Digest 08.20.2020: Battle over USPS | Removal of Trustees for Alleged Self-Dealing | Lenders vs. State Interest Rate Laws

Cozen in the News

Cozen O’Connor State AG Attorneys Recognized by Best Lawyers

  • In the 27th Edition of Best Lawyers in America published today, Cozen O’Connor State AG Group attorneys Bernie Nash, Milton Marquis and Jerry Kilgore were again recognized as leaders in the profession and in their specialist areas, among the over 200 Cozen O’Connor attorneys honored.
  • The State AG Group co-chair and editor of the State AG Report, Bernie Nash, was again recognized as a Best Lawyer in the categories of Government Relations Practice and Administrative/Regulatory Law.
  • Partner Milton Marquis was again recognized as a Best Lawyer in the category of Litigation – Antitrust.
  • Partner Jerry Kilgore was again recognized as a Best Lawyer in the category of Government Relations Practice.
  • Best Lawyers, created in 1983, uses a rigorous research and data analysis process together with feedback from peers in the legal profession to identify and highlight the top 6% of lawyers in private practice in the US each year.


Energy Company Agrees to Divest Gas Stations to Avoid FTC’s Antitrust Concerns

  • The Federal Trade Commission (“FTC”) reached an agreement with energy company Tri Star Energy LLC after determining that its proposed acquisition of certain assets from Hollingsworth Oil Company, Inc. and related entities (collectively “Hollingsworth”) would harm competition and violate the FTC Act and the Clayton Act.
  • The complaint alleged that, because Tri Star Energy and Hollingsworth both own and operate gas stations and convenience stores in middle Tennessee, the proposed acquisition would harm competition and create a monopoly in the retail gasoline and diesel market in that geographic region.
  • Under the terms of the consent order, Tri Star Energy will divest its retail fuel assets in middle Tennessee to Cox Oil Company, Inc. within 10 days after completing the acquisition, and the FTC may appoint a divestiture trustee should Tri Star Energy not perform its obligations under the consent order.


Minnesota Attorney General Seeks to Remove Charity’s Trustees for Alleged Breach of Fiduciary Duty, Self-Dealing

  • Minnesota AG Keith Ellison petitioned the Ramsey County Probate Court to remove the trustees of the Otto Bremer Trust (“OBT”) and to appoint a slate of proposed fiduciaries in their place over allegations that the current trustees breached their fiduciary duty in violation of Minnesota’s Charitable Trusts and Trustees Act and Trust Code.
  • The memorandum of law alleges, among other things, that the trustees acted recklessly in selling OBT’s main asset to hedge funds while seeking to enrich themselves, exposed OBT to significant legal risk, and used millions of OBT’s money for expenses that did not relate to OBT’s charitable purposes, including paying themselves unnecessary fees and significantly raising their own compensation, among other things.
  • The AG’s office filed two petitions. One petition seeks emergency interim relief, including injunctive relief and the replacement of the current trustees with a group of other fiduciaries while the other petition seeks substantially similar relief on a permanent basis.

Consumer Protection

California Online Services Provider Allegedly Inflated Effectiveness of Its Teletherapy Services

  • California AG Xavier Becerra reached a settlement with the online, for-profit provider of special needs services PresenceLearning, Inc. to resolve allegations that it used false advertising and misrepresentations in marketing its services in violation of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.
  • The complaint alleged, among other things, that PresenceLearning falsely and misleadingly claimed that its teletherapy services were equally as effective as in-person services, and that medical associations and federal agencies endorsed the effectiveness of PresenceLearning’s teletherapy services.
  • Under the terms of the proposed stipulated judgment, PresenceLearning agreed to pay $600,000 to the state, of which $250,000 will be used to reimburse attorneys’ costs, and to retain an expert consultant to monitor its compliance with federal and California telehealth-related laws and regulations. PresenceLearning will also be enjoined from making any unsubstantiated claims in the advertising and marketing of its services.


Burning Rubber: Rhode Island Scrap Metal Processor Pays Penalty for Allegedly Spewing Toxic Chemicals into the Air

  • Rhode Island AG Peter Neronha and the Rhode Island Department of Environmental Management reached a settlement with scrap metal processor SMM New England Corporation, d/b/a SIMS Metal Management (“SIMS”) to resolve allegations that SIMS engaged in polluting practices in its metal-shredding operations in violation of the Rhode Island Clean Air Act.
  • The complaint alleged that SIMS’s metal shredding process for recycling cars, appliances, and other metal-bearing equipment generated enough heat to melt plastics and other chemicals, thereby releasing impermissibly high levels of volatile organic compounds, particulate matter, and toxic air contaminants. The complaint further alleges that SIMS did not have the appropriate permits for the type of pollutants it was generating, and did not install the appropriate equipment to keep the pollutants from contaminating the environment.
  • Under the terms of the consent decree, SIMS agreed to a partially suspended penalty of $2 million. SIMS will pay $875,000 to the state, of which $325,000 will fund Supplemental Environmental Projects. $1.125 million will be suspended upon SIMS’s completion of certain actions required by the consent decree, including applying for the appropriate permits, installing emission-control technology at SIMS’s plant, and implementing interim controls to limit pollutant exposure in the vicinity of its plant.

Financial Industry

Two Non-Bank Lenders Agree to Settle Allegations of Overcharging Colorado Consumers, Hiding Behind Out-of-State Banks

  • Colorado AG Phil Weiser reached a settlement with non-bank lenders Marlette Funding LLC, and Avant of Colorado LLC and several out-of-state banks to settle allegations that Marlette and Avant “rented” the banks in a scheme to circumvent Colorado’s interest rate limits.
  • The complaints against Marlette and Avant allege that each lender violated Colorado’s finance charge and late fee limitations, and unlawfully enforced bank statutory interest rate exportation rights through assignment of loans for which they were the true lenders even though the loans were originated by the “rented” banks.
  • Under the terms of the assurance of discontinuance, Marlette, Avant, and the banks jointly will pay $1.05 million to the state of which $525,000 will be used for attorneys’ fees and costs and $500,000 will be paid to the Department of Education for K-12 financial education.

State vs. Federal

Save the Post Office! Democratic Attorneys General Sue Trump Administration over Recent Changes in Postal Service Procedures

  • A group of 14 Democratic AGs, led by Washington AG Bob Ferguson, sued the Trump administration and the U.S. Postal Service (“USPS”) over allegations that the recent changes to the USPS procedures are unlawful and unconstitutional.
  • Pennsylvania AG Josh Shapiro announced that he will also file a separate, similar multistate suit shortly, joined by 5 additional Democratic AGs.
  • The Washington complaint alleges that the changes in mail processing and delivery are slowing down mail delivery and making it unreliable, thereby impacting millions of people, including seniors and veterans, who rely on the USPS for delivery of such essentials as prescriptions and Social Security benefits. The complaint also alleges that the changes will interfere with the First Amendment right to vote.
  • The complaint seeks declaratory and injunctive relief, a writ of mandamus, and vacatur.