Digest 5.10.2018 The State AG Report Weekly Update

Breaking News

New York Attorney General Resigns Amid Allegations of Abuse

  • New York AG Eric Schneiderman announced his resignation amid allegations that he abused four former romantic partners.
  • In the announcement, the two-term Democratic AG denies the allegations against him, which were first published in The New Yorker on May 7, 2018.
  • Democrat Barbara Underwood, who has served as Solicitor General of New York since 2007, has been appointed Acting Attorney General pending the appointment of a replacement to see out the remainder of the AG’s term, which ends this year, by a joint ballot of the state Assembly and state Senate.
  • The Assembly has announced a panel to review potential candidates that will accept applications and conduct interviews on May 15 and 16, 2018—a week in advance of the state Democratic and Republican nominating conventions for the 2018 election.

2018 State AG Elections

Republicans Manny Alicandro and Thomas Humbach Announce Their Candidacies for New York Attorney General

  • Republicans Manny Alicandro and Thomas Humbach announced their respective bids for New York AG in 2018.
  • Alicandro is a corporate attorney from Manhattan who focuses his practice on digital assets and cryptocurrency markets and has previously worked for NASDAQ and JPMorgan. Humbach has been County Attorney for Rockland County since 2014 and previously worked in private practice in Rockland County.
  • Alicandro and Humbach are the only Republicans who have declared their candidacies for the Republican nomination; since the recent resignation of Democratic incumbent AG Schneiderman, no Democrats have yet announced their candidacies.

Ohio Democratic and Republican Parties Nominate Candidates for State Attorney General

  • Ohio held primary elections on May 8, 2018 for numerous federal and statewide offices, including state AG.
  • As the only candidates on the ballot, Democrat Steve Dettelbach, an attorney in private practice and former U.S. Attorney for the Northern District of Ohio, and Republican Dave Yost, the state’s Auditor and the former elected prosecutor for Delaware County, became their parties’ nominees.
  • Dettelbach and Yost are seeking an open seat currently held by AG Mike DeWine, who is term-limited and who secured the Republican nomination for governor on May 7, 2018.  

Consumer Protection

Arizona Attorney General Files Lawsuit Against Healthcare Device Manufacturer Over Deceptive Marketing Allegations

  • Arizona AG Mark Brnovich filed suit against healthcare device manufacturer DIY Neurocare of America, LLC and its CEO (collectively, “DIY Neurocare”) over allegations that they violated the state’s Consumer Fraud Act and federal law by deceptively marketing an LED light device intended to treat symptoms of peripheral neuropathy (the “device”).
  • According to the AG’s office, DIY Neurocare allegedly offered the device to elderly consumers suffering from peripheral neuropathy and other ailments for $4,000 and promised a “No Risk 100% Money Back Guarantee,” but failed to issue promised refunds to consumers and failed to provide consumers with notice of a three-day right to cancel in-home sales.
  • According to the AG’s announcement, the lawsuit seeks injunctive relief, restitution on behalf of affected consumers, attorneys’ fees, and statutory fines.

New Jersey Attorney General Creates New Data Privacy & Cybersecurity Civil Enforcement Section

  • New Jersey AG Gurbir Grewal announced the creation of a Data Privacy & Cybersecurity Section (“DPC Section”) within the AG’s Affirmative Civil Enforcement Practice Group.
  • According to AG’s office, the DPC Section will be tasked with investigating and enforcing state data privacy and cybersecurity laws and pursuing civil actions for related violations, including data breaches and unauthorized collection, use, and dissemination of personal information. The DPC Section will also provide legal advice to state agencies on compliance with state and federal laws and standards.

Texas Attorney General Reaches Settlement with 37 Store Owners and Wholesale Distributors Over Allegedly Illegal Contact Lens Sales

  • Texas AG Ken Paxton announced a settlement with 37 retailers and wholesale distributors of contact lenses to resolve allegations that they violated the Texas Deceptive Trade Practices Act (“TDPTA”) and the Texas Optometry Act (“TOA”) by marketing and selling illegal contact lenses.
  • According to the AG’s office, the wholesalers allegedly marketed the illegal lenses to an array of retailers who in turn offered the lenses to consumers without requiring consumers to provide prescriptions.
  • According to the AG’s announcement, the 37 retailers and wholesalers entered into Assurances of Voluntary Compliance that bar them from committing further violations of the TDTPA and TOA, obligate them to provide refunds to affected consumers, and require them to pay attorneys’ fees and a total of more than $140,000 in civil penalties to the state.


Illinois Attorney General Files Lawsuits Against Landfill Owners Over Alleged Environmental Violations

  • Illinois AG Lisa Madigan filed lawsuits against landfill owners Sheridan-Joliet Land Development, LLC and Sheridan Sand & Gravel Co. (collectively, the “Sheridan companies”) over allegations that they violated state environmental laws by accepting uncertified waste at two clean construction or demolition debris (“CCDD”) landfill facilities in the state.
  • According to the AG’s office, the Sheridan companies allegedly accepted improper waste materials for disposal, failed to issue required contamination certificates for waste deposited at two CCDD landfill sites, and, at one of the sites, failed to construct barriers to prevent water runoff from contaminating a nearby creek.
  • According to the AG’s announcement, the lawsuits seek injunctive relief and civil penalties.

Financial Industry

Virginia Attorney General Files Suit Against Internet Lender Over Alleged Illegal Lending Practices and Consumer Protection Violations

  • Virginia AG Mark Herring filed suit against internet lender NC Financial Solutions of Utah, LLC (“Net Credit”), over allegations that it violated the Virginia Consumer Protection Act, state lending laws, and federal bankruptcy laws through its allegedly predatory lending practices.
  • According to the complaint, Net Credit allegedly offered closed-end installment loans at illegal interest rates, misled consumers by claiming it was “licensed and regulated by the Utah Department of Financial Institutions,” operated in Virginia without required licensure, and continued attempting to collect money from some consumers in violation of court-ordered bankruptcy stays.
  • The complaint seeks to enjoin Net Credit from violating the law, restitution on behalf of affected consumers, civil penalties, and attorneys’ fees.


New York Attorney General Announces Settlement with Smoke Shop Over Alleged Sale of Mislabeled Cannabidiol Products

  • Former New York AG Schneiderman announced a settlement with the owner of Dusty B’s Smoke Shop (“Dusty B’s”) resolving allegations that the shop violated state labeling and gambling laws by selling mislabeled and misbranded cannabidiol (“CBD”)—a non-psychoactive cannabis-derived drug—and operating an illegal for-profit raffle.
  • According to the AG’s office, Dusty B’s allegedly sold and marketed CBD products without meeting the safety and consumer-education labeling requirements applicable to all drugs and allegedly attempted to mislead state investigators regarding Dusty B’s sale of CBD products.
  • According to the AG’s announcement, Dusty B’s will pay a $15,000 penalty, must disgorge the proceeds of its allegedly illegal conduct, and is barred from selling CBD products and other misbranded drugs and from conducting illegal raffles.

State v. Federal

Thirteen Democratic Attorneys General Submit Comments Regarding Proposed Fuel Economy Rate Penalty Rule

  • A coalition of thirteen Democratic AGs, led by former NY AG Schneiderman and California AG Xavier Becerra, submitted comments to the U.S. National Highway Traffic Safety Administration (“NHTSA”) in opposition to an April 2, 2018 proposed agency rule that would reduce the civil penalties for vehicle manufacturers that do not meet the Corporate Average Fuel Economy (“CAFE”) standards, which seek to improve the average fuel economy of cars and light trucks produced for sale in the United States.
  • As explained in the AGs’ comments, the proposed rule seeks to the return the penalty rate from $14.00 for every tenth of a mile-per-gallon by which the average fuel economy of a manufacturer’s vehicle fleet falls below applicable CAFE standards—a new penalty rate enacted in 2016—to the previous penalty rate of $5.50.
  • The AGs’ comments challenge the proposed rule on the grounds that it is meritless and, therefore, arbitrary and capricious, assert that the NHTSA lacks statutory authority to reduce the penalty, and argue that reducing the penalty will reduce vehicle manufacturers’ incentives to comply with CAFE standards.

State AGs in the News

Ohio Attorney General Wins Republican Nomination for Governor

  • Ohio AG Mike DeWine won the Republican primary for Governor over current Lieutenant Governor Mary Taylor by a margin of 59.8% to 40.2% with 100% of precincts reporting.
  • AG DeWine has endorsed Ohio Secretary of State Jon Husted as his running-mate for Lieutenant Governor.
  • In the general election, AG DeWine will face the Democratic nominee for Governor, Richard Cordray, the former head of the federal Consumer Financial Protection Bureau and former AG of Ohio.

West Virginia Attorney General Wins Republican Nomination for West Virginia U.S. Senate Seat

  • West Virginia AG Patrick Morrisey won the Republican primary for West Virginia’s U.S. Senate seat over U.S. Congressman Evan Jenkins, former Massey Energy CEO Don Blankenship, and other candidates by a margin of 34.9% (Morrisey) to 29.3% (Jenkins), 19.9% (Blakenship), and 15.9% (all other candidates), with 100% of precincts reporting.
  • In the general election, AG Morrisey will face incumbent Democratic West Virginia Senator Joe Manchin, who won his primary race.
  • If AG Morrisey is unsuccessful in his bid for U.S. Senate, he will remain in office as AG until his term expires in 2020.