The State AG Report Weekly Update March 1, 2018

Cozen in the News

Cozen O’Connor State Attorneys General Practice Highlights the Top Five Attorney General Primary Races to Watch in 2018

  • The AG primary election season will kick off in Texas on March 6 and conclude in Rhode Island on September 12. With 31 AG elections in 2018, including 10 open seat races, the primary election cycle will have its share of competitive and high-profile races.
  • Our latest analysis provides an overview of our picks for the top five AG primary races to watch this election cycle.
  • For daily coverage of AG election news, insights, and polls, visit Cozen O’Connor’s State AG Election Tracker. This online portal provides information on all AG candidates and allows users to sign up for primary and general election night emails and/or text messages.

AG Elections

Arkansas Attorney General Leslie Rutledge Files to Run for Reelection

  • According to reports, Republican AG Leslie Rutledge has filed to run for reelection to a second term in 2018.
  • AG Rutledge, the current Chairman of the Republican Attorneys General Association, was previously elected in 2014. Prior to serving as AG, she worked in private practice in Little Rock and as Counsel for the Republican National Committee.
  • No Republican has filed to challenge AG Rutledge. As reported below, Democrat Mike Lee is currently the sole challenger to AG Rutledge that has filed by today’s filing deadline.

Democrat Mike Lee Announces Bid for Arkansas Attorney General

  • According to reports, Democrat Mike Lee, a former federal consumer product regulator, has filed to run for AG in 2018.
  • Lee, who previously served as a compliance officer for the U.S. Consumer Product Safety Commission, is the only Democrat to officially announce his candidacy for Arkansas AG. As reported above, Republican incumbent AG Rutledge has filed to run for reelection.
  • The filing deadline for all candidates is today, March 1, 2018.

Consumer Protection

45 Attorneys General Reach Settlement with Airbag Manufacturer Over Defective Product

  • 45 AGs, led by South Carolina AG Alan Wilson, settled with the American subsidiary of airbag manufacturer Takata Corporation, TK Holdings, Inc. (“Takata”), to resolve allegations that the company engaged in fraudulent practices in connection with the sale of defective airbags.
  • According to the AGs, Takata allegedly knew that the inflator components in its airbags were defective and posed a danger to consumers, but concealed these safety risks from auto manufacturers, the public, and government regulators.
  • Under the terms of the proposed settlement, Takata must, among other things, cease selling allegedly affected airbags, comply with state and federal legal requirements and airbag replacement efforts, and pay investigative costs. Takata, which is currently undergoing bankruptcy proceedings, also agreed to a $650 million civil penalty, and the AGs have agreed to subordinate their recovery interests to those of affected consumers to maximize consumers’ chances of recovering from Takata. The AGs and Takata are seeking the Bankruptcy Court’s confirmation of the settlement as part of Takata’s bankruptcy plan.
  • As previously reported, Takata agreed in January 2017 to pay $1 billion in criminal penalties to the U.S. Department of Justice and pleaded guilty to wire fraud to resolve criminal charges arising from similar allegations.

Bipartisan Coalition of 19 Attorneys General File Amicus Brief Asking U.S. District Court to Reject Proposed Class Action Settlement

  • A bipartisan coalition of 19 AGs, led by Arizona AG Mark Brnovich, filed an amicus brief in the United States District Court for the District of New Jersey in the matter of Cannon v. Ashburn Corp., No. 16-cv-1452-RMB-AMD, asking the court to reject a class action settlement that allegedly would violate restrictions in the Class Action Fairness Act of 2005 (“CAFA”) on so-called “coupon settlements”—class action settlements that provide for a recovery of coupons to class members.
  • According to the AGs’ brief, the proposed settlement awards a fee of approximately $1.7 million to the class members’ attorneys while allegedly only providing “highly restrictive,” limited-value coupons to class members.
  • The AGs request that the district court decline to approve the proposed settlement under CAFA’s coupon settlement requirements because it does not provide an adequate benefit to class members.
  • As previously reported, a coalition of 16 AGs, led by AG Brnovich, recently filed an amicus brief in the Supreme Court of the United States asking the Court to weigh in on the use of cy pres provisions in class action settlements.

Massachusetts Attorney General Reaches Settlement with Home Care Referral Company to Resolve Allegations Arising from Alleged Background Check Misrepresentations

  • Massachusetts AG Maura Healey reached a settlement with home care referral company Care.com, Inc. (“Care.com”) to resolve allegations that it violated the Massachusetts Consumer Protection Act by misrepresenting the thoroughness of the background checks it offers to perform on prospective caregivers.
  • The AG’s office alleges that Care.com advertised that its “Preferred” and “Preferred+” background check services included a review of potential caregivers’ recent criminal records, but in actuality failed to review criminal records from Massachusetts’ District Courts—where records of most of the Commonwealth’s misdemeanor matters and some of its felony matters are maintained.
  • Under the terms of the Assurance of Discontinuance, Care.com agreed to revise its product disclosures to remove allegedly misleading or inaccurate representations, submit to yearly audits of its background check products for a period of five years, and pay approximately $127,000 in restitution to consumers and $355,000 to the AG’s office.

Financial Industry

Virginia Attorney General Reaches Settlement with Internet Lenders and Debt Collectors to Resolve Illegal Lending and Consumer Protection Allegations

  • Virginia AG Mark Herring reached a settlement with affiliated Internet lenders Field Asset Service Team, LLC, VIM Holdings, LLC, MR Capital Group, LLC, Nascent Holdings, LLC, B Financial, LLC, DTS Capital, LLC, and debt collectors Bradley Goldberg & Miller, LLC, and U Solutions Group, LLC (collectively the “lenders”) to resolve allegations that the companies offered illegal open-end credit plan loans and committed unfair and deceptive practices in violation of the Virginia Consumer Protection Act.
  • According to the AG’s office, the lenders allegedly offered open-end credit plan loans that imposed illegal fees and excessive interest during the statutorily-mandated grace period applicable to such loans, misrepresented the legality of the loans, and employed illegal assignment and collection practices.
  • Under the terms of the Assurance of Voluntary Compliance, the lenders agreed to institute supervisory compliance procedures, accept various types of injunctive relief including being enjoined from further lending and collections work in Virginia, refund or forgive nearly $150,000 in consumer debt and fees, and pay $105,000 in civil penalties and attorney’s fees.

State v. Federal

20 Republican Attorneys General and Governors File Lawsuit Seeking Declaration that Affordable Care Act Is Unconstitutional

  • A coalition of 20 Republican AGs and Governors, led by Texas AG Ken Paxton and Wisconsin AG Brad Schimel, filed a lawsuit in the United States District Court for the Northern District of Texas challenging the constitutionality of the Affordable Care Act (“ACA”) in light of a 2017 legislative amendment that eliminated the previously-existing tax penalties for failing to maintain minimum essential health insurance under the ACA.
  • According to the complaint, the Supreme Court allegedly predicated its decision upholding the constitutionality of the ACA, NFIB v. Sebelius, 567 U.S. 519 (2012), on a finding that the key “individual mandate” provision was connected to the lawful exercise of Congress’s power to tax. By eliminating the tax penalty for noncompliance with the ACA in 2017, the Republican AGs and Governors argue that Congress eliminated the sole constitutional basis for the ACA.
  • The lawsuit seeks a declaration that the ACA and any rules and regulations enacted thereunder are unconstitutional, injunctive relief barring enforcement of the ACA, attorney’s fees, and litigation costs.
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