Title: IN RE CERT QUES: WAYNE COUNTY V PHILIP MORRIS INC
Citation: N/A
Docket Number: 118261
State: Michigan
Issuer: Michigan Supreme Court
Date: January 31, 2002

____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
                                 
                                 
Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
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