Reputation For Rent

There may be no résumé in Oregon public life more impressive than the one that belongs to Dave Frohnmayer.

Rhodes scholar, state attorney general, University of Oregon president: Frohnmayer is regarded not only as one of the state's top legal minds but as someone who has fought for the public interest in venues ranging from the Oregon Legislature to the U.S. Supreme Court.

But Frohnmayer recently played another role far from the spotlight, as revealed in once-secret testimony in a major legal case against the state.

In that case, major tobacco companies challenged the state of Oregon's right to continue receiving payments under a massive tobacco industry settlement.

And the star witness and paid expert for Big Tobacco against the state of Oregon: Dave Frohnmayer.

In April, Frohnmayer appeared as an expert witness on behalf of the tobacco companies in front of a closed-door arbitration panel in Chicago. The Oregon Department of Justice released Frohnmayer's testimony to WW in response to a public records request. 

In an interview, Frohnmayer tells WW he simply provided what he says was unbiased, objective testimony. And he says he would have provided the same testimony had he instead been hired by the state of Oregon or called by the three-judge panel as an independent witness.

But neither of those things happened; instead, Frohnmayer appeared as a paid witness for tobacco firms trying to get out of making payments to the state of Oregon under the tobacco settlement reached more than a decade ago. 

Frohnmayer's testimony reinforced the tobacco companies' claims against the state.

Frohnmayer says his testimony for the tobacco companies was squarely in the public's interest, because his contention was that the state could have enforced the settlement more aggressively against smaller tobacco companies.

"I testified that the powers of the Oregon attorney general are expansive," Frohnmayer says. "That's totally consistent with my public service from the day I entered the Legislature."

In 1998, seven major tobacco companies—including Philip Morris, R.J. Reynolds, Brown & Williamson, and Lorillard—reached a $206 billion settlement with 46 states that had sued to recover tobacco-related health-care costs borne by taxpayers.

Frohnmayer, then UO president, was named to a three-member panel to decide how some of the money should be divvied up.

As its share of the settlement, Oregon would get about $80 million a year for 25 years.

But smaller tobacco companies didn't take part in the settlement. Instead, they agreed to pay into escrow accounts in states where they sold products. Those payments were supposed to level the playing field by reducing the smaller players' ability to undercut the big companies and create reserves for future settlements.

In 2006, Big Tobacco accused all the states, including Oregon, of failing to enforce the smaller companies' part of the settlement and withheld partial payment.

Since then, Oregon officials have been fighting to get the full tobacco settlement payments reinstated. 

"We could have given up $80 million a year," says Oregon DOJ spokesman Jeff Manning. "The downside risk for the state was enormous."

The dispute between states and Big Tobacco went to an arbitration hearing on April 26.

And that's where Frohnmayer took the stand for the tobacco companies.

Frohnmayer served as Oregon attorney general from 1981 through 1991 after three terms in the Oregon House. He lost the 1990 governor's race to Democrat Barbara Roberts and later became dean of the UO School of Law. In 1994, he became president of the university, where he oversaw 15 years of rapid growth. 

Frohnmayer now works for the Eugene law firm of Harrang Long Gary Rudnick, which has represented Philip Morris in the past. He bills as much as $550 an hour (but declined to say how much tobacco companies paid him to testify). In addition, he gets a $257,000 annual pension from the Public Employees Retirement System and $101,000 a year as a part-time law professor at UO. (Harrang Long is also UO's law firm, billing $647,000 since March 2012.)

His testimony began with highlights of his long legal and political career. The tobacco industry attorney noted that Frohnmayer as AG won six out of seven cases he argued before the U.S. Supreme Court—a record unmatched by his peers.

Big Tobacco's lawyers were keen to prove that the state of Oregon had failed to exercise all of its power to go after payments from the small tobacco companies.

The state, meanwhile, said it had indeed gone after smaller companies and had used all its authority under the law to do so. State officials said that in order to do more to regulate tobacco sales, they would need the Legislature to grant them new powers.

Frohnmayer's testimony backed up Big Tobacco's claim that the state had all the authority it needed.

"And what did you conclude, professor, with regard to these specific measures that you identified?" asked Kevin Schwartz of the New York firm Wachtell Lipton, one of the tobacco companies' attorneys.

"I concluded that Oregon did possess the powers that were in question," Frohnmayer replied.

He added that he had not reached a conclusion about the state's actions under the tobacco settlement.

"And are you offering any opinion on whether Oregon was obligated in some way to take these particular measures?" Schwartz asked.

"No, I am not." Frohnmayer replied.

On cross-examination, the state's attorney, David Markowitz, pressed the argument that the state of Oregon had followed the same legal precedents in the tobacco case as it had when Frohnmayer was attorney general.

Markowitz also attacked Frohnmayer's claims of neutrality. He noted that Frohnmayer's law firm represents Philip Morris in two large, long-running lawsuits. In one case, a Multnomah County jury awarded the estate of a deceased janitor $79.5 million. Philip Morris' appeal ground on for 14 years, finally concluding with a verdict for the plaintiff last year.

The state gets 60 percent of such awards. But Frohnmayer's firm argued Oregon's share should be covered by money paid under the tobacco industry settlement.

Frohnmayer testified that he had helped Harrang Long lawyers prepare appellate arguments on behalf of Philip Morris but had no other involvement in his law firm's tobacco cases.

Markowitz noted another lawsuit against the state of Oregon in which Frohnmayer was intimately involved: the case of Mark Long, the former Energy Department director who was criminally investigated for allegedly steering a public contract to Cylvia Hayes, Gov. John Kitzhaber's companion.

Long was cleared of wrongdoing. The Harrang Long firm—founded in part by Mark Long's father, Stan Long, a former deputy to Frohnmayer—filed a $7.5 million suit against the state on behalf of Mark Long. (The state has since settled the case for $1 million.)

In an interview with WW, Frohnmayer says the points Markowitz raised were "irrelevant" and insists he had no interest in whether the tobacco companies or the state of Oregon prevailed—even though the tobacco companies were paying for his testimony.

"I expressed no view on whether the state of Oregon should win or lose," Frohnmayer says.

On Sept. 10, the trial panel sided with the state of Oregon against the tobacco companies and ordered the companies to reimburse the state $9 million in withheld payments.

Frohnmayer's decision to work for Big Tobacco in this case is now being questioned by veteran Oregon lawyers who agreed to review his testimony at WW's request.

“I’m a huge fan of Dave Frohnmayer, so this puzzles me,” says Dan Skerritt, a partner at the Tonkon Torp firm. â€œThe range of the tobacco companies' behavior has been documented as somewhere between fraudulent and disingenuous for decades. I'm interested to hear Mr. Frohnmayer's explanation why he decided to testify for them."

Bob Stoll, a founder of the Stoll Berne law firm, which has sued Big Tobacco in the past, echoes Skerritt's concern.

"It's disappointing that somebody with such a stellar reputation would use that reputation for money from such a reprehensible industry,” Stoll says. 

The state, he adds, is better off for the verdict the panel reached, but Frohnmayer's reputation is not.

"His testimony is something that could have hurt the state for which he's done so much, and it could have had enormous financial costs to the state for years to come," Stoll says.

Frohnmayer says he thinks his critics lack context.

"I'm surprised they would say that," he says. "It's odd for lawyers to opine about a case they're not involved in."

WWeek 2015