Digest 08.13.2020: COVID-19 Price Gouging on Eggs | EPA Picks up Cleanup Tab | Not All Smiles with this Judgment


Paying 4X for Eggs? New York Attorney General Alleges Price Gouging in Lawsuit Against Egg Producer

  • New York AG Letitia James sued egg producer and wholesale distributor Hillandale Farms Corp. and related entities (collectively “Hillandale Farms”) for allegedly gouging the prices charged for eggs during the COVID-19 pandemic in violation of New York’s anti-price-gouging laws.
  • The complaint alleges, among other things, that Hillandale Farms as much as quadrupled the price of its eggs during the pandemic without a rise in costs to justify the price increase. The complaint seeks injunctive relief, an accounting for all New York sales since November 2019, restitution, disgorgement, damages, civil penalties, and attorneys’ costs.
  • Hillandale Farms denied the New York AG’s allegations in a statement saying the price of eggs, like several other commodities, has often been volatile. The statement noted that the current prices for eggs are lower than what they were in August 2019.

Attorneys General Urge Congress to Increase Protections for Senior Victims of Fraud

  • The National Association of Attorneys General (“NAAG”) sent a letter signed by a bipartisan group of 44 AGs to congressional leaders urging them to include the Edith Shorougian Senior Victims of Fraud Compensation Act (S. 3487/H.R. 7620) (“Edith’s Bill”) in COVID-19 relief legislation.
  • The letter notes that seniors are especially at risk for COVID-19-related fraud because scammers exploit seniors’ anxiety about the pandemic. The letter states that fraud against seniors is especially devastating because the majority of seniors live on fixed income and it is rare for seniors to be compensated for fraud even after the fraudster is caught.
  • The letter urges congress to enact Edith’s Bill, which will amend the Victims of Crime Act of 1984, to make victims of senior fraud eligible for reimbursement by the Crime Victims Fund. The bill will also direct penalties and fines from deferred prosecution and non-prosecution agreements to be deposited into the Crime Victims Fund.


EPA Agrees to Clean up Its Toxic Waste Blowout

  • Utah AG Sean Reyes reached a settlement with the U.S. Environmental Protection Agency (“EPA”) to resolve allegations of environmental and water contamination by the EPA and its contractors in violation of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Clean Water Act (“CWA”) and the Utah Solid and Hazardous Waste Act.
  • According to the amended complaint, the EPA and its contractors triggered an uncontrolled blowout at the Gold King Mine location in Colorado, dumping over three million gallons of acid waste and toxic metals into nearby waterways that stream into Utah, eventually reaching Lake Powell.
  • Under the terms of the settlement, among other things, the EPA will pay for costs of ongoing Superfund response actions in mining sites upstream from Utah at an expected cost of more than $220 million, provide $3 million in water quality grants to Utah’s Division of Water Quality, and initiate and pay for removal site evaluations in several locations throughout the state. 


Vaping Retailer Slapped with $22.5 Million Default Judgment and Permanent Injunction

  • Arizona AG Mark Brnovich obtained a default judgment and a permanent injunction against e-cigarette retailer Eonsmoke, LLC for allegedly marketing vaping products to minors in violation of the Arizona Consumer Fraud Act.
  • The complaint alleged that, among other things, Eonsmoke sold vaping products to consumers and retailers across Arizona without the required FDA marketing authorization and that its products were illegally marketed to youths, including by using fruit and candy flavors favored by minors.
  • The default judgment awards $22.5 million to the state, including nearly $22 million in civil penalties, approximately $511,000 in disgorgement of profits, and $50,000 in attorneys’ fees and costs. The default judgment also permanently enjoins Eonsmoke from advertising on social media through posts that may be accessible to minors and marketing or selling in Arizona any nicotine products not approved by the FDA, among other things.

Medicaid Fraud

$16.5 Million Judgment Entered Against Dentist in Texas Attorney General Medicaid Fraud Lawsuit 

  • Texas AG Ken Paxton obtained a judgment against Dr. Richard Malouf, former owner of All Smiles Dental Center, for fraudulently billing Texas Medicaid in violation of the Texas Medicaid Fraud Prevention Act in a case originally brought by two whistleblowers.
  • According to the AG’s office, the court found Dr. Malouf responsible for 1,842 unlawful acts including billing Medicaid for services he did not deliver such as over 100 claims he filed for a period of time during which he was out of the country.
  • The judgment awards approximately $15.4 million to the state, including approximately $538,000 for unlawfully received Medicaid payments, $1.08 million representing double the amount unlawfully received from Medicaid, $9.21 million in statutory minimum civil penalties, and $4.6 million in attorneys’ costs and fees. The judgment also awards approximately $1.1 million to the whistleblowers for attorneys’ fees and costs.


New York Attorney General Files Lawsuit to Dissolve NRA

  • New York AG Letitia James filed a lawsuit against the National Rifle Association and its executives (collectively, “NRA”) over allegations that its leadership mismanaged and diverted NRA funds for the personal gain of its executives and their associates in violation of New York’s Estates, Powers & Trusts Laws, New York’s Not-for-Profit Corporation Law, the New York Prudent Management of Institutional Funds Act, and New York’s Executive Law.
  • According to the complaint, the NRA’s leaders violated their fiduciary duty to the NRA and diverted millions of dollars for their personal use and to reward themselves, family members, and close associates with lucrative consulting contracts. In addition, the complaint alleges that the NRA failed to follow proper auditing procedures and retaliated against whistleblowers.
  • The complaint seeks, among other things, the dissolution of the NRA, declaratory and injunctive relief, restitution, and permanently barring the individual defendants from serving as officers, directors, or trusties of charitable organizations incorporated or authorized to conduct business in the State of New York.