The State AG Report

Editor-in-Chief: Christopher Allen
Contributing Editors: Grace Garver, Hannah Land, Keturah Taylor, Emily Yu

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The State AG Report Weekly Update March 10, 2016

Antitrust

Maryland Attorney General Sues Contact Lens Maker for Violation of State Antitrust Law

  • Maryland AG Bryan Frosh filed a complaint against Johnson & Johnson Vision Care, Inc. (“J&J”) for alleged violations of the Maryland Antitrust Act.
  • According to the complaint, J&J established a Resale Price Maintenance Policy (“Policy”), under which it set a minimum price that all sellers, including discounters, could charge for its contact lenses. The complaint alleges that when discounter Costco objected to the Policy, J&J revised it so that, in exchange for agreeing to charge the minimum price, Costco could also provide a $50 in-store cash card to customers that purchased a month’s supply of contacts. The complaint alleges that such agreements, where both a provider and seller of a product agree to a price, are illegal.
  • AG Frosh seeks, among other things, to enjoin J&J from enforcing its Policy as well as $100,000 in civil penalties.

Consumer Financial Protection Bureau

CFPB Settles with Online Payment Platform for Alleged Data Security Misrepresentations

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Dwolla, Inc. (“Dwolla”) to resolve allegations that the company misled consumers about the safety of its online payment system in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • According to the CFPB, Dwolla allegedly misrepresented that its data security practices exceeded industry standards, failed to encrypt some sensitive consumer personal information, and released applications to the public before testing whether they were secure.
  • Under the terms of the consent order, Dwolla must pay $100,000 in penalties and, among other things, fix security flaws and properly train employees on its data security policies and procedures.

Data Privacy

FTC Seeks Information from Credit Card Industry Data Security Auditors for a New Study

  • The Federal Trade Commission (“FTC”) issued orders to nine auditing companies requiring them to provide information on how they conduct audits of major payment card issuing companies.
  • The FTC requires certain payment card issuing companies to undergo audits to ensure they are complying with the Payment Card Industry Data Security Standards.
  • According to the Orders, the FTC is investigating the role data security compliance auditing has on protecting consumers’ information and privacy and specifically seeks details about the assessment processes employed by the nine companies.

Environment

Washington Attorney General Seeks Criminal Charges Against Company Over Contaminated Wastewater

  • Washington AG Bob Ferguson filed criminal charges against Broadband Environmental Service Inc. and its owner (“BES”) for allegedly violating the Washington Reclaimed Water Use Act.
  • The Washington State Patrol contracted BES to run the Washington State Fire Training Academy’s reclaimed water facility/wastewater treatment plant.
  • According to the complaint, BES allegedly submitted false water-quality reports with the state’s Department of Ecology, failed to maintain adequate and complete records, and allowed contaminated wastewater to be used in fire-fighting exercises.

False Claims Act

Massachusetts Attorney General Settles with Telecom Company to Resolve False Claims Allegations

  • Massachusetts AG Maura Healey reached a settlement with Level 3 Communications, LLC (“Level 3”), a telecommunications company and Internet service provider, to resolve allegations it breached its contract with the Massachusetts Department of Transportation (“MassDOT”) and violated the Massachusetts False Claims Act.
  • According to the AG’s Office, Level 3 breached its agreement with MassDOT, which allows it to run fiber optic cables alongside state highways, by allegedly withholding rental payments.  The AG also alleged that Level 3 violated the False Claims Act by concealing the amounts it owed and knowingly avoiding its annual rent obligations.
  • Under the terms of the settlement, Level 3 will resume making annual rent payments, will pay $7 million for contract damages and False Claim Act violations, and will pay an additional $1.2 million in contract damages over the next four years.

State v. Federal

23 Attorneys General File Amicus Brief in Support of Allowing Immediate Challenge to Federal Designations of Protected Land

  • A bipartisan coalition of 23 AGs, led by West Virginia AG Patrick Morrisey and Ohio AG Mike DeWine, filed an amicus brief with the U.S. Supreme Court asking it to affirm a ruling by the U.S. Court of Appeals for the Eighth Circuit that allowed property owners to immediately challenge the U.S. Army Corp of Engineers (the “Corps”) when the Corps issues a “jurisdictional determination” that a property is subject to federal jurisdiction because it contains “waters of the United States.”
  • As explained in the states’ brief, once the Corps issues such jurisdictional determinations, property owners are required to refrain from conducting otherwise lawful activities on their properties, and if they continue to use their land they could face significant potential civil and criminal penalties. The states assert that the Corps’ jurisdictional determinations are final agency actions and that immediate judicial review would provide for an important and timely check on federal authority.