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 21 states submitted a letter to the White House Office of Management and Budget urging the administration to finalize its review of the U.S. Food and Drug Administration’s (“FDA”) proposed rule that prohibits the sale of menthol cigarettes and flavored cigars. The coalition states that the proposed rule advances health equity and protects public health as menthol cigarettes have adverse impacts on health and disproportionately impact minority communities and vulnerable populations, including young people.
- Attorney General Mayes announced that Arizona Commerce Authority’s (“ACA”) CEO Forums violated the Arizona Constitution’s Gift Clause. This finding comes after a September 2023 request from the Arizona Auditor General for an investigation to determine if these forums violated the state’s constitutional gift rules, which prevent the government from giving away public assets to private businesses such as any donation or grant to individuals, associations, or corporations.
- Attorney General Bonta and the California Air Resources Board (“CARB”) announced a settlement with Cummins, Inc. of Indiana (“Cummins”), an engine manufacturer, for bypassing vehicle emissions control equipment in diesel engines with the use of illegal defeat devices. These defeat devices were found in model years 2013 to 2018 Ram 2500 and 3500 trucks with the 6.7-liter diesel engine manufactured by Cummins. Cummins will enter into a settlement agreement, subject to court approval, and pay a federal penalty to the U.S. Environmental Protection Agency (“EPA”). The settlement includes about: $164 million in penalties paid to CARB; $33 million to California Attorney General’s office for environmental violations and unfair business practices; and $175 million paid to CARB for mitigation programs to reduce the nitrogen oxide emissions caused by Cummins engines. In addition, Cummins will pay a penalty of $1.642 billion to the EPA, which is the largest penalty paid in a Clean Air Act case.
- Attorney General Bonta celebrated a federal district court order blocking JetBlue Airways’ proposed $3.8 billion acquisition of Spirit Airlines. On March 31, 2023, Attorney General Bonta, the U.S. Department of Justice, and a coalition of states challenged the proposed merger stating that it was an anticompetitive combination that threatened competition in an already negatively impacted industry of market consolidation.
- Attorney General Weiser announced a $500,000 settlement with TrueAccord, a third-party debt collection company, for illegal collection on high-interest debt in violation of the Colorado Fair Debt Collection Practices Act. Between 2017 to 2022, TrueAccord collected or attempted to collect from about 29,000 consumers by telling the consumers who had defaulted on loans issued by tribal lending entities that they owed the full loan balance. However, under state law, consumers do not have an obligation to pay finance charges greater than 12% and are entitled to refunds if they do pay such charges.
District of Columbia
- Attorney General Schwalb announced Liberty Tax, a tax preparation company, will pay $750,000 for misleading and overcharging more than 7,300 DC residents for tax preparation services. Liberty Tax will pay $550,000 to DC residents and $200,000 to the District. Liberty Tax misled consumers with false advertising by incentivizing consumers with a $50 cash handout to file with Liberty Tax with “no-catch” attached; however, in reality, Liberty Tax increased its prices for customers who accepted the cash.
- Attorney General Campbell announced a $1.8 million settlement with a federal student loan servicer, Nelnet, Inc. (“Nelnet”), for the company’s failure to appropriately communicate with borrowers regarding renewing Income-Driven Repayment (“IDR”) plans. Between 2013 and 2017 Nelnet violated state consumer protection laws by failing to provide borrowers with a sixty-day notice of the recertification deadline, as well as not explaining the consequences if borrowers did not recertify by the deadline.
- Attorney General Campbell announced a settlement with major online food delivery service platform, Grubhub Holdings Inc. and Grubhub, Inc. (“Grubhub”), to resolve a 2021 lawsuit alleging that Grubhub violated the statutory fee cap that was in place during the COVID-19 public health emergency. The terms of the settlement require Grubhub to pay over $3.5 million to affected restaurants and $125,000 to the Commonwealth. According to the lawsuit, Grubhub illegally overcharged fees to Massachusetts restaurants. The Massachusetts fee cap was in place between January 14, 2021 and June 15, 2021 and prevented third-party delivery service platforms from charging fees to restaurants that exceeded 15% of an order’s restaurant menu price. Grubhub continuously violated the fee cap and the state’s consumer protection statute by charging fees of 18% or more to restaurants.
- Attorney General Nessel filed a lawsuit in the Sixth Circuit Court for injunctive relief prohibiting John and Michele Church from incorporating, operating, and working for businesses offering snow removal, lawn care, or landscaping services. The suit claims the Churches and their business entities knowingly violated the Michigan Consumer Protection Act (“MCPA”) and a prior Assurance of Voluntary Compliance (“AVC”) agreed to in connection with prior consumer complaints.
- Attorney General Platkin announced the launch of the Home Appraisal Discrimination Initiative developed by the Division on Civil Rights (“DCR”) and Division of Consumer Affairs (“DCA”) to address systemic inequities in real estate appraisals. The initiative issues DCR enforcement guidance on how the New Jersey Law Against Discrimination (“LAD”) applies to discrimination in home appraisals.
- Attorney General Henry announced a settlement with Community Loans of America, Inc., a national auto title lending company, for nearly $6 million relating to unlawful lending practices and interest rates charged by the company. Under the terms of the settlement, Community Loans of America, Inc. will pay $2.2. million in restitution to consumers and will cancel $3.7 million of remaining debts from the thousands of unlawful loans issued to Pennsylvania borrowers.
- Attorney General Henry announced a settlement with Greek Housing Services, Inc., State College based landlord, for charging student tenants an unlawful administrative fee against their security deposits. Greek Housing Services, Inc. will pay $10,000 in restitution to eligible tenants, and will return security deposits to the tenants. Greek Housing Services violated the Landlord Tenant Act and the Unfair Trade Practices and Consumer Protection Law by charging student tenants administrative fees and not justifying or detailing the charges regarding the actual damages charged against the students’ security deposit. Greek Housing Services also unlawfully required students to waive their statutorily protected rights under the Landlord/Tenant Act.
- Attorney General Ferguson filed a lawsuit seeking to block the merger of Kroger and Albertsons. The suit asserts the proposed merger in Washington state will severely limit shopping options for consumers as the merger will eliminate Kroger’s closest competitor.