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The State AG Report Weekly Update February 9, 2017

Breaking News

Alabama Attorney General Appointed to U.S. Senate

  • Alabama AG Luther Strange was appointed by Governor Robert Bentley and sworn in as the state’s new U.S. Senator to fill the U.S. Senate seat of Jeff Sessions, who was confirmed as the U.S. Attorney General by a vote of 52 to 47 last night.
  • According to reports, Governor Bentley does not intend to call a special election prior to the general election in 2018, citing the high costs of special elections relative to low voter turnout. As a result, AG Strange will serve as U.S. Senator until the next scheduled general election in 2018.
  • Earlier today, Governor Bentley announced that Deputy AG Alice Martin will serve as acting AG until the Governor names a permanent replacement. The next AG will serve until the next scheduled general election in 2018.
  • AG Strange was first elected as Attorney General in 2010 and re-elected in 2014. He was the Chairman of the Republican Attorneys General Association. Prior to becoming AG, he was the founding member of his own law firm in Birmingham, Alabama, and a Partner with Bradley Arant Boult Cummings LLP, where he practiced in the area of economic development. He began his career working for the energy company Sonat, Inc., directing its Washington, D.C. office.

Consumer Financial Protection Bureau

CFPB and New York Attorney General File Lawsuit Against Financial Services Company Over Settlement Advances

  • The Consumer Financial Protection Bureau (“CFPB”) and New York AG Eric Schneiderman filed a complaint against RD Legal Funding, LLC, RD Legal Funding Partners, LP, and the companies’ owner (collectively “RD Legal”) for allegedly violating the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and state consumer protection and usury laws by misleading consumers into accepting high-cost advances on settlement payouts.
  • According to the complaint, RD Legal allegedly targeted 9/11 first responders and NFL retirees suffering from cancer, brain injuries, and other illnesses and misled them into entering agreements in which they paid high interest rates in exchange for advances on settlement and compensation funds through misleading contracts, among other things.
  • The lawsuit seeks restitution for consumers, civil penalties, and a permanent injunction barring the company from engaging in the allegedly illegal conduct.

CFPB and Virginia Attorney General Take Action Against Pawnbroker Over Alleged Loan Interest Misrepresentations

  • The CFPB and Virginia AG Mark Herring reached a settlement with Woodbridge Coins and Jewelry Exchange, Inc. f/k/a Woodbridge Gold & Pawn (“Woodbridge”) over alleged violations of the Dodd-Frank Act, federal Truth in Lending Act (“TILA”), the Virginia Consumer Protection Act, and the state’s pawnbroker statutes.
  • According to the CFPB and AG Herring, Woodbridge allegedly misled consumers about the actual costs of their “pawn” loans, required to be paid in full at the conclusion of their term, by advertising a low annual percentage rate that did not reflect additional “maintenance,” “interest,” “storage,” and “clerical” fees and charges.
  • Under the terms of the Stipulated Final Judgment and Order, Woodbridge will pay over $56,000 in restitution to approximately 1,000 consumers, over $17,000 in disgorgement to the CFPB, $5,000 to the CFPB Civil Penalty Fund, and over $6,000 in legal costs to Virginia.

Consumer Protection

Two Attorneys General and the FTC Settle with Telemarketers Over Alleged Advertising Scheme

  • Two AGs and the Federal Trade Commission (“FTC”) reached a settlement with Click4Support, LLC, its founder and owner, and several of its affiliates (collectively “Click4Suppport”) for allegedly misrepresenting their technology support services as being falsely associated with other large technology brands.
  • As we previously reported, the companies allegedly misled consumers about being agents or technology support for major technology companies, convinced consumers that their computers were infected with viruses or malware, and pressured them into paying for support plans and repair services that were costly and unnecessary.
  • According to the stipulated order, Click4Support must cease operations, pay $15,700 of a suspended $27 million award in restitution, and transfer title to certain assets.

Labor & Employment

Massachusetts Attorney General Settles with Drywall Company for Allegedly Misclassifying Workers to Gain Competitive Advantage

  • Massachusetts AG Maura Healey reached a settlement with Universal Drywall, LLC (“Universal”) and its owner for allegedly violating the state’s Consumer Protection Act and False Claims Act by misclassifying its workers.
  • According to AG Healey, Universal allegedly misclassified its workers as independent contractors rather than full-time employees to circumvent the state’s wage and hour laws and to gain an “unfair advantage over honest competitors.” The AG’s lawsuit also alleged that Universal created false documents relating to the misclassified workers.
  • Under the terms of the settlement, Universal must pay $250,000. The remainder of the $500,000 settlement is suspended as long as Universal remains in compliance with the terms of the agreement which include, among other things, proper classification of its workers.

State v. Federal

20 Republican AGs Pen Letter to U.S. Senate Leaders in Support of Judge Neil Gorsuch to the U.S. Supreme Court

  • 20 Republican AGs, led by West Virginia AG Patrick Morrisey, sent a letter to U.S. Senate leaders urging them to “promptly hold a hearing on and confirm” the nomination of Tenth Circuit Court of Appeals Judge Neil Gorsuch to the U.S. Supreme Court.
  • According to the letter, the AGs state that “Judge Gorsuch will be committed to resisting unlawful government overreach, respecting the democratic process, and protecting individual liberties.”
  • Judge Gorsuch was nominated by President Donald Trump on January 31 to fill the vacant seat on the Court left by the late Justice Antonin Scalia.

18 Democratic AGs Support Lawsuit Challenging President Trump’s Executive Order on Immigration

  • 18 Democratic AGs, led by Massachusetts AG Maura Healey, New York Attorney AG Schneiderman, and Pennsylvania AG Josh Shapiro, filed an amicus brief with the U.S. Court of Appeals for the Ninth Circuit in support of the federal lawsuit brought by Washington AG Bob Ferguson and Minnesota AG Lori Swanson challenging the Trump Administration’s executive order on immigration.
  • According to the amicus brief, the AGs allege that the order “inflicts harm” on the states by disrupting state educational facilities and medical institutions, and reducing tax revenues from students, tourists, and business visitors, among other things.
  • As previously reported, the amicus brief follows legal actions taken by several Democratic AGs last week against the order.