Office of the Tennessee Attorney General Annual Report

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					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
Attorney General.


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
    Division (CLASS)
       •    Led by Deputy Attorney General
            Kevin Steiling.
       •    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
            construction litigation.
       •    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
            state government.
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 Floods
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
Financial Division
                                                       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.
                                                                                                Consumer Protection
     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
Nation Merger
                                                                                                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
Decoupling Proposal
                                                                         prepare attorneys
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
Property Theft
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
control measures.

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
                                                                                                              utilities services.
         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
         $7.4 million.

     •   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
Division (LESP)
  •   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
      similar prosecutions.
  •   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.
      Sinclair, Jr.
  •   Enforces the provisions of the 1998 Master
      Settlement Agreement.
  •   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
Directory Advertising
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
                                                                                                            collecting taxes.
     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

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