Antitrust

Oklahoma Attorney General Sues to End Alleged Software Piracy

  • Oklahoma AG Scott Pruitt filed a lawsuit against an oil equipment supply company, Neway Valve Co., alleging that it used pirated software to sell equipment in Oklahoma at artificially low prices and to gain an unfair competitive advantage.
  • Neway allegedly stole manufacturing process-related software used by Oklahoma companies and used the pirated software to sell its equipment at lower costs creating an unfair market in violation of the state's Antitrust Reform Act and state common law. The lawsuit is the first of its kind filed in Oklahoma.
  • The suit seeks to enjoin Neway's allegedly unlawful business practices, impose civil fines and penalties, and award restitution, monetary damages, investigative costs and fees, and attorney fees.

Consumer Financial Protection Bureau

Consumer Financial Protection Bureau Attacks "Zombie" Foreclosures

  • The Consumer Financial Protection Bureau (CFPB) is beginning to look at "zombie" foreclosures, or foreclosures that banks allegedly begin and then abandon without notifying the homeowners, who may have moved out, that they are still responsible for the property.
  • According to the CFPB, banks and servicers are not technically required to communicate with borrowers about lien-interests or charge-offs, but the Truth-in-Lending Act, which requires periodic statements to borrowers who have liability for a delinquent mortgage debt, may push banks and servicers to release the borrower from liability for the debt.
  • To alleviate the alleged issues, the CFPB is proposing a national definition of "abandonment," hastening the foreclosure process, and creating a national registry of "zombie" foreclosures.

Amicus Brief Filed by Consumer Financial Protection Bureau on Collection of Time-Barred Debt

  • The CFPB, in conjunction with the Federal Trade Commission (FTC), filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit regarding interpretation of the Fair Debt Collection Practices Act (FDCPA) as applied to the collection of time-barred debt.
  • Time-barred debt refers to a debt with an expired statute of limitations. According to the amicus brief, it is settled law that a collector who sues or threatens a suit based on a time-barred debt violates the FDCPA. The CFPB and FTC argue, however, that actual or threatened litigation is not necessary; a communication that deceives or misleads an unsophisticated consumer can be sufficient to violate the statute.
  • "[A] settlement offer can erroneously lead unsophisticated consumers to believe a debt is enforceable in court even if the offer is unaccompanied by any clearly implied threat of litigation," reads the brief.

Consumer Protection

Washington State Passes "Pension Poacher" Legislation

  • Washington AG Bob Ferguson's Pension Poacher Prevention Act passed the state legislature. "Pension poachers" are those who allegedly try to defraud elderly veterans on benefit matters.
  • AG Ferguson, working with State Senator Andy Hill and State Representative Kevin Parker, secured approval for Senate Bill 6208, which gives the AG enforcement authority and prohibits certain unfair and deceptive practices against elderly veterans, including:
    • Receiving compensation for advising or assisting with a veterans' benefit matter;
    • Representing that the receipt of a certain level of veterans' benefits is guaranteed; and
    • Misusing personal or financial information gathered in a veterans' benefit matter.
  • The bill was delivered on March 13, 2014 to the Governor to sign.

South Dakota Strengthens Consumer Protection Laws

  • The South Dakota legislature passed Senate Bill 23, sponsored by the state senate judiciary committee at the request of AG Marty Jackley, to strengthen consumer protection laws—many of which had not been updated since their inception in 1971.
  • The laws introduce several new provisions, including:
    • Allowing the AG's office to recoup attorney's fees if it prevails;
    • Adding protection for consumers that are victim to identity theft through the use of their debit card;
    • Increasing the crime classification for deceptive acts; and
    • Creating the crime of "organized retail crime."

Data Privacy

Child Online Protection Act Proposed by Delaware Attorney General Would Permit Children to Remove Online Posts

  • Delaware AG Beau Biden, with State Representative Darryl Scott, proposed new legislation titled Child Online Protection Act aimed at strengthening online privacy protections for children.
  • House Bill 261proposes that operators of Internet websites, online services, online applications, or mobile applications with actual knowledge that a child is using their site or service must:
    • Permit users to remove or request to remove content posted by those users when they were children;
    • Provide notice of the feature and instructions on use;
    • Not market certain products or services, including tobacco or alcohol, on their site;
    • Not use children's personally identifiable information to direct marketing or advertising of prohibited products or services; and
    • Establish an age verification system.
  • Violations would be subject to prosecution by the AG under the existing state Consumer Fraud Act, with penalties of up to $10,000 per violation. The bill is modeled after California House Bill 261, a first of its kind state law scheduled to take effect in January 2015.

Ohio Attorney General Seeks Legislation for Harsher Identity Fraud Penalties

  • Ohio AG Mike DeWine, in collaboration with State Representatives Mike Dovilla and Terry Blair, proposed legislation to impose harsher penalties for those who commit identity fraud against active-duty military members and their spouses and to create a private cause of action for all identity fraud victims.
  • House Bill 471 amends the current identity fraud statutes to include active-duty service members in a protected class, as defined by the legislation, which was previously reserved only for elderly or disabled victims of identity fraud. The Bill also adds a private cause of action for all victims of identity fraud.
  • Active-duty-military reportedly experienced heightened exposure to identity fraud during periods of deployment, when service members may not be aware that their personal information has been compromised. Military identity fraud complaints increased in Ohio by almost 20 percent in the last year, according to the AG's office.

Employment

New York Attorney General Addresses Alleged Illegal Hiring Practices Through Settlement With Employee Background Check Companies

  • New York AG Eric Schneiderman settled with four of the nation's largest background check agencies over allegations that those companies automatically disqualified job applicants based solely on criminal history, in violation of New York state law.
  • HireRight Inc., First Advantage, General Information Services Inc., and Sterling InfoSystems agreed not to issue automatic rejection letters on behalf of employers based solely on criminal history to ensure that employers conduct an individualized assessment of candidates required under New York law.
  • New York law requires employers to consider a number of mitigating factors, including the nature and gravity of an applicant's criminal conviction, its bearing on the specific responsibilities of the job, the time that has elapsed since the conviction, the age of the applicant when the offense was committed, and any evidence of rehabilitation.

Environment

Wisconsin Attorney General Settles Air Pollution Allegations Against Ethanol Plant

  • Wisconsin AG J.B. Van Hollen settled with Marquis Energy-Wisconsin, LLC for violations of the state's air pollution control laws, requiring the company to pay $125,000 in penalties, fees, and costs.
  • Marquis allegedly failed to obtain timely air pollution control permits from the state department of natural resources, which are required if there is the potential to emit elevated levels of air contaminants, and allegedly violated the emission limits and other air pollution control requirements.

False Claims Act

New York Attorney General Settles Whistleblower Tax Fraud Allegations for $6.2 Million

  • New York AG Eric Schneiderman settled a qui tam action alleging that a medical imaging company, Lantheus Medical Imaging Inc., and its parent company at the time, Bristol-Myers Squibb, evaded applicable state franchise taxes, city corporation taxes, and Metropolitan Transportation Authority surcharges.
  • According to the AG's office, out of the thirty state and the federal false claims acts, New York's False Claims Act is the only one to cover tax fraud.

Healthcare

Twenty-Eight Attorneys General Urge Retailers with Pharmacies to Stop the Sale of Tobacco Products

  • Twenty-eight AGs sent letters to five of the nation's largest retailers encouraging them to cease selling tobacco products in their retail stores that have pharmacies.
  • The letters, which were sent to Rite Aid Corporation, Walgreen Co., The Kroger Company, Safeway Inc., and Wal-Mart Stores, Inc., stated that there is a contradiction in selling tobacco products in a retail chain that services health care needs.
  • The letter follows the announcement of CVS Caremark Corporation that it will stop selling tobacco products in its stores that also have pharmacies, as the chain moves to offer more heath care provider services, such as in store mini-clinics. CVS estimated that the decision might cost the company up to $2 billion in sales.

Pharmaceuticals

Thirty Attorneys General Send Letter to FDA Supporting Its Proposed Generic Labeling Plan

  • Thirty AGs sent a letter to the Food and Drug Administration (FDA) supporting its proposed rule, titled Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products. The proposed rule would enable generic drug manufacturers to update labeling of their products without prior FDA approval under a process similar to that used for brand name drugs.
  • According to the letter, if the proposed rule were enacted, generic drug manufacturers would have the ability to keep the public informed of any risks or benefits of their products, inform consumers of any potential safety hazards, and allow consumers who are adversely harmed by generic drugs to sue manufacturers in court.
  • The AGs believe that allowing consumers access to courts will alleviate some of the burden on Medicaid programs, which are allegedly paying for healthcare costs that arguably should be recouped in lawsuits against manufacturers of defective generic drugs.

State AGs in the News

"Insider Trading 2.0" Alleged Against High-Frequency Traders by New York Attorney General

  • New York AG Eric Schneiderman called for tougher regulations and market reforms to address what he calls the unfair advantages obtained by high-frequency traders using high-speed technology to allegedly gain early access to market information—a practice he is calling "insider trading 2.0."
  • AG Schneiderman believes that high-frequency traders have unique access to technology services offered by trading venues. These services include co-location of computer servers within trading venues, extra network bandwidth, and special high-speed connection cables and network switches. Allegedly, high-frequency traders are able to use these technologies to gain a timing advantage, often measured in milliseconds, which can potentially allow a technology enabled rapid trade before the rest of the market has access to the information.
  • To address this issue, the AG proposed a new methodology for processing orders in batches in frequent intervals, rather than continuously as the orders come in, to shift the deciding factor of who obtains a trade to price and not speed.

Court Validates Louisiana Attorney General's Decision to Allow Use of Outside Counsel 

  • A state court held that Louisiana AG Buddy Caldwell acted within his authority under state law when he approved a resolution that allowed a state political subdivision to hire outside legal counsel.
  • The Southeast Louisiana Flood Protection Authority-East, a political subdivision of Louisiana, sued almost 100 oil and gas companies for alleged damage to coastal wetlands. AG Caldwell approved a resolution that allowed the Authority to hire outside legal counsel to represent it in this lawsuit rather than be represented by the AG. The Louisiana Oil and Gas Association filed a lawsuit challenging the AG's approval.
  • State District Judge Janice Clark ruled that the AG's approval was valid under state law and that the AG is only required to serve as the political subdivision's counsel when called upon to do so. The media reports that the Association plans to file an appeal.

State v. Federal Government

New Mexico Attorney General Opposes Federal Government in the U.S. Supreme Court Regarding Rio Grande Water Rights

  • New Mexico AG Gary King filed a response to the U.S.'s motion for leave to intervene in an action between Texas and New Mexico regarding Rio Grande water rights. In that action, Texas alleges New Mexico is improperly allowing the flow of water to be diverted from a Rio Grande project.
  • In its brief to the U.S. Supreme Court, New Mexico argues that the U.S. fails to state a claim and that the U.S. should not be allowed to inject a new issue of whether groundwater is a source of water for the project because that issue has already been decided by the state court. New Mexico also argues that it should be allowed to combine its already planned motion to dismiss the Texas claims with a motion to dismiss the U.S. claims.

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