne believes it is the “independent role of a monitor” which is critical to a monitor’s success. During the settlement negotiation process, the use of a monitor would be incorporated into any settlement proposal and the fees for such a role would be incorporated into the settlement terms. As a true independent, the monitor is not the agent of either party. Rather, the role of the monitor is simply to accurately report the level of compliance by the parties, if non-compliant it is up to the parties to resolve the issue. The monitor takes no side in that dispute. Thus, the use of a monitor does not, in any way, assume the powers or duties of the AG.

It can be fairly stated that if a condition is important enough to be imposed, it is important enough to be followed. The limited resources of state AGs across the nation are not going to be expanded in the foreseeable future and AGs will continue to lack the resources to monitor the conditions imposed at the conclusion of nearly every regulatory or enforcement action, or nearly every piece of litigation.

If multi-state litigation is still in its early stages and continuing to evolve, then the use of corporate monitors is an even newer tool. The use of corporate monitors can enhance the ability of state AGs at no cost to the public and represents a road forward that is in the best interests of the AGs, the courts that approve settlements and other resolutions, and, ultimately, the public.

For more information on Affiliated Monitors, Inc. visit their website here.