Labor & Employment

Attorneys General Convince Burger King, Popeyes, and Tim Hortons to Discard “No-Poaching” Provisions from Their Franchise Agreements

• 14 Democratic AGs, led by Massachusetts AG Maura Healey, reached a settlement with fast food franchisors Burger King Corporation, Popeyes Louisiana Kitchen, Inc. (“Popeyes”), and Tim Hortons USA Inc. (“Tim Hortons”) to resolve allegations that the companies used anticompetitive “no-poach” provisions in their franchise agreements in violation of the settling states’ antitrust, unfair competition, and consumer protection laws.
• In each of the settlements with Burger King, Popeyes, and Tim Hortons, the AGs alleged that the company’s franchise or licensing agreements included “no-poach” provisions prohibiting franchise operators from hiring, recruiting or soliciting employees of another franchise operator. These provisions allegedly may have deprived employees of higher wages and upward job mobility and franchise owners of the workers they needed.
• Under the provisions of each settlement, the companies will no longer include “no-poach” provisions in their franchise agreements and will not enforce “no-poach” provisions in existing contracts, among other things.
• In 2018, AG Healey led a coalition of AGs in issuing letters seeking documents and information to assess the purpose and impact of “no-poach” provisions to a number of fast food franchisors, including Burger King and Popeyes. As previously reported, other Democratic AGs have reached settlements with a number of companies in a wide range of industries to remove “no-poach” provisions from their contracts.

AGs to Supreme Court: Allow States to Address Soaring Prices of Prescription Drugs

• A bipartisan coalition of 46 AGs, led by California AG Xavier Becerra, filed an amicus brief in the U.S. Supreme Court in support of Arkansas AG Leslie Rutledge’s position in Rutledge v. Pharmaceutical Care Management Association, 18-540, where AG Rutledge argued that states have the right to address the cost of prescription drugs through regulation of pharmacy benefit managers (“PBMs”) and that this right is not preempted by The Employee Retirement Income Security Act (“ERISA”).
• According to AG Becerra’s office, at issue is an Arkansas law that regulates the reimbursement rates PBMs pay to pharmacies. A PBM challenged the law, arguing that ERISA preempts the state’s ability to implement such a law, and the U.S. Court of Appeals for the Eighth Circuit agreed.
• In the brief, the AGs argue that the expansive approach to ERISA’s preemption adopted by the Eighth Circuit is in tension with Supreme Court precedent, which held that ERISA’s preemption clause only applies to state laws that make reference to ERISA plans or have an impermissible connection with ERISA plans, which the Arkansas law does not do. The AGs also argued that a more expansive interpretation of ERISA’s preemption clause would interfere with states’ traditional authority to regulate businesses for the purpose of protecting the health and welfare of their residents.

2020 AG Elections

Jim O’Neill Wins Republican Nomination for North Carolina Attorney General

• North Carolina held a Republican primary for AG on March 3, 2020, with three candidates competing for the Republican nomination.
• Jim O’Neill won the Republican nomination with 47.4% of the vote, defeating Christina Mumma and Sam Hayes, and will face incumbent Democratic AG Josh Stein in the general election.
• O’Neill currently serves as the Forsyth County District Attorney, a position he has held since November 2009.

Consumer Protection

CenturyLink Agrees to Pay Nearly $11 Million to Settle Suit over Marketing and Billing Practices

• Arizona AG Mark Brnovich reached a settlement with international telecommunications company CenturyLink, Inc. and related companies (collectively, “CenturyLink”) to resolve allegations of deceptive advertising and billing practices in violation of Arizona’s Consumer Fraud Act.
• In the consent judgment, the AG’s office alleged that, among other things, CenturyLink billed consumers for amounts other than those they were quoted, imposed hidden fees, did not honor promised discounts, improperly billed consumers for returned equipment, and sent accounts into collections over amounts it improperly charged for returned equipment.
• Under the terms of the consent judgment, CenturyLink will pay $7 million to the state and $1.9 million in direct refunds to Arizona consumers. In addition, the company is required to disclose all charges, fees, and material terms in its sales and advertising materials and provide consumers with an “Order Confirmation” containing a complete summary of the price consumers will pay, and invest $2 million in fiber optic infrastructure across Arizona, among other things.
• As previously reported, CenturyLink recently reached similar settlements with Minnesota AG Keith Ellison, Washington AG Bob Ferguson, and Oregon AG Ellen Rosenblum.

Who Knew? A “Missed Delivery” Slip Could Be a Marketing Ploy

• Arizona AG Mark Brnovich sued marketing company Valley Delivery, LLC and related entities and individuals (collectively “Valley Delivery”) for allegedly masquerading as a delivery service in order to obtain consumers’ personal information in violation of Arizona’s Consumer Fraud Act.
• The complaint alleges that Valley Delivery left fake “missed delivery” slips on consumers’ doors encouraging homeowners to call to reschedule the nonexistent delivery, then collected personal information from homeowners who called to reschedule.
• The complaint seeks injunctive relief, restitution, disgorgement of profits, civil penalties, and attorneys’ fees and costs.

State vs. Federal

Attorneys General Seek Appellate Review of DOE’s Rollback of Efficiency Standards for Common Light Bulbs

• 16 AGs and the City of New York, led by California AG Xavier Becerra and New York AG Letitia James, petitioned the U.S. Court of Appeals for the Second Circuit for a review of a Department of Energy (“DOE”) final determination rolling back energy efficiency standards for common light bulbs, arguing that the rollback is a violation of the Energy Policy and Conservation Act and the Administrative Procedure Act, and also fails to comply with the requirements of the National Environmental Policy Act.
• The petition asks the court to review the final rule, titled “Energy Conservation Program: Energy Conservation Standards for General Service Incandescent Lamps,” which the AGs argue affect approximately 3 billion – or nearly half – of all lighting sockets in the U.S., and that, among other things, the efficiency standards are critically important for energy savings for consumers and for reducing greenhouse gas emissions and pollution.
• A group of 16 Democratic AGs, some of whom are participating in the current petition, had previously sought a similar review of another DOE final rule, titled “Energy Conservation Program: Definition for General Service Lamps.”