The State AG Report

Editors Lori Kalani and Jerry W. Kilgore

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8.2.2018 The State AG Report Weekly Update

Cozen in the News

Cozen O’Connor Examines Key Takeaways from Completed 2018 Attorney General Primary Elections

  • Just over halfway through the AG primary election season, AG primary elections have been held in 17 states and the District of Columbia, South Dakota Republicans and Democrats have held their state conventions, and the Michigan Democratic Party has endorsed a candidate. Some big and contentious races remain, including primaries in Florida, Minnesota, and New York.
  • Check out our latest article assessing the key takeaways from completed AG primary elections and looking ahead to the next wave of AG primary elections.
  • For daily coverage of AG election news, insights, and polls, visit Cozen O’Connor’s State AG Election Tracker.

Consumer Protection

Florida Attorney General and FTC Sue Consulting Company Over Allegedly Deceptive Mailings

  • Florida AG Pam Bondi and the Federal Trade Commission (“FTC”) sued Starwood Consulting, LLC, d/b/a/ Corporate Compliance Services and its president (collectively, “CCS”) for allegedly misleading business owners into believing they represented government authorities instructing them to purchase labor law posters in violation of state and federal consumer protection laws.
  • According to the complaint, CCS allegedly violated the FTC Act and the Florida Deceptive and Unfair Trade Practice Act by mailing notices, which mimicked invoices from government agencies, to newly established businesses directing them to purchase labor law posters and stating that “Failure to comply with posting regulations can lead to fines of up to $17,000,” leading over 9,000 businesses to purchase more than $800,000 in posters from CCS.
  • The complaint seeks a permanent injunction against future violations by CCS; consumer redress including rescission or reformation of contracts, restitution, refund of monies paid, and disgorgement of profits; and civil penalties, among other things.

Financial Industry

Georgia Attorney General Settles with Mortgage Lender Over Allegedly Charging Unauthorized Fees

  • Georgia AG Chris Carr reached a settlement with PHH Mortgage Corporation (“PHH”) resolving allegations that PHH charged consumers unauthorized fees in violation of the state Fair Business Practices Act.
  • According to the AG’s office, PHH allegedly signed consumers up for third-party insurance and home warranty programs and charged consumers for those products and services without consumers’ knowledge.
  • According to the AG’s office, the terms of the settlement require PHH to stop soliciting consumers’ purchase of or enrollment in third-party products and services, notify consumers that they may cancel third-party products and services without penalty, pay $25,000 to fund an account from which consumers may receive restitution, and pay $50,000 in penalties, with an additional $50,000 penalty if PHH fails to comply with the settlement within a 120-day monitoring period.
  • As previously reported, PHH had entered into a separate agreement with AGs from 49 states and the District of Columbia over allegations of charging unauthorized fees, among other things, in January 2018.

Health Care

12 Attorneys General Challenge U.S. Department of Labor Rule Exempting Certain Health Insurers From Consumer Protection Mandates

  • A coalition of 12 AGs, led by Massachusetts AG Maura Healey and New York AG Barbara Underwood, filed a lawsuit challenging the U.S. Department of Labor’s (“DOL”) Association Health Plan Rule (“AHP Rule”), which exempts certain associations from consumer protection provisions of the Patient Protection and Affordable Care Act (“ACA”).
  • The AHP Rule redefines the term “employer” as used in the Employment Retirement Income Security Act (“ERISA”) to expand the class of “large employers” to include associations of small or individual employers that are formed for the purpose of selling insurance, thereby exempting those associations from consumer protections previously imposed by the ACA.
  • According to the complaint, the AHP Rule allegedly violates the Administrative Procedure Act because it is arbitrary and capricious, contradicts the ACA and ERISA, and exceeds DOL’s authority over ERISA, among other things.
  • The complaint seeks declaratory and injunctive relief vacating and setting aside the AHP Rule.

State AGs in the News

Arkansas Attorney General Announces Birth of Daughter

  • Arkansas AG Leslie Rutledge and husband Boyce Johnson announced the birth of their daughter, Julianna Carol Johnson, on July 27, 2018.
  • AG Rutledge, the first woman elected to the office of Arkansas AG, is now also the first constitutional officer of Arkansas to give birth while holding office.

Colorado Attorney General Selected to Chair CWAG Executive Committee

  • The Conference of Western Attorneys General (“CWAG”) selected Colorado AG Cynthia Coffman as its new Executive Committee Chairman during its annual Summer Meeting.
  • AG Coffman will serve as the Chair of CWAG during the 2018-2019 term and succeeds Arizona AG Mark Brnovich.
  • As Chair of CWAG, AG Coffman will also sit on the Executive Committee of the National Association of Attorneys General (“NAAG”).

State v. Federal

10 Attorneys General Sue, Obtain Nationwide Restraining Order Blocking Publication of Instructions for At-Home 3D Printing of Firearms; New Jersey Attorney General Issues Cease and Desist to Publisher

  • A coalition of 10 AGs, led by Washington AG Bob Ferguson, filed a lawsuit against the U.S. Department of State (“DOS”) and Directorate of Defense Trade Controls (“DDTC”) seeking to prevent them from allowing public distribution of Computer Aided Design (“CAD”) files containing downloadable instructions for 3D printing of firearms.
  • Under the terms of a settlement agreement entered into by DOS, DDTC, and Defense Distributed—an online, open-source digital firearm developer—DOS and DDTC temporarily modified the United States Munitions List to remove CAD files from the list, thereby allowing their public distribution, and agreed to publish a final rule to the same effect.
  • According to the complaint, DOS and DDTC actions allegedly violate the Administrative Procedure Act by failing to give required notice of the temporary modification to Congress or obtain necessary Department of Defense approval, and violate the Tenth Amendment to the U.S. Constitution’s reservation of police power to the states, among other things.
  • The complaint seeks a declaration that the temporary modification is invalid and an injunction against implementation of the modification. The U.S. District Court for the Western District of Washington has granted a nationwide temporary restraining order.
  • Separately, New Jersey AG Gurbir Grewal issued a cease and desist letter to Defense Distributed stating that publication of CAD files violates state public nuisance and negligence laws, and that publication will prompt legal action against the company.