Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
- A coalition of 42 state attorneys general obtained a victory in an ongoing lawsuit against Indivior Inc., a suboxone manufacturer, alleging the company conspired to maintain monopoly profits. Judge Goldberg in the Eastern District of Pennsylvania denied Indivior’s motions for summary judgment, holding that the plaintiff states’ lawsuit may proceed. The case alleges Indivior unlawfully engaged in a scheme to block generic competitors, forcing consumers to pay artificially high prices during a time when the manufacturing companies received more than $3 billion in profits.
- A coalition of 43 state attorneys general sent a comment letter to the FTC seeking increased obligations on telemarketers by requiring them to keep additional records about their activities, which will allow law enforcement to hold them accountable. The letter proposes changes to the Telemarketing Sales Rule of 1995 including requirements for telemarketers to maintain certain records such as prerecorded messages, telemarketing campaigns and consumer relationships, among others.
- A coalition of state attorneys general, led by Missouri Attorney General Schmitt, announced an investigation into ESG investing ratings company Morning Star, Inc. and its subsidiary Sustainalytics for alleged consumer fraud and unfair trade practices, which is the first investigation of this kind. In late July, Missouri sent civil investigative demands to Morningstar and Sustainalytics, containing 43 interrogatories for documents relating to an alleged “anti-Israel bias” in ESG ratings.
- A coalition of 15 state attorneys general, led by Michigan Attorney General Nessel and Illinois Attorney General Raoul, filed an amicus brief in support of the respondents in National Pork Producers Council et al. v. Karen Ross. The brief argues the Supreme Court should protect the ability of states to regulate industries within their borders and states “petitioners’ expansive view of the dormant Commerce Clause would distort the States’ traditional regulatory role and undermine their sovereign authority to regulate matters of importance within their borders.”
- Arkansas Attorney General Rutledge filed a lawsuit against Big Country Chateau, a multifamily housing complex serving low-income consumers in Little Rock, for violations of the Arkansas Deceptive Trade Practices Act. The housing complex allegedly pocketed resident utility payments instead of paying the utility companies. The housing complex failed to pay hundreds of thousands of dollars to utility companies.
- California Attorney General Bonta, in partnership with the U.S. Department of Justice, announced three settlements totaling $70.7 million against healthcare providers for violations of the False Claims Act. The settlements resolved allegations against Southern California County Organized Health System Gold Coast Health Plan, Dignity Health, Clinicas del Camino Real, Inc. and Ventura County Medical Center for submitting false claims in an organized scheme to wrongfully retain federal funds intended for Medicaid Audit Expansion under the Affordable Care Act.
- Iowa Attorney General Miller announced that three out-of-state companies agreed to permanently cease mail solicitations to purchase agricultural land in Iowa. The companies, CRT Acres, Land Acquisitions and Westward Land Holdings, allegedly violated the Consumer Fraud Act due to unfair conduct addressed in the assurance of voluntary compliance. The solicitations included a “Purchase Agreement” offering to purchase property at a small fraction of its fair market value.
- Maryland Attorney General Frosh announced a Final Order against various entities associated with Marcia Bailey and Arthur Wittenberg for violating the Consumer Protection Act when collecting hundreds of thousands of dollars from consumers to help them consolidate and pay off outstanding consumer debt, but never provided the promised services. The Final Order issues a permanent injunction prohibiting the two individuals and associated entities from further harming consumers, as well as an order requiring them to pay over $2 million in penalties.
- Massachusetts Attorney General Healey announced a national mortgage servicer, Fay Servicing, LLC, will provide $3.2 million in relief to Massachusetts homeowners to settle allegations that it engaged in unfair and deceptive conduct through its mortgage servicing, debt collection and foreclosure practices. The assurance of discontinuance alleged that Fay Servicing failed to take required steps to help homeowners avoid foreclosure, harassed consumers with excessive debt collection calls, failed to inform borrowers of their right to request verification of the amount of debt and unfairly charged foreclosure-related fees before obtaining authority to foreclose. These practices were in violation of the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures, known as “35B.”
- New Jersey Attorney General Platkin announced that the New Jersey Bureau of Securities issued a civil Summary Penalty and Cease and Desist Order against Fida Frank Rahman d/b/a Clueless8 Trading and FAS Holdings, LLC for the offer and sale of $130,000 of unregistered securities and misuse of investors’ funds. Rahman made false statements and material omissions to investors, and used their money to finance his personal expenses. As a result of the violations, Rahman was assessed civil monetary penalties in the amount of $450,000.
- Utah Attorney General Reyes announced a multistate lawsuit against Mariner Finance for violation of consumer protection laws that allegedly deceived consumers out of millions of dollars. The suit alleges Mariner Finance charged consumers for hidden add-on products that consumers did not agree to buy. Due to the hidden add-on products, Mariner added hundreds to thousands of dollars to the total amount consumers owed, totaling hundreds of millions of dollars nationwide. The lawsuit seeks full restitution for all borrowers, repayment of unlawfully gained profits and civil penalties.
- Attorney General Miyares announced a settlement with JumpStart U2, Vasilios Education Center Inc., and Carl S. Vaughan for violating the Virginia Consumer Protection Act and the Virginia Residential Landlord and Tenant Act. The lawsuit alleged that the entities falsely advertised programs offered to low-income tenant consumers. The settlement requires the entities to pay $10,000 in restitution to consumers who entered subleases during the relevant period.
- Washington Attorney General Ferguson filed a lawsuit against Ostrom Mushroom Farms for discriminating against U.S. residents and women, and retaliating against workers. The lawsuit asserts that Ostrom discriminated against its workers on the basis of gender, citizenship and immigration status in violation of the Washington Law Against Discrimination. From January 2021 to May 2022, the company fired over 140 of its U.S.-based mushroom pickers, most of whom were women. The company replaced these workers with temporary, foreign agricultural workers, most of whom were men. In addition, the company allegedly punished women disproportionately and retaliated against them.
- Washington Attorney General Ferguson filed a motion to intervene and oppose an expansion to the Gas Transmission Northwest pipeline. The motion asserts the company’s requested expansion would hurt Washingtonians and increase greenhouse gases that the state is working to reduce. The company asked FERC to allow it to expand its capacity for methane gas running through the pipeline that crosses the Pacific Northwest.