The State AG Report Weekly Update March 14, 2019

2020 AG Elections

Republican Jim O’Neill Announces Candidacy for North Carolina Attorney General

  • Forsyth County District Attorney Jim O’Neill, a Republican, has declared his candidacy for North Carolina AG in 2020.
  • O’Neill, who is currently serving his fourth term as Forsyth County DA, is the first candidate to announce his intention to seek the Republican nomination for AG; he previously unsuccessfully sought the Republican nomination in 2016.
  • Current AG Josh Stein, a Democrat who is serving his first term, has not announced whether he is seeking reelection.

Consumer Protection

New Jersey Attorney General Sues “Buy Here-Pay Here” Auto Dealerships Over Alleged Misrepresentations in Vehicle Advertising and Sales

  • New Jersey AG Gurbir Grewal filed a lawsuit against Nu 2 U Auto World, LLC, Pine Valley Motors Incorporated of New Jersey, and their president over allegations that they made misrepresentations in vehicle advertising and sales in violation of the state’s Consumer Fraud Act, Used Car Lemon Law, and regulations governing vehicle advertising and sales practices.
  • According to the complaint, the dealerships, known as “Buy Here-Pay Here” dealerships because they provide financing directly to consumers, allegedly sold vehicles at prices higher than advertised and for which they did not possess the titles; financed vehicles at high interest rates and under terms likely to result in default and repossession; failed to provide purchasers with sales documents and required disclosures; and repossessed and resold vehicles after consumers defaulted (otherwise known as “churning”), among other things.
  • The complaint seeks declaratory and injunctive relief, restitution, civil penalties, and costs and fees, among other things.

Data Privacy & Security

Mississippi Attorney General Settles with Education Assessment Company Over Alleged Failure to Secure Students’ Information

  • Mississippi AG Jim Hood reached a settlement with education assessment company Questar Assessment, Inc. (“Questar”) to resolve allegations that it failed to secure students’ information in violation of the state’s Consumer Protection Act.
  • According to the AG’s office, Questar’s alleged failure to secure students’ test records, including student names and ID numbers, allowed an unauthorized third party to access such information.
  • Per statements by the AG’s office, the assurance of voluntary compliance requires Questar to notify the state Department of Education and law enforcement of future breaches, notify students and parents of breaches, follow a comprehensive information security program, revoke terminated employees’ network access, and encrypt students’ personal information, among other things.

Financial Industry

Arizona Attorney General Sues Lender for Allegedly Charging Consumers Illegal Interest Rates

  • Arizona AG Mark Brnovich filed a lawsuit against CashCall, Inc., its subsidiary WS Funding, LLC, and its owner (collectively, “CashCall”) over allegations that it misrepresented its lending practices in violation of the state’s Consumer Fraud Act.
  • According to the complaint, CashCall allegedly attempted to evade state usury laws by forming a fictitious company that it claimed was governed by the Cheyenne River Sioux Tribe rather than state or federal law, made loans to consumers far exceeding the state usury limits, and operated without a license, among other things.
  • The complaint seeks restitution, disgorgement, civil penalties, injunctive relief, and costs and fees, among other things.
  • As previously reported, AGs in Michigan, Massachusetts, Nebraska, Indiana, the District of Columbia, Virginia, and Georgia have settled similar claims against CashCall and its affiliates.

Gaming/Gambling

14 States File Amicus Briefs Urging Court to Declare the U.S. Department of Justice’s Wire Act Opinion Unlawful

  • 14 states filed amicus briefs in the U.S. District Court for the District of New Hampshire in the matter of New Hampshire v. Barr, No. 1:19-cv-00163-PB, urging the court to grant the plaintiffs’ motions for a declaratory judgment that, contrary to a January 2019 U.S. Department of Justice (“DOJ”) opinion, the Wire Act does not apply to state-conducted lotteries, as well as seeking a permanent injunction against enforcement of the DOJ opinion.
  • 13 AGs, led by Michigan AG Dana Nessel, filed a brief arguing that the Wire Act’s prohibitions against interstate wire transmission of wagering information is limited to sports wagering, and a nationwide injunction against the order is necessary to preserve state lottery programs and multi-jurisdictional lottery games.
  • New Jersey AG Gurbir Grewal separately filed a brief similarly arguing that the DOJ’s new interpretation of the Wire Act is incorrect and that nationwide relief is needed.
  • As previously reported, AG Grewal and Pennsylvania AG Josh Shapiro sent a letter to the DOJ opposing its 2019 Wire Act opinion.

Labor & Employment

14 Attorneys General Reach Agreements with Fast Food Franchisors to Discontinue Use of “No-Poach” Provisions

  • 14 AGs, led by Massachusetts AG Maura Healey, reached agreements with fast food franchisors Arby’s Restaurant Group, Inc. (“Arby’s”), Dunkin’ Brands, Inc. (“Dunkin’”), Five Guys Franchisor, LLC (“Five Guys”), and Little Caesar Enterprises, Inc. (“Little Caesar”) (collectively, “franchisors”) to eliminate “no-poach” provisions in their franchise contracts, to the extent each franchisor operated in the states party to the agreement.
  • According to the agreements, the franchisors allegedly included provisions in their contracts with franchise owners that prohibited employees from moving among stores within the same corporate chain.
  • Under the terms of the agreements, each of the franchisors will cease enforcing the no-poach provisions currently in their franchise contracts and remove such provisions from current and future franchise contracts.
  • As previously reported, AG Healey led a coalition of 11 AGs in issuing letters to eight national fast food franchisors—including Arby’s, Dunkin’, Five Guys, and Little Caesar—regarding no-poach provisions in July 2018, and Washington AG Bob Ferguson has reached similar agreements, settled, and filed lawsuits over similar provisions with dozen of franchisors.

6 Democratic Attorneys General Sue U.S. Department of Labor and Occupational Safety and Health Administration Over Rollback of Workplace Injury and Illness Reporting Rule

  • 6 Democratic AGs, led by New Jersey AG Gurbir Grewal, filed a lawsuit against the U.S. Department of Labor and the Occupational Safety and Health Administration (“OSHA”) alleging that OSHA’s January 2019 Tracking of Workplace Injuries & Illnesses Rule, which rolls back prior OSHA reporting requirements for workplace injury and illness information, violates the Administrative Procedure Act (“APA”).
  • According to the complaint, the Rule is allegedly unsupported because OSHA failed to justify its position that the reporting of workplace injuries and illnesses has few benefits or that it puts workers’ privacy at risk, failed to provide a reasoned explanation for reversing its prior position, and failed to account for the benefits of disclosure of the information that commenters—including the AGs—had raised during the public comment period.
  • The complaint seeks a declaration by the court that the Rule is unlawful, among other things, an order requiring the agencies to implement the prior rule, and to award costs and attorneys’ fees to the AGs.
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