United States: State AGs In The News - December 11th, 2014

Last Updated: December 23 2014
Article by Bernard Nash and Lori E. Kalani

Hot News

Dickstein Shapiro Presents a Webcast on Antitrust Scrutiny: Ways to Plan, Prepare and Respond

  • Dickstein Shapiro is partnering with the National Constitution Center to provide a 90-minute webcast on December 17th at 1:00 PM ET discussing recent developments in antitrust laws.
  • Jim Martin and Jennifer Hackett, both partners in Dickstein Shapiro's Antitrust & Financial Services Practice, will provide analysis on the evolving governmental framework for antitrust scrutiny and advice for designing customized compliance programs.
  • To access a recording of the webcast, please click here. The presentation slides are also available here.

More States Join Texas Lawsuit Against President's Immigration Order

  • Seven additional states have joined Texas AG Greg Abbott's lawsuit challenging President Obama's Executive Order on immigration as unconstitutional and in violation of the U.S. Administrative Procedures Act.
  • The amended complaint now lists a total of 25 plaintiffs, including 19 State AGs.

Antitrust

Idaho Attorney General Settles With Physician Group

  • Idaho AG Lawrence Wasden settled with four doctors who allegedly violated the Idaho Competition Act. During negotiations with Madison Memorial Hospital in Rexburg, the doctors allegedly collectively sought compensation, in addition to hospital privileges, in return for providing on-call coverage.
  • AG Wasden clarified that the focus of his investigation was on whether the doctors formed an agreement to cease providing on-call coverage that constituted an unreasonable restraint of commerce in violation of state antitrust law, and not whether the doctors had a right to negotiate increased compensation.
  • The settlement requires that the physicians refrain from conspiring with other physicians in future negotiations with the hospital over compensation. It also requires them to certify their compliance with Idaho Competition Act to AG Wasden for each of the next five years.

Consumer Protection

Forty-Five Attorneys General Settle With Satellite Radio Provider

  • Led by Ohio AG Mike DeWine, 45 states reached a settlement with Sirius XM Radio Inc. for $3.8 million following an investigation of the company's advertising and billing practices. In addition to the payment to the states, Sirius will also provide restitution to consumers who have eligible claims based on the problems identified in the investigation.
  • The settlement resolves allegations that Sirius violated numerous state consumer protection laws through deceptive advertising and billing practices, including: automatically renewing subscriptions without customer consent, making it difficult for customers to cancel service and failing to honor customer requests to cancel once made, failing to provide timely refunds, and refusing to refund unapproved charges.
  • Sirius signed a detailed Assurance of Voluntary Compliance in which it agreed to increase customer disclosure and transparency through a wide range of compliance procedures. Sirius denied any wrongdoing, and stated that it had disclosed all relevant features of its billing practices and had obtained the proper consumer consent at the time of initial purchase.

Data Privacy

Massachusetts Settles With Bank Over Lost Data

  • Massachusetts AG Martha Coakley settled with TD Bank, N.A., to resolve an investigation into a 2012 incident where TD Bank lost unencrypted server backup tapes that contained information, including names, addresses, Social Security numbers, account numbers, and date of birth for approximately 90,000 Massachusetts residents, and failed to comply with state data breach notification requirements.
  • The settlement requires TD Bank to pay $325,000 in civil penalties and $75,000 in attorney's fees and costs. It also requires TD Bank to provide $225,000 to a fund administered by the AG's Office to promote data breach education and fund local programs aimed to increase consumer protection. TD Bank further agreed to encrypt personal information stored on backup tapes, to require third-party service providers to adopt stricter security practices, and to monitor service providers for compliance.
  • Earlier this year, nine states, led by Florida AG Pam Bondi, also reached a settlement with TD Bank for $850,000 to resolve their investigations into the 2012 data breach.

Environment

Attorneys General Pair With Nonprofit Organizations to Challenge EPA Rule at DC Circuit

  • Kansas AG Derek Schmidt, together with Nebraska AG Jon Bruning, filed a petition to the U.S. Circuit Court of Appeals for the District of Columbia challenging the Environmental Protection Agency's Rule requiring states to use a new air pollution estimating model as they create their State Implementation Plans under the U.S. Clean Air Act.
  • AG Schmidt contends that the EPA Rule was promulgated without notice and an opportunity for states to comment. AG Schmidt also contends that the MOVES2014 methodology required by the Rule produces false conclusions regarding the use of ethanol as an additive to gasoline, ultimately harming Kansas's and Nebraska's ethanol industries.
  • The AGs joined as petitioners with Urban Air Initiative Inc. and the Energy Future Coalition. The petition identifies the Energy Future Coalition as "an unincorporated initiative of the Better World Fund, which is in turn a nonprofit publicly supported endowment incorporated in a manner consistent with Section 501(c)(3) of the Internal Revenue Code." It identifies Urban Air Initiative as a "social welfare organization incorporated in a manner consistent with Section 501(c)(4) of the Internal Revenue Code."

False Claims Act

Florida and the U.S. Intervene in False Claims Suit Against For-Profit College

  • Florida AG Pam Bondi joined with the U.S. Attorney for the Southern District of Florida to intervene in a two-yearold lawsuit against FastTrain II Corporation d/b/a FastTrain College, and its owner Alejandro Amor, alleging violations of both the federal and state False Claims Acts.
  • The lawsuit alleges that from at least January 1, 2009 through June 22, 2012, FastTrain and Amor submitted numerous false claims for payment to the U.S. Department of Education by fabricating false documents, such as high school diplomas, and by inducing otherwise ineligible students to falsify applications for federal student aid programs. The lawsuit also alleges that FastTrain kept students on its financial aid recipient list long after those students were no longer attending. In total, FastTrain students received over $6.5 million in Federal Pell Grants and other federally-provided financial aid. FastTrain administered for-profit college programs across seven campuses in southern Florida, but is now defunct.
  • The lawsuit was originally filed on April 17, 2012 by Juan Pena, a former admissions employee of FastTrain. The case, U.S. ex rel Pena v. FastTrain II Corp. 1:12-cv-21431, is pending in U.S. District Court for the Southern District of Florida.

Intellectual Property

Nebraska Ordered to Pay Attorneys' Fees in Failed Attempt to Limit Alleged Patent Trolls

  • The U.S. District Court for the District of Nebraska has ordered the state to pay $725,000 in legal fees to MPHJ Technology Investments, LLC, and ActiveLight, Inc. (formerly known as Activision TV Inc.). MPHJ and ActiveLight were awarded attorneys' fees for prevailing in their action to preempt an investigation by Nebraska AG Jon Bruning.
  • AG Bruning had sought to use state consumer protection and deceptive trade practices laws to prevent MPHJ and ActiveLight from asserting their patent rights, allegedly in bad faith or in a deceptive manner.
  • We have followed this story from the outset, and reported on the court's decision to grant summary judgment to MPHJ and ActiveLight and to enjoin AG Bruning from conducting further investigations or enforcement actions.

States v. Federal Government

Attorneys General Argue Against Preemption by Natural Gas Act

  • Twenty-one State AGs, led by Kansas AG Derek Schmidt, submitted an amici brief in a U.S. Supreme Court case involving natural gas prices and state law. The AGs' brief supports the respondents—manufacturers, public schools, hospitals, and other direct purchasers of natural gas—in arguing that the U.S. Natural Gas Act (NGA) does not preempt state antitrust laws that apply to retail transactions for the sale of natural gas.
  • The core of the AGs' argument is that although the federal government has had a long-standing role in regulating the wholesale markets and interstate transportation of natural gas, it "disavowed any intent to preempt state regulation of retail sales of natural gas."
  • This dispute emerged from multiple lawsuits, some of which were brought individually by the respondents under various state antitrust laws, claiming that the petitioners—mostly energy companies—conspired to fix higher-than-market prices for natural gas sold at the retail level. The petitioners, who were defendants in the state lawsuits, removed the cases to federal court, where they were consolidated in the District of Nevada. The district court ultimately found that the NGA preempted state law. However, on appeal, the 9th Circuit unanimously reversed, and held that the NGA cannot preempt state antitrust in the area of retail sales.
  • The case, Oneok, Inc. v Learjet, Inc., No. 13-271, is scheduled for oral argument on January 12, 2015.

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