Digest 1.17.2019 The State AG Report Weekly Update

Consumer Protection

Massachusetts Attorney General Settles With Tax Preparation Company Over Allegedly Misleading and Deceptive Advertisements

  • Massachusetts AG Maura Healey reached a settlement with tax preparation company Jackson Hewitt Tax Service Inc. (“Jackson Hewitt”) to resolve allegations that it used misleading and deceptive advertisements in violation of state consumer protection laws.
  • According to the AG’s office, Jackson Hewitt’s advertising practices allegedly led consumers to believe that they would receive greater discounts on tax services than they actually received.
  • According to the AG’s office, under the terms of the Assurance of Discontinuance, Jackson Hewitt will pay over $93,000 in refunds to consumers and over $93,000 to the state.

New York Attorney General Settles With Delivery Services Company Over Alleged Shipments of Illegal Cigarettes

  • New York AG Letitia James and the New York City Corporation Counsel reached a settlement with FedEx Ground Package System, Inc. (“FedEx”) to resolve three lawsuits against FedEx alleging that it shipped untaxed cigarettes to residents in the state in violation of a 2006 Assurance of Compliance with the AG’s office and a federal anti-cigarette trafficking statute.
  • According to the AG’s office, FedEx allegedly enabled cigarette trafficking businesses to illegally ship hundreds of thousands of untaxed cigarettes to New York residents.
  • According to the AG’s office, under the terms of the settlement, FedEx will pay $35.3 million, cease domestic shipments of tobacco products, with limited exceptions, implement internal reforms, and take disciplinary action against employees and contractors who knowingly facilitate tobacco shipments, among other things.

New York Attorney General and Consumer Financial Protection Bureau Settle With Jewelry Retailer Over Alleged Deceptive Credit Practices

  • New York AG Letitia James and the Consumer Financial Protection Bureau (“CFPB”), reached a settlement with Sterling Jewelers Inc., d/b/a Kay Jewelers, Jared The Galleria of Jewelry, and other brand names (“Sterling”), to resolve allegations that it engaged in deceptive practices regarding its store-branded credit cards in violation of state consumer protection laws, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Truth in Lending Act.
  • According to the complaint, Sterling employees allegedly submitted applications for store-branded credit cards without consumers’ consent, enrolled consumers in payment-protection insurance for the cards without consent, and misrepresented credit financing terms and conditions to consumers.
  • According to the proposed consent order, Sterling will pay a $1 million penalty to the state and a $10 million penalty to the CFPB, cease its deceptive practices regarding store-branded credit cards and payment-protection insurance, and abide by other compliance and reporting requirements.


Attorneys General and Federal Agencies Settle With Vehicle Manufacturer and Parts Supplier Over Alleged False Advertising and Emissions Test Manipulation

  • 52 AGs reached a settlement with Fiat Chrysler Automobiles N.V., FCA US LLC, V.M. Motori S.p.A, and V.M. North America, Inc. (collectively, “Fiat Chrysler”) to resolve allegations that Fiat Chrysler falsely advertised certain vehicles as environmentally friendly in violation of state environmental and consumer protection laws and the federal Clean Air Act (“CAA”).  50 of the participating AGs also reached a separate settlement with vehicle parts supplier Robert Bosch GmBH and Robert Bosch LLC (collectively, “Bosch”) over allegations that Bosch supplied Fiat Chrysler and other vehicle manufacturers with “defeat device” software designed to circumvent emissions testing.
  • Separately, California AG Xavier Becerra and the California Air Resources Board (“CARB”), the U.S. Department of Justice (“DOJ”), and the U.S. Environmental Protection Agency (“EPA”) reached a joint settlement with Fiat Chrysler and Bosch over similar allegations of environmental and consumer protection law violations.
  • According to the AGs, DOJ, and EPA, Fiat Chrysler allegedly advertised certain diesel vehicles as environmentally friendly, among other claims, when the vehicles emitted significant pollutants and contained a “defeat device” allegedly supplied by Bosch and designed to mask the vehicles’ true emissions characteristics during testing.
  • Under the terms of the settlements, Fiat Chrysler will pay $72.5 million in civil penalties to the 52 AGs, $305 million in civil penalties to DOJ, EPA, and California, $19 million for pollution mitigation to California, implement a pollution mitigation program, and cease its false advertisements of certain vehicles, among other things.
  • Under the terms of the settlements, Bosch will pay $98.7 million to the 50 AGs and $5 million to the National Association of Attorneys General, and refuse and report future requests to supply shut-off devices, among other things.


United States Department of Justice Issues Opinion Concluding that Wire Act’s Prohibitions Apply to Online Non-Sports Gambling

  • The U.S. Department of Justice (“DOJ”) issued an opinion regarding the Wire Act’s gambling prohibitions and whether they are limited to sports betting, which reconsidered the DOJ’s 2011 opinion that concluded that the Wire Act’s prohibitions are limited to sports gambling and do not apply to other gambling activities such as state lotteries.
  • The DOJ has now concluded that the Wire Act’s prohibitions on interstate wire transmission of wagering information are not limited to gambling on sporting events or contests. According to the opinion, only one of the Wire Act’s four prohibitions—which specifically criminalizes transmitting “any information assisting in the placing of bets or wagers on any sporting event or contest”—is limited to sports betting, but the remaining three prohibitions are not limited to sports betting, and the 2006 enactment of the Unlawful Internet Gaming Enforcement Act did not alter the scope of the Wire Act.
  • This opinion supersedes and replaces the DOJ’s 2011 opinion, and notes that the new opinion is likely to be tested in the courts.

Health Care

New York Attorney General Settles With Dental Office Chain Over Allegedly Allowing Uncertified Employees to Perform Orthodontic Procedures

  • New York AG Letitia James reached a settlement with dental office chain Diamond Braces and Oleg Drut (collectively, “Diamond Braces”) to resolve allegations that it allowed uncertified employees to perform orthodontic procedures and improperly billed Medicaid for those procedures in violation of the state Education Law, which prohibits employees who are not properly certified from performing such procedures.
  • According to the AG’s office, Diamond Braces allowed employees who were not certified by the New York State Educational Department to perform intraoral procedures, represented to Medicaid that those individuals were certified, and billed Medicaid for those procedures.
  • According to the AG’s office, under the terms of the settlement agreement, Diamond Braces will pay $4.5 million in restitution and $4.5 million in penalties, and enter into a corporate integrity agreement or retain a compliance monitor.

Wisconsin Attorney General Obtains Judgment Against Health Care Provider Over Alleged Improper Disposal of Hazardous Waste

  • Wisconsin AG Josh Kaul obtained a judgment against Froedtert Memorial Lutheran Hospital, Inc. (“Froedtert”) over allegations that it improperly disposed of pharmaceutical waste in violation of state hazardous waste laws.
  • According to the complaint, Froedtert allegedly disposed of hazardous pharmaceutical waste as ordinary solid waste, failed to keep records of hazardous waste determinations, failed to adequately train employees on hazardous waste management, and failed to develop a contingency plan for hazardous waste releases, among other things.
  • According to the judgment, Froedtert must pay $360,000 in forfeitures, court costs, surcharges, and attorney fees to the state.

Labor & Employment

11 Democratic Attorneys General Oppose National Labor Relations Board’s Proposed Rule to Narrow Joint Employer Standard

  • 11 Democratic AGs, led by New York AG Letitia James and Pennsylvania AG Josh Shapiro, submitted comments in opposition to the National Labor Relations Board’s (“NLRB”) proposed rule to narrow its joint employer standard, which would be used to determine whether two employers are a joint employers of a group of employees under the National Labor Relations Act (“NLRA”).
  • According to the AG’s comments, the NLRB’s proposed rule would effectively exclude certain employers from the bargaining process in contravention of the purposes of the NLRA, make enforcement of the NLRA more difficult, and raises substantive and procedural concerns under the Administrative Procedure Act, among other things.
  • The AGs request that the NLRB maintain the current joint employer standard.

Washington Attorney General Reaches Agreements with Four Franchisors to Eliminate “No-Poach” Provisions in Franchise Contracts

  • Washington AG Bob Ferguson reached agreements with franchisors Bonefish Grill, LLC, Carraba’s Italian Grill, LLC, Management Recruiters International, Inc., and Outback Steakhouse of Florida, LLC  to resolve allegations that the franchisors’ use of “no-poach” provisions constituted unlawful restraints of trade in violation of the state’s Consumer Protection Act.
  • Under the terms of the assurances of discontinuance reached with Bonefish Grill, Carraba’s Italian Grill, Management Recruiters International, and Outback Steakhouse, each of the franchisors agreed to cease enforcing no-poach provisions—which prevent franchisees within the same chain from hiring away each other’s employees—currently in franchise agreements, to remove such provisions from current and future contracts, and to notify all franchisees of the prohibition.
  • AG Ferguson previously reached settlements with various franchisors in July, August, September, November, and early and late December 2018 to resolve investigations regarding their uses of no-poach provisions, and filed a lawsuit against a fast food franchisor in October 2018 over its alleged use of these provisions.

State AGs in the News

Court Rules that Louisiana Public Records Law Applies to Citizens of Other States in Lawsuit Filed Against Louisiana Attorney General

  • A Louisiana court has reportedly held that a citizen of another state can bring suit under Louisiana’s public records law, resolving a lawsuit filed against Louisiana AG Jeff Landry by an Indiana resident alleging that AG Landry’s office violated the law by responding to a request for records approximately six months after the request was submitted and only after the requesting party filed suit.
  • The Court disagreed with AG Landry’s argument that non-citizens may not sue under the public records law because the public records law is rooted in state constitutional rights to direct participation in government, which are only extended to state citizens.
  • The court reportedly found that state legislators did not specify that the law only applied to Louisiana citizens, refused to dismiss the lawsuit, and ordered that the AG’s office pay the plaintiff’s attorney’s fees.