The State AG Report Weekly Update June 4, 2015


Ohio Attorney General and DOJ Investigate Movie Theater Chains for Possible Antitrust Violations

  • Ohio AG Mike DeWine and the U.S. Department of Justice (DOJ) have sent civil investigative demands (CIDs) to AMC Entertainment Holdings, Inc., Regal Entertainment Group, and Cinemark Holdings, Inc., in connection with investigations under federal and Ohio antitrust laws.
  • According to U.S. Securities and Exchange Commission (SEC) filings by AMC, Regal, and Cinemark, the CIDs from both AG DeWine and the DOJ seek information on film clearances and other alleged conduct. Film clearances are agreements between theaters and movie studios to exclusively show first-run movies in their theaters within a particular market.
  • In their filings, the theaters state that they do not believe they have violated federal or state antitrust laws, and are cooperating with the relevant government authorities.

Consumer Protection

Florida Attorney General and CFPB Obtain $27.7 Million Judgment Against Foreclosure Relief Company

  • Florida AG Pam Bondi and the Consumer Financial Protection Bureau (“CFPB”) obtained a final judgment against Hoffman Law Group (“HLG”), f/k/a The Residential Litigation Group, P.A., its corporate affiliates, and officers for allegedly using deceptive marketing practices and scamming distressed homeowners into paying illegal advance fees.
  • According to the complaint, HLG, with the assistance of its corporate affiliates, allegedly represented to consumers that by joining frivolous lawsuits against their mortgage lenders, they would receive modifications on their loans or avoid foreclosure.  In carrying out this alleged scheme, HLG and its affiliates collected upfront fees, misrepresented the likelihood of success and the legal representation being provided, and discouraged consumers from talking to their lenders and making mortgage payments.
  • The court entered a default judgment against HLG, its affiliates, and officers for the full amount of fees paid by consumers (over $11.7 million) and ordered the companies to pay a $10 million civil penalty to the CFPB and more than $6 million in penalties to the State of Florida.

New York Attorney General and FTC Will Host Debt Collection Dialogue

  • On June 15, 2015, New York AG Eric Schneiderman and the Federal Trade Commission (“FTC”) will host a “Debt Collection Dialogue” in Buffalo, New York, as part of a broader effort by the FTC to hold discussions on debt collection throughout the country with state and federal law enforcement partners.
  • The dialogue will include a discussion of recent enforcement actions, consumer complaints about debt collection practices, and compliance issues.
  • Speakers at the Buffalo event will include FTC Bureau of Consumer Protection Director Jessica Rich, New York AG Schneiderman, and officials from the New York State Department of Financial Services and the Consumer Financial Protection Bureau.

Illinois Attorney General Asks FERC to Investigate Utility Company for Alleged Market Manipulation

  • Illinois AG Lisa Madigan filed a complaint with the Federal Energy Regulatory Commission (“FERC”) requesting that it investigate whether Dynegy Inc. manipulated a power auction, and further requesting that the agency block $113 million in rate increases resulting from that auction, which were scheduled to go into effect on June 1.
  • According to the complaint, Dynergy’s consolidation of the market led to the Midcontinent Independent System Operator, Inc. (MISO), an independent body responsible for providing open access transmission service, increasing its price for capacity by 900% over the previous year for the power auction that serves Illinois, which is more than 40 times higher than the highest price in the other eight MISO zones.
  • The complaint alleges that the Illinois MISO auction produced unjust and unreasonable prices in violation of the Federal Power Act and requests that FERC investigate whether “Dynergy or any other market participant” engaged in market manipulation in an attempt to increase the auction price for this year.

Consumer Financial Protection Bureau

CFPB and DOJ Settle With Mortgage Lender for Allegedly Violating Fair Lending Laws With Discretionary Broker Compensation Policy

  • The Consumer Financial Protection Bureau (“CFPB”) and the Department of Justice (“DOJ”) entered into a proposed consent order with Provident Funding Associates, L.P. (“Provident”), a wholesale mortgage lender, to resolve alleged violations of fair lending laws.
  • According to the joint complaint, Provident allegedly gave its brokers “subjective and unguided discretion” to determine the fees they would charge in connection with an individual loan application, which was unrelated to an applicant’s creditworthiness, borrower risk, or the loan characteristics, and then compensated the brokers for the higher rates and fees they charged.  The complaint alleges that, as a result of these practices, African-American and Hispanic borrowers paid, on average, higher fees on mortgage loans than white non-Hispanic borrowers.
  • Under the proposed consent order, Provident would be required, among other things, to pay $9 million in monetary relief to aggrieved borrowers.


New York Attorney General Settles With Retail Corporation to Resolve Alleged Environmental Law Violations

  • New York AG Eric Schneiderman settled with Walmart Stores, Inc. over allegedly failing to display phosphorus-containing lawn fertilizers in a manner required by state law.
  • New York’s Nutrient Runoff Law, intended to reduce phosphorus runoff from non-agricultural sources, requires retailers who sell fertilizer containing more than 0.67% phosphate to display phosphorous-containing lawn fertilizers separately from those that are phosphorus-free and post signs notifying consumers regarding the legal restrictions on using phosphorus-containing lawn fertilizer. Walmart, according to the settlement, failed to comply with the signage requirements in 16 of the 18 stores inspected by the AG’s office.
  • Under the settlement, Walmart will pay $98,000 in penalties and has agreed to comply with the Nutrient Runoff Law by voluntarily discontinuing sales of phosphorus-containing fertilizers intended for non-agricultural use at Walmart and Sam’s Club stores in New York and over the Internet (at to consumers in New York.


Connecticut Attorney General Forms Department on Privacy and Data Security

  • Connecticut AG George Jepsen announced the creation of the Privacy and Data Security Department within the Connecticut Office of the Attorney General.  The new department will work exclusively on investigations and litigation related to privacy and data security.
  • The creation of the Privacy and Data Security Department makes permanent the Privacy Task Force, formed in 2011 by AG Jepsen to educate consumers and respond to Internet privacy concerns and data breaches.  Assistant AG Matthew Fitzsimmons, who has served as chair of the Privacy Task Force, will lead the new department.

State v. Federal Government

New York and Indiana Attorneys General Urge FDA to Overhaul Dietary Supplement Regulations

  • New York AG Eric Schneiderman and Indiana AG Greg Zoeller sent a letter to the Food and Drug Administration (“FDA”) requesting that it revise the federal Dietary Supplement Current Good Manufacturing Practices (CGMP) regulations.
  • In the letter, the AGs claim that the current regulations are not adequate with regard to labeling and ingredient testing, citing to recent AG scrutiny of the dietary supplement industry.
  • AG Schneiderman and AG Zoeller, a Democrat and a Republican, respectively, lead a group of AGs that are investigating the business practices of the dietary supplements industry under state consumer protection and other laws.