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Meeting of the Minds – Negotiating State AG Settlements | 2022 NAAG Spring Consumer Protection Conference (Part 4 of 4)

By: Chris Allen, Meghan Stoppel, and Ann-Marie Luciano

The National Association of Attorneys General’s biennial Consumer Protection Conference always provides a fascinating deep dive into the minds and priorities of state attorney general consumer protection staff, and of the leaders who run the day-to-day investigations and litigations that most directly impact companies.  The May 24, 2022 meeting in Raleigh, North Carolina, attended by representatives from 42 states, DC, and four territories, was no exception.

The fourth panel of the day examined the complexities of negotiating resolutions to state AG investigations and litigation, and featured panelists with extensive experience resolving multistate AG investigations and litigation. This panel was moderated by Connecticut Consumer Protection Chief Michael Wertheimer and featured Nebraska Consumer Protection Chief Phil Carlson, Tennessee Executive Counsel Jeff Hill, former U.S. Associate AG Tom Perrelli, and former Connecticut Chief Deputy AG Perry Zinn Rowthorn. The panelists shared their insights from their roles as senior AG staff and frequent negotiators into what state AGs appreciate (and don’t appreciate) during settlement negotiations.  They noted that the best settlements should create buy-in from all stakeholders, achieve universal peace for the parties (if possible), and address the problems giving rise to the initial investigation.  Ineffective settlements, on the other hand, leave issues unresolved and adopt unacceptable timeframes for implementing changes.

The panelists repeatedly referenced “trust” during the hour-long discussion, while emphasizing this factor as key in reaching positive resolutions.  The panelists suggested both companies and AGs should move quickly through any “ritualistic posturing”  in order to find common ground.  The AG representatives noted that trust can often be established by, for example, being open and honest in document production or retaining settlement counsel already known (and trusted) by the AGs.  Various panelists noted the importance of agenda setting and demonstrating patience with the other side, especially when it comes to missteps or companies experiencing a multistate investigation for the first time.

The panelists provided fascinating insights into the role played by company principals in providing technical or quick answers to AG questions, and perspective on the broader industry or competitive market.  All panelists acknowledged that sometimes a company under investigation may want to plead their case to the Front Office or even the AGs, especially in the case of particularly thorny impasses, but they warned that doing so carries risk in terms of breaking trust with AG staff.  As such, the decision by opposing counsel to escalate a conversation should be done transparently and conveyed to staff in advance.

Navigating The Internal Dynamics of A Multistate

The panelists also discussed the internal dynamics of a multistate and how those dynamics impact settlement negotiations, specifically that the lead states are in a position of trust with the other multistate participants and that position needs to be respected.  Those on the panel also agreed that it is important for counsel to set expectations with their clients.  The panelists noted that experienced settlement counsel can often be very effective, as they understand how the multistate process works and can demystify this process for clients and litigation counsel, if litigation has been threatened or appears imminent.  Experienced settlement counsel also can work in smaller groups to hammer out creative solutions that both sides can buy into, although the panelists stressed that such work needs to be transparent, so as to not undermine trust with the rest of the multistate.

Is “Global Peace” Still Possible?

Each of the panelists expressed concern regarding the impact of recent interest from political subdivisions, especially in matters that involve consumer protection claims traditionally resolved by state AGs through multistates.  They all agreed that such actions by cities and counties is a trend that is not going away, and that multistates must understand that the potential for follow-on action by hundreds or thousands of localities degrades the “global peace” that companies are looking for when they seek to resolve a case.  While the current best outcome may be a multistate settlement where localities opt in, none of the panelists viewed that as a good outcome and expressed a need for a new framework for addressing this issue.  The panelists concluded by echoing a thought expressed by the AGs earlier in the day, namely that a world without the coordination and support provided by NAAG would not be a better world, and that such a vacuum would be filled by outside counsel retained by localities or states that are not coordinated, to the detriment of companies seeking meaningful and comprehensive settlements.

To read about the other panels at the 2022 NAAG Spring Consumer Protection Conference, go here:

A View from the Top:  AGs on Their Consumer Protection Role (Part 1 of 4)

Dark Patterns: The Next UDAP Frontier (Part 2 of 4)

Counting Down the Hits – Top Consumer Complaints (Part 3 of 4)