United States: State AGs In The News - September 25th, 2014


Firm Fights Back Against Alleged Unconstitutional Unclaimed Property Audit

  • Temple-Inland, Inc., a subsidiary of International Paper, and three Delaware state officials will present oral arguments on cross motions for summary judgment on October 1 in a lawsuit brought by Temple-Inland over the methods the state can employ to determine unclaimed property obligations.
  • For more information on this case, please see our recent blog post about this issue.

Insights From FTC Commissioner Brill and Nevada Attorney General Masto at Women, Influence & Power In Law Conference

  • Last Friday, Dickstein Shapiro partner Lori Kalani moderated a panel at the 2014 Women, Influence & Power in Law conference, a national forum facilitating women-to-women exchanges on current legal issues.
  • The panel, "Coordinated State and Federal Enforcement Trends: An Up-Close Perspective from the Regulators," featured insights from FTC Commissioner Julie Brill and Nevada Attorney General Catherine Cortez Masto on how the FTC and states work together on a wide range of issues, including data privacy and data security, antitrust, and consumer protection.
  • When asked how the FTC evaluates a data breach, Commissioner Brill explained that the FTC is not looking for "perfect security," but instead evaluates whether the affected business took reasonable security measures, including whether the business had an ongoing process to analyze what happens to its data, data policies, encryption, and training of employees.
  • AG Masto emphasized to the audience that data privacy is a priority for state AGs. In light of the many different state requirements on data privacy protection, AG Masto called for legislative action to establish a national, consistent standard.


ACC Webcast: Post-Election Analysis of the New Attorney General Landscape

  • Dickstein Shapiro and the Association of Corporate Counsel (ACC) are partnering for a webcast on Wednesday, November 5 at 2:00 PM EST for a post-election analysis of the new Attorney General landscape.
  • Bernie Nash, head of Dickstein Shapiro's State AG practice will lead an interactive discussion about that new landscape and its implications for the business community.
  • This webcast is free and open to the public. Register here.


State Attorneys General Review Proposed Merger Between AT&T and DirecTV

  • According to a press report, California, Florida, and New York have confirmed that they are a part of a multistate group reviewing the proposed merger of AT&T Inc. and DirecTV. Indiana also reportedly acknowledged that it is reviewing the deal, but did not confirm whether it was part of the multistate group.
  • Their press report stated that the review will focus on whether the merger will reduce competition in service markets where both companies are active; adversely impact the creation, distribution, and cost of programming; or adversely affect development of high-speed broadband.
  • The DOJ and the Federal Communications Commission must approve the proposed deal before it can be finalized.


Indiana Attorney General Files Lawsuit to Halt the Fraudulent Collection of Donations for War Veterans

  • Indiana AG Greg Zoeller filed a lawsuit to stop certain nonprofit organizations from allegedly soliciting donations in support of war veterans without donating the contributions as represented.
  • The AG's lawsuit alleges that the defendants, operating as Sandbox Veterans of America Incorporated and Catholic Veterans of Indiana Limited, violated the state Deceptive Consumer Sales Act. It also claims that the defendants solicited donations in the name of Iraq and Afghanistan Veterans of America Incorporated, which implicates a legitimate nonprofit organization by the same name based in Washington, D.C., without actually providing proceeds to that organization.
  • The AG seeks a permanent injunction, consumer restitution, civil penalties and investigative costs.


State Attorneys General Sue Foreign Language Course Provider for Deceptive Internet Sales Practices

  • Washington AG Bob Ferguson initiated a first of its kind lawsuit against Internet Order LLC and its CEO alleging violations of the federal Restore Online Shoppers' Confidence Act (ROSCA), state Consumer Protection Act, and state Unsolicited Goods Act. According to AG Ferguson's office, Washington is the first state to bring claims under ROSCA.
  • According to the complaint, the company provides audio-based foreign language instruction products over the internet, commonly under the brand name "Pimsleur Approach." The lawsuit alleges that the defendants engaged in deceptive marketing practices by providing introductory lessons for $9.95, but then automatically enrolling consumers, without their consent, in a purchase plan that included up to four follow-on installments costing $256 each.
  • In addition, the lawsuit alleges that consumers faced burdensome cancellation and return processes, "restocking" fees, and threats of collection agency action if they refused to pay. The complaint seeks declaratory and injunctive relief, fees, and costs.
  • Pennsylvania AG Kathleen Kane also filed a lawsuit against Internet Order, making similar allegations and seeking declaratory and injunctive relief, restitution, disgorgement, civil penalties, and costs under the Pennsylvania Unfair Trade Practices and Consumer Protection Law and the state Fictitious Names Act.

Michigan Attorney General Resolves Price Gouging Allegations With One Propane Company and Brings Lawsuit Against Another Propane Company

  • As part of a larger and ongoing investigation, Michigan AG Bill Schuette filed a class action lawsuit against propane retailer AmeriGas alleging that it violated various provisions of the Michigan Consumer Protection Act by charging grossly excessive prices during the colder than normal winter of 2013-2014.
  • The complaint, filed in Berrien County Circuit Court, alleges price gouging, denial of established advance contract pricing, and failure to honor prices quoted for orders.
  • On the same day that he filed the lawsuit, AG Schuette announced that he had reached an agreement with another propane retailer, Ferrellgas, to resolve improper pricing claims. Under the terms of that agreement, Ferrellgas will provide consumer credits totaling more than $100,000.


The CFPB Files Lawsuit Against Payday Lender With Many Heads

  • The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court against a group of U.S. and foreign companies, referred to summarily as Hydra Group, and three individuals who allegedly control Hydra Group, for violations of the Consumer Financial Protection Act, the Truth in Lending Act, and the Electronic Fund Transfer Act.
  • The complaint, filed in the Western District of Missouri on September 8, alleges that the defendants used consumer information purchased from third party lead generators to originate payday loans without consumers' direct consent. It further alleges that the defendants initiated unauthorized withdrawals from consumers' bank accounts, while charging thousands of dollars in finance charges on what were initially $200 to $300 loans.
  • The CFPB lawsuit describes a situation similar to one contained in a complaint filed on September 5 by the Federal Trade Commission, also in the Western District of Missouri, charging a web of U.S. and foreign subsidiary companies with similar practices.

CFPB Issues Final Rule to Oversee Large Nonbank Providers of International Money Transfers

  • The CFPB finalized a rule that will subject to the CFPB's supervisory authority any nonbank company providing more than one million international money transfers per year.
  • The Dodd-Frank Act gives the CFPB the express authority to supervise "larger participants" in consumer financial markets as defined by rule. This is the CFPB's fourth larger participant rule. The other larger participant rules involved student loan servicing, debt collection, and consumer reporting markets.
  • The final rule is planned to go into effect on December 1, 2014, and will apply to approximately 25 of the largest nonbank international money transfer companies in a $50 billion market space.

CFPB Defines Authority Over Nonbank Auto Finance Companies Through Proposed Rule

  • The CFPB proposed a new rule that would give it authority to supervise nonbank auto finance companies that are "larger participants" in the market and "make, acquire, or refinance 10,000 or more [auto] loans or leases in a year."
  • According to the CFPB, the proposed rule would provide express authority for the CFPB to ensure that larger nonbank auto finance companies are fairly marketing and disclosing the terms of the loans, providing accurate information to credit bureaus, and engaging in fair debt collection practices.
  • The proposed rule, if finalized, would apply to approximately 38 nonbank auto finance companies, covering about 90 percent of the nonbank auto loan and lease market.


Eight Attorneys General Seek Clarity in Clean Water Act Enforcement

  • A coalition of AGs from seven states and the District of Columbia, led by New York AG Eric Schneiderman, issued comments in a letter to the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers in support of a proposed rule that would expressly include tributaries and adjacent waters (such as wetlands) as "water of the United States" under the federal Clean Water Act (CWA).
  • The need for a clarifying rule stems from two recent U.S. Supreme Court decisions, which allegedly created uncertainty as to whether the CWA applies to some waters, including smaller, seasonal, or rain-dependent streams and wetlands. According to the coalition of AGs, as a result of the uncertainty, roughly 20 million wetland acres and 2 million miles of streams have lost or could lose protection under the CWA.
  • In addition, the coalition highlights that a majority of states have laws in place that could prevent state agencies or municipalities from regulating waters that are not included in the definition of water under the CWA.
  • In contrast, West Virginia AG Patrick Morrissey, argues that including waters such as smaller streams and wetlands as water under CWA jurisdiction will make it harder for small farmers and other local businesses to operate efficiently.

Maryland Attorney General Reaches Settlement for Remediation of Former Steelmaking Site

  • Maryland AG Douglas Gansler announced a $48 million settlement with the new owner of the Sparrows Point steelmaking facility.
  • Under the terms of the settlement, Sparrows Point Terminal, LLC will assume responsibility for environmental remediation by providing an initial $48 million in financial assurances to the Maryland Department of the Environment (MDE), coupled with a budgetary review process every six months and coverage of the MDE's oversight costs up to $100,000 per year.
  • The settlement is part of a larger effort to redevelop the 3100-acre Sparrows Point site into a hub for shipping, energy, and advanced manufacturing uses.


Forty-Six States and the District of Columbia Settle With Medicaid Supplier

  • New York AG Eric Schneiderman announced that 46 states and the District of Columbia settled claims that Medtronic violated the False Claims Act by improperly inducing physicians to recommend its devices. AG Schneiderman led a national team in negotiating the settlement.
  • Under the terms of the settlement, Medtronic will pay in excess of $362,000 to the settling states' Medicaid programs. In May, the U.S. Department of Justice settled related claims against Medtronic for $9.9 million.
  • The lawsuit was initiated by a whisteblower in the U.S. District Court for the Eastern District of California under the qui tam provisions of the False Claims Act.


Virginia Attorney General Drops Two Banks From Lawsuit After Learning About Confidential Settlement

  • Last week we blogged about Virginia AG Mark Herring's $1.15 billion lawsuit against 13 national banks for alleged false claims and fraudulent misrepresentations regarding the value of mortgage-backed securities sold to the Virginia Retirement System.
  • This week, according to a news report, the AG's office has dropped J.P. Morgan Securities LLC, as current owner of Bear, Stearns & Co., as well as its subsidiary WAMU Capital Corp., from that lawsuit after learning that AG Herring's predecessor had reached a confidential settlement with JPMorgan Chase in 2013 that precludes this action. According to the news report and the AG's website, the lawsuit will proceed against the remaining 11 banks.

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