Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
Monday, January 11, 2021:
- New Jersey Attorney General Grewal announced a settlement with Elite Aluminum Products Inc., which does business as DaytonaTactical.com and GunPartsPlus.com, for violating the New Jersey Consumer Fraud Act by offering and selling large capacity magazines to New Jersey buyers and for failing to comply with a subpoena. The Consent Judgment includes a civil penalty of $135,000 and requires the company to stop selling large capacity magazines within the United States as well as to maintain records of attempted purchases in New Jersey.
- The New Hampshire Attorney General’s Office announced that a civil enforcement action was filed against Trigram Education Partners, LLC for allegedly violating the New Hampshire Consumer Protection Act with unfair and deceptive acts or practices in its operation of the American School of Nursing and Medical Careers. The company allegedly deceived students about the school’s loss of accreditation and higher education bond as well as its eviction from campus for failure to pay rent. It also deceived students about their ability to be refunded if they withdrew from the program when it did not have the financial ability to pay refunds.
- A bipartisan coalition of 48 attorneys general led by West Virginia Attorney General Morrisey and New Mexico Attorney General Balderas is seeking a progress report about steps the U.S. Food and Drug Administration has taken to combat the opioid crisis under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (“SUPPORT Act”). The SUPPORT Act includes provisions requiring safer opioid packaging and disposal features, new regulations on non-addictive alternatives, and guidelines for prescribing opioids.
- The owners of construction company G&R Drywall and Framing, LLC have been charged with misclassifying workers as independent contractors in violation of the Construction Misclassification Act for a project in Delaware County. In connection with the prosecution, Pennsylvania Attorney General Shapiro stated, “Today’s prosecutions send a clear message — misclassification will have real consequences in Pennsylvania. We cannot tolerate business practices that ignore the legal requirements for contractors and engage in this kind of theft here in the Commonwealth.”
- A 12-state coalition of attorneys general submitted comments to the Environmental Protection Agency (“EPA”) arguing that its draft guidance misinterprets the U.S. Supreme Court’s County of Maui v. Hawaii Wildlife Fund standard for determining if the indirect discharge of wastewater through groundwater or another similar conduit into U.S. waters is subject to a Clean Water Act permit. The coalition is arguing that the EPA’s draft guidance allows polluters to avoid regulation under the Clean Water Act.
Tuesday, January 12, 2021:
- A multistate coalition of 11 attorneys general announced a stipulated judgment against sham veterans’ charity Healing Heroes Network, Inc. after an investigation revealed that it falsely promised to use charitable donations to help wounded veterans receive medical treatments, when the vast majority of these funds were actually used for business expenses. Under the judgment, the company must cease charitable solicitations and pay $95,000, which will be distributed to a veterans’ charity.
- Arizona Attorney General Brnovich announced that his office obtained a judgment against the owner of Pacific Auto Sales for allegedly violating the Arizona Consumer Fraud Act by altering odometers to advertise the vehicles using false mileage figures, failing to honor the implied warranty of merchantability for used motor vehicles, failing to disclose finance terms for vehicles, and including impermissible late fee amounts and time limits in its contracts. The settlement includes $30,000 of restitution and up to $80,000 in civil penalties.
- Virginia Attorney General Herring announced a settlement with Joule Wellness Pharmacy for allegedly violating the Virginia Post-Disaster Anti-Price Gouging Act by charging unconscionable prices on rubbing alcohol when it charged $22 per 16-oz bottle. The settlement includes injunctive relief and disgorgement and also requires the pharmacy to pay $2,500 in civil penalties and attorneys’ fees.
- Washington D.C. Attorney General Racine announced a settlement with the owners of a Ward 5 commercial property for improperly storing hazardous waste and allowing oil to spill and leak into public spaces for several years. The settlement requires the defendants to pay a $350,000 civil penalty, comply with the Leaking Underground Storage Tank (LUST) Program, and assess additional sites they own to determine if further action is needed.
Wednesday, January 13, 2021:
- Kentucky Attorney General Cameron announced an over $300 million multistate settlement with cigarette manufacturer S&M Brands, Inc., which was not part of the Tobacco Master Settlement Agreement, to offset liability associated with cigarette manufacturing, distribution, and sales. The settlement ends a lawsuit S&M brought against North Carolina to reclaim deposits made for cigarette sales, and it requires S&M to pay 30% of escrow principal to the states and 30% to the Master Settlement Agreement participating cigarette manufacturers.
- California Attorney General Becerra led a coalition of 17 attorneys general and New York City in a lawsuit challenging the Environmental Protection Agency’s (“EPA”) choice not to change existing National Ambient Air Quality Standards for particulate matter pollution. The coalition is arguing that the EPA’s decision to maintain the current standards was arbitrary and capricious because its review was flawed and biased and because the scientific data demonstrates the need for more robust standards.
- A bipartisan coalition of 50 attorneys general, co-led by Washington D.C. Attorney General Racine, Colorado Attorney General Weiser, Idaho Attorney General Wasden, and Nebraska Attorney General Peterson, and the National Association of Attorneys General condemned the January 6, 2021 attacks on the U.S. Capitol, in a letter urging Acting Attorney General Rosen not to let the actions go unchecked.
Thursday, January 14, 2021:
- Minnesota Attorney Genera Ellison announced a settlement with student loan debt relief company Document Assist Center for allegedly falsely promising consumers student loan forgiveness when only the federal government can forgive student loans, as well as charging them to enroll in programs in which they can enroll themselves for free, collecting upfront fees for debt settlement services, and operating without registration. The settlement requires the company to pay $11,499 in restitution and to cease operating in Minnesota unless it registers as a debt-settlement service provider.
- The Department of Justice announced that Toyota Motor Company must pay $180 million in a settlement agreement over longstanding noncompliance with the Clean Air Act’s reporting requirements, which are designed to control emissions and include that manufacturers must report potential defects and recalls that affect vehicle components.
- New York Attorney General James filed a lawsuit against the New York City Police Department and its leaders, alleging illegal conduct during racial justice protests and failure to address this pattern of abuse by not providing adequate training, supervision, or discipline.
Financial Services/ Consumer Financial Protection Bureau
- The Consumer Financial Protection Bureau (“CFPB”) and the National Credit Union Administration announced a Memorandum of Understanding to improve their coordination related to consumer protection supervision of credit unions that are over $10 billion in assets.
- Washington D.C. Attorney General Racine announced a lawsuit against construction materials processing and recycling facility Rodgers Brothers Custodian Services, Inc. for discharging petroleum and construction waste into waters in D.C. The lawsuit is seeking injunctive relief and civil penalties.
- New Jersey Attorney General Grewal announced that New Jersey joined Connecticut, Delaware, Massachusetts, New York, and New York City in a lawsuit against the U.S. Environmental Protection Agency (“EPA”) alleging that the EPA abdicated its duty to act against harmful ozone pollution from upwind states.
- New Jersey Attorney General Grewal announced that New Jersey is suing the federal government for its contamination of groundwater and drinking water on and around U.S. military bases and other federal facilities located in New Jersey through its use of aqueous film-forming foam, a fire suppressant that contains toxic chemicals.
Friday, January 15, 2021:
- Massachusetts Attorney General Healey announced that Colonial Automotive Group, Inc. agreed to pay $1 million in penalties to settle claims that it took advantage of unemployment benefits during the pandemic. The company allegedly encouraged furloughed employees to apply for unemployment benefits when dealership showrooms were ordered to close and then requested that they continue to work without pay.
- Vermont Attorney General Donovan announced a settlement with Club Fitness of Vermont, Inc. and its owner, resolving claims stemming from the gym’s re-opening for in-person operation in May, violating Governor Scott’s Executive Order prohibiting gyms from opening. Under the settlement, the gym has agreed to comply with existing orders and addenda, which now allow gyms to operate with restrictions, as well as make a $1,000 payment to the Vermont Foodbank’s Rutland Regional Distribution Center.
- Attorneys general from D.C., Illinois, Massachusetts, and New Jersey sent a letter to Facebook, urging it to stop advertising military tactical gear and weapon accessories until at least after the presidential inauguration, following the attack on the U.S. Capitol.
- Minnesota Attorney General Ellison announced that as part of a settlement, travel company Voyageurs International will pay $664,835 in refunds to music students who signed up for 2020 European tours. The settlement resolves an investigation into whether the company truthfully and fairly communicated about and charged cancellation fees.
- California Attorney General Becerra announced a lawsuit against the U.S. Department of Education over its efforts to ease oversight and accountability on for-profit colleges through its “Distance Education and Innovation” regulations, which allow colleges to bypass Higher Education Act requirements for Title IV funds. Attorney General Becerra is arguing that the new rule helps predatory institutions at the expense of students and taxpayers.
- California Attorney General Becerra and the California Air Resources Board announced that they are leading a multistate coalition in a lawsuit against the Environmental Protection Agency (“EPA”), challenging its decision to regulate greenhouse gas emissions from airplanes at a level that would result in essentially no reductions in emissions. The coalition is arguing that the EPA acted arbitrarily, capriciously, and unlawfully in adopting this rule.
Financial Services/Consumer Financial Protection Bureau
- The Consumer Financial Protection Bureau filed a lawsuit against 1st Alliance Lending, LLC and several of its former executives for allegedly engaging in illegal mortgage-lending practices, violating the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Mortgage Acts and Practices—Advertising Rule, and the Consumer Financial Protection Act of 2010. The company allegedly unlawfully employed unlicensed employees for mortgage-origination activities and consumer interactions, required consumers to submit verifying documents related to their residential mortgage loan applications before providing loan estimates, and denied credit to consumers based on consumer report or application information but did not give consumers requisite notice. The lawsuit seeks injunctive relief, damages, consumer redress, disgorgement, and civil penalties.