State AGs and Feds: The Dynamics of Influence & Collaboration

“Global peace” may be elusive, but there are times when companies under investigation may gain a strategic advantage by proposing that states and feds work together.  In this podcast episode, Cozen O’Connor State AG Group partners Chris Allen, Maria Colsey Heard and Siran Faulders discuss the impact of collaboration between state and federal agencies with respect to regulation, enforcement, rulemaking and interpretation of statutes, and lift the veil on when collaboration makes sense and why.


Christopher Allen, Member, Executive Producer

Meghan Stoppel, Member, Executive Producer

Suzette Bradbury, Director of Practice Group Marketing (State AG Group)

Elisabeth Hill Hodish, Policy Analyst

Legal Internet Solutions Incorporated


Chris Allen (00:02):

Welcome to the second season of State AG Pulse. In this season, we will be releasing a new podcast episode every two weeks. In addition to providing a deep dive into news stories that showcase the enormous power and broad authority of state attorneys general, we’ll be talking with new AGs about their transition into office and their priorities. As we did in the last season, we’ll leverage our decades of experience to provide insight and perspective to help business leaders better understand and successfully work with state AGs. Listen for new voices as co-chairs, Bernie Nash and Lori Kalani share the host mic with other members of Cozen O’Connor’s State AG Group. So now let’s jump right into this week’s episode.

Hello everyone and welcome to another episode of State AG Pulse, season two. I’m Chris Allen, a partner in the State Attorneys General practice at Cozen O’Connor, and we are so happy you’re joining us today for what is going to be our sixth episode. Today we are going to shift from our excellent conversation last week with the new Nebraska AG, Mike Hilgers, which I hope you all listened to and found as interesting and informative as I did, back to the part of our series that’s going in depth on some substantive issues in the state AG world. What we’re going to be talking about today are state and federal cooperation on enforcement efforts, that is the trend and practice of state AGs to work with their federal counterparts across the panoply of federal agencies on a variety of enforcement actions.

And I am joined today by two people who could not be better positioned to speak to this issue, colleagues of mine. First, Siran Faulders, who actually comes from an enforcement background and brings a unique perspective to the conversation in that respect. Siran, could you tell us a little bit about your background?

Siran Faulders (01:55):

Sure, thanks Chris. I spent a little less than a decade in the Virginia Attorney General’s office where I worked for three different attorneys general. And the last AG that I worked with, as you know, is our colleague, Jerry Kilgore. So it was a pleasure for me to join this team and this group fairly recently and work with my old boss.

Chris Allen (02:19):

Well, anything that involves Jerry Kilgore is a pleasure, I have to say.

Siran Faulders (02:22):

I agree.

Chris Allen (02:26):

We’re also joined by our partner, Maria Heard. Maria, I’m very pleased to say I’ve worked with for many, many years. Anything good about me as a lawyer, I owe to her. And anything bad is just the stuff she hasn’t managed to chip away from me yet. Maria, could you tell us a little bit about yourself?

Maria Colsey Heard (02:42):

Sure. Chris, that was very nice. I’ve been very fortunate to be with our State AG practice group from its infancy and see it grow from a time when we didn’t call things a State AG practice, it was public sector litigation. We were using our litigation skills, our negotiation skills, our policy skills in the arena where there always was public sector entities involved. And we also represented organizations, individuals and companies that were getting inquiries from State AG offices, and also were sued. Not only all of the state attorneys general offices across the country, but also federal entities, the FTC, the FCC, the SEC, all the acronyms that you could come up with, the DOJ, CFPB, FDA, they impact what we do also. And that’s why we’re here today. And I’m happy to be here too, happy to talk about this issue.

Chris Allen (03:52):

And so as you can all hear, we’re going to hear a lot of variety of experience and I cannot wait to hear what y’all’s thoughts on this conversation. But before we get to that, I just want to set the table a little bit and ask maybe what our audience is thinking, why do the State AGs matter? Isn’t there federal preemption? Well, the answer to that question is no, not always. What you have with the state AGs, in fact, I would offer, is really 51 separate regulators apart from these federal counterparts, that operate in parallel with and sometimes in coordination and cooperation on a national scale with their federal counterparts. And this impacts every facet of regulation and business. Where do the AGs get this authority? Well, some of it comes from the sweeping state UDAP laws that we’ve talked about in some prior podcasts, unfair and deceptive acts and practices or consumer protection laws. Some of this is the states’ antitrust laws. A big part of this and an increasing part, which I think we’ll talk about are state data breach notification and personal privacy acts. You have state false claims acts, security laws, and then you have a unique set of federal laws, which is increasingly growing, that actually give AGs express co-enforcement power. Dodd-Frank is the most recent one of these. But you have COPPA, which deals with children’s privacy. You have the Hart-Scott-Rodino Act, which our partner, Bernie Nash, was instrumental in writing back in the ’70s and gave AGs co-enforcement authority or antitrust.

So as a result of this, you have essentially almost every area that businesses are interested in. Not only do you have to consider the feds, but you also have to consider every single state AG either operating on their own or as a multistate, acting as basically a second concurrent parallel federal regulator. And I’ll just add that even when the AGs are not authorized specifically in this area, as we’ll talk about, they’re still highly influential on their federal counterparts when it comes to regulations, when it comes to enforcement, when it comes to rulemaking, when it comes to interpretation, basically in how you conduct your business.

So with that introduction, I’ll turn to Siran first. Siran, why does this coordination happen? I mentioned there’s a parallel system, but why would they need to work together? Why do they work together?

Siran Faulders (06:17):

Well Chris, federal state cooperation in my experience, really happens for a host of reasons. Sometimes it’s based on the subject matter at hand, and sometimes it’s based on which party’s in the White House. During the last presidential administration, I believe you saw fewer cooperative efforts between the state attorneys general and the FTC and then CFPB, although there were some that we will speak about a little later in this podcast. I think we tend to see cooperative efforts in areas where there is the greatest potential for consumer harm: illegal debt collection, healthcare fraud, robocalls. Everyone likes to jump on board when it comes to robocalls. Nobody likes that. That is definitely a bipartisan concern. Also in the area of elder abuse and when certain vulnerable populations are affected based on an environmental disaster or whether it’s a weather-related disaster.

Another area where you see federal and state enforcers teaming up is what you said, Chris, and that’s the area of data privacy. State investigations are often accompanied by investigations by their federal counterparts such as the FTC. And not just the FTC, also the SEC. And this is, especially when it comes to tech companies, we are seeing a greater cooperation there. And I also want to mention one other fact that has brought the states and the CFPB a bit closer, and that is in the middle of 2022, last year, I believe it was May, the CFPB actually issued an interpretive rule which encouraged the states to enforce the Federal Consumer Financial Protection Act. So not only do the states have their own data security and privacy statutes along with being, as you alluded to, Chris, the chief enforcers of their unfair deceptive trade practices statutes, the CFPB director is encouraging the states to enforce federal law too. Chris?

Chris Allen (08:36):

Do you think part of this also is just our economy now is so nationalized. We have so many companies that really do business in a lot of states, and it’s not like before where you had to build a brick and mortar store in Arkansas or Alaska or Arizona, but you have the internet now and you can just be in one place but sell all over the country. Do you think that’s another aspect of why you increasingly have the AGs acting on a national scale and then coordinating with their federal counterparts?

Maria Colsey Heard (09:07):

Yeah. And these products and services even, because many services are virtual online, it’s not just national, it’s international.

Chris Allen (09:17):


Maria Colsey Heard (09:17):

And by banding together the federal agencies and each state can try to at least get their arms around what this entity or company is doing within the United States as they look across the entire country and also globally.

Chris Allen (09:39):

Yeah, because Siran, you mentioned robocalling. And a lot of robocalling doesn’t originate in the US, it originates overseas. And so AGs need to work with the FTC or the FCC in order to have that international reach and stop that. That’s a really good point. So Maria, let me ask a follow-up then. What do state AGs bring to the table? Do they have unique aspects that they lend to federal cooperative efforts?

Maria Colsey Heard (10:07):

Yeah. Well, the first one I will mention is very important. UDAP statutes allow the states to seek penalties against an entity that has violated their consumer protection laws. In the wake of the Supreme Court’s 2021 decision in AMG Capital, the FTC can no longer go to court directly and seek equitable monetary relief. So that tool has been stripped from the FTC. And when a government entity is investigating or suing a company, money talks. And so it’s in the federal agencies, the FTC’s in particular, interests to have the states at the table. FTC can seek injunctive relief directly in court. The states can also seek injunctive relief, but they also have these penalties that they can seek.

Chris Allen (11:14):

Which in some cases can be extreme, I mean in terms of how they can compound upon themselves.

Maria Colsey Heard (11:20):

Yes. And as we’ve seen, there is a lot of debate over interpretation of the penalty clauses in these statutes. And what is a violation? A per violation or per day statutory fine can really compound if you’re looking back years in the allegations about what are the acts. Or is it per sale, is it per service, is it per consumer? You can come up with some pretty big numbers that are being demanded by the state. So the power of the dollar, the power of the penalty they bring to the table.

And then practically speaking, there are many avenues for a consumer to bring their concerns to a business. One is, of course, it can go directly to the company, to the business. They can go to the BBB, the Better Business Bureau. They can go to their state AG’s office. Now, yeah, they can also go to the FTC directly or the SEC directly and can go to a federal agency. But a state AG can look at it from a very local perspective. What is happening to the consumers in my state? They can have real time consumer experience brought to them, and they can actually, boots on the ground, go talk to consumers, interview them, visit them, go to, if there is a brick-and-mortar store or office of a company, they can go there, they can talk to employees, they can talk to the managers. And they bring that local, direct, face-to-face information to the matter.

Siran (13:18):

I think you make such a good point about the boots on the ground and the fact that they bring the local direct face-to-face interaction with consumers. As AGs offices have expanded, and they’re some that have just expanded their consumer protection sections, I can’t even tell you how many people they’ve added. But one of the things they do have is they have investigators. So it’s not just the lawyers that we may talk to or the staff that we may talk to on a regular basis. There are investigators who go into businesses, who do it undercover, look to see what’s posted in businesses, etcetera.

Maria (13:58):

Siran, I think that’s a great point, bringing in the role of the investigators. And they can secret shop, they can walk into a store, they can engage with the managers, the employees. They call customer care and they ask questions. They pose as consumers to see how is my customer care experience going to go? How is my online sales experience going to go? So yes, the investigators do play a very important role in this.

Chris Allen (14:31):

It strikes me that AGs also have a different incentive, almost, to do this, right? Because unlike the federal regulators, which generally I think they’re all appointed, AGs in most states are elected. And so not only do you have this power which allows you to do this, but you also have the incentive to be reactive to your consumers. Because politically speaking, when you’re standing in front of the voters every four years, one of the things they want to hear is, are you being reactive to my concerns?

And it strikes me also, the states bring unique perspectives. You have some states that are really on the cutting edge of data privacy and data security and federal legislations, Siran, you and I both know that’s been batted around for more than 10 years at this point, and it never moves. Yet the states are just charging right ahead and they’re blazing the trail. I think it was Justice Brandeis called them the laboratories of democracy. And in that way, they’re kind of driving a lot of these enforcement efforts. They’re driving policy, they’re developing consumer protection in new areas because they can just do it faster.

You have one AG versus five commissioners, if you ever get five commissioners, which, sorry any FTC people who are listening, it must be a little tough over there right now. And I think that’s another thing that’s driving this cooperation, really, is that the states are able to do things that the federal government… We think of the federal government as all powerful, but it’s really not, it’s constrained. And they rely on the states and the states are useful to them in these really interesting ways.

Let me ask, now that we’ve talked about the why and what, let’s talk a little bit about the how. How do you get a coordinated federal state effort? Siran, do you want to start us off on that?

Siran Faulders (16:29):

Sure, sure. Of course, I’m no longer in the AGs office. So much of this coordination, it may take place, but behind the scenes. But what we do know is that the FTC and AGs, they have joint calls perhaps monthly where they discuss a particular industry. I believe there are certain AG offices that take the lead as experts in certain industries and in working with their federal counterparts. And sometimes, but not always, it’s consumer complaints that will trigger an investigation, on the state front, and I’m sure also on the federal front. The state AGs and the CFPB and the FTC all have portals or methods by which complaints can be lodged. Often, the states get complaint information from the CFPB portal and what’s also known as the FTC’s Consumer Sentinel. In major mergers, certain states will form an executive committee, and sometimes it’s a large number of states. In particularly challenging mergers, you’ll have a large number of states get together with their federal counterparts to consider a merger.

Chris Allen (17:47):

I think there’s one more important way that states and the federal counterparts might coordinate, and that is something Maria and I were talking about experiencing, and that’s at the request of business. Maria, can you talk a little bit more about that?

Maria Colsey Heard (18:02):

Absolutely. Someone listening to this podcast may think, “Oh my goodness, I really don’t want the state AGs to join together. I don’t want them to bring in the FTC, that I’m on one side of the table, just little old me, and I’ve got these powerful agencies and offices across the table from me.” But actually, you have to think about what is your goal? If you are facing investigations or claims from multiple entities at the federal level, at the state level, a business may want to request that coordination. You want to have global peace at the end of this. You want to know what your complete obligations are going to be. You want consistent obligations.

So for example, let’s say you’re being targeted by the FTC and you’re also being targeted by a group of states. You don’t want to reach a resolution with the FTC on injunctive relief and then turn to the states, and they may want injunctive relief that conflicts with what you’ve already agreed to with the FTC. That makes your business operations very, very difficult. So there may be a strategic advantage, a practical advantage, to propose to the feds and the states that they work together. You’ll get efficiencies in how you have to respond to the investigation. You will get consistency in how you describe your business operations to the entities. You can say it once and they’re both hearing the same thing. You’ll get consistency in the terms, hopefully, if you reach a resolution, you’ll get consistency in those terms, and then you’ll get the certainty and the global peace that you’re trying to achieve.

Chris Allen (20:03):

It’s almost analogous to a class action. And I’m not talking about how class actions are now. Sorry, business listeners, I know that’s a bad word. But the original concept behind a class action was you don’t want a million people filing individual lawsuits. You want to be able to resolve all common claims at the same time. And it is somewhat analogous. If the feds and the states are interested in the same thing, why not talk to them at the same time and resolve it at the same time?

Siran Faulders (20:34):

Yeah. One thing I did want to mention is when there’s not federal-state cooperation, or even frankly when some states are not part of the multistate, you have certain number of states joining and other states that are on the outside and haven’t joined for multiple reasons, maybe they don’t want to join or they may be thinking about their own action, a lot of multistates are asking for what’s known as an MFN clause, a most favored nation clause, in an agreement. So here, you enter into a settlement, and then you have a provision that says, “You know what? If you, business client, decide that you’re going to give better or different injunctive relief to another entity, whether it’s federal or another state, then you need to come back to us and provide us with the same relief that you give to whatever regulator that you agree with.” And that’s a huge risk. And what that means is that the company really doesn’t even have global peace with the AGs or with the whoever is part of the multi-state agreement. So I think that that is another reason why companies, Maria, really want this global peace that you speak about, which is completely reasonable from a business’s perspective.

Chris Allen (21:52):

Let’s get a little concrete here. So we’ve talked about, I think we’ve done the reporter questions, the who, what, why, how. So let’s do some examples of where the AGs and their federal counterparts have cooperated. Because as we said before, this is not limited to consumer protection. There are all kinds of examples. Maria, do you want to get us started on that?

Maria Colsey Heard (22:15):

Sure. I think I will. Do not presume that the current coordination that is happening happens or doesn’t happens based on political party. There is coordination, red, blue, purple, together. So for example, last year, the FTC, of course under Biden administration, joined with, okay, here’s a bunch of democratic AG states, California, New York, Colorado, Massachusetts, Illinois, and Florida. Florida joined this action and it was to sue a company called Roomster. They were suing a rental listing platform called Roomster, alleging that Roomster was duping customers with fake reviews, charging money for allegedly verified listings. Basically, misrepresentations. Roomster filed a motion to dismiss. And one of the issues was, was this federal-state coordination in this lawsuit appropriate? And the court specifically affirmed the appropriateness of this coordination. So that’s one example, and also an affirmation of the ability of the counterparts at the federal and state level to coordinate together. There was a settlement last year also where you had the FTC and I seven states involving Google, iHeart Media about radio ads and whether, endorsement ads were appropriately done. And you had states, here’s the list of states: Arizona, Texas, Georgia, Illinois, California, Massachusetts, New York. Must be a great dinner party, you know, for all them to get together and talk about this. But you do have that coordination. And I’ll mention one more, just to keep beating this drum. I think this one’s really interesting. You had, in 2021, the FTC together with a single state, Georgia, Georgia Attorney General, Republican, together suing the founders of a company, of a bunch of companies, it’s the Stem Cell Institute of America, alleging that these founders of the company were making false claims about the use of their stem cell therapy for arthritis and other orthopedic ailments.

So again, misrepresentation, allegations of no scientific studies to support the claims about the use of this therapy. And you could say, why would the Georgia AG, who has been very open about his disagreements with the Biden administration on many policy issues, who also is very strong on economic development and supporting businesses… This case is about, for him, and I know this because he’s quoted in the press release, the Georgia AG, Chris Carr. These founders are preying on seniors. One of his very important issues is elder abuse and protecting seniors. And so for him, this case fits that goal. And so he joined together with the FTC and that case also is pending. And I’m sure, Siran, you have a bunch of examples in other areas where there’s been coordination.

Siran Faulders (25:30):

I was going to just focus briefly on the antitrust area. We certainly see coordination in the consumer protection area. But we also see it in the antitrust area. In this administration, but also in the last administration. And so Maria, I wanted to focus on that because I think that it supports what you’ve just said, which is that it’s not necessarily driven by whether there’s an R or a D. So I’d start by just giving you a very, very recent example, just this month in March where DOJ together with Massachusetts, New York and DC, filed a lawsuit to block JetBlue’s $3.8 billion merger with Spirit. And I think what’s interesting there is that you had, and of course, those are all Democrats. I will say those were certainly all Democrats and states that are very aggressive in this area. But I think that what’s particularly interesting there is you have two newly elected AGs who were willing to jump on board after they had only been in office for two months.

Massachusetts, you had Andrea Campbell, you had the DC AG, General Schwalb, willing to jump on board with the feds and join that lawsuit, which was I believe, March 7th. So just a couple of weeks ago. But on the other hand, the Florida AG went in a bit of a different direction with the merger, and she reached an agreement with the merged company to increase the seat capacity for Florida airports in which JetBlue and Spirit Airlines operate. So that was a different direction there. But of course, Florida’s certainly very concerned about that because those airlines operate there and they are very concerned about making sure that they have people who can come down and visit their state and spend money. So her interest in that was probably very predictable, as I think it was in the case that you talked about where Florida joined-

Maria Colsey Heard (27:43):

The Roomster case. Yes, of course. Lot of big interest in rental property.

Siran Faulders (27:48):

That’s right. That’s right. I did want to just affirm your view, Maria, that definitely, it’s not just this new administration. So back in 2019, the states were even willing to go at it alone, as they did in connection with the T-Mobile, Sprint merger. Some states settled, some states broke off from that. But the bottom line is that the states, in that case, were willing to go at it alone, including Texas, not just the Democratic states. There were certainly Republicans who join that and various states that broke off then and settled the litigation. But that is an unusual step to do and to get ahead of the feds in an antitrust matter.

Chris Allen (28:37):

And I think it’s interesting, some of the examples that y’all brought up. It takes us back to why this happens. First of all, Maria, your example of Chris Carr, who we all know very well, he is a very pro business AG. But that doesn’t mean that if you’re out there harming consumers, you get a pass, whether you got an R next to your name or a D next to your name.

And the second is you talked about Arizona being involved in the iHeart media space, and I think you meant them as a R, as a Republican state when you were listing it, but now they’re a Democrat state. And it just brings up the fact that even when you have a change in AGs, and we’ve talked about this on prior podcasts, the staff often remain the same. And these are life staffers in many cases with decades of experience. And not only decades of experience, but decades working with their federal counterparts. So you will have senior consumer protection officials who deeply know and have deep, long-standing relationships with their FTC counterparts or their US DOJ counterparts. And so whoever is at the top, whether you’re Republican or a Democrat, a lot of the staffers that we deal with on a day-to-day basis who we know who are doing the legwork, actually know their federal counterparts and have personal longstanding relationships that really, I think is another thread in facilitating this cooperation.

Maria Colsey Heard (30:03):

And let’s not forget Chris, career movement.

Chris Allen (30:09):

Absolutely, absolutely.

Maria Colsey Heard (30:09):

You have some people who may have started in an AG’s office and decided they wanted to move to a federal agency, or vice versa. And we know people personally that, that has been their career trajectory, and that creates bonds too, and opportunities.

Chris Allen (30:29):

Yeah. When the CFPB was set up, it was Rich Cordray who was the former Ohio AG who was in charge of that. And the first thing he did was reach out to some of the very best consumer people across the country, Republican offices and Democrat offices, and pull them into his enforcement office. But for a little inside baseball, there are also other ways that states can coordinate or influence their federal officials. And Maria, I’m thinking of one particular example that we worked on, but without talking too much in detail, can you explain a little bit more about the phenomenon I’m talking about?

Maria Colsey Heard (31:04):

There are things that happen behind the scenes. And the example I was going to use is the FDA. The FDA is seen as a very much a regulatory entity as opposed to a litigating entity. And the FDA is charged with oversight: food, drug dietary supplements, medical devices. They are the experts, and they have the responsibility of looking at what claims and ingredient information you have on a product label. So imagine you are a state AG who believes that a certain company that sells a dietary supplement, for example, is marketing and advertising that supplement in a way that is misleading, deceptive, does not have support. Who are you going to hope aligns with you to help you? You’re going to hope the FDA aligns with you because of their expertise and their role.

So you have, behind the scenes, discussions going on between AG offices and the FDA seeking what is called warning letters or policy statements. These warning letters are issued by the FDA to companies making claims: “This is what’s wrong”. Basically, putting it in very simple terms, “This is what we believe is wrong with your product label. This is what’s wrong with the claims you’re making about your product.” And if they get the warning letters, if the FDA agrees, then the state AG can use those warning letters, whether it’s to support their investigatory demands, their demands for settlement, or even their lawsuits. So there is behind-the-scenes coordination with entities that you view as more regulatory.

Chris Allen (33:04):

And I guess that’s something we talked about what the feds get from the AGs: the penalty hammer, the flexibility, their reactiveness, but that’s something AGs get from their federal counterparts, is the deep well of expertise and subject matter expertise at agencies like the FCC, the FDA, the SEC, the FTC with their economic bureau, a federal agency that not only has an enforcement arm, but a regulatory arm and a policy development arm can be a huge and powerful tool for AGs to have behind them when they come and bring investigations or litigations.

Maria Colsey Heard (33:41):

Oh, exactly. And my describing what happens is I’m not trying to imply that there’s anything untoward about that. It is like having an expert that you can go to and consult with, test your theories, see if there’s something there there, and it’s a circle of assistance that occurs from these discussions.

Chris Allen (34:05):

I think we’ve covered a lot of really good things today, and I hope our listeners are taking away the idea that, first of all, this is something you need to think about. If you have federal regulatory counsel, that’s fantastic, you should have them. But that is not covering all your bases. In fact, you have an entire equally broad flank that you really need to think about in terms of your exposure to AGs.

I also think that this isn’t to scare you, because as Maria discussed, there are instances where you might want the federal government to work with their state counterparts in order to achieve the kind of global peace that Siran was mentioning is just so important to any company that’s in this area. And again, just understanding the dynamics that underlie all of this, why AGs do what they do, and that’s what we’re trying to bring to you in this podcast series.

For our next episode, I hope you join us when you’ll hear me again this time with my colleague, Lori Kalani, and we are going to be speaking with Minnesota AG, Keith Ellison, newly reelected and roaring into his second term. That episode will drop in two weeks. In the meantime, everybody stay safe, healthy, and thank you for listening.

You have been listening to State AG Pulse, brought to you by Cozen O’Connor’s State AG Group. Research for this podcast was provided by our associates, Ryan Bottegal, Hannah Cornett, Keturah Taylor, and Emily Yu, as well as our policy analyst, Elisabeth Hill Hodish. If you enjoyed this week’s episode, please leave us a five star rating and review. That will help our visibility and will allow other listeners to learn about the podcast. And of course, please tune in again in two weeks for our next episode.



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