Digest 2.1.2018 The State AG Report Weekly Update

AG Elections

Minnesota Attorney General Lori Swanson Announces Bid for Reelection

Democrat Chris Johnson Declares Candidacy for Delaware Attorney General

  • Democrat Chris Johnson, former deputy legal counsel to Delaware Governor John Carney, announced his intent to run for Delaware AG in 2018.
  • Johnson recently stepped down from his position as deputy legal counsel to prepare for his campaign. Johnson currently serves as the Vice Chair of the Wilmington Democratic Party and as a board member of the Delaware Center for Justice. He previously served as counsel for the City of Wilmington’s Law Department.
  • Johnson joins fellow Democrats Kathy Jennings, Tim Mullaney Sr., and LaKresha Roberts in seeking his party’s nomination for AG. Thomas Neuberger is the sole Republican to announce his candidacy.
  • As previously reported, incumbent AG Matt Denn, a Democrat, announced that he will not seek re-election to a second term.


New York Attorney General Files Suit Against Car Wash Company Over Alleged Wage and Benefit Claims

  • New York AG Eric Schneiderman filed a petition in New York Supreme Court against car wash company U.S. Auto Wash, L.L.C., d/b/a Tropical Breeze Car Wash, and its owner and managers (collectively, “Tropical Breeze”) for allegedly violating the state’s Labor Law, Workers’ Compensation Law, and Executive Law, as well as the New York City Earned Sick Time Act, by failing to pay hundreds of thousands of dollars in wages and benefits to its minimum-wage employees.
  • According to the petition, Tropical Breeze allegedly underpaid wages and benefits that in total exceeded $540,000 to more than 150 employees, kept misleading and incomplete records, and underreported its number of employees and payroll expenditures to the state in order to pay lower unemployment insurance and workers’ compensation contributions.
  • In additional to seeking declaratory and injunctive relief, the petition seeks nearly $543,000 in unpaid wages, nearly $543,000 in liquidated damages, and statutory penalties and damages of over $475,000.

Financial Industry

Massachusetts Attorney General Reaches Settlement with National Mortgage Servicer to Resolve Loan Servicing and Loan Modification Allegations

  • Massachusetts AG Maura Healey reached a settlement with national mortgage servicing company Nationstar Mortgage, LLC, d/b/a Mr. Cooper (“Nationstar”), for allegedly committing unfair and deceptive lending practices and violating the state’s Act Preventing Unlawful and Unnecessary Foreclosures (“Foreclosures Act”).
  • According to the AG’s office, Nationstar allegedly offered short-term interest-only loan modifications on terms that set borrowers up to default, failed to follow state-mandated loan servicing practices, and failed to make good-faith efforts to avoid foreclosing on borrowers whose mortgages included unfair subprime terms.
  • According to the AG’s office, Nationstar has agreed to an assurance of discontinuance that will require it to implement a lawful loan modification program, pay certain foreclosed borrowers $500,000, and update its loan servicing practices consistent with the Foreclosures Act.

State v. Federal

Minnesota and New York Attorneys General File Suit Against HHS Over Defunding of ACA Health Plans

  • Minnesota AG Swanson and New York AG Schneiderman filed a petition in the U.S. District Court for the Southern District of New York against the U.S. Department of Health and Human Services (“HHS”) and HHS Secretary Eric Hargan to challenge HHS’s alleged withholding of more than $1 billion in federal funding for 2018 for health plans that Minnesota and New York implemented under the Affordable Care Act to provide coverage for their states’ low-income residents.
  • According to the AGs’ petition, HHS violated the notice-and-comment rulemaking procedures mandated by the Administrative Procedure Act, failed to consider alternative proposals offered by the states that would have preserved most of their federal funding, and failed to provide an adequate explanation for its decision.
  • The petition requests a declaratory judgment that HHS is in violation of its statutory and regulatory obligations regarding the federal cost-sharing reduction subsidies that fund the health plans, as well as declaratory and injunctive relief.

6 Attorneys General Urge DOI to Reject Changes to the Department’s Safety and Environmental Regulations Governing Offshore Oil and Gas Drilling

  • 6 AGs, led by Maryland AG Brian Frosh, submitted comments to the U.S. Department of the Interior’s (“DOI”) Bureau of Safety and Environmental Enforcement (“BSEE”) urging it to reject proposed rule changes to DOI’s current regulations governing the safety systems required to conduct offshore oil and gas production.
  • According to the AGs’ comments, the BSEE adopted the current set of regulations in 2016 to reduce the environmental impact and safety risks associated with offshore drilling. The AGs argue that any rollback of the 2016 regulations would be unjustified, premature, and potentially deleterious to both the environment and public safety, especially in light of the allegedly dramatic proposed expansion of the scope of offshore drilling operations in the United States.
  • The AGs further request that DOI and BSEE decline to enact any rule changes that would roll back the BSEE’s current environmental and safety regulations.