As the world continues to settle into its new normal, regulators have so, too. Recently, State Attorneys General (AGs) are increasingly focused on several specific enforcement priorities, including (1) price gouging; (2) privacy concerns; (3) antitrust litigation; and (4) harmful substances in products and environmental issues. Many of these priorities have gained prominence in the midst of the COVID-19 pandemic.
Price gouging enforcement was triggered in large part in March 2020 from the COVID-19 pandemic. Many State AGs have been actively and aggressively investigating price gouging. Recent emergencies, outside of COVID-19, have also triggered emergency changes in costs, including from forest fires, hurricanes, and other severe weather events and natural disasters. States have broad authority in this area, and enforcement varies state-to-state. Usually State AGs look for any issues with change in cost post-emergency, not during the emergency, looking to the reasonableness of the increase. Some states have percentage limits, others cover both essential and non-essential goods. Price increases of 10% or less will generally be considered low risk. Price increases will generally be allowed where sellers can tie price increases to increased costs. It is a best practice is to have documentation supporting any decision for price increases.
There has been an increased focus on protecting personal data and consumer privacy. Specifically, State AGs have been focused on data breaches and unlawful location tracking, and State AGs have looked into certain seller practices, such as screen scraping without notice or consent. Arizona AG Mark Brnovich has investigated companies’ tracking of consumer smartphone locations.
State specific laws require detailed compliance with data protection and privacy requirements: the first act passed in 2018 was the California Consumer Privacy Act (CCPA). Next there was the Colorado Privacy Act (CPA) then the Virginia Consumer Data Protection Act (VCPDA). These acts have similar requirements: allowing consumers to access their personal data; correct any inaccuracies with their personal data; and delete personal data. Companies must have transparency on what personal data is collected, how it is used, and the consumer’s rights. State AGs have authority to enforce these acts within their respective states.
In November 2020, California passed the California Privacy Rights Act (CPRA). The CPRA changed the CCPA, but did not replace it, expanding the rights of Californians and giving rights to consumers to rectify inaccurate personal data. The new law also created and gave authority to California’s new Privacy Protection Agency; changed the definition of a “business”; and made businesses responsible for how third parties use/share personal data that the business collects.
States also focus on protecting minors and children through the Children’s Online Privacy Protection Act (COPPA). Maintaining consumer privacy and data security remain, and will continue to be, a significant area of concern for State AGs.
There has been an increase in State AG antitrust litigation. Notable examples are described below:
- Facebook: New York AG Letitia James and 48 AGs have filed complaints to end Facebook’s alleged monopoly. This was dismissed in June 2021, but there are currently efforts underway to try to bring this case back.
- Amazon: District of Columbia AG Karl Racine is pursuing novel state-law based antitrust claims against Amazon.
- Google: Lawsuit by 37 AGs against Google, also referred to as the “Gatekeeper of Our Digital Devices,” for allegedly maintaining a monopoly in the market for distributing apps for the Android operating system.
On September 23, 2021 the Senate Judiciary Committee approved legislation that allows State AGs to choose which court hears their antitrust cases. It is retroactive, and the intent is to prevent multi-district litigation (MDLs). Congress is also considering increases in the Department of Justice’s (DOJ) budget, specifically for the Antitrust Division, and also for the Federal Trade Commission (FTC). Although State AGs have not taken their cues from related federal actions there has been increased cooperation between the two, so an increased focus on antitrust enforcement at the federal level could lead to the same at the State AG level.
Harmful Substances in Products and Environmental Issues
A significant area of focus for State AGs has been harmful substances in products, and other environmental issues, such as product emissions and discharges. State AGs have looked closely at the harmful ingredients affecting consumers. Notable examples and relevant areas of inquiries are outlined below:
- Talc litigation against Johnson & Johnson for baby powder.
- Coalition of 15 State AGs have submitted comments to the EPA in support of the EPA’s proposal to include per and polyfluoroalkyl substances, also known as PFAS as a class in the Contaminant Candidate List 5.
- PFAS Litigation: District of Columbia AG Racine investigating and considering litigation against chemical manufacturer for the distribution and sale of synthetic pesticides.
- Litigation on toxins in groundwater.
- District of Columbia AG Racine soliciting counsel to investigate and possibly litigate claims against baby food company for allegedly misleading parents about the health and safety of its products.
- California AG Rob Bonta secured a court decision requiring a public health agency to comply with air monitoring requirements for petroleum refineries.
- Coalition of 20 State AGs sent a letter to Congressional leadership, asking Congress to allocate funding in its reconciliation bill to programs that promote clean energy, fight pollution, and improve air quality
- Vermont AG T.J. Donovan filed suit against fossil fuel companies alleging that they violated Vermont’s Consumer Protection Act (VCPA) by concealing information and disseminating misleading marketing about climate change and fossil fuels. AG Donovan sought disgorgement, civil penalties, and injunctive relief.
- Coalition of 13 State AGs sent a comment letter to the National Highway Traffic Safety Administration (NHTSA) urging higher fines for fuel economy violations.
Retailers should remain vigilant to the ingredients they put in their products and should ensure that the manufacturing and distribution processes they employ are safe.
State AGs have been actively engaged on several areas of importance as the world continues to navigate within a global pandemic. To take on these efforts, State AGs have increasingly sought the help of outside counsel to litigate its claims. This has been a marked shift in strategy from just five years ago. These shifts and State AG enforcement trends identified above should serve as a guide for companies as they continue to identify and employ best practices for their own policies as they adapt and settle into the new normal.