Breaking News

Cozen O’Connor Attorney to Serve in the Trump Administration

• James D. Schultz, Chair of Cozen O’Connor’s Government Law and Regulatory Affairs practice group, was appointed by President Trump to serve as Special Assistant to the President and Associate Counsel to the President.
• In this role, Mr. Schultz will advise President Trump and the Executive Office of the President on compliance and ethics matters.
• Before joining Cozen, Mr. Schultz’s distinguished career in public service included serving as General Counsel of the Commonwealth of Pennsylvania, General Counsel to then-Governor Thomas W. Corbett, and legal counsel and senior advisor to the first campaign of Congressman Patrick L. Meehan.

CFPB

17 Democratic Attorneys General File Motion Defending CFPB

• 17 Democratic AGs, led by Connecticut AG George Jepsen, filed a motion to intervene in support of the Consumer Financial Protection Bureau's ("CFPB") petition for a rehearing by the U.S. Circuit Court of Appeals for the D.C. Circuit after a divided three judge panel found the independent structure of the CFPB unconstitutional.
• According to the motion, the AGs are seeking to intervene in the case because they have a vital interest in defending the CFPB as an independent agency to protect the interests of consumers and are concerned that the Trump Administration will “fail to adequately defend the CFPB” in the appeal and take steps to dismantle the agency.
• As previously reported, under the terms of the circuit court opinion, the CFPB is an executive agency supervised and directed by the President, and the President can remove the CFPB’s director at any time.

CFPB and Two Attorneys General Sue Student Loan Servicer for Allegedly Deceiving Borrowers

• The CFPB, Illinois AG Lisa Madigan, and Washington AG Bob Ferguson filed separate lawsuits against Navient Corporation, the largest student loan servicer in the country, over alleged violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Fair Credit Reporting Act, and the Fair Debt Collections Practices Act.
• According to the CFPB’s complaint, Navient, formerly part of Sallie Mae, Inc., allegedly failed to apply payments as instructed by borrowers with multiple loans, steered struggling borrowers toward forbearance rather than less costly options, and failed to provide adequate information about income-based repayment plans, among other things.

CFPB Sues Bank for Allegedly Misleading Customers Into Costly Overdraft Fees

• The CFPB filed a complaint against TCF National Bank (“TCF”) for allegedly violating the Electronic Fund Transfer Act and the Dodd-Frank Act by misleading customers into accepting costly overdraft fees.
• According to the complaint, TCF allegedly designed its account application process to obscure the overdraft fees and make overdraft protection seem mandatory for new customers to open an account in an attempt to circumvent regulations which require banks to ask customers to opt-in to such overdraft services.
• The lawsuit seeks monetary relief for customers harmed by Navient’s alleged unlawful conduct, injunctive relief, legal costs, and civil penalties.

CFPB Settles With Two Mortgage Service Providers for Allegedly Mistreating Customers

• The CFPB filed separate consent orders with Citigroup Inc. subsidiaries CitiFinancial Servicing, LLC (DE), CitiFinancial Company (DE), CitiFinancial Services, Inc. (MN), and CitiFinancial, Inc. (WV) (collectively “CitiFinancial”) and CitiMortgage, Inc. (“CitiMortgage”) over alleged violations of the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, and the Dodd-Frank Act.
• According to the CFPB, CitiFinancial and CitiMortgage allegedly made it difficult for borrowers to apply for foreclosure relief by burdening them with excessive and unnecessary paperwork.
• Under the terms of the consent order, CitiFinancial will pay $4.4 million to consumers, pay a $4.4 million civil penalty, and make changes to its disclosures and mortgage servicing practices, among other things. CitiMortgage will pay $17 million to consumers, pay a $3 million civil penalty, and freeze any foreclosures where the improper information requests were made, among other things.

Consumer Protection

New Mexico Attorney General Sues Automotive Parts Company and 15 Automakers Alleging Unfair Trade Practices

• New Mexico AG Hector Balderas filed a lawsuit against Takata Corporation and TK Holdings, Inc. (collectively “Takata”), and 15 automakers for allegedly fraudulent conduct related to the sale of defective airbags in violation of the state’s Unfair Practices Act.
• According to the complaint, Takata allegedly manufactured, used, and marketed defective airbags the company knew were prone to deploy unexpectedly and explode, causing injuries and deaths.
• The lawsuit seeks maximum statutory penalties for each defective air bag that entered the New Mexico market and for each day Takata and the automobile manufacturers misrepresented the safety of their products.
• AG Balderas’ lawsuit comes shortly after Takata agreed to pay $1 billion in criminal penalties and plead guilty to wire fraud in a settlement with the U.S. Department of Justice over the sale of defective airbag inflators.  Last year, Virgin Islands AG Claude Earl Walker and the Hawaii Office of Consumer Protection filed separate lawsuits against Takata, Honda Motor Company, and related subsidiaries over similar allegations.

Pharmaceuticals

Five Attorneys General and FTC Reach Settlement with Pharmaceutical Company Over Alleged Attempt to Maintain Monopoly

• Five AGs and the Federal Trade Commission (“FTC”) reached a settlement with Mallinckrodt ARD Inc., f/k/a Questor Pharmaceuticals Inc., and Mallinckrodt plc (collectively “Mallinckrodt”) for allegedly engaging in acts of monopolization for the only hormone-based drug in the U.S. used to treat infant spasms, in violation of the FTC Act, the Sherman Act, and relevant state laws.
• According to the settlement, Mallinckrodt acquired the drug in question in 2001 when the price was $40 per vial and restrained competition by disrupting the bidding process and acquiring Synacthen Depot, the only other similar drug sold in the world, as a means to increase its product’s price by 85,000 percent, to $34,000 per vial today.
• Under the terms of the $100 million settlement, the states will receive $10 million and an additional $2 million for legal costs. Mallinckrodt must also license the alternative drug to Marathon Pharmaceuticals for development.

New Jersey Attorney General Seeks to Amend Rules that Regulate Opioid Prescribers

• New Jersey AG Chris Porrino sent a letter to notify the New Jersey Board of Medical Examiners (the “Board”) of his intent to use his emergency regulatory authority to crack down on the opioid epidemic affecting New Jersey citizens.
• AG Porrino’s letter follows Governor Chris Christie’s call for stronger regulations and investigations into relationships between doctors and drug manufacturers in his recent State of the State
• According to the letter, AG Porrino will use his authority under the state’s Uniform Enforcement Act to establish more rigorous standards for prescribing opioids for acute and chronic pain, which include reducing the allowable prescription quantity of opioid drugs from a thirty-day supply to a five-day supply.

State v. Federal Government

14 Republican Attorneys General Pen Letter to Trump Administration Challenging Endangered Species Act Habitat Rules

• 14 Republican AGs, led by Alabama AG Luther Strange, sent a letter to Ado Machida, the Policy Implementation Team Lead for the Trump Administration, challenging two February 2016 final rules (“Rules”) that expand the definition and procedures surrounding “critical habitats” under the Endangered Species Act, which were promulgated by the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (collectively the “Services”).
• In the letter, the AGs purport that the Rules “unlawfully and vastly expand the authority of the Services to designate areas as critical habitats.” The AGs urge the Trump Administration to issue an executive order that the Rules are unlawful, withdraw the Rules, reinstitute the prior regulations governing “critical habitats” under the Act, and intervene in the current litigation of these Rules.
• As previously reported, 18 AGs filed a lawsuit on November 29, 2016, challenging the Rules. On January 17, 2017 the Obama Administration filed a motion to dismiss the litigation.

13 Attorneys General File Lawsuit, Pen Letter to Congressional Leadership Challenging Federal Mining Law

• 13 AGs and the Kentucky Energy and Environment Cabinet, led by Ohio AG Mike DeWine and West Virginia AG Patrick Morrisey, filed a lawsuit against the U.S. Department of Interior and the Office of Surface Mining Reclamation and Enforcement (“Agencies”), alleging that the Streamline Protection Rule (“Rule”) is an overreach of federal authority in violation of the various federal laws and the U.S. Constitution
• According to the lawsuit, the Rule will drastically and illegally limit coal mining by prohibiting any change to the land and environment around coal mines and consequentially increase the cost of electricity for consumers and reduce the nation’s energy supply. In addition, the States argue that they should be the primary regulators of coal mining.
• In addition to filing the lawsuit, most of the AGs involved also sent a letter to U.S. House Speaker Paul Ryan and U.S. Senate Majority Leader Mitch McConnell urging Congress to pass a joint resolution disapproving the Rule under the procedures of the Congressional Review Act, which would stop the Rule from going into effect. As previously reported, 14 AGs sent a letter in January 2015 requesting that the Agencies withdraw the Rule and develop an alternative in consult with state officials.

State AGs in the News

Xavier Becerra Confirmed as Attorney General of California

• Xavier Becerra was sworn in as California’s 33rd AG on Tuesday by Governor Jerry Brown.
• Prior to his becoming AG, AG Becerra served in the U.S. House of Representatives for 24 years. During his last term in Congress, AG Becerra was Chairman of the House Democratic Caucus, a member of the Committee on Ways And Means, and Ranking Member of the Ways and Means Subcommittee on Social Security. He also served one term in the State House of Representatives and was a Deputy Attorney General with the California Department of Justice.