Hot News

U.S. Supreme Court Upholds Michigan Constitutional Amendment Banning Use of Affirmative Action in Admissions

  • The U.S. Supreme Court ruled, in a 6-2 decision in the case of Schuette v. Coalition to Defend Affirmative Action, that the Michigan constitutional amendment banning the use of racial preferences in school admission decisions did not violate the U.S. Constitution. Justices Roberts, Breyer, and Scalia joined by Thomas filed concurring opinions. Justice Ginsburg joined Justice Sotomayor in dissent. Justice Kagan took no part in consideration or decision of the case.
  • The petitioner, Michigan AG Bill Schuette, praised the Court's decision that Michigan voters did not violate the Equal Protection Clause when they required equal treatment in university admissions. Arizona AG Tom Horne, who filed an amicus brief in support of Michigan joined by the AGs of Alabama, Georgia, Oklahoma, and West Virginia, also praised the decision.
  • The decision reversed a judgment of the U.S. Court of Appeals for the Sixth Circuit. The Supreme Court stated, "This case is not about how the debate about racial preferences should be resolved. It is about who may resolve it. There is no authority in the Constitution of the United States or in this Court's precedents for the Judiciary to set aside Michigan laws that commit this policy determination to the voters."
  • We had listed this as a case to watch in an October 2013 blog post. We also posted a summary of oral arguments and a copy of the transcript.

U.S. Supreme Court Reinstates EPA's Cross-State Air Pollution Rule

  • In a 6-2 decision in the case of U.S Environmental Protection Agency (EPA) v. EME Homer City Generation, the U.S. Supreme Court reversed the D.C. Circuit and reinstated the EPA's Cross-State Air Pollution Rule. The rule delineates the scope of the Clean Air Act's Good Neighbor Provision by limiting the emission of pollutants in upwind states that significantly contribute to keeping downwind states from meeting federal air quality standards. Justice Thomas joined Justice Scalia in dissent. Justice Alito took no part in consideration or decision of the case.
  • The Court held that the Clean Air Act does not command that states be given a second opportunity to file a plan after the EPA has quantified the state's interstate pollution obligations and that the EPA's "cost-effective allocation of emission reductions among upwind States is a permissible, workable, and equitable interpretation of the Good Neighbor Provision."
  • A coalition of 10 AG's and five cities, led by New York AG Eric Schneiderman, filed briefs with the Court in support of the EPA's rule. Nine other AGs filed an amicus opposing the EPA's rule. We also listed this as a case to watch in the October 2013 blog post.

Antitrust

Second Circuit Grants Apple Administrative Stay of Class Notification and Agrees to Hear Apple's Request for Stay of Damages Trial in Attorneys General Antitrust Case

  • The U.S. Court of Appeals for the Second Circuit granted Apple Inc.'s emergency motion seeking an administrative stay of the class notification, scheduled to commence on April 28, while the court determines the request for a stay pending appeal. In its decision, the court also referred to a 3-judge panel Apple's request for stays pending appeal of class notification and the damages trial scheduled to commence in July.
  • In this case, multiple AGs allege that the company conspired with publishers to fix prices for e-books. In 2013, the court ruled against Apple in the liability phase of the case and ordered further proceedings on damages.
  • The U.S. District Court for the Southern District of New York denied Apple's motion for stay pending appeal and its request for an administrative stay two days before the Second Circuit issued its order. The Southern District's decision followed its denial of Apple's motion to dismiss that we recently posted on the blog.

Charities

Massachusetts Attorney General Sues Former President and CEO of Non-Profit School

  • Massachusetts AG Martha Coakley sued Dr. Robert Gee, the former president and chief executive officer of the non-profit National Graduate School for Quality Management, Inc., for allegedly breaching his fiduciary duty of loyalty by collecting an excessive compensation and other benefits from the school without the school board of directors' knowledge or consent.
  • Dr. Gee allegedly collected excessive compensation through compensation agreements that the school board did not approve and gained other benefits without the board's knowledge, including a vacation property, a private residence, and several personal luxury vehicles.
  • The complaint seeks declaratory relief, disgorgement of funds obtained, restitution to the school, and an order that Dr. Gee not be allowed to serve again as a fiduciary for any state public charity. The AG also entered into an agreement with the school and the school board that requires the board to be reconstituted and approved by the AG's office and that the board provide regular reporting to the AG's office. Pursuant to the agreement, if the terms of the agreement are not met, the board will dissolve the school.

New York Attorney General Settles with Fundraiser Already Subject to Lifetime Fundraising Ban

  • New York AG Eric Schneiderman settled allegations of violations of a prior agreement with Mark Gelvan, owner of Raising Money, Inc., for $50,000. Gelvan was previously banned for life from fundraising in New York pursuant to a settlement agreement arising out of AG allegations that Gelvan made fraudulent claims to potential contributors regarding how he would use donations.
  • Gelvan allegedly solicited charitable donations in violation of the prior agreement by acting as a broker for another fundraiser, who in return agreed to give Gelvan a portion of the charitable donations.
  • Under the settlement, Gelvan must pay $50,000, which includes disgorgement of allegedly ill-gotten gains and a penalty. He also remains banned from conducting or receiving any benefits from the solicitation of charitable donations in the state.

Massachusetts Attorney General Sues Veterans Charity for Allegedly Deceptive Fundraising

  • Massachusetts AG Martha Coakley sued Veterans Community Foundation, Inc., its chief executive officer, and two branch managers (Veterans Community Foundation), alleging that they illegally solicited charitable donations and used deceptive fundraising techniques in violation of state charitable solicitation laws.
  • Veterans Community Foundation allegedly solicited donations in storefronts without a valid certificate of solicitation from the AG's office and allegedly used unfair and deceptive charitable solicitation practices during these fundraising campaigns.
  • The court issued a temporary restraining order preventing Veterans Community Foundation from any fundraising activities until it obtains a valid certificate. In addition to the temporary restraining order, the complaint requests a preliminary injunction barring Veterans Community Foundation from deceptive fundraising and ordering them to account for all money raised since 2012.

Consumer Protection

Florida Attorney General Confirms Multi-State Investigation Into Auto Manufacture Recall

  • Florida AG Pam Bondi's office confirmed that it is a part of a multi-state group that is forming to investigate complaints related to General Motors Co.'s recent recall of vehicles with faulty ignition switches.
  • In a quarterly financial report filed with the Securities and Exchange Commission, General Motors disclosed an investigation by a state attorney general and other government entities, stating: "We are also the subject of various inquiries, investigations, subpoenas, and requests for information from the U.S. Attorney's Office for the Southern District of New York, Congress, NHTSA, the SEC, and a state attorney general in connection with our recent recalls. We are investigating these matters internally and believe we are cooperating fully with all requests, notwithstanding NHTSA's recent fines for failure to respond. Such investigations could in the future result in the imposition of damages, fines, or civil and criminal penalties."

Vermont Attorney General Announces Illegal Lending Initiative

  • Vermont AG Bill Sorrell announced a sweeping effort to address illegal and predatory online lending, including actions against lenders under the state's consumer protection act.
  • Vermont has predatory internet lending legislation enacted in 2012 that makes lenders who fail to comply with lending requirements and those who process their electronic loan payments directly liable under the state's consumer protection act. The law also imposes direct liability on any person or business that knowingly and substantially assists illegal lenders.
  • "Online lenders are taking advantage of thousands of low and moderate income Vermonters. They offer illegal short-term, very high-interest loans via the internet. These predatory loans are designed to entrap consumers in long-term debt," stated AG Sorrell.
  • According to a report issued by AG Sorrell, his office has settled with three lenders and a payment processor for approximately $1 million in potential refunds and loan forgiveness for consumers and $90,000 in payments to the state.

Data Privacy

Florida Attorney General Supports Passage of Florida Information Protection Act

  • Florida AG Pam Bondi supported the passage of the Florida Information Protection Act of 2014, sponsored by State Senator John Thrasher, which provides new protections for personal information and expedites notice of data breaches.
  • The state senate unanimously passed Senate Bill 1524. It repeals previous legislation governing the breach of confidential personal information.
  • The new law requires covered entities to take reasonable measures to protect, secure, and dispose of electronic data containing personal information. It also requires covered entities to provide notice within 30 days of a breach or a reasonable determination that a breach occurred to consumers and to the AG's office if the breach affects more than 500 individuals. Entities must also provide notice to credit reporting agencies if they must notify more than 1,000 individuals of the breach. The law allows a 15-day extension for a good cause delay provided in writing within 30 days. Third-party agents of covered entities who maintain systems containing personal information must provide notice to the covered entity within 10 days.
  • The legislation also provides that: the AG must provide an annual report to the state legislature regarding any breaches reported by a government entity; the law does not allow private causes of action; and violations of the act shall be treated as an unfair or deceptive trade practice.

Energy

Amicus Brief Filed in U.S. Supreme Court by 21 Attorneys General Supporting Review of California Fuel Standards

  • Twenty-one AGs filed an amicus brief in the U.S. Supreme Court in the case of Rocky Mountain Farmers Union v. Corey asking the Court to review whether California's low carbon fuel standard is unconstitutional because it allegedly discriminates against interstate and foreign commerce and regulates aspects of fuel production occurring wholly beyond the borders of California.
  • The U.S. Court of Appeals for the Ninth Circuit reversed a lower court decision in September 2013 that had held that the low carbon fuel standards program was constitutional.
  • The AGs argue that the standards unfairly restrict interstate commerce by effectively prohibiting the use of ethanol and crude oil produced outside of California by assigning these fuels higher carbon intensities.

Environment

Illinois Attorney General Announces Court Order Requiring Cleanup of Soybean Oil Spill

  • Illinois AG Lisa Madigan announced an interim court order that requires BN National Trail Biodiesel, LLC to cleanup waterways allegedly polluted by a soybean oil spill at the company's facility.
  • The order requires the company to implement new operating procedures, install equipment designed to prevent overflows of contaminating substances, apply to the state environmental protection agency for required permits, and remediate the affected waterways by July 31.
  • A status hearing is set for August 12 regarding the interim order.

Financial Industry

New York Attorney General Settles Claims for $7.5 Million Related to Bank's Acquisition

  • New York AG Eric T. Schneiderman announced that his office has settled claims against Bank of America Corporation's former chief financial officer Joe L. Price related to the bank's 2009 acquisition of Merrill Lynch.
  • The AG's suit was filed under the state's Martin Act and a section of the state's executive law alleging that the defendants failed to disclose certain Merrill Lynch losses to shareholders and engaged in other activities related to the merger.
  • Under the settlement, Price will pay $7.5 million and is prohibited from serving as an officer or director of a public company for 18 months.
  • AG Schneiderman also recently settled claims against Bank of America and Bank of America's former chief executive officer Kenneth D. Lewis for $25 million.

State AGs in the News

New York Attorney General Defends Subpoenas Issued to Hosts of Online Lodging Service

  • During oral arguments in the Albany County Supreme Court, New York AG Eric Schneiderman's office defended subpoenas issued last fall to over 15,000 hosts renting space in New York city through Airbnb, an online lodging service.
  • AG Schneiderman issued the subpoenas as part of an investigation into possible non-payment of New York City hotel occupancy and state and city sales taxes and alleged violations of the state Illegal Hotel Law, which generally prohibits apartments from being rented in New York City for less than 30 days without the permanent occupant present.
  • Airbnb argues that there is no factual basis for the subpoenas and that they are overbroad and burdensome. Airbnb also expressed concern for the privacy of guests whose confidential information may be revealed during the investigation of Airbnb hosts.
  • The AG's office responded that it had sufficient evidence to support the subpoenas, including analysis of data from Airbnb's website, which revealed that nearly two-thirds of the listings were for less than 30 days and for the entire apartment. According to the AG's office, this data meant that the permanent occupant would not be present during the rental as required by the state law.
  • Acting Supreme Court Justice Gerald Connolly, the judge presiding over the case, concluded the hearing without a ruling.

States v. Federal Government

Washington Attorney General and Governor Trigger Dispute Resolution With Federal Government Related to Radioactive and Chemical Waste Site

  • Washington AG Bob Ferguson and Washington Governor Jay Inslee sent a letter to the U.S. Department of Justice triggering dispute resolution pursuant to a clause in a 2010 consent decree ("Consent Decree") governing the cleanup of a radioactive and chemical hazardous waste site in Hanford, Washington.
  • The Hanford site produced plutonium as part of the Manhattan Project during World War II. Both Washington state and the U.S. Department of Energy (DOE) had made proposals to amend the Consent Decree and later rejected each other's proposal. AG Ferguson claimed that the DOE's proposal lacked specificity, accountability, and enforceability and that the proposal did not go far enough. The DOE argued that the state's proposal did "not adequately account for the realities of technical issue resolution, project management imperatives, and fiscal constraints, and that it exceeds the scope of the Consent Decree."
  • The dispute resolution process is a 40-day process of good faith negotiation. If the state and federal government cannot reach an agreement during this process, then the state may ask a federal court to issue an order directing the DOE to implement the state's plan.

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