Digest 02.13.2020: Who Controls When State and Federal Regulators Disagree on Whether a Chemical Is a Carcinogen?


Who Controls When State and Federal Regulators Disagree on Whether a Chemical Is a Carcinogen?

  • California AG Xavier Becerra filed an amicus brief in the California Court of Appeal in support of the plaintiff’s position in Johnson v. Monsanto Co., Nos. A155940 & A156706, arguing that the designation of certain chemicals as carcinogens and the requirement to include warnings about them under California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) is not preempted by federal law.
  • In the lower court, a jury found that the plaintiff had developed non-Hodgkin’s lymphoma as a result of using Monsanto’s weed killer Roundup, which contains glyphosate, a chemical designated as a carcinogen by California but not by the federal Environmental Protection Agency. On appeal, Monsanto argued that Proposition 65 is preempted by the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”).
  • In the amicus brief, AG Becerra argues that the duty to warn under Proposition 65 is not preempted because it is fully consistent with FIFRA in that it requires that pesticides not be misbranded; there is no conflict between the state and federal laws because FIFRA does not address point-of-sale warnings; and that federal preemption of state laws protecting public health is generally disfavored.


T-Mobile’s Acquisition of Sprint Cleared by Federal Court

  • The acquisition of Sprint Corporation by T-Mobile US, Inc. and its parent company (collectively, “T-Mobile”), which was challenged by a coalition of 14 AGs, has been cleared by a federal court.
  • As previously reported, a bipartisan group of AGs led by New York AG Letitia James sued to enjoin T-Mobile from acquiring Sprint, arguing that these companies are two of the four largest wireless phone service providers in the country, and alleging that T-Mobile’s proposed acquisition would decrease competition, increase market concentration, and increase prices.
  • In his decision, Judge Victor Marrero of the U.S. District Court for the Southern District of New York did not find sufficient evidence to support the plaintiffs’ arguments that T-Mobile would engage in anticompetitive behavior; that Sprint, absent the merger, could continue operating as a strong competitor to T-Mobile in the nationwide market; or that other parties would not enter the market to increase competition.
  • In a statement about the decision, AG James stated that her office is reviewing its options, including a possible appeal.


Fantasy Sports Contests Constitute Illegal Gambling, New York Appeals Court Rules

  • A New York appeals court struck down a 2016 law amending the state’s Racing, Pari-Mutuel, Wagering and Breeding Law to legalize interactive fantasy sports (“IFS”) contests.
  • In the decision in White v. Cuomo, No. 528026, the court held that the 2016 law violates the state constitution’s ban on gambling because, even though IFS contests require a degree of skill, contestants’ skills cannot eliminate or overcome the significant factor of chance in winning these contests.
  • The court also held that the 2016 law’s revision to the penal code definition of “gambling” to exclude IFS contests must be struck, even though it is not unconstitutional, because it cannot be severed from the portion of the law found unconstitutional.

Consumer Financial Protection Bureau

CFPB Reminder to Lenders: You Can’t Collect on Illegal Loans

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with lender and loan collector Think Finance, LLC and six related subsidiaries (collectively, “Think Finance”) to resolve allegations that Think Finance engaged in illegal loan collection practices in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
  • In the amended complaint, the CFPB alleged that Think Finance, in affiliation with tribal lenders, operated an enterprise that offered and collected online installment loans and online lines of credit nationwide, even though the loans offered were partially or completely void in 17 states. The CFPB further alleged that Think Finance made deceptive demands to consumers, illegally removed funds from consumers’ accounts, and provided substantial assistance to two debt collection companies that also engaged in illegal debt collection practices.
  • Under the terms of the proposed stipulated final consent order, which is a component of a global resolution of a Think Finance bankruptcy proceeding that also includes settlements with Pennsylvania AG Josh Shapiro and a consumer class action lawsuit, Think Finance will be barred from offering or collecting on loans in any state where the loan violates state lending laws, among other things. The global resolution will also establish a fund for consumer redress, and it is anticipated that distributions from the fund will reach over $39 million.

Data Privacy & Security

California AG Offers Clarifying Tweaks to Proposed CCPA Regulations

  • California AG Xavier Becerra issued revised proposed regulations under the California Consumer Privacy Act (“CCPA”), which went into effect January 1, 2020.
  • Among other things, the revised proposed regulations clarify how businesses may determine whether the information they handle is “personal information” for the purposes of the CCPA, and specify that businesses cannot use “personal information” for any purpose that is “materially different than disclosed in the notice of collection” – a less stringent standard than the standard specified in the original regulations.
  • The deadline to submit written comments regarding the regulatory update is February 25, 2020. The AG cannot bring an enforcement action under the CCPA until July 1, 2020.

Consumer Protection

FTC Busts a Fantasy: Pills That Promise Youth Allegedly Don’t Deliver

  • The Federal Trade Commission (“FTC”) reached settlements with supplement company Quantum Wellness Botanical Institute, LLC and its officer (collectively “Quantum Wellness”) and Maria Gutierrez Veloso (“Veloso”) to resolve allegations that they deceptively marketed a pill as a cure-all for age-related conditions in violation of the FTC Act.
  • In the complaint, the FTC alleges that first Veloso, then Quantum Wellness aggressively advertised ReJuventation, a pill containing amino acids and herbal extracts that they claimed – without substantiation – could reverse the aging process by increasing human growth hormone, and reverse a number of conditions including Alzheimer’s disease and wrinkles.
  • The stipulated orders against Quantum Wellness and Veloso, among other things, enjoin them from making health claims that are not substantiated by scientific evidence, and impose partially suspended judgments totaling $3.4 million with required payments totaling $660,000 to the FTC, which the FTC may use to provide refunds to defrauded consumers.