The State AG Report Weekly Update December 10, 2015


Pennsylvania and District of Columbia Attorneys General and the FTC Challenge Merger of Two Office Supply Companies

  • Pennsylvania AG Kathleen Kane, District of Columbia AG Karl Racine, and the Federal Trade Commission (“FTC”) have sought a preliminary injunction and temporary restraining order to block the merger of Office Depot, Inc., and Staples, Inc., pending administrative review by the FTC.
  • According to court filings and the FTC’s administrative complaint, the proposed merger allegedly eliminates competition, which would result in higher prices and reduced quality in the “business-to-business” market, where large business customers buy consumable office supplies for their own use under a contract.

California Attorney General Grants Conditional Approval of Health Care System Acquisition

  • California AG Kamala Harris approved the acquisition of the Daughters of Charity Health System (“Health System”), a nonprofit religious hospital system, by private-equity firm BlueMountain Capital Management, LLC, with conditions to protect against bankruptcy and ensure continuity of care.
  • Under the AG’s proposed conditions to the 15-year management agreement, the Health System must remain a non-profit entity for at least the first three years of the agreement period, must invest $180 in capital improvement expenditures, and must maintain essential services for at least 10 years at a number of facilities.

Consumer Financial Protection Bureau

CFPB Settles with Credit Reporting Company for Alleged Unlawful Information Collection Practices

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Clarity Services, Inc. and its owner over alleged violations of the federal Fair Credit Reporting Act.
  • According to the CFPB, the company allegedly obtained consumer credit reports from other credit reporting companies without consumer authorization or a permissible purpose, used the credit reports for marketing, and unlawfully requested that other credit reporting companies delete evidence of these unauthorized pulls.
  • Under the terms of the consent order, Clarity Services and its owner must pay penalties of $8 million and implement policies and procedures to, among other things, ensure it obtains consumer reports only for a permissible purpose.

Data Privacy

New York Attorney General Settles with Hospital for Alleged Breach of Patient Information

  • New York AG Eric Schneiderman reached a settlement with University of Rochester Medical Center (“URMC”) for alleged violations of the Health Insurance Portability and Accountability Act (“HIPAA”).
  • According to the settlement, a URMC nurse practitioner gave a list containing the unencrypted protected health information (“PHI”) and/or personal information of approximately 3,403 patients, without obtaining patient authorization, to her future employer, who sent letters to the patients.
  • Under the terms of the settlement, URMC must pay a $15,000 penalty, notify the AG of any future breaches, and provide training to its workforce on their policies and procedures for appropriately handling PHI.


New York Attorney General Urges the Federal Government to Regulate Vapor Pressure of Crude Oil Transported by Rail

  • New York AG Eric Schneiderman filed a petition for rulemaking with the U.S. Pipeline and Hazardous Materials Safety Administration to urge the agency to promulgate a rule that would create a federal limit on the vapor pressure for rail-transported crude oil in the United States.
  • According to the petition, crude oil shipped by rail should be required to have a specific vapor pressure at or below 9.0 pounds per square inch to reduce the oil’s flammability and explosiveness, in order to minimize the risks and severity of rail car accidents.


Massachusetts Attorney General Fines Environmental Testing Lab Operators for Alleged Consent Judgment Violations

  • Massachusetts AG Maura Healey reached a new settlement with Accutest Laboratories of New England, Inc. (“Accutest”) for allegedly violating the terms of a May 2014 settlement that had resolved allegations the company failed to obtain required state permits and control its hazardous air pollutant emissions.
  • According to the AG’s office, Accutest allegedly failed to comply with all of the Commonwealth’s hazardous waste laws, as required under its previous settlement, when it stored hazardous wastes for longer than permitted, did not label or store waste containers appropriately, and did not conduct hazardous waste training for its personnel.
  • Under the terms of the new settlement, Accutest must pay $100,000 and retain a qualified Environmental, Health and Safety Officer to direct the company on compliance with the state’s environmental laws and regulations for at least the remainder of the settlement term.

State AGs in the News

Tennessee Attorney General Finds Short-Term Home Rentals Subject to State Hotel and Sales Taxes

  • Tennessee AG Herbert Slatery issued an opinion, reportedly requested on the behalf of the Tennessee Hospitality Association, finding short-term home rentals are subject to state hotel occupancy and sales taxes.
  • According to the opinion, individuals who rent their homes, apartments, or rooms to guests on a “short-term” basis (a period of less than 90 continuous days for the same individual) must collect and remit a hotel occupancy tax.  Individuals who “regularly or frequently” rent their homes on a short-term basis, must also collect and pay a state sales tax.

States v. Federal Government

Sixteen Democratic Attorneys General File Joint Amicus Brief in United States Supreme Court to Support Executive Immigration Order

  • Sixteen Democratic AGs, led by Washington AG Bob Ferguson, filed an amicus curiae brief with the U.S. Supreme Court in support of the U.S. Department of Justice’s certiorari petition in Texas v. United States, a lawsuit brought by 26 states, led by Texas AG Ken Paxton, challenging the President’s authority to implement immigration changes by executive action.
  • According to the AGs’ petition, the lower courts erred in concluding that the immigration directives would harm the states by forcing them to issue more driver’s licenses, particularly where they are already provided in some states to undocumented immigrants and where states would benefit from the executive actions through increased fees, additional tax revenue, and enhanced public safety.