Photographs of the John Sevier State Office Building courtesy of State of Tennessee Photographic Services.
Mural photographs by Aubrey C. Watson, courtesy of the Tennessee State Library and Archives.
Photograph of the building dedication courtesy of the Tennessee State Library and Archives.
Dear Fellow Tennesseans:
I am pleased to present the Tennessee Attorney General’s Office 2010 Annual Report. 2010 was a year that none of
us will soon forget. There was historic flooding in Middle Tennessee, particularly in the capital city of Nashville, but
in true “Volunteer” spirit, our citizens pulled together to help each other in the time of need.
We celebrated the 70th anniversary of the dedication of the John Sevier State Office Building where most of the
office’s staff is housed. We are proud of the building and its grandeur, and so we have sprinkled bits of information
about it throughout this report and hope that you find it interesting.
We are saddened by the loss of our colleague, Mike Moore, who served as Solicitor General from 1993 until his
death in November 2010. We are thankful for Mike’s dedication and service to the Office and the State of
I am also proud of the dedication and service of the staff in the Attorney General’s office and for what we have
accomplished on behalf of Tennesseans despite the state’s ongoing economic crisis. It is an honor to serve as your
Robert E. Cooper, Jr.
Attorney General and Reporter
Management .....................................................................2 Public Protection ............................................................ 18
Executive Office, Administrative Division, and Office of the Consumer Advocate and Protection Division, Criminal Justice
Solicitor General Division, Law Enforcement and Special Prosecutions Division,
Defense ............................................................................ 4 and Tobacco Enforcement Division
Civil Litigation and State Services Division, Civil Rights and Claims State Finances ................................................................. 26
Division, Public Interest Division, and Special Litigation Division Bankruptcy Division, Collections Unit, and Tax Division
Health and Welfare.......................................................... 9
Environmental Division, Financial Division, General Civil Division,
Health Care Division, and Real Property and Transportation
Management of the Tennessee Attorney The Attorney General’s duties are derived Chief Policy Deputy J. Lawrence Harrington
General’s Office is handled by three from the Tennessee Constitution, statutes, supervises special projects, oversees
divisions: Executive, Administrative, and and common law. The office is responsible legislative matters and external
Office of the Solicitor General. for the legal representation of the State of communications, and coordinates multistate
Tennessee, its agencies and its officers. policy initiatives with the National
Executive Office Attorneys from the office appear in state Association of Attorneys General.
Attorney General Robert E. Cooper, Jr., is and federal courts.
Tennessee’s chief legal officer and Chief of Staff Leigh Ann Apple Jones is a
administrative head of the Attorney The Attorney General is charged with principal contact with the Tennessee
General’s Office. enforcing the Consumer Protection Act and General Assembly and National Association
Tennessee and federal antitrust laws. The of Attorneys General. She also works with
The Attorney General is appointed to an office provides legal advice to state agencies the Chief Policy Deputy and director of
eight-year term by the Tennessee Supreme and officials, issues formal legal opinions, communications in handling media inquiries.
Court pursuant to Article VI, Section 5, of the reviews proposed rules and regulations, and Sharon Curtis-Flair is the director of
Tennessee Constitution. General Cooper reviews many state contracts, deeds and communications and is the primary liaison
was sworn in as Tennessee’s 26th Attorney leases. between the office and the media.
General on November 1, 2006.
The Attorney General is a member of several Administrative Division
state commissions, including the Tennessee Deputy Ruth A. Thompson runs the
Code Commission and the Tennessee Administrative Division, whose primary
Judicial Council. function is to support every other division
and to ensure the smooth operation of the
General Cooper is assisted by a Chief office. The division performs a multitude of
Deputy Attorney General whose duties tasks including: interviewing and hiring of
are both legal and administrative. attorneys and staff; preparation and
Chief Deputy Lucy Honey Haynes oversight of the budget and fiscal matters;
assists with the daily operation of the providing information systems hardware,
office—assigning lawsuits and other software and services; investigative services;
projects and participating in hiring purchasing; facilities management; records
decisions. She reviews many legal management; and library services.
documents and assists in the development
and implementation of office policies.
Office of the Solicitor General
Solicitor General Michael E. Moore served as Tennessee’s solicitor In Memoriam
general for 17 years until his death on November 14, 2010. As
solicitor general, he headed the Office of the Solicitor General
which oversees and coordinates all appellate litigation practice in
the Tennessee Supreme Court, Court of Appeals, and Court of
Criminal Appeals and the United States Supreme Court and Sixth
Circuit Court of Appeals. He also supervised the drafting of
opinions issued by the Office.
Solicitor General Moore argued many cases in the state and federal
appellate courts, including three cases before the United States
Supreme Court. He also served as Acting Attorney General in
October 2006 pending appointment of the current attorney
Prior to joining the Attorney General’s Office, General Moore
served as Director of Law for the Metropolitan Government of
Nashville and Davidson County from 1985 to 1987 under Mayor
Michael E. Moore
Richard Fulton. He worked in private practice for the Nashville law
firm of Waller Lansden Dortch & Davis from 1979 to 1985 and 1987
to 1993. He served as law clerk to Judge Gilbert S. Merritt, United
Michael E. Moore served as Solicitor General from 1993 until his
States Court of Appeals for the Sixth Circuit, 1978-1979, and as an
attorney in the Appellate Section, Criminal Division, United States death on November 14, 2010. General Moore was a brilliant and
Department of Justice in Washington, D.C., 1975-1978. He served
on the Charter Revision Commission of the Metropolitan
principled lawyer under whose leadership the Tennessee
Government of Nashville and Davidson County. Solicitor General’s office was recognized nationally by winning
General Moore obtained his J.D. from Stanford University in 1975 the National Association of Attorneys General Best Brief Award.
and was admitted to the California and Tennessee bars. He
We are thankful for General Moore’s service to this Office and the
received his A.B. from Dartmouth College in 1972 (summa cum
laude with high distinction). He graduated from Dobyns-Bennett State of Tennessee.
High School in Kingsport in 1968. General Moore was born in
Leominster, MA, in 1950 and grew up in Kingsport, TN.
Memphis Research Facility and pay rent totaling $8 million for its share U.S. District Court in the Middle District of
Employee Sues after Contract Not of the debt service over the term of the Tennessee.
Renewed lease (62% of the total debt). The facility will
In Paul Rydelek v. Board of Regents, et al., an be conveyed to Shelby County at the end of Charitable Trusts
employee sued the University of Memphis’ the lease term. • The Public Interest Division continues to
Center for Earthquake Research and represent the Attorney General in an
Information (CERI) for age and sex Department of Safety’s Review of ongoing lawsuit, In re Fisk University,
discrimination. Rydelek’s non-tenure track Citizenship for Driver’s Licenses
involving the restricted charitable gift
contract was not renewed after he failed to Challenged
by Georgia O’Keeffe of the Alfred
obtain required outside funding to sustain In Mata-Cuellar v. Tennessee Department of Stieglitz Collection to Fisk University.
his research. Ultimately after another Safety, the CRAC Division in conjunction with After a three day trial, the Davidson
employee resigned, CERI hired two the Law Enforcement and Special County Chancery Court found it was
individuals, a male approximately plaintiff’s Prosecutions Division continues to impractical for Fisk to continue to
age and a younger woman. The plaintiff successfully defend the Department of display and maintain the art collection
agreed to a settlement on the eve before Safety’s procedure for reviewing citizenship because of the University’s financial
trial was to begin. The agreement, documents presented by applicants for condition. The trial court rejected two
negotiated by Civil Litigation and State drivers’ licenses. The case is currently in the separate proposals from the Attorney
Services Division attorneys, released an
individual defendant from liability,
prevented the plaintiff from returning to
CERI, and was favorable to the University. TennCare Provider Task Force
In 2010, the TennCare Provider Fraud Task
CLASS Division Negotiates Force recovered $15.6 million under
Agreement for Shelby County
Forensic Center Tennessee’s Medicaid False Claims Act.
The Civil Litigation and State Services The Task Force is made up of four offices
Division worked on an agreement between fighting health care fraud: the Tennessee
Shelby County and the State for the Attorney General’s Office, the TennCare
development, construction, and lease of a Bureau, the Medicaid Fraud Control Unit of
Regional Forensic Center facility to be
the Tennessee Bureau of Investigation, and
constructed in Memphis. The State will
the Office of Inspector General.
issue tax exempt bonds not to exceed $13
million. Shelby County will lease the facility
General, one establishing a fund for the display and
maintenance of the Collection, and the other relocating the
Collection until Fisk resolves its financial difficulties. The trial
court also rejected Fisk’s proposal to sell 50 percent
ownership interest in the Collection for $30 million. Instead,
the trial court ordered a no-sale condition be removed so Fisk
could sell the 50 percent ownership interest but directed that
$20 million be placed in an endowment fund for the care of
the Collection and to promote the study of art, and the
remaining $10 million be paid to Fisk for its general operating
expenses. Fisk and the Attorney General have appealed.
• In Morrow, et al. v. SunTrust, et al., the Public Interest Division
was successful in upholding the validity of a $1 million
charitable trust for the benefit of entities that provide services
to the mentally disabled.
County Seeks to Recover Historic Marriage License
In Jefferson County v. Margaret Smith, the County is seeking to
recover an 1805 marriage license issued for David Crockett and
Margaret Elder. The marriage did not take place. Smith alleges
her uncle found the marriage license in the trash behind the
courthouse, and it was passed down to Ms. Smith, who took it to The Tennessee State Office Building (now the John Sevier Building)
the Antiques Roadshow. The Jefferson County Circuit Court
ordered the license be immediately returned to the County. The was dedicated on March 14, 1940. Speaking at the dedication,
Special Litigation Division is defending the law which allows the
Governor Prentice Cooper said centralizing various departments of
county to recover unlawfully possessed government records.
state government—including conservation, agriculture, insurance,
and banking—would save approximately $100 per day in rent.
State ex rel. Waters v. Dunn involves a lawsuit against officials in
Sevier County, the Sevier County Election Commission, and the Construction of the building cost approximately $900,000.
State Coordinator of Elections alleging various candidates were
prohibited from running for office because of the federal Hatch
Act. The case was subsequently removed to almost 30,000 pages of documents, had affiliation between Morristown-
federal court; however, the plaintiffs sought extensive meetings with the parties and Hamblen Hospital Association, the
to have the case remanded to state court. with representatives of the local operator of Morristown-Hamblen
The Public Interest Division was successful in communities, and played an Hospital, and Covenant Health, a
getting the motion for remand denied and instrumental role in facilitating a Tennessee nonprofit hospital company,
having the case dismissed by the federal settlement between the purchaser and whereby Covenant Health would
court. The plaintiffs have filed an appeal and Sumner County. On July 20, 2010, the become the sole member of
the case is currently pending before the Division issued a “no-action” letter to Morristown-Hamblen Hospital
Sixth Circuit Court of Appeals. the parties, allowing the transaction to Association. The transaction involved
proceed. The United States Bankruptcy approximately $60 million in
Validity of Holographic Will Bequest court also approved the transaction. assets. After reviewing almost 10,000
to State Disputed pages of documents, the Division office
In a Sumner County Probate case involving • Morristown Hamblen Medical Center: issued a “no-action” letter to the parties
the estate of Tony Ray Spurlock, the Special On April 12, 2010, the Public Interest on June 29th, allowing the transaction to
Litigation Division assisted in representing Division received notice of a proposed proceed.
Volunteer State Community College in
settling a jury trial involving a dispute over
the validity of an alleged holographic will. At
issue is whether the 1981 will, which left real
and personal property to the college,
William M. Leech, Jr., Award
controls the distribution of the estate.
The William M. Leech, Jr., Award recognizes those
Public Hospitals, Public Records who have made significant contributions to the
• Sumner Regional Medical Center: On
Attorney General’s Office. The award is named
May 30, 2010, the Public Interest in memory of the late Bill Leech who served as
Division received notice of the proposed Attorney General from 1978 to 1984.
bankruptcy sale of Sumner Regional
Health Systems, Inc., a Tennessee public In 2010, the office recognized Associate Deputy
benefit nonprofit corporation and Attorney General Jennifer Smith in the Criminal
owner of four hospitals in Middle Justice Division with the Leech Award.
Tennessee, to LifePoint Hospitals, Inc., a
publicly traded hospital company, for
$156 million. The Division reviewed
• The Public Interest Division successfully defended a number of
lawsuits filed against State departments and officials seeking
access to public records, including the Governor, Attorney
General, and members of the Public Records Commission
(Jones v. Bredesen); the Department of Children’s Services
(Gurrola v. Miller) and several District Attorneys General
(Johnson v. Cox, Ledford v. Cox, and Young Bok Song v. State).
Lethal Injection Execution Protocol Challenged
In West & Irick v. Schofield, the Civil Rights and Claims Division
(CRAC) continues to defend the lethal injection execution protocol
developed by the Department of Correction. The most active
challenge is the suit in Davidson Chancery Court relative to the
sufficiency of the explicit check for consciousness performed after
administration of a lethal dose of the first drug (an anesthetic) in
the three-drug series.
The massive outer bronze doors of the John Sevier
Building are ornamented with eight symbols in
Supreme Court Determines Negligent Claims may not
be Referred to Claims Commission relief (right) representing Agriculture, Health,
In Candace Mullins v. State of Tennessee, the CRAC Division argued Welfare, Law, Labor, Protection, Finance, and
successfully in the Tennessee Supreme Court that claims of
negligent investigation of referrals to the Department of Children’s Conservation. The inner doors are bronze with
Services could not be brought in the Claims Commission.
glass panels and are surmounted by grilles (above)
Adult Establishment Registration Act Challenged depicting scenes characteristic of
The Special Litigation Division continues to defend the
Tennessee—a shock of wheat and two ears of
constitutionality and enforceability of Tennessee’s Adult-Oriented
Establishment Registration Act in Entertainment Productions, et al. corn, a rooster crowing beside a churn and
v. Shelby County, et al., and East Brooks Books v. Shelby County.
These cases are before the federal courts. milk can, a beehive, a forest, a mine, a marble
crane at work, wild ducks in flight, fish
leaping, and a possum crouching in a tree.
Guns in Restaurants • Handles inmate-related litigation. • Deputy Janet Kleinfelter was elected
• Also defends state employees of to the Board of the National
In Randy Rayburn, et al. v. Robert E. Cooper,
various departments sued in civil Association of State Charities
Jr., the Special Litigation Division assisted Officers (NASCO) at its 2010 annual
rights actions for money damages.
the Law Enforcement and Special meeting. NASCO is an association of
Prosecutions Division in defending the state offices charged with oversight
Public Interest Division of charitable organizations and
constitutionality of the 2009 amendment
charitable solicitation in the United
that allows a person with a state issued • Led by Deputy Attorney General
Janet M. Kleinfelter.
permit to carry a handgun in a restaurant
that serves alcohol. The law (subsequently • Carries out the office´s statutory
duty to oversee the operation of Special Litigation Division
amended) allowed the permit holder to nonprofit entities on behalf of • Led by Special Counsel Steven A.
carry a weapon inside such establishments Tennesseans. Hart.
as long as the holder was not consuming • Handles charitable oversight and • Handles special litigation and assists
alcoholic beverages on premises. charitable solicitations as well as other divisions in litigation matters.
issues involving open meetings,
public records, and campaigns and
Civil Litigation and State Services
• Led by Deputy Attorney General
• Represents the state’s various
educational agencies and
2010 Opinions by Requestor
• Deals with state purchasing and
personnel matters and represents
the state in employment and
• Reviews state contracts.
Civil Rights and Claims Division
• Led by Deputy Attorney General
Kimberly J. Dean.
• Defends tort and workers’
compensation actions filed against
all departments and agencies of
U.S. Supreme Court Denies Review of Mississippi’s
Complaint in Water Rights Case
The U.S. Supreme Court denied the State of Mississippi’s motion to
review a complaint against the State of Tennessee, the City of
Memphis, and Memphis Light, Gas & Water (MLGW). Mississippi’s
proposed complaint against Tennessee sought an equitable
apportionment of the groundwater in the Memphis Sand Aquifer,
which underlies portions of northern Mississippi and western
Tennessee and portions of other nearby states. Mississippi also
sought monetary damages from the City and MLGW for past
withdrawals from the aquifer and an injunction against future
withdrawals. Tennessee argued Mississippi’s proposed complaint
failed to plead a legally cognizable claim for damages and also
failed to show harm sufficient to support an equitable Murals painted by Dean Cornwell depicting notable figures
apportionment. Memphis also filed a brief opposing Mississippi’s
and events from Tennessee history were installed in the
motions. The Supreme Court ultimately rejected Mississippi’s
motion for review. Mississippi had earlier sued the City and MLGW John Sevier Building foyer in 1941. The central figure of
without success in the federal courts over withdrawals from the the Discovery mural (above) is the first governor of
aquifer, and Mississippi also asked the U.S. Supreme Court to
Tennessee and building namesake, John Sevier.
review the lower court’s decision. Tennessee filed a brief
supporting the City and MLGW, and the Supreme Court declined Development (below) is anchored by Andrew Jackson,
review. seventh president of the United States.
State Sues Two Firms for Repeated Violations of the
Underground Storage Tank Act
• As part of a joint enforcement initiative between the Attorney
General’s Office and the Department of Environment and
Conservation (TDEC), the Environmental Division filed suit
against repeat offenders of the Petroleum Underground
Storage Tank Act (UST Act).
• The State sued Coffman Oil Company, Inc. and Sandra Coffman
Harper when the company failed to respond to previous
administrative orders to stop UST Act Environmental Division, TDEC 2010, the Department issued an
violations. TDEC had issued 11 orders to Assess Damages from TVA Kingston administrative order, which is now final,
the company over the last eight years. Ash Spill assessing TVA $11.5 million in civil penalties
Coffman agreed to retain a consultant The Environmental Division continues to for the solid waste and water quality
to review UST compliance at all its assess the natural resources damages violations.
facilities. Under a consent order, caused by the December 22, 2008, ash spill
Coffman agreed to pay an upfront civil from the coal-fired Tennessee Valley Conservation Easement Granted on
penalty of $105,000 and a $76,000 Authority Kingston Plant. A massive failure Land Valued at $6.6 Million
contingent civil penalty if the company of the dike walls at the ash dredge cells In October 2010, the U.S. Department of
has a Level 1 UST violation within two released an estimated 5.4 million cubic yards Energy (DOE) and the Tennessee
years. Coffman will also send its of waste ash, a significant amount of which Department of Environment and
employees involved in environmental was discharged into the Emory River. The Conservation, with assistance from this
compliance to UST training given by ash dredge cells were a solid waste disposal Office, agreed to an Administrative Order to
TDEC. facility permitted by the Tennessee resolve the TDEC’s claims of natural
Department of Environment and resource damage at the Lower Watts Bar
• The State also sued Willoughby Oil, Inc., Conservation (TDEC), and the settling ponds Reservoir. Under the order, DOE agreed to
in Davidson County Chancery Court adjacent to the disposal cells had a permit provide Tennessee with an indefinite term
after TDEC issued six administrative from the Department. Since the spill, this conservation easement on approximately
orders against Willoughby for UST Office has worked with TDEC to address 3,000 acres of ecologically significant land
violations at its facilities. On July 22, the various legal issues arising from the spill, on the Oak Ridge Reservation, which is a
parties reached an agreement in which including civil penalty liability. On June 14, Superfund site. The land is valued at $6.6
Willoughby agreed to pay
approximately $50,000 in upfront civil
penalties and to be subject to
approximately $150,000 in contingent
civil penalties if the firm violates Consumer Advocate
compliance over the next two years.
In 2010, cases handled by the Consumer
The company also agreed to hire a
Advocate resulted in $4.5 million in savings for
consultant to ensure Willoughby is in
customers of public utilities in Tennessee.
environmental compliance at all
million. In addition, the State will receive annual monetary and in-
kind support for the easement, and $50,000 to be used by the
Trustee Council, of which the State is a member, for restoration
projects to benefit recreational fishing in the Lower Watts Bar
Reservoir. The Trustee Council continues to address all remaining
natural resource damages associated with DOE’s Oak Ridge
Environmental Division Helps Compile List for Petition
of Lands Unsuitable for Mining
The Environmental Division, at the request of Governor Bredesen’s
Office, worked with the Tennessee Department of Environment
and Conservation and the Tennessee Wildlife Resources Agency to
prepare and file an administrative petition asking certain state-
owned lands be exempt from mining. Specifically, the State has
asked the U.S. Department of the Interior’s Office of Surface
Mining (OSM) to designate certain lands as unsuitable for surface
The first floor of the John Sevier
coal mining operations. The petition area focuses on public lands Building is the most lavishly decorated
and would encompass approximately 600 feet on either side of
the ridge lines within the State’s North Cumberland Wildlife space in the building. The grand
Management Area and Emory River Tracts conservation easement,
Cornwell murals fill the side walls of the
an area of about 67,000 acres. On November 23, 2010, the State
was informed by OSM that the State’s application was determined foyer. Geometric art deco stenciling of Greek
to be complete and would be fully evaluated by OSM.
keys, stylized flowers, and bundled arrows
Protecting Insurance Consumers decorates the ceilings of the foyer, halls, and
In State v. Smart Data Solutions (SDS), the Davidson County
Chancery Court granted the State’s request to stop an illegal elevator lobby. Marble clads the walls, and
insurance business comprised of a purported third-party terrazzo covers the floors. Stepped ceilings in the octagonal
administrator, membership association, and foreign insurance
company. The defendants, who sold health benefits through vestibules at each end of the hallway are decorated with zodiac
internet websites and out-of-state marketers, argued they could
symbols and gilded allegorical figures of agriculture,
not be liquidated by the Commissioner of Commerce and
industry, commerce, prosperity, and abundance.
Insurance for the benefit of those being Upholding State Tax Collections allow those employers to become “self-
insured because they were not an insurance The Financial Division succeeded in insured” for their employees’ health
company. The Court held the administrator upholding the State’s ability to collect benefits. Thus, the Court concluded the
and association had acted as insurers in insurance premium taxes from a self-funded, statutory scheme regulates insurance
Tennessee and found the illegal insurance multiple-employer welfare arrangement in because it can substantially alter the
operation to be insolvent and hazardous to Tennessee Independent Colleges and available health care and insurance coverage
the public. The defendants have filed to Universities Association Benefit Consortium for the employees.
appeal to the Tennessee Court of Appeals. v. Tennessee Department of Commerce and
Insurance. The consortium, which met state Agreement Ends Lawsuit
State TNInvestco Program requirements to qualify as a self-insurer,
Challenging Veterans Home
In Coleman v. Kisber, a disappointed sought a refund of insurance premium taxes
applicant for an allocation of tax credits paid to the State under protest beginning in A lawsuit challenging conditions at the
sued to obtain documents the plaintiff 2001. The taxpayer argued the statute Tennessee State Veterans Homes in
claimed were public records. The lawsuit requiring self-insurance pools to pay Humboldt and Murfreesboro has come to an
concerned records related to the award of premium taxes like a typical insurance end. In United States v. State of Tennessee,
tax credits under the Small Business company was preempted by federal ERISA the U.S. Department of Justice claimed the
Investment Company Credit Act and law because the state law did not regulate State violated the Civil Rights of
documents related to the sale of the tax insurance. The Court of Appeals, however, Institutionalized Persons Act. This
credits by the successful applicants. The Act determined Tennessee’s law enables complaint alleged violations of the
initially authorized the allocation of tax employers to form organizations that are constitutional rights of residents at the State
credits to six investment firms known as self-funded by their members. As such, they Veterans Homes in Humboldt and
“TNInvestcos.” The TNInvestcos sold the
tax credits to insurance companies, using
the proceeds to invest in start-up businesses
to create jobs and economic development in Nonprofits
Tennessee. The Tennessee Court of Appeals
In 2010, the office completed review of 49
affirmed the State’s position, presented by
nonprofit mergers, sales, or dissolutions.
the Financial Division, that the information
sought by the plaintiff is confidential “tax Assets of the nonprofits involved
administration information” and “tax totaled approximately $250 million.
information” not open for public inspection.
The Tennessee Supreme Court denied
permission to appeal.
Murfreesboro. The State reached an agreement with the plaintiffs
addressing such issues as nutrition and hydration care, use of
psychotropic medications, pain management, and fall prevention.
The State was able to show compliance in all areas, and this
lawsuit terminated on July 16, 2010.
State Hopes to Exit Ten-Year Foster Care Lawsuit
The State marked a ten-year milestone in Brian A. v. Bredesen. The
State filed a plan with the U.S. District Court, Middle District, which
established a procedure by which the Department of Children’s
Services (DCS) can exit the lawsuit. Brian A. was filed in May 2000
on behalf of all children in foster care in Tennessee, alleging that
the state-operated foster care system failed to comply with federal
law and deprived foster children of their constitutional rights. The
state settled the case in July 2001. Since then, DCS has worked
The five-story center of the John Sevier
hard to comply with the agreement. In November, the parties
jointly filed the 2010 Modified Settlement Agreement and Exit Building faces the corner of Sixth and
Plan. The plan negotiated by the General Civil Division calls for the
end of court oversight once DCS achieves compliance with all Charlotte Avenues while the four-story
agreement provisions and maintains compliance for a year. The
wings enclose an open plaza at the entrance of
exit plan also requires a public accountability center to continue to
issue periodic data reports for eighteen months. DCS hopes to exit the building. The building is faced with
all but the public accountability provision by December 2012.
limestone extending up from the granite base.
Workers’ Compensation Challenges Three large, recessed portals mark the
During 2010, the General Civil Division handled numerous
entrances, decorated with images
challenges to the Tennessee Workers’ Compensation Act. In
Andrew Carter v. Quality Outdoor Products, the Division addressed representing Justice, Agriculture, and
the issue of when a medical report, a C-32 form, may be submitted
at trial in lieu of the physician’s testimony at a worker’s Commerce. Bronze, art deco light fixtures with
compensation trial. In a case of first impression, the Tennessee
translucent glass panels flank the doors.
Supreme Court ruled an opposing party has an absolute right to
depose a physician whose findings will be introduced through a
medical report at a workers’ compensation the community, and Arlington alleging the State was not meeting its
trial. The Court held that although the Developmental Center officially closed its obligation to provide these enrollees with
employee had proven the physician was doors on October 27, 2010. early and periodic screening, diagnosis, and
unavailable to testify, the medical form was treatment services required by the federal
still inadmissible because it did not fit into State Prevails in Public Defender’s Medicaid Act. On December 16, 2010, the
one of the exceptions found in the Rules of Attempt to Withdraw from Indigent Court of Appeals for the Sixth Circuit, in
Evidence. The Court reversed the decision Cases response to the State’s motion, vacated a
of the trial court and disallowed The Court of Appeals ruled in favor of the portion of the 1998 consent decree and
introduction of the physician’s C-32 form. State when the Knox County Public remanded the case to the district court for
Defender sought to withdraw further consideration of the legal issues
Court Allows State to Close representation of indigent criminal presented by the state and for further
Developmental Center as a Result of defendants in certain Knox County courts. proceedings. The State filed a motion to
Settlement Agreement The Public Defender argued his office lacked vacate the consent decree because of a
Substantial progress was made in the sufficient personnel to handle the volume of change in the law establishing that the
lawsuit United States v. State of Tennessee cases assigned to it. The General Civil federal statutory provisions enforced by the
(Arlington). This civil rights action, filed in Division represented the Administrative decree do not confer individual rights
1992, challenges the services and care Office of the Courts in this four-year case as enforceable under 42 U.S.C. § 1983. The case
provided to residents of Arlington it went through Knox County General continues to be litigated.
Developmental Center. Following a trial, the Sessions, Criminal, and Chancery Courts.
U.S. District Court, Western District, entered The Court of Appeals ultimately upheld the Landowner Disputes Value of
an order requiring the State to improve Knox County Chancery Court’s dismissal of Property State Claims Through
conditions at the center. The Court the petition for lack of jurisdiction. The Eminent Domain
subsequently allowed a class of former Public Defender filed a motion to voluntarily During 2010, the Real Property and
residents, current residents and individuals dismiss his appeal from the Court of Transportation Division represented the
at risk of placement at Arlington Appeals, thereby ending the case. Tennessee Department of Transportation
Developmental Center to intervene. After (TDOT) in approximately 1,000 cases, most
many years of contentious post-judgment involving right-of-way acquisition. In State
1998 Consent Decree Partially
litigation, the district court approved an Vacated in the TennCare Early and of Tennessee v. Donald Bruce Anderson, the
agreement defining the At-Risk Class and Periodic Screening, Diagnosis, and State filed to acquire 16 acres of a 40-acre
providing for the closure of Arlington Treatment Services Lawsuit tract of land located at the intersection of
Developmental Center. All of the remaining This ongoing class action, John B., et al. v. U.S. Highway 64 and Collierville-Arlington
residents at Arlington Developmental Center Goetz, et al., was brought on behalf of all Road near Memphis for the construction of
were successfully transitioned to homes in State Route 385. The landowner believes
TennCare enrollees under the age of 21
May 2010 brought historic 500-year floods to Middle Tennessee.
As always, Tennesseans came together to help one another in a
time of crisis. The Attorney General’s Office worked to provide
information to help flood victims protect themselves as they
worked through recovery and rebuilding.
Almost every employee of the office was
either directly affected or knew someone
impacted by the floods. The Office set up an
internal blog where staff could share information
about supplies or help needed or resources
available for flood victims.
While no one can prevent disasters of this kind,
we can work together to make sure laws designed
to protect storm victims are enforced and victims
receive the assistance they need.
just compensation for this acquisition is $14 hearing of issues that affected other Engineers and the Tennessee Department of
million although TDOT has estimated just regulatory efforts of the Department. The Environment and Conservation modified
compensation is less than $1.1 million. Prior State of Tennessee appealed to the Court of environmental permits obtained by TDOT
to the filing of the case, the City of Memphis Appeals, which dismissed the Thomas allowing it to use wetland credits from a
adopted an advisory land use plan that counterclaim. The Supreme Court of local wetland mitigation bank. The plaintiff
anticipated major commercial development Tennessee subsequently rejected Thomas’ alleged the modification was unlawful. The
at this intersection. Both federal and state application for permission to appeal. U.S. District Court ruled for the defendants
eminent domain laws preclude the recovery on the issue of liability for civil penalties but
of compensation in an eminent domain Wetland Credits Case Argued before denied their motion for summary judgment
proceeding that is based upon the market U.S. District Court regarding compliance with the
value of the State’s intended land use. The The Real Property and Transportation compensatory wetland mitigation
parties continue litigation to determine Division defended the Tennessee requirements initially imposed by the federal
whether evidence related to the advisory Department of Transportation (TDOT) in an and state environmental permits. This case
land use plan is admissible. environmental case, PEER v. Nicely, et al., in presents issues of first impression regarding
which the plaintiff alleged TDOT violated the wetland mitigation via the use of wetland
Billboard Regulation Cases Litigated federal Clean Water Act. The U.S. Corps of credits.
The Real Property and Transportation
Division represented the Tennessee
Department of Transportation (TDOT) in
several billboard regulation cases, the most
significant being State of Tennessee v.
William H. Thomas, Jr. The defendant began Tobacco Master Settlement
construction of a billboard next to Interstate Agreement
40 in Shelby County without obtaining the
necessary state outdoor advertising permits
During 2010, the State of Tennessee’s General
and placed the billboard structure within a Fund received over $144 million in payments from
public drainage easement area. Following a the tobacco companies participating in the
TDOT complaint, the defendant filed a Master Settlement Agreement.
counterclaim alleging TDOT had denied his
previous application and had selectively
enforced the Billboard Regulation and
Control Act against him. The Shelby County
Chancery Court conducted an extensive
Environmental Division Mental Health and Developmental
Disabilities, Labor and Workforce
• Led by Deputy Attorney General Barry Development, Agriculture, Tourism,
Turner. Veterans Affairs, and Military.
• Enforces civil environmental
protection laws regarding clean air,
clean water, hazardous waste, and Health Care Division
other areas. • Led by Deputy Attorney General Linda
• Gives advice to and reviews A. Ross.
regulations for the Department of • Primarily provides legal advice and
Environment and Conservation and representation to the Bureau of
the Tennessee Wildlife Resources TennCare and the Department of
Agency. Health and its health-related boards
such as the Board of Dentistry, the
Board of Medical Examiners, the Board
of Nursing, and the Board of
• Led by Deputy Attorney General Gina Optometry along with the Health
J. Barham. Services Development Agency.
• Provides legal services for much of the
State’s business-related activities such Real Property and Transportation
as investments of the State Treasury Division
and the Tennessee Consolidated
Retirement System. • Led by Deputy Attorney General Larry
• Represents a number of agencies
handling issues of government • Represents the state of Tennessee in
financing, banking, and insurance land acquisition for all purposes.
regulation. • Most of the work performed by the
division involves the Tennessee
General Civil Division Department of Transportation.
• In addition to Nashville, the Real
• Led by Deputy Attorney General
Property Division has regional offices
Dianne Stamey Dycus.
in Knoxville, Chattanooga, and
• Handles a wide variety of civil matters Jackson.
representing a number of state
departments, boards and agencies
including the Departments of
Children’s Services, Human Services,
Tennessee, FTC Obtain Restraining Order, Asset Freeze, their defective equipment was replaced, and they were misled about
and Appointment of Receiver in Case Alleging Fake the availability of sports programming, among other complaints. As
Insurance Sales part of the agreement, DIRECTV agreed to clearly disclose all material
Businesses that targeted people who did not have health insurance terms, cost, contract commitments and other obligations as well as
have now been targeted by the Tennessee Attorney General and a the availability of local and sports programming. Additionally,
federal-state coalition of law enforcement agents for alleged DIRECTV agreed to give cash back whenever it promises such and to
fraudulent marketing of “medical discount plans” as health insurance clearly notify consumers 10 days before charging cancellation or
plans. Tennessee asked the U.S. District Court, Middle District, to equipment fees.
intervene after receiving numerous complaints from consumers
regarding Nashville-based United States Benefits, LLC, and its owner/ Tennessee Joins DOJ to Break Voting-Machine
operator Timothy Thomas. Monopoly
Citing anti-competitive concerns, Tennessee, eight other states, and
Yogurt Company Sued in Deceptive Ad Lawsuits, $21 the U.S. Department of Justice sued Election Systems & Software
Million Agreement Reached (ES&S) to force the company to divest itself of voting machine assets
Tennessee and several other states reached a $21 million agreement it obtained from Diebold, Inc.’s Premier Election Solutions in 2009.
resolving deceptive-advertising complaints against Dannon Company, The parties reached an agreement that would dissolve the merger
Inc., the producer of Activia and DanActive. Tennessee’s agreement and force ES&S to sell its Premier business to a buyer approved by
amounts to the largest payment to date in a multistate settlement the Justice Department. The agreement was designed to foster
with a food producer. Dannon was alleged to have made competition to provide secure, accurate, and reliable voting-
unsubstantiated claims regarding the health benefits touted in the equipment systems.
marketing, packaging, advertising, offering and selling of their line of
yogurt products. Under the agreement, Dannon agreed to stop
making certain claims entirely and other claims unless they could be
substantiated by reliable scientific evidence.
Tennessee Leads Nationwide $13.25 Million Agreement
with DIRECTV Resolving Deceptive Marketing The Consumer Protection team’s cases
Allegations resulted in awards of almost $4.6 million
Tennessee filed a $13.25 million multistate agreement with DIRECTV including $1.8 million in restitution
to settle allegations of deceptive and unfair sales practices. Among to consumers in 2010.
the allegations were the company did not clearly disclose how much
consumers were being charged or the terms of the commitment to
the contract, consumers were enrolled in additional contracts when
States, DOJ Require Changes to Ticketmaster and Live
Moot Court Program
This multistate and U.S. Department of Justice agreement required
Ticketmaster Entertainment, Inc. and Live Nation, Inc. to change
their proposed merger. To preserve competition in ticketing in the
United States, the merger would now also include a software
licensing agreement, divestiture of certain assets, and anti-
retaliation provisions. These modifications addressed concerns
the proposed merger would have violated federal and state law, The moot court
resulted in higher prices for consumers, and had a potentially program is a vital
negative impact on the music industry. tool used by the
Office of the
TRA Rejects Piedmont Natural Gas Company Solicitor General to
Piedmont Natural Gas Company sought permission from the
for oral argument
Tennessee Regulatory Authority (TRA) to implement a decoupling
mechanism. The filing asserted the utility could not encourage
in state and federal
energy conservation without a rate mechanism to make up for appellate courts.
revenue lost from consumers using less natural gas. The
Consumer Advocate intervened and conducted an investigation Approximately one week before a case is scheduled for argument,
which revealed the decoupling mechanism would have raised rates the attorney assigned to the case presents a “practice” argument
by $1.9 million. Following a hearing in January 2010, the TRA
before a panel of moot court “judges” consisting of other attorneys in
rejected Piedmont’s proposed decoupling mechanism.
the office. The judges study the briefs and relevant lower court
TRA Allows Modified Decoupling Mechanism in
decisions in the case and ask questions of the arguing attorney
Chattanooga Gas Company Case intended to anticipate those likely to be posed by the court at the
Chattanooga Gas Company (CGC), a public utility offering natural actual hearing.
gas service, filed for a $2.2 million rate increase with the Tennessee
Regulatory Authority (TRA). Additionally, CGC sought to decouple At the conclusion of each moot court session, the panel and arguing
revenues from sales volume alleging this was necessary for the attorneys discuss the case and share suggestions concerning how the
utility to promote energy conservation. The Consumer Advocate
state’s position might be most effectively presented at the upcoming
intervened, asserting CGC was due a rate decrease of
approximately $300,000. The Consumer Advocate also opposed
the proposed decoupling mechanism. The affirmed the denial of habeas relief to the money in the register, and threatened to
TRA entered an order allowing CGC to Donald Middlebrooks for his conviction and shoot if she failed to comply. The victim saw
increase its rates by $60,068 and to death sentence imposed for the torture and Franklin on the security monitor as he was
implement the decoupling mechanism, murder of a 14-year-old boy in 1987. In leaving and saw a white van leaving the
modified to protect consumers. November 2010, Billy Ray Irick’s execution parking lot. She screamed to a contractor
was stayed pending his appeal challenging next door to get the license plate number.
Capital Litigation the state’s lethal injection protocol, but the The contractor wrote down the license plate
Criminal Justice Division members litigated Tennessee Supreme Court rendered its number on a piece of paper and gave it to
13 capital cases in which opinions were opinion affirming the trial court’s finding the victim. The prosecution was unable to
rendered in 2010. For six of those that Irick is mentally competent for find the contractor for trial. Franklin was
defendants—Richard Odom, John Henretta, execution. convicted of robbery and sentenced to 12
Harold Hester, David Jordan, Joel years. The Tennessee Supreme Court
Schmeiderer, and Hubert Sexton— Supreme Court Allows “Excited upheld the conviction, ruling the license
Tennessee’s appellate courts affirmed the
Utterance” Note in Robbery Case plate number written down by the
convictions and death sentences on direct In State v. Franklin, the Criminal Justice contractor met the excited utterance
appeal. The Court of Criminal Appeals Division successfully argued an evidentiary exception to the hearsay rule. The Court
affirmed the denial of post-conviction relief issue of first impression in the Tennessee also found no confrontation clause violation
to Larry McKay and Michael Sample, finding Supreme Court. Darrell Franklin entered the because the contractor’s primary purpose
that neither had proven that the prosecutor Yorkshire Cleaners in Shelby County while was to provide help for the frightened victim
withheld exculpatory evidence in their trials the victim was working alone, demanded all during an ongoing emergency.
for a 1981 murder during the course of a
store robbery. The intermediate appellate
court, however, granted relief in the form of
a new trial to Timothy McKinney and
granted a new sentencing hearing to
Leonard Smith, but the Tennessee Supreme The Bankruptcy Division handled more than
Court has granted review in Smith’s case. 15,000 cases in 2010, collecting and assisting
The Court of Criminal Appeals also affirmed other agencies in the collection of $7.5 million.
the trial court’s denial of Michael Coleman’s The division filed 4,018 claims for liability
motion to reopen his post-conviction
totaling over $84 million.
petition, but the Supreme Court also
granted review of that decision. The United
States Court of Appeals for the Sixth Circuit
Value of DNA Evidence for the Prosecution
The Criminal Justice Division prevailed in a case in which the Court
of Criminal Appeals discounted the value of the State’s DNA Appeals in Termination of Parental Rights Cases
evidence, dismissing James Rae Lewter’s convictions for burglary
and theft in connection with the break-in of a dental office.
Lewter’s girlfriend pleaded guilty to the offenses but claimed she
did not remember precisely what took place. At the crime scene, a
large office table had been moved from the center of the room to
the wall. The table was too heavy for Lewter’s girlfriend to have
moved alone. The police also found a white dress shirt with skin
cells that matched Lewter’s DNA. The intermediate court
minimized the significance of the DNA evidence, contending that
unlike blood or fingerprint evidence, the mere presence of
Lewter’s skin cells on the shirt was insufficient to prove his
participation in the crime. The Supreme Court reversed, noting
that the jury could reasonably infer that Lewter had left the shirt
behind and that other circumstantial evidence pointed to Lewter’s
having assisted his girlfriend in committing the offenses.
During 2010, the General Civil Division handled over 40
Owner of Memphis Cemetery Pleads Guilty to termination of parental rights appeals. Under the
The former owner of Forest Hill Funeral Home and Cemetery in Tennessee Rules of Appellate Procedure, these appeals
Memphis pleaded guilty to one count of theft of property over are expedited and the State is allowed only 20 days to file
$60,000 and was sentenced to ten years in prison in State v.
Clayton Smart, et al. Smart was alleged to have been involved in a responsive brief. The trial court’s decision terminating
the theft of approximately $20 million in trust funds from pre-need
parental rights was affirmed in over 80% of the cases.
funeral and burial plans sold by Forest Hill. Smart was originally
indicted in Tennessee on multiple counts of theft, conspiracy, and
money laundering. The Tennessee plea was part of a global
settlement with all the prosecuting jurisdictions. The investigation
and prosecution of this matter was a joint effort of the Law
Enforcement and Special Prosecutions Division and the Shelby
County District Attorney’s Office. Other participating agencies
included the Tennessee Bureau of Nashville Attorney Sentenced Bookkeeper in Ponzi Scheme Pleads
Investigation, the Funeral and Burial Following Investigation Involving Guilty, Sentenced for Unregistered
Services Board of the Tennessee Official Misconduct Securities Sales
Department of Commerce and Insurance, In State v. David Weed, the Shelby County State v. Mark Riddle involved a bookkeeper
the Oklahoma State Bureau of Investigation, Criminal Court sentenced Nashville attorney alleged to have been involved in a Ponzi
the Michigan Attorney General’s Office, the David Weed to 90 days in jail followed by scheme operated out of Rutherford County.
IRS Criminal Investigation Division, and the five years probation following his guilty plea Riddle pleaded guilty to three counts of
U.S. Attorneys’ offices in the Eastern District to two counts of official misconduct. Weed selling unregistered securities and was
of Oklahoma and Western District of had been appointed by the Tennessee sentenced to six years probation. Riddle
Tennessee. Two remaining codefendants in Department of Commerce and Insurance to also surrendered his CPA license and
the case are scheduled to go on trial for serve as a receiver in matters involving accepted a lifetime ban from the Board of
theft and money laundering charges in insolvent insurance companies and Accountancy and from the Securities
September 2011. unregistered securities dealers. The charges Division of the Department of Commerce
arose from Weed’s misappropriation of and Insurance. Riddle provided accounting
Knox County Official Convicted for funds that belonged to receivership estates services to Robert McLean, a Rutherford
Forgery in Misuse of Public Funds under his control. The investigation and County resident indicted for his role in a
Investigation prosecution of this matter was a joint effort Ponzi scheme which victimized a number of
In State v. Cynthia Finch, the former Director of the Attorney General’s office and the Middle Tennessee investors. McLean
of Community Affairs for Knox County was Shelby County District Attorney General’s committed suicide shortly after being
alleged to have submitted forged receipts Office. indicted. Investigators determined Riddle
for an audit investigation of the use of
purchasing cards issued to county officials.
A Knox County Criminal Court jury found
Finch guilty of two counts of forgery. The
investigation was conducted at the request
of District Attorney General Randy Nichols, Collections
who also authorized the Attorney General to In 2010, the Collections Unit recovered
prosecute any criminal cases which arose
$1.1 million from over 50 debtors.
from the investigation. Sentencing was
scheduled for spring 2011.
persuaded some of his clients to invest in promissory notes issued
by McLean. McLean then used the proceeds to make interest
payments to other investors. Helping Crime Victims
Real Estate Developer Sentenced in Water Pollution
In State v. Billy J. Mace, Mace pleaded guilty to two counts of
polluting waters through his real estate development operation in
Clarksville. The defendant received a two-year suspended jail
sentence on each count to run concurrently. He also agreed to
stop polluting the waters and to refrain from future permit
requirement violations. Additionally, Mace agreed to stop further
discharges of any substances into waters of the State; maintain
stabilization of disturbed soil; maintain storm water pollution
prevention plans, and maintain erosion prevention and sediment
Office Sends Warning to Retailers to Stop Illegal
2010 New Victim Liaison Contacts
Single Cigarette Sales
Single cigarette sales pose a health threat to young people
An important function of the Attorney General’s Office is
because they are usually easier and cheaper to purchase than a full
package of cigarettes. Health officials are concerned the its responsibility to provide information and assistance to
availability of single cigarettes may attract young people as an
victims and families involved in criminal appellate cases.
easy, affordable way to begin smoking. In conjunction with
several other Tennessee agencies, the Office is working to stop the
illegal sale of cigarettes removed from the pack and sold
individually. The Office has sent warning letters to numerous During 2010, Victim Liaisons received over 2,800 contacts
Tennessee tobacco retailers alleged to have sold single cigarettes.
from victims and their family members and over 450
In addition, the Office has entered into compliance agreements
with several tobacco retailers whereby retailers agreed to pay contacts from other agencies.
State Wins Judgments against • In State of Tennessee v. P. T. Gudang agents seized cigarettes that were no longer
Tobacco Companies for Escrow Garam, the Office sued an Indonesian listed on the Tobacco Directory from the
Violations cigarette manufacturer in Davidson company. Apurva agreed to pay $1,500 to
The State has obtained favorable judgments County Circuit Court seeking an order the State and to comply with Tennessee’s
in these tobacco cases against Non- directing the company to make an Directory Statute in the future.
Participating Manufacturers alleging escrow deposit for sales of its cigarettes
violations of the Escrow Fund Act by not in Tennessee. Soon after the complaint Consumer Advocate and Protection
making the escrow payments required was filed, P.T. Gudang Garam agreed to Division
manufacturers that are not members of the pay the full amount sought in the • Led by Deputy Attorney General
tobacco Master Settlement: lawsuit. Cynthia E. Kinser (Mills).
• The Consumer Protection team
• In State of Tennessee v. CLP, Inc., the State Wins Settlements with protects consumers and businesses
Tobacco Retailers for Sales of Illegal from unfair and deceptive trade
Office obtained a judgment against CLP,
practices and enforces the
Inc. for unpaid escrow and civil penalties Cigarettes
Unauthorized Practice of Law
exceeding $1.2 million. During 2010, the Office reached agreements statute.
with 16 Tennessee tobacco retailers for • The Consumer Advocate team
• In State of Tennessee v. Sudamax violation of state laws prohibiting the sales represents the interests of
Industria e Comercio de Cigarros, et al. of cigarettes not listed on the Directory of Tennessee consumers of public
the State obtained a judgment against Approved Tobacco Product Manufacturers.
• Enforces state and federal antitrust
this Brazilian manufacturer for unpaid One of these retailers was Apurva
escrow and civil penalties exceeding Corporation. Department of Revenue
• In State of Tennessee v. Procesadora
Nacional Cigarillera S.A. the Office sued Real Property and Transportation
a Colombian NPM in Davidson County
The Real Property and Transportation Division
Circuit Court seeking escrow funds
handled approximately 1,000 cases in 2010,
exceeding $300,000. The State
obtained a judgment for approximately most involving right-of-way acquisition.
$700,000 in penalties.
Criminal Justice Division
• Led by Deputy Attorney General Amy L.
• Handles all direct and post-conviction appeals
from criminal judgments.
• Defends criminal judgments in habeas corpus
proceedings in the trial and appellate courts.
• Also handles capital cases on appellate review
in both the state and federal courts.
Law Enforcement and Special Prosecutions
• Led by Deputy Attorney General Michael A.
• Handles criminal prosecution enforcement
cases such as securities fraud and
environmental law violations in addition to
assisting the state’s district attorneys in
• Handles false claims act matters with a
particular focus on health care fraud.
• Also handles some civil enforcement matters
such as forfeitures.
Tobacco Enforcement Division
• Led by Deputy Attorney General John H.
• Enforces the provisions of the 1998 Master
• Handles other tobacco-related matters.
Tennessee Education Lottery Money Bankruptcy Division Seeks to Collect and stall the judgment in the bankruptcy
May be Collected in Bankruptcies Judgment against Predatory Lender court, and the court appointed a trustee to
The Bankruptcy Division represents the
Targeting Soldiers oversee the company’s operations. The
Tennessee Education Lottery Corporation in In Rome Finance Co., Inc., the Bankruptcy trustee has determined the company’s
bankruptcy actions. Since lottery funds are Division assisted the Consumer Advocate assets should be liquidated. The Bankruptcy
state trust fund money, the Division is able and Protection Division in its action against Division is working to defend and collect the
to collect not only funds during bankruptcy Rome Finance Company, a predatory lender judgment.
plans but also to exclude outstanding funds that targeted military soldiers who
from discharge at the end of the case. This purchased electronic equipment at mall Collections Unit Collects More than
allows the Lottery to collect later any unpaid kiosks. After the Consumer Division $1.1 Million from Debtors in 2010
amounts for state education. obtained an $11 million judgment against The Collections Unit recovered $1.1 million
Rome in state court, the company filed for from over 50 debtors in 2010.
Bankruptcy Division Defends Tax bankruptcy in the Northern District of
Claims California. The State successfully defended • In Tennessee Department of
In 2010, the Bankruptcy Division continued against the company’s attempt to invalidate Environment and Conservation v. Larry
its work on several high profile bankruptcy
cases filed in previous years. The Division
protected the State’s citizens and treasury in
handling multiple legal issues while these
companies either continued to wind down Service Awards
or reorganize. In 2010, the office recognized three staff members
who achieved significant career milestones.
• In Circuit City Stores, a major electronics
retailer, the State is defending its tax
Deputy Attorney General Kimberly Dean and
claim of almost $1 million.
Special Counsel Steve Hart both reached 30 years of
• In Blue Hippo Funding LLC, the debtor
state service, and Administrative Secretary
offered financing for electronics by Tessa Harris 35 years. The three were presented
attracting customers with its deceptive with plaques recognizing their tenure.
practices. The Bankruptcy Division,
working with the Consumer Advocate
and Protection Division, successfully
opposed the Trustee’s motion to sell
customer accounts to a debt collector.
Melton, Walden Blankenship, et al., the Department seeks to
recover penalties of $235,646 assessed by the Water Quality
Control Board in 2001 arising from the Defendant’s Swallow
Bluff Island development in the Tennessee River. The
Department alleges a recent assignment of the rights to
$268,000 in bankruptcy proceeds by defendant Melton to a
third party is a fraudulent conveyance.
• In Tennessee Bureau of TennCare v. Estate of Crumley, the
Hamilton County Chancery Court must determine whether an
estate administrator must assure that the Bureau of TennCare
is paid $187,000 from the estate representing medical benefits
provided by TennCare to the deceased, even though the
administrator was appointed more than 12 months after a
2008 date of death.
State Successfully Defends Taxes to Telephone
The Tax Division handled a number of significant franchise and
excise tax cases focusing on the extent of the State’s taxing power
over multistate businesses. The Division obtained a favorable
ruling before the Davidson County Chancery Court in BellSouth
Advertising & Publishing Co. (BAPCO) v. Chumley, which
determined Tennessee could apportion and tax the significant
earnings BAPCO derives from charging its customers for
advertising in Tennessee telephone directories. BAPCO argued
that since most of its costs of production for those directories are
incurred in other states, Tennessee cannot treat its earnings from
advertising in Tennessee as Tennessee receipts in its
apportionment formula. The Court of Appeals overturned the trial
court decision in BAPCO’s favor and ruled in favor of the State.
The decision was upheld by the Tennessee Supreme Court.
High Court Determines Class business earnings rather than passive • In 2010, saved approximately
Actions Not Designed for Tax investment income. Further, the Court $850,000 in fraud claims from
Disputes discharge, preserving the agencies’
refused to allow artificial corporate lines to
right to collect these claims after the
In Wicker v. Farr, two taxpayers sought to obscure the scope and activities of the one bankruptcy has been dismissed or
bring a class action suit on behalf of unitary business conducted by Blue Bell and during bankruptcy in accordance
themselves and other unnamed taxpayers subject to tax in Tennessee. with a confirmed Chapter 13 plan.
before the Maury County Chancery Court. • Protects and defends the State’s
regulatory and police powers in
On appeal, the Court of Appeals held that DIRECTV Challenges Tennessee’s
bankruptcy courts in Tennessee and
laws providing “Taxpayer Remedies for Method of Taxing Multistate
around the country.
Disputed Taxes” require each taxpayer to Businesses
pursue its own claim and do not allow for a The Tax Division always has a large number Collections Unit
class to be certified. The Tennessee of sales and use tax cases, many of which • Part of the Special Litigation Division
Supreme Court declined further review, also focus on Tennessee’s nexus to tax and headed by Deputy Attorney
General Vincent Williams.
establishing the precedent that class actions transactions of multistate businesses. These
are not designed for and are not available cases often deal with manufacturers’ • Collects penalties and other debts
owed to state departments and
concerning tax disputes in Tennessee. exemptions and other exemptions and
credits. In DIRECTV, Inc. v. Chumley, the Tax
Fair Share Taxes on Restructured Division is defending the sales tax on Tax Division
Corporations Upheld satellite television charges. DIRECTV claims • Led by Deputy Attorney General
In Blue Bell Creameries, LP v. Chumley, the taxing cable television at a different and Charles L. Lewis.
Court of Appeals found a holding company lower rate violates equal protection and • Represents the Department of
discriminates against interstate commerce. Revenue in all matters related to
that wholly owns and controls its
subsidiaries was not part of a unitary
• Also represents a wide variety of
business with them. The Attorney General’s Bankruptcy Division
other agencies including the Board
Office, supported by the Multistate Tax • Led by Deputy Attorney General of Professional Responsibility, the
Commission, appealed to the Tennessee Kathryn Behm Celauro. Board of Law Examiners, the
Supreme Court. The Supreme Court • Represents state agencies in Commission on Continuing Legal
bankruptcy courts across the Education, the Tennessee
reversed the lower courts and determined
country. Regulatory Authority, the Tennessee
the Department of Revenue had correctly Consolidated Retirement System,
taxed Tennessee’s fair share of the earnings • Represents the state’s interest by and many of the regulatory boards
filing proofs of claims and of the Department of Commerce and
resulting from Blue Bell’s business
administrative claims in bankruptcy Insurance.
reorganization. The Court found the cases where a state entity is owed a
corporate restructuring income to be