United States: State AGs In The News - March 27th, 2014

Last Updated: April 3 2014
Article by Bernard Nash


Attorneys General To Review $45 Billion Comcast And Time Warner Merger for Antitrust Violations

  • AGs will allegedly join the U.S. Department of Justice (DOJ) to review the proposed $45 billion merger of Comcast and Time Warner Cable to determine the impact on their states and whether there are any antitrust violations.
  • "We are part of a multistate group reviewing the proposed transaction along with the U.S. DOJ Antitrust Division," Florida AG Pam Bondi's office stated. In addition, Indiana AG Greg Zoeller's office confirmed that it would also be reviewing the deal, but did not disclose whether it was part of the multistate group. Pennsylvania AG Kathleen Kane's office confirmed that it would independently review the merger.

 Consumer Protection

Twenty Attorneys General And The City Attorney of San Francisco Settle Unsafe Energy Drink Allegations

  • Twenty AGs and the city attorney of San Francisco settled with Phusion Projects, LLC over allegations that it marketed and sold its energy drink, Four Loko, in violation of consumer protection and trade practice statutes.
  • Four Loko is a flavored caffeinated alcoholic malt beverage. The AGs and the city attorney alleged that Phusion: promoted its drink to underage individuals; promoted dangerous and excessive consumption of its drink; failed to disclose to consumers the effects and consequences of drinking alcoholic beverages that are combined with caffeine; and before 2011, manufactured, marketed, and sold caffeinated beverages that were unsafe.
  • Under the agreement, Phusion will pay $400,000 and agree to discontinue a number of practices related to the sale and distribution of its beverage, including promoting the misuse of alcohol or the mixing of alcohol with caffeine.

 Illinois Attorney General Sues Lender for Allegedly Evading State Reforms for Short-Term Loans

  • Illinois AG Lisa Madigan sued short-term lender CMK Investments, Inc., which operates All Credit Lenders, for allegedly selling short-term loans intended to evade state protections against predatory lending.
  • The complaint alleges that CMK violated the state Consumer Fraud and Deceptive Business Practices Act and the Dodd-Frank Act by: including mandatory account protection fees that acted as interest when factored into the total cost of the loan and exceeding the state's 36 percent interest cap; misrepresenting the true cost of the loan; and failing to inform consumers that they must pay more than the minimum to pay off the loan—leaving many consumers in an endless cycle of debt.
  • This is the AG's first lawsuit under the Dodd-Frank Act. The lawsuit seeks to: enjoin CMK from offering unlawful products and marketing or providing lines of credit or revolving credit plans; rescind all unlawful contracts; require restitution to consumers; impose civil penalties, including a $10,000 penalty per violation for violations committed against elderly victims; obtain disgorgement or compensation for unjust enrichment; and require public notification.

 Delaware Attorney General Proposes Debit Card Fraud Legislation

  • Delaware AG Beau Biden, in collaboration with State Representative Trey Paradee, proposed legislation that would impose the same penalties on individuals that steal or misuse debit cards as those who steal or misuse credit cards.
  • House Bill 246 would update the state criminal code and expand the state statute governing unlawful use of a credit card to include debit cards and other types of payment cards. The bill also expands definitions to include the number assigned to these cards so that the law would apply to an individual who commits a crime without using the physical card.
  • "Thieves using a debit card to commit their crimes should not be able to avoid being held accountable because of a technicality," said AG Biden.

 Texas Attorney General Obtains Restraining Order and Freezes Assets Of Alleged "Diploma Mills"

  • Texas AG Greg Abbott obtained a temporary restraining order and asset freeze against two organizations that allegedly falsely claim to be nationally accredited home schools. The restraining order prohibits the organizations from accepting payments from students or promoting unlawful services.
  • Lincoln Academy and its affiliate, Brownstone Academy, allegedly offer fraudulent online high school diplomas and General Education Development (GED) degrees. AG Abbott claims that these two "diploma mills" are not qualified under state law as a home school or to provide GED testing.
  • The AG is seeking civil penalties and restitution from the academies for multiple alleged violations of the state Deceptive Trade Practices Act and the Texas Business and Commerce Code's Uniform Fraudulent Transfer Act.


Agreement With Connecticut Attorney General Leads to Power Company's $2.5 Million Donation to Operation Fuel

  • Connecticut AG George Jepsen is withdrawing his petition seeking penalties against Connecticut Light & Power (CL&P) subject to an agreement that its parent, Northeast Utilities, donate $2.5 million to Operation Fuel, an organization that provides energy assistance to those in need.
  • AG Jepsen had filed a petition against CL&P alleging that it had impaired and impeded the state Public Utilities Regulatory Authority (PURA) during the authority's investigation of CL&P's restoration of power after a large snowstorm in October 2011.
  • "This is a true compromise. While I am agreeing to disagree with CL&P on whether its conduct in the PURA investigation was appropriate, we can agree that directing substantial funds to Operation Fuel is a vitally important and meaningful result," said AG Jepsen.


Oklahoma Attorney General Sues Federal Government Over Alleged "Sue and Settle" Tactics

  • Oklahoma AG Scott Pruitt sued the U.S. Department of Interior and the U.S. Fish and Wildlife Service (FWS) seeking declaratory and injunctive relief for violations of the Endangered Species Act (ESA), the Administrative Procedure Act, and the U.S. Constitution.
  • The complaint alleges that the Department of Interior and the FWS engaged in alleged "sue and settle tactics" by agreeing to enter into "friendly settlements" with a special interest environmental group over the listing status of animal species, circumventing the legislative and regulatory process, making fundamental changes to ESA imposed obligations, and excluding the state from participating in shaping the substantive policy choices embedded in the settlement.
  • "Using courts to impose regulations undermines the rule of law," according to AG Pruitt.


Arkansas Supreme Court Reverses $1 Billion Judgment Against Johnson & Johnson

  • The Arkansas Supreme Court reversed and dismissed in part and remanded in part, a more than $1 billion judgment against Janssen Pharmaceuticals and its parent Johnson & Johnson (Janssen) on the grounds that AG had erred in suing under the state Medicaid Fraud False Claims Act (MFFCA) and that the circuit court had abused its discretion in admitting evidence.
  • Arkansas AG Dustin McDaniel received a verdict against Janssen in a lawsuit alleging that it had concealed the risks associated with its antipsychotic drug Risperdal by downplaying risks of strokes, seizures, and other side effects allegedly associated with the drug. The opinion held that MFFCA did not apply to Janssen because it was not a healthcare facility and that the circuit court erred in allowing a warning letter that was prejudicial hearsay to be used as evidence of violation of the state Deceptive Trade Practices Act.
  • A verdict against Janssen related to the marketing of this drug was reversed in a case in Louisiana, but the company has settled with Montana and with the District of Columbia and other states.

 State AGs in the News

Five Attorneys General Sign Letter of Intent With Mexico to Fight Money Laundering

  • The California, Colorado, Florida, Nevada, and New Mexico AGs formed a working group and signed a letter of intent with the National Banking and Securities Commission of Mexico to fight money laundering.
  • The AGs, working with Mexico, will establish the scope of coordination on money laundering enforcement issues, develop a training and technical assistance plan, and share best practices on money laundering enforcement techniques.

 States v. Federal Government

South Carolina Attorney General Files Complaint in Federal Court Regarding MOX Facility

  • South Carolina AG Alan Wilson filed a complaint against the U.S. Department of Energy (DOE) and the National Nuclear Security Administration (NNSA) alleging that the reduction of funding for a mixed oxide fuel fabrication facility (MOX facility) violates the Constitution and federal law.
  • In 2000, the United States and Russia agreed to dispose of weapons-grade plutonium, which resulted in the DOE recommending construction of the MOX facility in South Carolina for disposal. Congress appropriated money in the 2014 fiscal year budget for the continued build of the facility, which is about 60 percent complete. The president's budget proposal for the 2015 fiscal year included a reduction in funding for the facility, indefinitely suspending the build. The DOE and NNSA allegedly announced plans to accelerate the president's proposal and suspend the build before the end of the 2014 fiscal year.
  • AG Wilson argues that the actions of the DOE and NNSA violate: the Constitution because the separation of powers doctrine requires the executive branch to follow the directions of the legislative branch; constitutional and statutory authority because the recommendations were not approved by Congress; federal appropriation statutes; and the congressional mandate to build the facility. AG Wilson requests declarations of these violations and an injunction against DOE and NNSA.

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