United States: State AGs In The News - January 15th, 2015

Last Updated: January 28 2015
Article by Bernard Nash and Lori E. Kalani

Hot News

California Attorney General Announces Candidacy for 2016 Senate Race

  • California AG Kamala Harris announced that she will run for the U.S. Senate seat that will be vacated by Senator Barbara Boxer, who will not seek reelection when her fourth term expires in 2016.

Consumer Protection

Nine State Attorneys General Settle With Online Shoe Retailer

  • AGs from nine states reached a settlement with Zappos.com, Inc., resolving their investigation into a 2012 data breach that potentially affected over 24 million customers.
  • The server exposed in the breach contained customer names, email addresses, billing and shipping addresses, phone numbers, and cryptographically scrambled passwords. However, Zappos asserts that the breach did not expose databases where critical credit card and other payment data were stored.
  • Zappos agreed to pay $106,000 and to implement a number of data security reforms, including: appointing a third party to audit its security procedures and reporting to the AGs the procedures that Zappos implements to bring its data security practices in compliance with the Payment Card Industry Data Security Standard.

New York Attorney General Collects From Allegedly Deceptive Debt Purchaser 

  • New York AG Eric Schneiderman reached a settlement with Encore Capital Group, Inc., to resolve claims that Encore improperly obtained more than 4,500 debt judgments in New York.
  • The investigation and settlement were based on allegations that Encore pursued debt collection lawsuits against consumers in New York, even though the underlying debt obligation originated in a different state and was outside of that state's statute of limitation for debt collection. AG Schneiderman alleged that Encore was able to obtain default judgments on otherwise time-barred claims because many consumers do not generally respond to debt collection lawsuits.
  • Encore has agreed to vacate $18 million in allegedly improperly obtained judgments and pay $675,000 in civil penalties and costs. It also has agreed to change its future debt collection operations to provide better disclosures to debtors, including the following information: the name of the original creditor and the date of the debtor's last payment on the debt, whether the debt is outside of the statute of limitations for litigation purposes, and whether the debt is outside of limits for reporting to credit reporting agencies.

Data Privacy

Washington Attorney General Seeks Greater Data Privacy Through Improved State Laws

  • Washington AG Bob Ferguson introduced draft legislation, with bipartisan support, designed to amend the state data breach and notification law to better protect consumers through increased breach disclosures.
  • The proposed legislation would strengthen data breach notification requirements by eliminating the blanket exemption for encrypted data, requiring consumer notification no later than 30 days whenever personal information is likely compromised, and requiring that the AG be notified within 30 days when a data breach occurs at a business, nonprofit or public agency.

Intellectual Property

Federal Judge Sends Alleged "Patent Troll" Back to State Court

  • A federal judge for the District of Vermont again remanded to state court a lawsuit brought by Vermont AG William Sorrell alleging violations of the Vermont Consumer Protection Act by MPHJ Technology Investments, LLC.
  • AG Sorrell is suing MPHJ on allegations that it violated state consumer protection laws by sending "unfair and deceptive" letters to small businesses and nonprofits throughout Vermont, claiming they had infringed MPHJ's intellectual property and demanding that they pay licensing fees. The patent MPHJ claims to have been infringed pertains to "scanning documents and attaching them to email via a network."
  • This lawsuit was initially filed in Vermont state court in May 2013, and has been removed twice to federal court on arguments that deciding these claims in state court would negatively affect MPHJ's patent rights under federal law. For more background on this, and a related lawsuit in Nebraska, please see our previous post.

States v. Federal Government

Twenty-Five Attorneys General Argue for Reversal of Ninth Circuit Decision on Gun Law

  • A bipartisan group of twenty-five AGs, including Montana AG Tim Fox, submitted an amici brief to the U.S. Supreme Court in support of petitioners' application for a writ of certiorari to review the Ninth Circuit's decision affecting gun rights.
  • The Ninth Circuit decision, Jackson v. City & County of San Francisco, upheld a San Francisco ordinance requiring firearms in a private residence to be stored in locked and inoperable condition when not being carried on a person. The amici AGs—many from states in the Ninth Circuit—argue that this ordinance infringes on gun owners' rights under the Second Amendment by denying them immediate access for the core lawful purpose of home defense.
  • The AGs contend that the San Francisco ordinance in question is substantially similar to the law that was struck down for being too restrictive in District of Columbia v. Heller, a 2008 Supreme Court decision.

Eleven Attorneys General Argue in Support of Executive Action on Immigration

  • Eleven states, led by Washington AG Bob Ferguson, submitted an amici brief to the U.S. District for the Southern District of Texas as part of  the recently filed case Texas v. U.S. The AGs argue in support of  President Obama's executive actions on immigration and in opposition to the plaintiff states' motion for a preliminary injunction.
  • In contrast, recently elected Texas AG Ken Paxton is leading the group of 24 states seeking to enjoin and have declared unconstitutional the executive actions, which include a U.S. Department of Homeland Security (DHS) Directive providing deferred action for certain groups of immigrants. A preliminary hearing is scheduled for today in Brownsville.
  • In their amici brief, the AGs supporting President Obama's actions argue that the requirements for injunctive relief are not met because directives allowing immigrants to work legally do not irreparably harm but rather substantially benefit states, through increased wages and therefore spending power of immigrant workers, increased state tax revenues, and by allowing the DHS to focus its resources on the deportation of criminals and other threats to state security.

Utilities

Massachusetts Attorney General Resolves Disputes Over Electricity Prices; Provider to Refund $44.7 Million

  • Massachusetts AG Martha Coakley settled a series of related disputes pending before the Massachusetts Department of Public Utilities (DPU), that alleged that NSTAR Electric & Gas Company overcharged customers.
  • The overcharges are alleged to have occurred due to billing practices that allowed NSTAR to raise rates to address predicted increases in certain associated costs, such as capital improvement expenses, energy efficiency projects, and pension increases. However, the DPU had allegedly failed to review and reconcile the predicted cost increases with the actual cost outlays each year for accuracy. The complaints stem from allegations that NSTAR increased rates without later incurring the associated costs.
  • As a result of the settlement, which must be approved by the DPU in March, NSTAR will refund $44.7 million in overcharges, provided to its current customers in the form of rate reductions, starting in April 2015.

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