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 November 17, 2016

Breaking News

Cozen O’Connor to Host Webinar on Employment and Antitrust Law

  • Cozen O’Connor will host a webinar on December 6, 2016 entitled “Violating Employment and Antitrust Law: New Developments and Non-Compete Agreements” at 11:30 AM ET.
  • Milton A. Marquis, Member of the State Attorneys General Practice, and Michael C. Schmidt, Vice Chair of the Labor & Employment Department, will discuss considerations companies must incorporate into their hiring, compensation, and information exchange practices to comply with Federal Trade Commission ("FTC") and U.S. Department of Justice ("DOJ") regulations, as well as how companies can mitigate risk by implementing a multifaceted approach that takes regulators’ priorities into account.
  • To register for the webinar, please click here.

 

Antitrust

Six Attorneys General Settle with Sports League Over Alleged Antitrust Concerns

  • Six AGs, led by New York AG Eric Schneiderman, reached a settlement with the National Football League (“NFL”) to resolve antitrust concerns in relation to the NFL’s league-wide mandatory price floor policy for resold tickets.
  • According to AG Schneiderman, the NFL allegedly required its teams to impose a minimum price on secondary market ticket sales, and also banned sellers from selling tickets on officially sanctioned sites at prices lower than face value.
  • Under the terms of the settlement agreement, the NFL must pay approximately $100,000 towards the cost of the investigation, refrain from encouraging any pricing practices among member clubs, and refrain from interfering with member clubs’ anti-fraud measures, among other things.

 

Massachusetts Attorney General Settles with Real Estate Association for Allegedly Restraining Competition

  • Massachusetts AG Maura Healey reached a settlement with the Nantucket Association of Real Estate Brokers, Inc. (“NAREB”) over allegations that the association violated consumer protection and antitrust laws by restricting competition for real estate brokers.
  • According to AG Healey, NAREB allegedly excluded competitors from joining its association by requiring its members to maintain a physical office in Nantucket, imposing a “potentially pretextual” community involvement requirement, and charging a $5,000 membership initiation fee.
  • Under the terms of the agreement, NAREB must allow brokers without physical offices located in Nantucket to join the association if they meet certain requirements regarding showing properties, eliminate the community involvement requirement, reduce the fee to join from $5,000 to $500, and pay $5,000 towards the cost of the investigation.

 

Charities

New York Attorney General Settles with Vietnam Veterans Charity Over Alleged Charity Law Violations

  • New York AG Eric Schneiderman reached a settlement with the National Vietnam Veterans Foundation, Inc., also known as the American Veteran Support Foundation, and its Chairman of the Board and president (collectively the “NVVF”) to resolve allegations that its solicitation and filings practices violated state charity and other laws.
  • According to AG Schneiderman, NVVF allegedly solicited and received small dollar donations from the public that it claimed would be used “to help Vietnam Veterans,” while nearly all of the money raised was instead used to pay for its fundraisers and the personal expenses of the charity’s president. The charity also allegedly made false filings to the New York Charities Bureau, and among other things, failed to disclose the identity of fundraisers operating on its behalf in New York.
  • Under the terms of the Assurance of Discontinuance with NVVF and its president, NVVF stopped all fundraising activities in New York, and agreed to cease operations both in New York and Washington, D.C. Additionally, the charity’s president must pay $100,000 to the New York Department of Law, most of which will be directed to veterans’ charities.

 

Consumer Protection

15 Attorneys General Settle with Software and Technology Company Over Alleged Data Breach

  • 15 AGs, led by Connecticut AG George Jepsen, reached a settlement with Adobe Systems Incorporated to resolve allegations that the company violated state consumer protection and data security statutes in relation to a data breach experienced by the company.
  • According to the AGs, the company discovered unauthorized access to consumers’ personal information held by Adobe, including credit card information, in 2013. Adobe allegedly failed to use reasonable security measures to protect its systems from a data breach, and failed to have measures in place to immediately detect an attack.
  • Under the terms of the Assurance of Voluntary Compliance, Adobe must pay the AGs’ offices $1 million to be used for costs at the discretion of each AG’s office and, among other things, perform ongoing risk assessments and notify the AGs’ offices of any future data breaches.

 

FTC Issues Policy Statement on Marketing Claims for Over-the-Counter Homeopathic Drugs

  • The FTC issued an enforcement policy statement providing guidance regarding marketing claims for over-the-counter homeopathic drugs following a workshop last year that examined how these drugs are advertised.
  • The enforcement policy statement provides that efficacy and safety claims for homeopathic drugs will be held to the same standards as similar claims for non-homeopathic drugs, and that there is no basis for treating them differently under the Federal Trade Commission Act (“FTC Act”).
  • The FTC states that homeopathic drugs with efficacy claims solely based on traditional homeopathic theories with no valid studies using current scientific methods are likely to be misleading and in violation of the FTC Act. In order to avoid misleading consumers, homeopathic drugs should, among other things, clearly disclose that there is no scientific evidence supporting efficacy and that the product’s claims are based “only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts.”

 

FTC Sues Prepaid Card Company for Deceptively Marketing Products

  • The FTC filed a lawsuit against NetSpend Corporation (“NetSpend”) alleging that the prepaid card company violated the FTC Act over the way it marketed its reloadable prepaid debit cards.
  • According to the FTC, NetSpend allegedly advertised that consumers who purchased cards would be “guaranteed approval” and have “immediate access” to funds, while in reality some consumers were unable to complete the legally required identity verification process to activate the card and were not able to access their deposited funds.
  • The lawsuit seeks a permanent injunction to prevent future violations, relief for consumers, and the costs of the lawsuit.

 

State AGs in the News

Alabama Attorney General to Serve as Chairman of RAGA

  • The Republican Attorneys General Association (“RAGA”) announced that Alabama AG Luther Strange officially assumed his role as chairman of RAGA at its Fall National Meeting, which was held in Austin, Texas from November 11 through November 14, 2016. As chairman, AG Strange will lead election and fundraising efforts on behalf of RAGA for the 2017 cycle.
  • RAGA also announced that West Virginia AG Patrick Morrisey will serve as chairman of RAGA for the 2018 term.

 

State v. Federal

Court Hands Challenging AGs a Victory on DOL Persuader Advice Exemption Rule Expansion

  • The U.S. District Court for the Northern District of Texas granted a motion for summary judgment filed by ten AGs and various private groups, issuing an order determining the U.S. Department of Labor’s (“DOL’s”) Persuader Advice Exemption Rule is unlawful and issuing a nationwide permanent injunction against it.
  • The court held that DOL exceeded its authority by passing the rule, which would have required labor relation consultants, including attorneys, to publicly disclose employers’ persuader activities. The court stated that the rule attenuated the attorney-client relationship and violated the First Amendment.
  • We previously reported that a coalition of AGs, led by Alabama AG Luther Strange, submitted a comment letter to the U.S. Office of Management and Budget (“OMB”) opposing the rule, stating that it would have a “chilling effect” on a business’s right to counsel. More recently, a group of AGs, led by Massachusetts AG Maura Healey, filed an amicus brief in the U.S. District Court for the District of Minnesota supporting the revised rule, stating that the required disclosures protect collective bargaining rights.