Antitrust

Illinois, Iowa, and Missouri Attorneys General Propose Settlement to Resolve Competitive Concerns Related to Tyson’s Acquisition of Hillshire

  • The AGs of Illinois, Iowa, and Missouri and the U.S. Department of Justice simultaneously filed a complaint and proposed final judgment in the U.S. District Court for the District of Columbia regarding Tyson Foods Inc.’s proposed acquisition of the Hillshire Brands Company. The proposed settlement would allow Tyson to proceed with the acquisition if it divests ownership of sow purchaser Heinold Hog Markets.
  • Tyson’s acquisition of Hillshire would allegedly combine two major sow purchasers and eliminate the benefit farmers have received from the competition between Heinold and Hillshire. “Our concern was that this buyout would have greatly reduced the competitive market and would affect purchase prices for Iowa hog breeders trying to sell their sows,” Iowa AG Tom Miller said. “Without the divestiture agreement we just reached, the Tyson-Hillshire deal would have combined companies that account for more than a third of all sow purchases. That’s significant.”
  • The settlement is subject to a 60-day public comment period and approval by the court.

California Attorney General Applauds Passage of Bill Related to Sale of Public Benefit Health Corporation Assets

  • California AG Kamala Harris applauded the passage of state Senate Bill 1094, introduced by State Senator Ricardo Lara, which would, among other things, extend the time the AG has to issue a decision regarding the sale of assets of a nonprofit public benefit corporation operating or controlling a health facility.
  • Under existing law, a nonprofit public benefit corporation operating or controlling a health facility must provide notice to the AG prior to selling or disposing of its assets and the AG must issue a decision regarding approval of that transaction within 60 days of notice. Senate Bill 1094 allows the AG 90 days, instead of 60 days, to issue a decision; to enforce conditions on the agreement or transaction; to amend conditions after a decision under specified circumstances; and to require the transferee to fulfill all representations made during the application process.
  • According to a news report, supporters of the bill say that the new restrictions are necessary to protect community interests at a time of industry consolidation. In comparison, the California Hospital Association argues that the AG already has broad authority and that allowing the AG to amend conditions after a decision will have a chilling effect on transactions.
  • AG Harris stated, “SB 1094 is about good public health policy that ensures choice and access to quality, affordable healthcare for underserved communities. I want to thank Senator Lara for introducing this bill and applaud the Assembly and Senate for passing this important legislation.”

Consumer Financial Protection Bureau

CFPB Settles With Debt-Settlement Payment Processor

  • The Consumer Financial Protection Bureau (CFPB) simultaneously filed a complaint and a proposedconsent order in federal court to resolve allegations that debt-settlement payment processor Global Client Solutions and two of its principals (collectively, Global Client) violated the Telemarketing Sales Rule and Consumer Financial Protection Act.
  • Global Client allegedly assisted debt-settlement companies with charging and collecting unlawful upfront fees from consumers before settling the consumer’s debt.
  • If approved by the court, the consent order will require Global Client to pay over $6 million in consumer relief and a $1 million civil penalty. The order would also prohibit Global Client from enabling other companies to collect any unlawful advance fees, require it to screen and monitor its prospective debt relief service provider clients, and require it to be monitored by and report to the CFPB to ensure compliance.

Consumer Protection

Colorado State Court Orders Vacation Club to Pay Over $7 Million in Penalties and Restitution

  • A Colorado state court ordered Sea to Ski Vacations and its owners to pay over $7 million in civil penalties and restitution to consumers in a lawsuit brought by Colorado AG John Suthers alleging violations of the state Consumer Protection Act. The court also enjoins the owners from owning, managing, or operating travel-related businesses.
  • According to the complaint, the company and its owners allegedly engaged in unlawful deceptive trade practices, including using misleading sales presentations regarding the benefits of membership, branding deals as “exclusive” when they were purportedly not, and offering a misleading “buy-back guarantee.”

New York Attorney General Sues and Obtains Restraining Order Against Companies Allegedly Operating Fraudulent Home Loan Modification Program

  • New York AG Eric Schneiderman filed a lawsuit and obtained a restraining order against four interrelated companies and their principles alleging that they marketed and operated a fraudulent home loan modification program. The companies are Home Affordable Direct, Inc.; Home Affordable Solutions, Inc.; JR Holding Group Corp; and Clear Solutions and Settlements, Inc.
  • The companies allegedly engaged in fraudulent and misleading practices, including collecting unlawful advance fees, misrepresenting their affiliations, failing to make required disclosures, and failing to perform their promises of providing substantial relief from unaffordable mortgage payments through loan modifications and other forms of foreclosure prevention.
  • At the request of the AG, a court froze the companies’ assets and granted a temporary restraining order prohibiting the companies from collecting any unlawful advance fees or operating their business without making required disclosures to consumers.
  • The lawsuit seeks injunctive relief, restitution, damages, disgorgement, penalties, and costs.

Environment

Eleven States, the District of Columbia, and the City of New York Move to Intervene in Lawsuit Brought by Twelve Attorneys General Regarding the EPA’s Regulation of Power Plant Emissions

  • Eleven states, the District of Columbia, and the City of New York, led by New York AG Eric Schneiderman, filed a motion in the U.S. Court of Appeals for the DC Circuit to intervene in a lawsuit filed by 12 AGs, led by West Virginia AG Patrick Morrisey. The lawsuit challenges a prior settlement agreement in which the U.S. Environmental Protection Agency (EPA) committed to proposing and finalizing a rule that will require states to regulate the emissions of certain power plants under the Clean Air Act.
  • The coalition led by AG Schneiderman dispute the claim asserted by the AGs in their lawsuit that invalidating the prior agreement would block the ongoing EPA rulemaking. The coalition seeks, among other things, to ensure that the EPA encounters no further delays in finalizing the rules.
  • The 11 states led by AG Schneiderman are New York, California, Connecticut, Delaware, Maine, Massachusetts, New Mexico, Oregon, Rhode Island, Vermont, and Washington. The 12 AGs led by AG Morrisey are the AGs of West Virginia, Alabama, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, and Wyoming.

Texas Attorney General Issues Opinion on Municipal Prohibitions and Fees Related to Single-Use Plastic Bags

  • Texas AG Greg Abbott issued a formal opinion regarding whether municipalities can enact bans on or adopt fees for single-use plastic bags. In the opinion, he stated that a court would likely find a city ordinance that prohibited or restricted single-use plastic bags for waste management purposes impermissible. However, the opinion implied that a court might find such an ordinance permissible if it had a purpose other than waste management—for example, a purpose of protecting animal life.
  • In addition, the opinion states that a court would likely find that a city ordinance that assesses a fee on the sale or use of single-use plastic bags is prohibited.
  • The opinion was issued in response to a question from State Representative Dan Flynn.

Iowa State Court Orders Packing Company to Pay Civil Penalties and Restitution for Alleged Environmental Violations

  • An Iowa state court ordered Sioux-Preme Packing Company to pay a $54,000 civil penalty and almost $23,000 in restitution in a lawsuit brought by Iowa AG Tom Miller alleging environmental violations related to the company’s wastewater discharge operations.
  • The company admitted to violating its permitted discharge limits, environmental monitoring requirements, and other construction and operation permit requirements. According to the complaint, the actions leading to these violations allegedly caused a large fish kill involving almost 200,000 fish.
  • Pursuant to the consent decree, in addition to paying the civil penalty and restitution for the fish kill and the investigation into its cause, the company is subject to injunction and is required to submit engineering documents regarding its irrigation system and a permit application for its nondischarge wastewater treatment system.

For-Profit Colleges

Iowa Attorney General Sues Cosmetology School for Alleged Unfair and Deceptive Practices

  • Iowa AG Tom Miller filed a lawsuit against cosmetology school La’ James International College for alleged unfair and deceptive practices in violation of the state Consumer Fraud Act.
  • According to the complaint, La’ James allegedly harmed its students by understaffing its classrooms, operating more like a workplace than an educational institution, failing to disclose material information to prospective students, and charging unfair and deceptive late program completion fees.
  • The complaint seeks injunctive relief, restitution, disgorgement, civil penalties of up to $40,000 per violation, costs, and fees.

Insurance

Massachusetts Attorney General Settles With Companies Allegedly Engaged in Deceptive Marketing and Sale of Discount Health Plans

  • Massachusetts AG Martha Coakley settled with Guarantee Trust Life Insurance Company and its subsidiary Vantage America Solutions, Inc. for $1.3 million to resolve allegations that the companies deceptively marketed and sold a discount health plan to state consumers.
  • The companies allegedly falsely represented one of their discount health plans as enabling residents to meet the state’s health insurance coverage mandate and misled consumers to believe that the plan was health insurance.
  • Pursuant to the settlement, the companies must pay close to $476,000 in restitution, more than $272,000 in interest, and close to $552,000 in civil penalties and costs. The settlement also prohibits the companies from making any misrepresentations regarding discount health plans, marketing or selling products as health insurance that are not insured health plans, and from violating any regulations governing discount health plans and organizations.

Intellectual Property

Illinois Enacts Anti-“Patent Troll” Legislation

  • Illinois AG Lisa Madigan applauded the state governor for signing into law Senate Bill 3405, which protects businesses from “patent trolls” who allegedly seek to acquire patents to profit from fraudulent infringement claims. The bill was crafted by AG Madigan and sponsored by State Senator Daniel Biss and State Representative Ann Williams.
  • The law bans patent demand letters that contain false or deceptive information, are sent by individuals lacking the right to license or enforce the patent, falsely threaten litigation, or fail to identify necessary information such as who is asserting the patent or an explanation of the alleged infringement.
  • “The law balances restrictions to crack down on this abusive practice while ensuring legitimate patent holders have the right to pursue infringement claims,” stated AG Madigan.
  • The anticipated effective date for this legislation is January 1, 2015.

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. A Vermont superior court denied MPHJ’s motion to dismiss for lack of personal jurisdiction.
  • 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. We more recently blogged about another of AG Sorrell’s victories in this case—a federal appeals court’s decision to dismiss MPHJ’s appeal of a ruling to send the case back to state court.
  • In its decision, the superior court acknowledged the state’s “strong interest in protecting its citizens from consumer fraud,” which the court stated weighed “heavily in favor of jurisdiction.” AG Sorrell announced, “We are pleased to be able to go forward with this litigation.”

Marijuana

Washington Court Holds That State Law Does Not Preempt City Ordinances Prohibiting Marijuana-Related Businesses

  • Following oral arguments, a Washington Superior Court judge issued a decision in MMH, LLC v. Fifeholding that state Initiative 502 (I-502), which decriminalizes the state regulated use and sale of marijuana, does not preempt the City of Fife’s local ordinances prohibiting marijuana-related businesses.
  • Washington AG Bob Ferguson filed a brief in this case, which we blogged about last week, supporting a grant of summary judgment to uphold the city’s local ordinances. The brief alternatively argued that if the court found that I-502 did apply and override the city’s ordinances, then federal law did not preempt the city’s ordinances. Because the court found that state law did not preempt local law, the court did not need to address the federal preemption issue.
  • “Today’s ruling affirms the opinion of my office earlier this year and allows [I-502] to continue to be implemented in Washington state,” stated the AG. “As I have said from the beginning, the drafters of [I-502] could have required local jurisdictions to allow the sale of recreational marijuana. It could have been done in a single sentence, but it was not. Now it is up to the Legislature to decide whether to require local governments to allow for the sale of marijuana.”

Mortgages/Foreclosures

New York Attorney General Sues Banks for Alleged Discriminatory “Redlining”

  • New York AG Eric Schneiderman sued Evans Bank, N.A. and Evans Bancorp, Inc. on allegations that the banks engaged in unlawful discrimination by “redlining” in the City of Buffalo. Redlining is the practice of denying access to mortgage loans in select neighborhoods based on the composition of those neighborhoods.
  • The banks allegedly created a map that defined their lending area by excluding predominantly African-American neighborhoods and the residents of those neighborhoods. The AG alleges that this approach of defining a lending area resulted in the banks systematically denying mortgages and services to African-Americans in the Buffalo metro area regardless of their credit-worthiness.
  • The complaint alleges violations of the Fair Housing Act, the state Human Rights Law, and the city code. The AG seeks declaratory and injunctive relief, compensatory and punitive damages, civil penalties, fees, and costs. According to the AG, this action is part of an ongoing and wider investigation into mortgage redlining by banks operating in the state.