Election News

The State AG Report Weekly Update November 3, 2016

2016 AG Elections

AG General Election Road Map

  • With only 5 days remaining until Election Day, we have updated our AG predictions: Missouri to Strong Republican; North Carolina to Leans Democrat. Please visit our AG election page to learn more about the 10 AG races in 2016.


Consumer Financial Protection Bureau

CFPB and New York Attorney General File Lawsuit Against Debt Collection Companies

  • The Consumer Financial Protection Bureau (“CFPB”) and New York AG Eric Schneiderman filed a lawsuit against Northern Resolution Group, LLC, Enhanced Acquisitions, LLC, Delray Capital, LLC, and their owners over allegations that the companies’ collection practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Debt Collection Practices Act, and New York state laws.
  • According to the complaint, the debt collectors allegedly inflated and misrepresented consumer debts, threatened legal action in order to pressure consumers into paying debts, and among other things, impersonated government officials to barrage consumers with calls.
  • The lawsuit seeks a $5,000 civil penalty per violation of New York law, injunctive relief, and restitution for consumers.


CFPB Issues Notices to Mortgage Lenders and Brokers Regarding Reporting Requirements

  • The CFPB issued warning letters to 44 mortgage lenders and brokers notifying the companies that they are required to collect, record, and report mortgage lending data relating to home purchase loans, home improvement loans, and refinancing under the Home Mortgage Disclosure Act.
  • The CFPB identified the 44 companies based on available bank and nonbank mortgage data allegedly demonstrating that these companies were classified as entities required to disclose mortgage lending data. The letters state that, while no legal determinations have been made, the companies are expected to review their business practices and communicate their next steps to the CFPB.
  • According to the CFPB, mortgage lending data must be reported to assist in distributing public sector investments, identify discriminatory lending practices, and monitor how banks serve the housing needs of their communities, among other things.


Consumer Protection

34 Attorneys General Settle with Car Manufacturers for Allegedly Misrepresenting Fuel Economy Ratings

  • 34 AGs reached a settlement with Hyundai Motor Company, Hyundai Motor America, Kia Motors Corporation, and Kia Motors America, Inc., (collectively, “Hyundai and Kia”) to resolve allegations that the car manufacturers violated state consumer protection laws by misrepresenting mileage and fuel economy ratings for certain 2011, 2012, and 2013 vehicle models.
  • According to California AG Kamala Harris, Hyundai and Kia allegedly used false and inflated data when estimating mileage ratings for their vehicles, prominently displayed the misrepresented ratings on window stickers of vehicles sold across the United States, and utilized the miscalculated ratings in various promotional campaigns, among other things. In 2012, the car manufacturer reissued adjusted fuel economy ratings, which spurred the AGs’ investigations.
  • Under the terms of the proposed final judgment, Hyundai and Kia must pay $41,223,320 to the states participating in the settlement. Separately, the U.S. Environmental Protection Agency reached a $100 million settlement with Hyundai and Kia under the Clean Air Act, and the companies also settled a consumer class action addressing similar claims, both of which were reached in 2014.


Georgia Supreme Court Finds Out-of-State Lender Subject to State Payday Lending Laws

  • The Supreme Court of Georgia unanimously held in Western Sky Financial, LLC, et al. v. State of Georgia that South Dakota-based Western Sky Financial, LLC, and California-based CashCall, Inc., are subject to Georgia law and must pay $15 million to be placed in escrow for the pendency of the State’s lawsuit.
  • This case originated when now-former Georgia AG Sam Olens filed a suit in 2013 alleging that CashCall and Western Sky violated Georgia lending laws by offering short-term, small-dollar loans with high interest rates to consumers.
  • The Court’s decision is the latest in a string of actions in other states involving CashCall and Western Sky and their affiliates and subsidiaries over allegations that they violated state lending laws.


Missouri Attorney General Sues Retailers for Alleged Unprescribed Cosmetic Contact Lens Sales

  • Missouri AG Chris Koster filed a lawsuit against Celebrate the Season and Gotcha Costume Rental and Theatrical Supplies, LLC, for allegedly violating state and federal law by selling cosmetic contact lenses to consumers without a prescription.
  • According to the AG’s office, cosmetic contact lenses, classified by the Food and Drug Administration as medical devices that require a prescription, were repeatedly sold by the stores even after they received letters from AG Koster’s office informing them that a consumer must possess a prescription in order to purchase contact lenses and warning about the potential damage these lenses can cause.
  • The lawsuit seeks to stop the stores from selling cosmetic contact lenses, restitution for consumers, and civil penalties.


New York Attorney General Reaches Agreement with Gym Over Alleged ADA Violations

  • New York AG Eric Schneiderman reached an agreement with Fitness International, LLC, and L.A. Fitness International, LLC, (collectively, “LA Fitness”) to resolve allegations that the gym violated Title III of the Americans with Disabilities Act and the New York State Human Rights Law by failing to provide accommodations to individuals with disabilities.
  • According to AG Schneiderman, his office began an investigation in May 2015 after receiving complaints that the gym allegedly refused to modify its fees for aides accompanying individuals with disabilities and required one individual in particular to pay a guest fee for his licensed practical nurse to accompany him during his work out.
  • Under the terms of the agreement, LA Fitness must adjust its policies to ensure fees are waived for aides accompanying individuals with disabilities, train employees on how to handle requests for reasonable accommodations, and among other things, submit to monitoring by the AG’s office for three years.



Illinois Attorney General Settles with Oil Companies Over Alleged Pollution

  • Illinois AG Lisa Madigan reached a settlement with Phillips 66 Company, ConocoPhillips Company, and WRB Refining LP to resolve allegations that the companies violated state and federal law by allowing pollutants to discharge into the Mississippi River.
  • According to AG Madigan, the crude oil refinery allegedly allowed excessive amounts of polluted wastewater, including mercury and fecal coliform, to be discharged in the river at rates that surpassed legal limits under state and federal laws.
  • Under the terms of the consent order, the companies must pay a $125,000 civil penalty, install new pollution controls, and among other things, construct and operate a new wastewater disinfection system.


Labor & Employment

New York Attorney General Settles with Delivery Contractor for Allegedly Underpaying Workers

  • New York AG Eric Schneiderman reached a settlement with Cornucopia Logistics, LLC, a shipping delivery contractor, to resolve allegations that the company violated state labor laws by underpaying its employees.
  • According to AG Schneiderman, the contractor deducted pay from employees for lunch breaks that were never taken, failed to provide compensation to workers who reported to work but were sent home, and among other things, failed to maintain records for actual hours worked weekly.
  • Under the terms of the settlement, Cornucopia must pay $100,000 in restitution to its employees, comply with labor laws, and appoint an internal officer to ensure compliance and to provide quarterly reports and payroll documents to the AG’s office.



South Dakota Attorney General Pens Letter to FDA and DEA Urging Accelerated Research for Marijuana Derivatives

  • South Dakota AG Marty Jackley sent a letter on August 19, 2016 to the Drug Enforcement Agency (“DEA”) and the Food and Drug Administration (“FDA”) following their decision to maintain marijuana as a Schedule I drug under the Controlled Substances Act (“Act”), urging the agencies to consider accelerated research and development processes of marijuana derivatives for treatment purposes in order to determine if developing cannabinoid medicines (such as Cannabidiol or “CBD”) have the potential for medical opportunities that outweigh the benefits of current treatments.
  • In AG Jackley’s letter, he urged the DEA and FDA to review medical research restrictions on marijuana in order to maintain public health safety while also working towards FDA approval of medical marijuana that will eventually lead to the ability of South Dakota doctors and pharmacists to prescribe and dispense a treatment safely to patients.
  • The DEA stated in its October 13, 2016 response, that it is committed to working with the FDA to make research of CBD easier while ensuring public safety and assured AG Jackley that they are actively evaluating with the FDA how to best conduct scheduling of CBD in accordance with the Act.