A federal court has remanded International Paper, Co., et al. v. Harris County to the First Court of Appeals in Houston. International Paper sought to remove the case to federal court when the First Court of Appeals affirmed the trial court’s refusal to issue a temporary injunction against Harris County’s contract with contingency-fee attorneys. At issue in the case is whether a governmental entity may contract with a private law firm to pursue punitive civil-enforcement penalties on a contingency fee basis. International Paper argued that such an agreement violates its fundamental due process rights under the Fourteenth Amendment to the U.S. Constitution.
In July the First Court of Appeals ruled that Harris County’s contingent fee contract with a private firm did not violate International Paper’s constitutional rights, although it introduced into the case a pecuniary interest on the part of the prosecuting attorneys. The Court cited numerous federal and state authorities for the proposition that the due process clause does not place a blanket prohibition on the use of contingency fee lawyers to pursue civil litigation in which the only remedy sought consists of civil penalties. The Court applied a balancing test to determine whether IP’s due process rights outweighed the benefits to the governmental entity and the public of pursuing the litigation through a private firm. Weighing factors such as the probability that IP would prevail on its due process claim, the risk to IP’s ongoing business operations, the resources available to both parties in the litigation, and the nature of IP’s liberty and property interest, the Court ruled that the trial court did not abuse its discretion in denying to issue the injunction.
No motion for rehearing was filed by the October 3o deadline, so the case is once against before the 295th District Court of Harris County.