The State AG Report Weekly Update July 26, 2018

Charities

Federal Trade Commission and Attorneys General of 50 States, DC, and US Territories Announce Coordinated Crackdown on Allegedly Fraudulent Veterans Charities 

  • The Federal Trade Commission (“FTC”) and AGs representing all 50 states, the District of Columbia, American Samoa, Guam, and Puerto Rico initiated a coordinated nationwide campaign of enforcement actions against charities that allegedly violate the FTC Act and state consumer protection laws by soliciting donations from consumers based on false representations that charitable proceeds would go to benefit military veterans and service members.
  • The enforcement campaign, dubbed “Operation Donate with Honor,” includes over 100 separate civil enforcement actions in state and federal courts nationwide.
  • In conjunction with the civil enforcement actions, Operation Donate with Honor includes a consumer educational initiative to teach consumers how to investigate charities and avoid alleged charitable scams.

Consumer Protection

Bipartisan Coalition of 19 Attorneys General Files Amicus Brief Asking U.S. Supreme Court to Set Limits on Cy Pres Provisions in Class Action Settlements

  • A bipartisan coalition of 19 AGs, led by Arizona AG Mark Brnovich, filed an amicus brief in the Supreme Court of the United States in the matter of Frank v. Gaos, No. 17-691, asking the Court to reverse the United States Court of Appeals for the Ninth Circuit’s decision upholding a cy pres-only class action settlement.
  • According to the brief, cy pres provisions in class action settlements, which distribute portions of settlement funds to entities such as charities, universities, and think tanks rather than distributing all of the funds to the plaintiff class, improperly divert compensation from class members, and cy pres-only settlements, which do not distribute any funds to class members, further violate the fairness requirements of Rule 23 of the Federal Rules of Civil Procedure by failing to deliver any direct benefit to class members.
  • As previously reported, AG Brnovich led a coalition of 16 AGs in filing an amicus brief in support of the petitioners’ petition for writ of certiorari on similar grounds.

Massachusetts Attorney General Initiates Investigation of E-Cigarette Manufacturer and Issues Cease and Desist Letters to E-Cigarette Retailers Over Alleged Unfair or Deceptive Sales of E-Cigarettes to Minors

  • Massachusetts AG Maura Healey initiated an investigation of e-cigarette manufacturer JUUL Labs, Inc. (“JUUL”) and two internet e-cigarette retailers, Direct Eliquid LLC and Eonsmoke, LLC (collectively, “retailers”), over allegations that they violated state consumer protection laws and tobacco and e-cigarette regulations by allegedly failing to prevent under-aged individuals from purchasing e-cigarette products.
  • According to the AG’s announcement, the investigation will examine JUUL’s efforts to audit its own website and the websites of the retailers to assess whether they are adequately verifying purchasers’ ages and preventing minors from purchasing e-cigarette products.
  • In connection with the investigation, the AG’s office issued cease and desist letters demanding that the retailers immediately cease accepting all orders from Massachusetts addresses and delivering orders to Massachusetts customers until they demonstrate compliance with the state’s tobacco and e-cigarette regulations.

State AGs in the News

Bipartisan Coalition of Nine Attorneys General Issues Response to Proposed Rulemaking Urging the FDA to Ban Flavored Tobacco

  • A bipartisan coalition of nine AGs, led by New York AG Barbara Underwood, issued comments in response to the Food and Drug Administration’s (“FDA”) March 2018 advance notice of proposed rulemaking regarding the regulation of flavors, including menthol, in tobacco products including e-cigarettes.
  • According to the AGs’ letter, flavored tobaccos products provide no public health benefit and are associated with attracting young consumers and minorities to tobacco use.
  • The AGs expressed concern about the increased use of flavored tobacco products among young people and recommended that the FDA ban all flavored tobacco products, a category in which the AGs include e-cigarettes.

State v. Federal

Coalition of Six Democratic Attorneys General Files Suit Against U.S. Department of Justice Over Alleged Withholding of Federal Law Enforcement Grant Funding

  • A coalition of six Democratic AGs filed suit against the U.S. Department of Justice (“DOJ”) in the U.S. District Court for the Southern District of New York alleging that the DOJ is illegally conditioning its release of federal law enforcement funding upon states’ and localities’ cooperation with federal civil immigration enforcement efforts.
  • According to the complaint, DOJ is allegedly denying Edward Byrne Memorial Justice Assistance Grant (“Byrne JAG”) funds to states and localities that decline to cooperate with federal efforts to locate, question, and share information regarding immigrants, when DOJ lacks statutory authorization to impose such conditions, which the AGs allege violates federal law, separation of powers doctrine, and the anti-commandeering principles of the Tenth Amendment.
  • The complaint seeks a declaration that DOJ’s conditions are unlawful, injunctive and mandamus relief to bar enforcement of the allegedly unlawful conditions, and the states’ costs, expenses, and attorneys’ fees, among other relief.
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