United States: State AGs In The News - July 31st, 2014

Antitrust

West Virginia Attorney General Settles Allegations of Antitrust Violations

  • West Virginia AG Patrick Morrisey settled antitrust allegations with GE Funding Capital Market Services, Trinity Plus Funding Co. LLC, and Trinity Funding Co. LLC for $950,000. Those allegations included violations of the Sherman Act and the state Antitrust Act by illegally rigging bids, fixing prices, and manipulating the municipal derivatives market.
  • The AG sued more than 20 companies as part of this initiative and previously had settled with Royal Bank of Canada, Bank of America, Morgan Stanley, and JPMorgan Chase. The other lawsuits are ongoing.
  • Pursuant to the settlement, the money paid by the companies, minus fees and costs, will go to state agencies that invested in municipal derivatives. The companies denied the allegations during the lawsuit and denied any liability in the settlement.

Consumer Financial Protection Bureau

Consumer Financial Protection Bureau Director Invites Consumers to Share Personal Financial Marketplace Experiences

  • In conjunction with the Consumer Financial Protection Bureau's (CFPB) third anniversary, the CFPB Director invited consumers to share their personal financial marketplace experiences. The CFPB maintains that these stories can help show trends and provide insight into consumer financial products and services.
  • The invitation closely follows the CFPB's proposed policy statement that it would add consumer complaint narratives to its consumer complaint database. Currently, the CFPB only publishes basic summary and demographic information related to consumer complaints. This proposal has been highly controversial among commentators and several concerns have been raised, including concerns regarding privacy and unverified data.

Consumer Protection

Amicus Brief Filed in U.S. Supreme Court by 27 Attorneys General Regarding the Truth in Lending Act

  • A coalition of 27 AGs, led by New York AG Eric Schneiderman, filed an amicus brief in the U.S. Supreme Court in the case of Jesinoski v. Countrywide Home Loans. The coalition requested that the Court overturn a ruling by the U.S. Court of Appeals for the Eighth Circuit and find that consumers may rescind a transaction under the federal Truth in Lending Act (TILA) without filing a lawsuit.
  • TILA requires creditors to disclose the terms of loans to consumers and inform them of their statutory rights. If creditors fail to do this, consumers may rescind a loan within three years of the date of the loan. The question presented to the court is whether notice to creditors of intent to rescind a covered home loan is sufficient or whether consumers must also file a lawsuit.
  • The AGs argue that TILA does not contain an express requirement for a lawsuit to enforce rescission rights. They also argue that rescission is a powerful consumer remedy and that requiring consumers to file court actions to exercise TILA rescission rights would dilute the deterrent purpose of the remedy and place it out of reach for many consumers.
  • Argument in the case has not been scheduled yet.

Vermont Attorney General Sues Discount Retail Chain for Allegedly Violating Its Prior Settlement With the State

  • Vermont AG William Sorrell filed a lawsuit against Dollar Tree Stores, Inc., alleging that it violated a 2010 settlement agreement with the state that prevented it from selling jewelry that contained toxins, such as lead or cadmium, in violation of state law.
  • The complaint is seeking injunctive relief that will prohibit Dollar Tree from selling jewelry in the state, consumer relief, civil penalties of up to $10,000 per violation of the state Consumer Protection Act, costs, and fees.

New York Attorney General and Ridesharing Service Reach Agreement

  • New York AG Eric Schneiderman and the state Superintendent of Financial Services reached an agreement with Lyft that will allow the launch of ridesharing services in New York City.
  • Pursuant to the agreement, Lyft will operate in compliance with state laws and regulations, launch in New York City using only commercial drivers, and suspend operations in Buffalo and Rochester. The AG and Superintendent will withdraw the application for a temporary restraining order and preliminary injunction that they previously filed against Lyft.

Connecticut Attorney General and Federal Trade Commission Settle With Ticket Resellers

  • Connecticut AG George Jepsen and the Federal Trade Commission (FTC) filed a complaint and consent orders related to allegations that TicketNetwork, Inc. (a ticket resale company), its subsidiary, two business partner companies, and the owners of those business partner companies (collectively, TicketNetwork) violated the state Unfair Trade Practices Act and the Federal Trade Commission Act.
  • The AG and FTC allege that TicketNetwork falsely created the impression for consumers that TicketNetwork websites were the websites of the official venues or other entities authorized to sell tickets at face value.
  • The agreements, which the court must approve, prohibit TicketNetwork from making any misrepresentations on their websites, require them to make certain disclosures on their websites, and require them to collectively pay $1.4 million to the state.

Data Privacy

Massachusetts Attorney General Settles Data Breach Allegations

  • Massachusetts AG Martha Coakley settled with Women & Infants Hospital to resolve allegations that it violated the HIPAA Privacy Rule and state rules and regulations designed to protect personal and protected health information.
  • The settlement arose from a data breach that the hospital reported to the AG's office in November 2012. The hospital allegedly discovered several missing unencrypted backup tapes containing personal and protected health information. The AG alleged that inadequate employee training and policies contributed to delays in the discovery and reporting of the breach.
  • Pursuant to the settlement, the hospital agreed to pay $150,000 to the state. That amount includes a civil penalty, fees, costs, and payments to funds to support future information security litigation and promote data protection education and awareness. The hospital also will take measures to enhance its compliance program, including changing its inventory process and conducting an audit and any necessary remediation of its security measures.

Employment

Indiana Attorney General Requests Stay of Ruling Regarding State Right to Work Statute

  • Indiana AG Greg Zoeller requested an immediate stay of a county judge's ruling finding the state right to work statute unconstitutional. The statute prohibits charging union dues to nonmembers as a condition of employment. The judge ordered the ruling to take effect upon entry, but the AG seeks a stay pending appeal.
  • "Strong opinions exist on both sides about involuntary union dues, but the Attorney General's Office has a duty to defend the laws the Legislature passes from legal challenges plaintiffs file. If a trial court finds a law unconstitutional, then the appropriate action is to stay its ruling pending the appeal," stated the AG.
  • The AG is defending the statute in another case where a judge found the law unconstitutional. That case is stayed pending appeal to the state supreme court. Oral arguments for that appeal are scheduled for September 4.

Environment

Colorado Attorney General Responds to Fracking Decision

  • Colorado AG John Suthers applauded a state district court decision that a city may not ban hydraulic fracturing (also known as fracking) or storage and disposal of fracking waste.
  • City of Longmont voters had passed an amendment to their city charter that banned fracking and the storage and disposal of fracking waste. The city asserted that the amendment was a valid exercise of local police power and land use authority and that the state oil and gas conservation commission does not regulate fracking.
  • The court disagreed and ordered that the amendment was invalid as preempted by the Colorado Oil and Gas Conservation Act. The court issued a stay of its order pending appeal.
  • "The law regarding preemption of local oil and gas regulation by the Colorado Oil and Gas Conservation Act is clear and the court got it right. Under the current law, local governments can't ban fracking," stated the AG.

Michigan Attorney General Issues Notice Regarding Great Lakes Pipelines

  • Michigan AG Bill Schuette and Michigan Department of Environmental Quality Director Dan Wyant sent a formal notice of noncompliance and request for corrective action to Enbridge Energy and Enbridge Pipelines, L.L.C., (collectively, Enbridge) regarding two of their Great Lakes pipelines.
  • In April, AG Schuette and Director Wyant sent a letter to Enbridge requesting information about their pipelines. Pending full review of Enbridge's response, the AG and Director issued a notice that two of Enbridge's pipelines were not in compliance with a state easement that limits the maximum span of unsupported pipe.
  • AG Schuette and Director Wyant requested that Enbridge correct the alleged noncompliance within 90 days or take remedial action as soon as reasonably possible.

Financial Industry

Bank Seeks to Dismiss Lawsuit Alleging Wrongful "Dark Pool" Practices

  • Barclays filed a motion to dismiss the lawsuit recently brought by New York AG Eric Schneiderman alleging wrongful practices related to Barclays' operation of its "dark pool," a type of privately owned and operated trading venue.
  • In its motion, Barclays argued that it did not make any false statements to its sophisticated clients and investors, that the AG's claims fail on their merits, that the AG lacks standing to sue on behalf of private parties, and that the AG lacks authority to bring claims under the Martin Act.
  • "Barclays works closely with its regulators in all jurisdictions and will continue to cooperate with the New York attorney general," stated a bank representative. "However, we do not believe that this suit is justified, and we have a duty to our shareholders, clients and staff to defend our position."

For-Profit Colleges

Minnesota Attorney General Sues For-Profit Schools

  • Minnesota AG Lori Swanson sued the Minnesota School of Business and Globe University alleging that they misrepresented job opportunities available to graduates and the transferability of credits.
  • The AG alleged that the schools advertised about or recommended their degree programs for certain professions, but did not disclose that those professions required additional certification or degrees. The AG also alleged that the schools inaccurately told students that their credits could transfer to regionally accredited schools.
  • The lawsuit seeks injunctive relief, civil penalties, and restitution.

Health Care

Two Conflicting Federal Appeals Court Decisions Issued Regarding Affordable Care Act

  • Two federal appeals courts issued two conflicting decisions regarding the Affordable Care Act (ACA) employer mandate. In Halbig v. Burwell, the U.S. Court of Appeals for the DC Circuit held that the Internal Revenue Service's (IRS) rules authorizing federal subsidies and the ACA employer mandate in states that opted not to set up a state-based exchange were invalid. In King v. Burwell, the U.S. Court of Appeals for the Fourth Circuit upheld those same rules.
  • Kansas AG Derek Schmidt, who led one set of amicus briefs in both cases in opposition to the IRS rules, stated that the "rulings move this important legal dispute one step closer to final resolution. Our interest is to ensure the IRS follows the law and Kansas obtains the benefit it anticipated when state policy makers chose not to establish a state-run health insurance exchange. Congress might not have expected so many states to decline to establish an exchange under the Affordable Care Act, but that misjudgment cannot justify allowing the IRS to effectively rewrite the statute to satisfy policy and political objectives. We will continue to represent the state's interest as this litigation proceeds to its next stage, perhaps ultimately to the U.S. Supreme Court."
  • Alabama, Georgia, Nebraska, Oklahoma, South Carolina, Virginia, and West Virginia also filed briefs in opposition to the IRS rule in Halbig and King.

Mortgages/Foreclosures

The CFPB, Federal Trade Commission, and 15 Attorneys General Take Action Against Foreclosure Relief Service Providers

State AGs in the News

Illinois Attorney General Testifies Before U.S. Senate About the Role of States in Higher Education

  • Illinois AG Lisa Madigan testified before the U.S. Senate Health Education Labor and Pensions Committee regarding the role of states in higher education.
  • Her testimony included recommendations for the committee to consider as it works to reauthorize the Higher Education Act, including heightened funding controls, a streamlined and accessible information system for students, and legislation to allow students to refinance federal loans.
  • This testimony follows the AG's recent first-in-the-nation lawsuit that targeted an alleged new industry of student loan debt relief fraud.

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