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Humphrey on Behalf of State v. McLaren, 402 N.W.2d 535

Facts

The Attorney General of Minnesota initiated a lawsuit against C. Michael McLaren, the former executive director of the Public Employees Retirement Association (PERA), to recover funds allegedly improperly paid to him during his tenure. McLaren moved to disqualify the Attorney General's office from representing PERA, claiming a conflict of interest and asserting that the payments were approved by the PERA Board. The trial court denied his motions, leading to an appeal and subsequent review by the Minnesota Supreme Court.

Attorney General Humphrey, as the named plaintiff and on behalf of the State of Minnesota and the Public Employees Retirement Fund (PERA), brings this lawsuit against defendant C. Michael McLaren, former executive director of PERA. Plaintiff's complaint seeks recovery from defendant of public funds allegedly improperly paid to defendant during his tenure as director for severance pay and reimbursement of educational expenses, for expenses of a fishing trip and relocation expenses, and for the value of free-flight coupons.

Issue

Did the Attorney General have the authority to represent PERA in the lawsuit against McLaren, and was there a conflict of interest that warranted disqualification of the Attorney General's office?

Defendant McLaren contends that if attorney Murphy were to handle this litigation, he would be disqualified from acting as counsel, both because he would have a conflict of interest and because he will be a necessary witness at trial.

Rule

The Attorney General has broad authority to represent the state in lawsuits, and the disqualification of one attorney in a government legal department does not automatically disqualify the entire office unless there is a clear conflict of interest.

Minn.Stat. § 8.01 (1986) gives the attorney general broad authority to represent the state in lawsuits. It provides in part: The attorney general shall appear for the state in all causes in the supreme and federal courts wherein the state is directly interested; also in all civil cases of like nature in all other courts of the state whenever, in the attorney general's opinion, the interests of the state require it.

Analysis

The court determined that the Attorney General had the authority to bring the action on behalf of PERA, as the interim director had requested the Attorney General to seek reimbursement of the payments. The court also found that McLaren had failed to establish an attorney-client relationship with the special assistant attorney general, which meant that the conflict of interest rules did not apply. Furthermore, the court ruled that the disqualification of one attorney did not extend to the entire Attorney General's office due to the organizational structure and separate divisions within the office.

We conclude the attorney general has ample authority to bring this action on behalf of the PERA and the fund it administers. While plaintiff argues that no PERA board has authorized this lawsuit, the fact is that interim director Eldridge, acting with full powers of the board, did request in writing that the attorney general, as the board's statutory legal adviser, seek reimbursement of the McLaren payments.

Conclusion

The Minnesota Supreme Court affirmed the trial court's decision, allowing the Attorney General's office to represent PERA in the lawsuit against McLaren.

We hold, therefore, that defendant McLaren has failed to show an attorney-client relationship between himself and Special Assistant Attorney General Murphy. Rules 1.9 and 1.10 are, therefore, not involved and may not serve as the basis for disqualification.

Who won?

State of Minnesota, represented by the Attorney General, prevailed because the court found that the Attorney General had the authority to bring the action and that there was no conflict of interest that warranted disqualification.

The attorney general has authority to sue for recovery of monies allegedly improperly paid to the executive director of the Public Employees Retirement Association (PERA).

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