Digest 10.29.2020: 2020 Election Impact | Waste Management Merger Antitrust Concerns | NAAG Consumer Protection Conference Highlights

Breaking News

A Preview of How the Presidential Election Will Influence the Agendas of State Attorneys General

  • Cozen O’Connor’s State Attorneys General Practice Member Sean Riley penned an alert analyzing the effect of the presidential election on state AGs’ agenda.
  • In the alert, Riley lays out the likely impacts of either a continuation of the Trump presidency or a new Biden/Harris administration on AGs’ priorities and focus in the policy and enforcement arenas.


What a Waste! Merging Waste Disposal Companies Must Divest Assets to Avoid Antitrust Concerns

  • The U.S. Department of Justice (“DOJ”) and the AGs of Florida, Illinois, Minnesota, Pennsylvania, and Wisconsin sued to block the merger of waste disposal companies Waste Management, Inc. (“WMI”) and Advanced Disposal Services, Inc. (“ADS”) over allegations that the $4.6 billion merger between the two companies would substantially harm competition for waste collection and disposal services in more than 50 local markets. DOJ and the AGs simultaneously filed a proposed final judgment that would require WMI to divest certain assets to mitigate the alleged anticompetitive harms of the merger.
  • The complaint alleges that WMI and ADS compete against each other in many local markets over small container commercial waste collection and municipal solid waste disposal services and that, because the two companies are either the only two competitors or two of a small number of competitors in each local market, their merger would threaten to raise prices and worsen service by eliminating direct competition.
  • Under the terms of the proposed final judgment, WMI would be required to divest 15 landfills, 37 transfer stations, 29 hauling locations, and over 200 waste collection routes, among other things, to GFL Environmental Inc., a Canadian waste management company operating throughout North America. The proposed settlement is subject to a 60-day comment period, after which the court will enter the judgment if it finds the settlement serves the public interest.

Consumer Financial Protection Bureau

Alleged Mortgage Data Inaccuracies Result in a $200,000 Penalty

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Washington Federal Bank, N.A. to resolve allegations that it reported inaccurate data about its mortgage transactions in violation of the Home Mortgage Disclosure Act (“HDMA”), Regulation C, and the Dodd–Frank Wall Street Reform and Consumer Protection Act. HDMA data is used to identify discriminatory lending practices and analyze community credit needs.
  • According to the consent order, the CFPB found that Washington Federal Bank failed to report accurate data about its mortgage applications, with some samples having error rates of 40% due to insufficient staffing and training, poor oversight, and an ineffective compliance-management system. The consent order also notes that Washington Federal Bank is the subject of a 2013 consent order with the CFPB that involved similar allegations of inaccurate mortgage data reporting.
  • Under the terms of the consent order, Washington Federal Bank will pay a $200,000 civil money penalty and must develop and implement an adequate HDMA compliance-management system, among other things.

Consumer Protection

Priorities and Trends Discussed at this Week’s NAAG Consumer Protection Fall Conference

By: Hannah Cornett and Ann-Marie Luciano

On October 27, 2020, the National Association of Attorneys General (“NAAG”) held its Fall Consumer Protection Conference virtually with more than 500 attendees.  The session involved a series of panel discussions with State Attorneys General (“AGs”), their senior staff, Federal Trade Commission (“FTC”) officials, and industry professionals on a number of topics of interest to businesses.  The following are our key takeaways from each panel:

Panel of Attorneys General: Consumer Protection Priorities

  • AGs continue to see an increase in COVID-19-related scams including price-gouging, robocalls, fraudulent and deceptive product claims, and scams involving unemployment and housing.
  • Despite the increased COVID-19 related activity, the AGs indicated that they continue to pursue high-profile multistate investigations, including matters involving the opioid crisis, vaping industry, and antitrust issues in the “big tech” industry.
  • The AGs emphasized that they almost always first engage with a business before taking action. The AGs expressed a desire to understand a business’s perspective and cautioned that businesses should not be too eager to litigate.

The ABCs of Advertising: An Overview of Advertising Law and Practice in the Modern Market

  • The FTC has seen an increase in COVID-19-related complaints involving health and safety, a failure to deliver goods, and business education.
  • The FTC remains active in pursuing actions that involve native advertising, deceptive rankings and reviews, and unsubstantiated endorsements made by social media influencers. Investigations into deceptive online rankings and reviews typically fall into one of two categories: (1) companies that deceptively promote positive reviews; and (2) companies that actively suppress negative sentiment.
  • Many of the agency’s enforcement actions have involved a failure to disclose reviewer compensation or other material connections between the reviewer and advertiser.

California Consumer Privacy Act: What Is It, How Will It Affect You, And How It May Change

  • The panel discussed how the California Consumer Privacy Act’s (“CCPA”) new regulations provide detailed compliance procedures that still offer some flexibility for small businesses.  The regulations also account for the logistics of compliance, and provide practical guidance for businesses.  For example, the regulations include detailed guidelines for businesses to verify a customer’s identity before complying with a request for disclosure.
  • Businesses have been proactive in adapting to the new law, and often voluntarily change their practices soon after receiving a notice of non-compliance and within the CCPA’s 30-day opportunity to cure period.
  • Many states are considering legislation modeled after the CCPA, and the panelists recommended that states remain mindful of how the law should be operationalized, which includes allowing for flexibility and planning consumer education efforts.  The panelists urged states to use the opportunity to incorporate data minimization into any new statute or legal framework.  The panelists predicted that a regulatory shift towards data minimization will likely shift the industry away from targeted marketing efforts and towards a more contextual advertising approach, which poses fewer consumer privacy concerns.

 False Claims

Mental Health Service Provider Pays Millions to Settle Medicaid False Claims Cases

  • Arkansas AG Leslie Rutledge reached two settlements with mental health care provider Preferred Family Healthcare (“PFH”) to resolve allegations that former PFH employees submitted false claims to the Arkansas Medicaid Program in violation of the federal and state False Claims Acts.
  • According to the AG’s office, PFH employees allegedly billed Medicaid for counseling services that were not rendered or overbilled, and PFH inappropriately billed an entire class of recipients whose bills should have been submitted to Medicare and not to Medicaid. Five former PFH employees have reportedly been charged in state court over their involvement in the scheme.
  • According to the AG’s office, PFH will pay over $4.55 million to resolve the federal false claims case and nearly $1.95 million to resolve the state false claims case.

VMware Allegedly Sold Software at Hyperinflated Prices to California

  • California AG Xavier Becerra reached a settlement with software company VMware to resolve allegations that it made false statements and overcharged state and local governments for information technology software in violation of California’s False Claims Act.
  • According to the settlement agreement, VMware allegedly submitted inaccurate and incomplete information to the federal government, which led the federal government to negotiate inflated prices for its software. Because California relies on the federal government’s pricing for its contracts, it was allegedly defrauded by VMware into paying inflated prices as well.
  • Under the terms of the settlement agreement, VMware will pay $4 million, of which over $2.95 million will be paid in restitution to the state and California colleges and universities.

 Financial Industry

“True Lender” Rule Goes into Effect Despite Heated Pushback from Attorneys General

  • The Office of the Comptroller of the Currency issued a final rule to determine whether a national bank or federal savings association is the “true lender” on a loan in the context of a bank’s relationship with a third party.
  • The rule specifies that a bank is the true lender of a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. The rule also specifies that in the event that one bank is named as the lender in the loan agreement while another bank funds that loan, the bank that is named as the lender is considered to be the true lender. In addition, the rule clarifies that the true lender retains the compliance obligations associated with the origination of the loan.
  • As previously reported, Democratic AGs objected to the rule during the comment period, arguing that it would undermine states’ usury laws and allow predatory lenders to circumvent states’ enforcement actions through “rent-a-bank” schemes.

 Labor & Employment

Democratic AGs Fight Trump Administration’s Proposed Employee/Contractor Classification Rule

  • A group of 24 democratic AGs, led by Massachusetts AG Maura Healey, New York AG Letitia James, and Pennsylvania AG Josh Shapiro, sent a comment letter to Labor Secretary Eugene Scalia calling on the Department of Labor (“DOL”) to rescind a proposed rule titled Independent Contractor Status Under the Fair Labor Standards Act (the “Rule”) that would make it easier for employers to classify workers as independent contractors rather than as employees.
  • The Rule would establish a five-factor test, including the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss, to determine whether a person is an “employee”—and therefore protected by the FLSA—or an “independent contractor” not subject to such protections.
  • In the letter, the AGs argue that the proposed rule could harm workers by lowering wages and stripping benefits such as employer-sponsored health coverage for millions of workers, exposing reclassified or misclassified workers to tax liability, and removing federal minimum wage and overtime pay requirements for workers reclassified or misclassified as independent contractors. The letter further argues that DOL did not provide a satisfactory explanation for its proposed rule or attempt to quantify the real-world consequences of its implementation.