The State AG Report

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

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Digest 07.09.2020: AGs’ Expanding Focus Due to COVID-19 | New Antitrust Guidelines | AG Sues Timeshare Exit Companies

Cozen in the News

New Challenges for Attorneys General as They Respond to COVID-19

  • Christopher Allen, a Member of Cozen O’Connor’s State Attorneys General Practice, penned an Alert analyzing the novel ways in which AGs are wielding their legal, political, and policy-making authority in response to the COVID-19 pandemic.
  • In the Alert, Allen highlights AGs’ increasing enforcement activity to protect consumers, enhance data privacy and security, eliminate price-gouging, and combat false claims for payment to state authorities, and discusses the implications of AGs’ expanded areas of focus for businesses.
  • The Alert notes that AG offices across the country are likely to face budgetary shortfalls and therefore will be under pressure to find new targets for investigations and litigation as additional sources of funding.

2020 AG Elections

Utah Attorney General Fends Off Challenger in Republican Primary

Arkansas Attorney General Enters 2022 Arkansas Governor’s Race

Antitrust

FTC and DOJ Issue Joint Antitrust Guidelines for Vertical Mergers

  • The Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) issued new joint Vertical Merger Guidelines for evaluating the potential competitive impact of vertical and other non-horizontal transactions, which are mergers by two entities that operate at different levels of the supply chain. This is the first time that the FTC and the DOJ have issued antitrust guidelines jointly.
  • The Guidelines reflect current enforcement approaches and provide information about the techniques and types of evidence that the FTC and DOJ typically use to determine whether vertical mergers may substantially lessen competition, and additionally include illustrative examples to demonstrate the range of issues that could raise anticompetitive red flags as well as circumstances that likely would not trigger an investigation.
  • The new guidelines replace the DOJ 1984 Non-Horizontal Merger Guidelines, which were withdrawn in January 2020.

Climate Change

AGs Sue Exxon for Allegedly Misleading Public on Climate Change

  • Minnesota AG Keith Ellison sued ExxonMobil Corp., the American Petroleum Institute, Koch Industries, Inc., Flint Hills Resources LP, and Flint Hills Resources Pine Bend (collectively “Defendants”) for allegedly deceiving the public on the impact of fossil fuels on climate change in violation of the Consumer Fraud Act and False Statements in Advertising Act, among other things.
  • The complaint alleges that, among other things, Defendants knowingly hid the warnings of internal experts about the costs and consequences of fossil fuel consumption, and paid third parties to promote false information and funded fraudulent science to raise doubts about the link between greenhouse emissions and climate change. The complaint also alleges that Defendants’ actions adversely impacted Minnesota’s environment, ecosystem, infrastructure, and public health.
  • Separately, DC AG Karl Racine also sued Exxon Mobil, as well as BP, Chevron Corporation, and Shell Oil Corporation, and related parents and subsidiaries, for allegedly systematically and intentionally misleading District consumers about the role their products play in causing climate change; the DC complaint is similar to that filed by Minnesota AG Ellison.
  • As previously reported, in December 2019, Exxon prevailed in a suit brought by New York AG Letitia James over allegations that Exxon violated the Martin Act by misleading investors about the risks associated with fossil fuel-related climate change.

Consumer Protection

Timeshare Exit Companies Allegedly Defrauded Customers with Hefty Fees and Empty Promises

  • Missouri AG Eric Schmitt sued Brian Scroggs and four timeshare exit companies under his control, Vacation Consulting Services LLC, VCS Communications, LLC, The Transfer Group, LLC, and Real Travel L.L.C. (collectively “Scroggs”), for allegedly charging fees and not providing promised timeshare-exit services in violation of Missouri’s Merchandising Practices Act.
  • The complaint alleges that Scroggs solicited large sums of money from customers by falsely promising to either transfer or terminate timeshare interests, or buy out the interests if the transfer or termination did not occur within a year. Scroggs also allegedly promised to cover clients’ timeshare maintenance fees but failed to do so, thereby putting many clients in arrears with their timeshare operators.
  • The complaint seeks declaratory and injunctive relief, restitution, civil penalties, and attorneys’ fees and costs.

Mail-Order Pharmacy Agrees to Pay $11 Million to Settle Allegations that It Dispensed Thousands of Potentially Illegal Prescriptions

  • Massachusetts AG Maura Healey reached a settlement with workers’ compensation mail-order pharmacy Injured Workers Pharmacy, LLC (“IWP”) to resolve allegations that it shipped thousands of potentially illegitimate controlled substance prescriptions, such as opioids, in violation of the Massachusetts Consumer Protection Law.
  • The complaint alleged that, among other things, IWP failed to implement policies and procedures to prevent unlawful dispensing of prescriptions, including by failing to verify prescriptions for controlled substances before filling the prescription, and using unfair sales tactics such as paying healthcare providers and attorneys for new patient referrals.
  • Under the terms of the proposed consent judgment, IWP will be required to pay $9.0 million in civil penalties, $1.5 million to the AG’s office to be used at the office’s discretion for initiatives related to the prevention, treatment, and enforcement against medication abuse, and $500,000 for attorneys’ fees and costs. IWP is also obligated to implement policies and procedures to prevent dispensing illegal prescriptions in the future and is banned from offering payments for new patient referrals, among other things.

Environment

Monsanto Agrees to Pay $95 Million to Settle PCB Liability

  • Washington AG Bob Ferguson reached a settlement with chemical manufacturer Monsanto Company to resolve allegations of public nuisance and products liability stemming from Monsanto’s manufacturing of probable human carcinogens polychlorinated biphenyls (“PCBs”) and hiding their toxicity and harmful effects to human and animal health.
  • The complaint alleged that Monsanto knew that PCBs caused systemic toxic effects as early as 1937, forty years before PCBs were banned in the United States, and it discontinued manufacturing them. In addition, the complaint alleged that PCB contamination was identified in 600 sites in the state, including in water sources, sediment, soil, and air.
  • Under the terms of the settlement agreement, Monsanto will pay $95 million to resolve its manufacturing, marketing, and distribution liability, but not liability related to the direct discharge of PCBs, including pending and potential liability for PCB contamination at Superfund sites in the state.
  • According to the AG’s office, at least $60 million of that amount will go to the state General Fund, $2 million will cover the AG’s legal costs, and $21.25 million will cover the legal fees and costs of outside firms engaged by the AG’s office for this case.