Antitrust

Ohio Attorney General Investigates Businesses for Potential Price Gouging Following a City Tap Water Ban

  • In response to consumer complaints, Ohio AG Mike DeWine is investigating businesses for any possible bottled water price gouging during the city of Toledo’s water ban. The city of Toledo banned the use of tap water for drinking and food preparation after allegedly finding toxins in its water supply.
  • As part of his investigation, AG DeWine has sent letters to 58 businesses seeking information about the price of bottled water before, during, and after the water ban.
  • While the state does not have a statute that defines price gouging, the state Consumer Sales Practices Act prohibits unfair, deceptive, or unconscionable sales practices. According to the AG, under that law, a practice could be considered unconscionable if the supplier knew at the time of the transaction that the price was substantially higher than the price at which similar goods or services could be readily obtained. In addition, it could be considered unfair or deceptive to dramatically increase the price of in stock products in response to current events.

Charities

Massachusetts Attorney General Sues and Obtains Restraining Order Against Charity

  • Massachusetts AG Martha Coakley has filed a lawsuit and obtained a temporary restraining order against the Focus on Veterans, Inc. charity, alleging that the charity violated state charitable solicitation laws by soliciting funds without a required certificate and used deceptive practices.
  • The charity allegedly failed to submit annual financial filings, which are required to obtain a valid certificate from the AG that enables the charity to solicit charitable funds in the state. The charity also allegedly misled potential donors by falsely representing that it would use donations to assist veterans in the state.
  • The temporary restraining order bars the charity from soliciting in the state. The complaint requests further injunctive relief, declaratory relief, and disgorgement.

Contingency Fee Counsel

Massachusetts Attorney General Resolves Allegations of Inappropriate Contingency Fee Agreement With Lobbying Firm

  • Massachusetts AG Martha Coakley entered into a joint disposition agreement with lobbying firm the Brennan Group, Inc. to resolve allegations that the Brennan Group profited from an illegal contingency fee agreement.
  • According to the AG, lobbying firms are prohibited from entering into contingency fee agreements with clients. The Brennan Group allegedly entered into a payment contract with the Franciscan Hospital for Children that required the Brennan Group to lobby the legislature on the hospital’s behalf in exchange for payment based on a two-tiered fixed percentage structure determined by the amount of money the hospital received following the lobbying.
  • Under the joint disposition agreement, the Brennan Group will return $100,000 to the hospital.

Consumer Financial Protection Bureau

Consumer Financial Protection Bureau Settles Servicemember Consumer Protection Allegations With Retail Store

  • The Consumer Financial Protection Bureau (CFPB) settled with retail chain USA Discounters, Ltd. to resolve allegations that it engaged in deceptive marketing, misled servicemembers, and failed to provide services for which it was paid.
  • USA Discounters, which sells home goods, often has retail stores located near military bases. It allegedly charged a $5 fee for representative services to assist servicemembers with their rights under the Servicemembers Civil Relief Act (SCRA), which provides certain legal protections to active duty servicemembers, including protections from debt collection lawsuits. The CFPB alleged that these services were unnecessary or sometimes never performed.
  • The consent order requires the company to pay a $50,000 penalty, not engage in any unfair or deceptive practices, not charge for SCRA services, and provide restitution to affected servicemembers.

Consumer Protection

Maryland and New York Attorneys General Enter Into Agreements With Ask.com

  • Maryland AG Douglas Gansler and New York AG Eric Schneiderman entered into separate, but similar, agreements with Ask.com, an operating company of IAC/InterActiveCorp., to protect users of the newly acquired Ask.fm.
  • Ask.fm is an online social networking website that allows users to post anonymous questions to other users. The agreements are meant to diminish cyberbullying and harassment of Ask.fm users.
  • Pursuant to the agreements, Ask.fm will enhance its safety policies and procedures, which will include creating a safety center resource, hiring a trust and safety officer, and establishing a board to oversee safety issues. Ask.fm will also, among other things, review user complaints within 24 hours and delete accounts of certain alleged repeat violators.

New York Attorney General Settles Illegal Payday Loan Collection Allegations

  • New York AG Eric Schneiderman settled with Forster & Garbus, one of the state’s largest debt collection firms, to resolve allegations that it violated state law by collecting on “payday” loans. Payday loans are short-term loans with high interest rates and are illegal in New York because they exceed the maximum allowed interest rate of 16 percent.
  • Forster allegedly unknowingly collected on payday loans placed with it by another company. After being notified by the AG’s office, Forster stopped collecting on the loans. The AG stated that lack of knowledge that a loan is a payday loan is not an acceptable excuse for violations of state predatory lending laws.
  • Pursuant to the settlement, Forster must pay $10,000 in costs and penalties. In addition, Forster may not file a consumer credit action against a state resident without obtaining a copy of the loan document and determining that the loan is not a payday loan. Forster must also obtain a copy of the loan document if it receives a consumer complaint regarding an existing settlement or judgment, then vacate any judgments and pay restitution if Forster determines that the loan at issue is a payday loan.
  • The settlement is part of ongoing payday loan enforcement efforts by the AG.

Acting New Jersey Attorney General Settles With “As Seen on TV” Company

  • After an investigation, acting New Jersey AG John Hoffman and the state Division of Consumer Affairs filed a complaint against Telebrands Corp., which is known for its “As Seen on TV” products, alleging that it violated the state Consumer Fraud Act and the terms of a 2001 consent judgment. The 2001 consent judgment resolved prior litigation with the state and required compliance with the state Consumer Fraud Act.
  • Telebrands allegedly committed several violations of state law, including using aggressive sales techniques to “upsell” products, failing to allow customers to opt out of ordering processes, shipping and billing for products not ordered by consumers, using misleading advertisements, making false promises and misrepresentations, and omitting material facts.
  • The lawsuit seeks restitution for affected consumers, civil penalties, costs, and fees. The state is seeking enhanced penalties of up to $20,000 per violation, instead of the standard $10,000 per violation allowed under the state Consumer Fraud Act, because of the alleged violation of the 2001 consent judgment.

New York Attorney General Enters Into Agreement With Retailer Regarding Allegations of Racial Profiling of Customers

  • Following an investigation, New York AG Eric Schneiderman entered into an agreement with Macy’s Retail Holdings, Inc. to resolve allegations that it racially profiled and falsely detained minority customers.
  • The AG found that Macy’s allegedly used heightened surveillance for and wrongfully detained minority customers and denied interpreter services to customers with limited English proficiency. Macy’s operated under a consent decree from 2005 to 2008 to resolve allegations that it had violated antidiscrimination laws.
  • Under the agreement, Macy’s will pay $650,000 in costs, fees, and penalties; designate an independent antidiscrimination expert; hire a security monitor; post a customer bill of rights; establish new recordkeeping requirements; adopt new antiprofiling policies; train employees; and investigate any customer complaints.
  • We recently blogged about a similar settlement reached by the AG with Barneys New York.

Florida Attorney General Sends Letter to FDA Regarding Regulation of Tobacco Products

  • Florida AG Pam Bondi sent a letter to the Food and Drug Administration (FDA) regarding its proposed rule that will further regulate certain tobacco products, including e-cigarettes and cigars, and extend certain regulations that are already in place for cigarettes to these products.
  • AG Bondi supports regulation of e-cigarettes, including regulation of these products for youth, but stated in her letter that the FDA needed to “more narrowly tailor these overbroad regulations.” Specifically, AG Bondi expressed concern for a small Florida cigar company, J.C. Newman Cigar, stating that it was unique in the industry and “should not be regulated in the same manner as the nation’s largest cigarette companies.”
  • We recently blogged about a separate letter submitted by 29 AGs in support of the proposed rule and additional regulation of e-cigarettes, which emphasized the importance of regulatory protections for youth.

Employment

New York Attorney General and Taxi and Limousine Commission Settle With Medallion Leasing Agent for Over $1.6 Million

  • New York AG Eric Scheiderman and the state Taxi and Limousine Commission (Commission) settled with Yellow Cab SLS Jet Management Corp, a taxi medallion leasing agent, to resolve allegations that it violated the Commission’s rules governing “lease cap rules.”
  • Most taxi drivers in New York City lease the medallions required to operate their taxis from owners and leasing agents. The Commission has lease cap rules to protect drivers and limit fees drivers may be charged for leasing medallions to ensure a baseline level of take-home earnings for drivers.
  • SLS Jet allegedly caused drivers to incur or charged late fees in violation of the Commission’s lease cap rules.
  • Under the agreements with the AG and the Commission, SLS Jet will pay almost $1.39 million in restitution, $125,000 in penalties, $125,000 to the commission, and $25,000 to monitor compliance. It will also ensure future compliance by training employees, posting notice of the lease cap rules, appointing a compliance officer, reporting quarterly to the AG’s office, and notifying the Commission of any new fees.

Environment

Vermont Attorney General Settles Alleged Hazardous Waste Violations

  • Vermont AG William Sorrell has settled with Sisters and Brothers Investment Group, LLP to resolve allegations that it violated state Hazardous Waste Management Rules relating to the release of waste oil.
  • Pursuant to the court approved consent order, the company admitted liability for 11 violations of the state rules, including failing to make a hazardous waste determination, using improper hazardous waste containers, and failing to notify the state Agency of Natural Resources of the release.
  • Under the agreement, the company will pay $70,000 in civil penalties.

Health Care

Indiana Attorney General Announces Partial Victory in Lawsuit Regarding Affordable Care Act

  • Indiana AG Greg Zoeller announced a partial victory in the lawsuit that he and 39 school corporations brought against the U.S. Internal Revenue Service (IRS), the U.S. Department of Health and Human Services, and the U.S. Department of the Treasury, alleging that the IRS overstepped its authority by requiring financial penalties for employers in states that did not create health insurance exchanges under the Affordable Care Act (ACA). In ruling on a motion to dismiss, the U.S. District Court for the Southern District of Indiana ruled that that the main parts of the lawsuit can continue.
  • The court held that the plaintiffs could proceed with the allegations that the IRS violated the Administrative Procedures Act. A similar argument was recently successful in a separate legal challenge to the ACA in Halbig v. Burwell.
  • According to the AG, the state does not plan to seek an interlocutory appeal. Oral arguments on summary judgment are scheduled for October 9.

Intellectual Property

Vermont Attorney General Wins Another Victory in Alleged “Patent Troll” Lawsuit

  • Vermont AG William Sorrell announced another victory in his landmark lawsuit against MPHJ Technology Investments, LLC. The U.S. Court of Appeals for the Federal Circuit dismissed MPHJ’s appeal of the federal district court’s ruling to send the case back to state court for resolution.
  • As we previously blogged, AG Sorrell filed the case in state court in May 2013 alleging that MPHJ’s practice of sending patent demand letters, purportedly in bad faith, to individuals, businesses, and nonprofits violated Vermont consumer protection law. MPHJ removed the case to federal court arguing that it involved issues of patent law implicating a federal question, as well as asserting that diversity existed between the state and MPHJ. The federal district court rejected those arguments and ordered the case back to Vermont state court. MPHJ appealed the district court’s decision.
  • “We’re pleased the Federal Circuit has rejected MPHJ’s appeal. Now we can turn in earnest to litigate the case in state court—where it began and where it rightfully should be,” stated the AG.

Marijuana

Arkansas Attorney General Certifies Proposed Medical Marijuana Ballot Item for 2016

  • Arkansas AG Dustin McDaniel certified the ballot title and popular name of a proposed ballot item for the 2016 ballot that would legalize the use of marijuana for medical purposes. Arkansans for Compassionate Care is sponsoring the proposed item. It was unable to obtain the required signatures before the deadline for this year’s general election ballot. A similar proposal on the 2012 ballot was defeated.
  • According to a news report, the AG stated that the proposal meets state requirements that will allow the sponsor to begin gathering signatures, but the AG warned that the “complexity and far-reaching effects of the proposal” could make it susceptible to challenges.
  • The AG also recently certified another proposal for a constitutional amendment that would make marijuana legal without restricting it to medical use. According to another news report, a lawyer in the state is anticipating a third marijuana ballot proposal for 2016 that would legalize medical marijuana. The proposal would be similar to the Arkansans for Compassionate Care proposal, but would not include provisions allowing home growth or lower-cost options for low income individuals.

Medicaid Fraud

New York Attorney General Settles Allegation of Medicaid Fraud With Adult Day Health Care Program for $6.5 Million

  • Following an investigation, New York AG Eric Schneiderman settled for $6.5 million with Northern Manor Multicare Center, Inc. to resolve allegations that its health care facility, Northern Manor Adult Day Health Care Program (Northern Manor ADHCP), did not provide services as represented in its claims for payment to Medicaid. The AG also announced the arrest of four employees of Northern Manor ADHCP.
  • Northern Manor ADHCP allegedly hired unqualified individuals and admitted more registrants than the state certified it to admit.
  • Northern Manor Multicare Center agreed to pay $6.5 million and close Northern Manor ADHCP. The employees were charged with grand larceny for causing Medicaid payments based on false claims, falsifying business records, and unauthorized practice of a profession.

Mortgages/Foreclosures

CFPB Settles With Mortgage Provider for Over $19.3 Million

  • The CFPB settled with Amerisave Mortgage Corporation, its affiliate Novo Appraisal Management Company, and the companies’ owner to resolve allegations of engaging in deceptive practices.
  • Amerisave allegedly advertised misleading interest rates, charged improper upfront fees, failed to honor advertised rates, and illegally overcharged for affiliated services offered by Novo.
  • Pursuant to the consent order, Amerisave and Novo will refund customers $14.8 million and Amerisave will pay a $4.5 million penalty. The agreement also prohibits Amerisave from advertising any unavailable mortgage rates or charging any illegal fees. In addition, the owner will pay a $1.5 million penalty.