2016 AG Elections

Vermont Holds Primary Election for Attorney General

• Vermont held their primary elections for AG on Tuesday, August 9.
• In the Democratic primary, Chittenden County State’s Attorney and 2014 AG candidate T.J. Donovan defeated H. Brooke Paige by a margin of 80% to 20%. In the Republican primary, former Vermont Republican Party Vice Chair Deborah Bucknam received her party’s nomination without opposition.
• To find additional updates about State AG elections, please click here.

 

Antitrust

FTC Sues Contact Lens Company Over Alleged Anti-Competitive Behavior

• The Federal Trade Commission (“FTC”) filed an administrative complaint against the contact lens company 1-800 Contacts, Inc. over allegations that it violated the FTC Act by entering into anticompetitive agreements with its competitors that restrained competition for online search advertising auctions.
• According to the FTC’s complaint, 1-800 Contacts allegedly coerced its competitors to enter into bidding agreements, under threat of trademark infringement lawsuits, which effectively prohibited the companies from bidding against 1-800 Contacts. As a result, the FTC alleges that 1-800 Contacts harmed competition by distorting the price of advertising in such auctions and causing some consumers to pay higher prices for contact lenses.
• The FTC complaint seeks to, among other things, prohibit the company from entering into such bidding agreements in the future.

 

Consumer Financial Protection Bureau

CFPB Issues Final Mortgage Servicing Rule

• The Consumer Financial Protection Bureau (“CFPB”), under the authority vested in it by the Dodd-Frank Wall Street Reform and Consumer Protection Act, issued a final rule adopting multiple amendments to a mortgage servicing rule that it proposed in November 2014.
• The final rule requires, among other things, that: (a) mortgage servicers give certain borrowers more than one opportunity to access certain foreclosure protections during the life of a loan; (b) “successors in interest” generally receive the same consumer protections as original borrowers; and (c) mortgage servicers delay foreclosures or sales when timely loss mitigation applications are received.
• The provisions in the final rule will become effective in either 12 or 18 months after publication in the Federal Register, depending on the specific provision. The CFPB also issued an interpretive rule regarding servicers’ compliance with certain servicing provisions that the final rule amended.

 

Consumer Protection

Georgia Attorney General Settles with Car Dealerships Over Alleged Lemon Law Violations

• Georgia AG Sam Olens reached a settlement with Southtowne Motors of Newnan, Inc. d/b/a Southtowne Chevrolet Buick GMC, Southtowne Motors, Inc. d/b/a Southtowne Hyundai Riverdale, and Southtowne Motors of Newnan II, Inc. d/b/a Southtowne Hyundai of Newnan (collectively “Southtowne”) to resolve allegations that the dealerships failed to comply with the state’s Lemon Law, which requires dealerships to fully disclose the buyback status of vehicles to consumers.
• According to the AG’s office, Southtowne allegedly purchased vehicles bought back by manufacturers under state lemon laws but failed to provide consumers with a required form that would have disclosed the buyback status of the vehicles, causing the consumers to purchase the vehicles for more than their actual value.
• Under the Assurances of Voluntary Compliance, Southtowne must pay the state a total of $95,000 in fees and penalties. In addition, it must institute a repurchase policy for consumers who unknowingly purchased lemon buybacks, under which the dealerships will purchase the vehicles for their clean trade-in values.

Illinois Attorney General Settles with Energy Company Over Alleged Misleading Advertisements

• Illinois AG Lisa Madigan reached a settlement with alternative retail electricity supplier Ethical Electric Inc. over allegations that the company engaged in consumer fraud by providing misleading information regarding its Clean Energy Option product.
• The AG’s office alleges that Ethical Electric falsely advertised its product to be completely fueled by “green” energy sources such as solar and wind power, despite being fueled in part by the electric grid, and misled consumers to believe the product’s costs were comparable to that of traditional utility providers in the state.
• Under the terms of the settlement, Ethical Electric must, among other things, issue customer refunds to those who purchased the product, which could amount to $3 million, and accurately provide information on its energy sources.

 

Data Privacy

New York Attorney General Settles with E-Retailer Over Data Breach

• New York AG Eric Schneiderman reached a settlement with Provision Supply, LLC d/b/a EZcontactsUSA.com to resolve allegations the company violated New York’s General Business and Executive Laws relating to its data security practices.
• According to the AG’s office, Provision Supply allegedly misrepresented the security of its website, which it claimed was “100% safe and secure,” and allegedly failed to provide required notices to customers and law enforcement after a data breach involving over 25,000 credit card numbers.
• Under the terms of the settlement, Provision Supply must pay a $100,000 penalty and among other things, address the security vulnerabilities contained on its website.

 

Environment

Pennsylvania Attorney General Settles with Energy Company Over Alleged Environmental Violations

• Pennsylvania AG Kathleen Kane reached a settlement with XTO Energy Inc., a subsidiary of ExxonMobil Corporation, over allegations that it violated the Clean Streams Law and Solid Waste Management Act by illegally releasing toxic waste.
• According to the AG’s office, XTO Energy allegedly spilled fracking wastewater from a gas well into a tributary, failed to obtain a required permit to discharge wastewater, and failed to report the spills to the Pennsylvania Department of Environmental Protection (“DEP”), subsequently requiring the excavation and removal of 3,000 tons of contaminated soil.
• Under the terms of the settlement, XTO Energy must pay $300,000 in civil penalties to the DEP and $100,000 to the Susquehanna Greenway Partnership to advance environmental projects in the areas affected by the spill.

 

Financial Industry

44 Attorneys General Settle with Multinational Bank Over Alleged LIBOR Manipulation

• 44 AGs reached a settlement with Barclays Bank PLC and Barclays Capital Inc. (“Barclays”) to resolve allegations that it manipulated benchmark interest rates, including the U.S. Dollar London Interbank Offered Rate (“LIBOR”).
• According to the AGs, Barclays allegedly made LIBOR submissions that were lower than its true cost of borrowing, which allegedly harmed government and not-for-profit entities that entered into financial transactions with the company.
• Under the terms of the settlement, Barclays must pay $100 million to the states, of which $93.35 million will be available as restitution to government and not-for-profit entities that entered into LIBOR-linked financial transactions with the company.

 

Labor & Employment 

New York Attorney General Settles with Medical Information Services Provider Over Non-Compete Agreements

• New York AG Eric Schneiderman reached a settlement with nationwide medical information services provider Examination Management Services, Inc. (“EMSI”) to resolve allegations that the company violated New York law by requiring all of its employees to sign non-compete agreements.
• According to the AG’s office, EMSI required its employees, who almost entirely consist of non-senior-level staff that travel extensively throughout the state, to sign non-compete agreements that restricted the employees from seeking positions with any competitors located within fifty miles of any location that the employees worked at while employed by EMSI for a period of nine months after leaving the company. Under New York law non-compete agreements are only permitted in limited circumstances.
• Under the terms of the settlement, EMSI must end its use of the non-compete agreements for all non-executive staff in New York and must notify current employees and former employees who left the company in the last nine months that the non-compete agreements they signed are void. As we have previously reported, AG Schneiderman reached similar settlements against Jimmy John’s Enterprises and Law360 in June 2016.

 

Mortgages/Foreclosures

Colorado Attorney General Obtains Judgment Against Foreclosure Law Firm Over Title Insurance Policy Costs

• Colorado AG Cynthia Coffman obtained a judgment against The Hopp Law Firm, related title companies, and its owner (“Hopp”) for alleged violations of the Colorado Consumer Protection Act and the Colorado Fair Debt Collection Practices Act.
• According to the AG’s office, Hopp allegedly charged consumers false and misleading costs, including costs the firm did not incur for title insurance policies that were often never issued to homeowners.
• Under the court’s order, Hopp must pay $1.8 million in penalties, as well as attorney fees and costs.

 

Pharmaceuticals

49 Attorneys General Settle with Biopharmaceutical Company Over Alleged Efforts to Delay Generic Competition

• 49 AGs settled with biopharmaceutical company Cephalon, Inc. and affiliated companies Barr Laboratories, Inc., Teva Pharmaceutical Industries Ltd., and Teva Pharmaceuticals USA, Inc. (“Cephalon”) to resolve allegations that the company violated antitrust and consumer protection laws by engaging in efforts to delay competition for its sleep disorder treatment drug, Provigil.
• According to the AGs, Cephalon allegedly engaged in multiple efforts to delay generic competition against Provigil, including misleading the U.S. Patent & Trademark Office to secure a new patent for Provigil after its initial patent was set to expire, filing patent infringement suits against potential generic drug competitors, and settling those lawsuits by entering into “pay for delay” arrangements under which the competitors delayed entry of their generic versions of the drug into the marketplace.
• Under the terms of the settlement, which is subject to court review, the states will receive a total of $125 million, including $35 million for consumers who purchased Provigil. The FTC settled its own suit against Cephalon in 2015 for injunctive relief and $1.2 billion in escrow, which facilitated the multistate AG settlement.