The State AG Report Weekly Update June 21, 2018

Breaking News

New York Federal Judge Declares Structure of Consumer Financial Protection Bureau Unconstitutional

  • The U.S. District Court for the Southern District of New York held in Consumer Financial Protection Bureau v. RP Legal Funding, LLC that the structure of the Consumer Financial Protection Bureau (“CFPB”), as established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), is unconstitutional.
  • Senior Judge Loretta Preska’s opinion and order held in relevant part that Title X of Dodd-Frank, which authorizes the creation of the CFPB, is unconstitutional because it creates an independent agency that exercises substantial executive power and is headed by a single director.  Judge Preska also held that because the unconstitutional portion of Title X is at the “heart” of the statute, Title X should be struck down in its entirety.
  • This ruling contrasts with the January 2018 ruling by the U.S. Court of Appeals for the District of Columbia Circuit finding the CFPB structure constitutional.  If Judge Preska’s decision is appealed and upheld by the U.S. Court of Appeals for the Second Circuit, it would lead to a circuit split and the possibility that the U.S. Supreme Court may be petitioned to resolve the constitutionality of the CFPB’s authorizing legislation.

2018 AG Elections

Democratic Incumbent Karl Racine Secures Party Nomination for District of Columbia Attorney General

  • Democratic incumbent AG Karl Racine secured his party’s nomination for District of Columbia AG in 2018 and will run unopposed in the November 6, 2018 general election.
  • Prior to his election in 2014, Racine was the managing partner of the Washington, D.C. office of an international law firm, and previously served in the Public Defender Service for the District of Columbia and as an Associate White House Counsel.
  • AG Racine is the District of Columbia’s first elected AG. Prior to Racine’s election, the AG was appointed by the Mayor.

South Dakota Democratic Party Selects Randy Seiler as Candidate for Attorney General

  • The South Dakota Democratic Party voted at its state convention to nominate Randy Seiler for AG in 2018.
  • Seiler, the former U.S. Attorney for the District of South Dakota, previously served in the U.S. Air Force.
  • As previously reported, incumbent AG Marty Jackley, a Republican, is term-limited.
  • The South Dakota Republican Party will nominate its candidate for the open AG seat at its state convention on June 23, 2018.

Consumer Financial Protection Bureau

Kathy Kraninger Selected by President as Director of the Consumer Financial Protection Bureau

  • President Donald Trump has announced he will nominate Kathy Kraninger, a program associate director at the federal Office of Management and Budget (“OMB”), as the next Director of the Consumer Financial Protection Bureau (“CFPB”).
  • Kraninger previously worked for the Department of Homeland Security and the Senate Appropriations Committee before joining the OMB.
  • If confirmed by the Senate, Kraninger will replace current Acting Director of the CFPB Mick Mulvaney.
  • Separately, Acting Director Mulvaney has proposed referring to the agency as the “Bureau of Consumer Financial Protection,” or “BCFP,” in accordance with the text of the Dodd-Frank Act that establishes the agency, and agency press releases such as that announcing Kraninger’s appointment have begun using the new acronym, although the agency’s website and other materials continue to refer to the “CFPB.”

Environment

Connecticut and New York Attorneys General Secure Summary Judgment Against Environmental Protection Agency in Dispute Over Clean Air Act Implementation Plans

  • Connecticut AG George Jepsen and New York AG Barbara Underwood secured summary judgment in a federal lawsuit against the U.S. Environmental Protection Agency (“EPA”) that sought to compel the EPA to develop federal implementation plans (“FIPs”) that the AGs argue are required under the “Good Neighbor” provision of the federal Clean Air Act (the “Act”) to control the interstate spread of ozone pollution.
  • According to the AGs’ January 2018 complaint, the EPA has allegedly failed to promulgate FIPs that the AGs allege should have been issued in August 2017 to help prevent the spread of ozone pollution from certain upwind states into downwind states that bear the environmental consequences of the pollution.
  • According to the order granting summary judgment, the EPA is declared in violation of the Act and is enjoined to promulgate FIPs consistent with the Act.

Financial Industry

42 Attorneys General Reach Settlement with Global Financial Institution Over Alleged Interest Rate Manipulation

  • 42 AGs, led by NY AG Underwood, reached a settlement with Citibank, N.A. (“Citibank”) over allegations Citibank allegedly violated state and federal antitrust laws, consumer protection laws, false claims statutes, securities laws, fraud statutes, and the common law by misrepresenting the integrity of the London Interbank Offered Rate (“LIBOR”), a benchmark interest rate used in international financial markets.
  • According to the AGs, Citibank allegedly misrepresented the credibility of LIBOR to state and local governmental, not-for-profit, private, and institutional trading partners by concealing, misrepresenting, or failing to disclose its alleged efforts to manipulate the rate to improve its relative trading position, enhance its public image, and profit from financial contracts secured from governmental and not-for-profit entities.
  • Under the terms of the settlement agreement, Citibank must pay $100 million to the AGs, $95 million of which will be used to make restitution to those affected by Citibank’s alleged conduct.
  • As previously reported, other financial institutions reached similar settlements with similar multistate coalitions of AGs in 2016 and 2017 over allegations of LIBOR manipulation.

Labor & Employment

New York Attorney General Reaches Settlement with Global Shoe and Accessory Retailer Over Allegedly Discriminatory Hiring Practices

  • New York AG Underwood reached a settlement with global shoe and accessory retailer Aldo Group, Inc. (“Aldo”) over allegations it violated the New York City Fair Chance Act (“FCA”), a local “Ban the Box” law that prohibits criminal record information from being solicited in initial screening applications.
  • According to the AG’s office, the initial job applications distributed by Aldo among its New York City stores asked prospective employees to provide information about their criminal histories in violation of the FCA.
  • According to the AG’s office, the settlement requires Aldo to pay $120,000 in penalties and costs and to come into compliance with the law.

Pharmaceuticals

Kentucky Attorney General Files Suit Against Nationwide Pharmacy Chain Over Alleged Distribution and Dispensing of Prescription Opioids

  • Kentucky AG Andy Beshear filed suit against Walgreens Boots Alliance, Inc. and four related entities (collectively, “Walgreens”) over allegations they distributed and dispensed excessive amounts of prescription opioids.
  • According to the complaint, Walgreens allegedly knew or should have known that it was receiving a suspiciously high number of opioid orders, but failed to properly monitor, halt, and report suspicious opioid orders and allowed excessive numbers of opioids to be dispensed from local Walgreens pharmacies.
  • The complaint seeks, among other relief, a declaratory judgment, injunctive relief, compensatory and punitive damages, civil penalties, restitution, and attorneys’ fees and costs.

State AGs in the News

Maine Attorney General Wins Democratic Nomination for Governor Following Ranked-Choice Primary Election

  • Maine AG Janet Mills won the Democratic nomination for Governor and will face the Republican gubernatorial candidate, businessman Shawn Moody, in the general election on November 6, 2018.
  • As previously reported, Maine’s primary elections were the first “ranked-choice” elections in recent U.S. history. Under a ranked-choice system, voters rank the candidates in order of preference, and the votes for the candidate in last place are redistributed to those voters’ next choice candidate until a candidate reaches 50%.
  • AG Mills’ successor will be elected by secret ballot at a joint session of the Maine State Legislature; Maine is the only state in the nation that selects its Attorney General in this manner.

Kim Berger Appointed as Chief of Bureau of Internet and Technology for the Office of the New York Attorney General

  • New York AG Underwood has appointed Kim Berger as the new Chief of the Bureau of Internet and Technology (“BIT”), a part of the Economic Justice Division.
  • Prior to her appointment, Berger worked in private practice as a partner at a law firm and previously held various public and private legal positions, including Assistant U.S. Attorney for the Northern District of California and Managing Counsel for Tesla, Inc.
  • The BIT investigates and enforces internet- and technology-related matters and seeks to keep the New York public informed regarding emerging internet- and technology-related issues and threats.
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