State AGs in the News

Former New Hampshire Attorney General Confirmed as Chief Justice of the State Supreme Court

• Former New Hampshire AG Gordon MacDonald was confirmed to be the chief justice of the state Supreme Court by a 4-1 Executive Council vote.
• MacDonald was appointed AG in 2017, but temporarily stepped down from the position in January 2021 after being nominated to the court.
• MacDonald named Deputy AG Jane Young as acting AG prior to stepping down.

Consumer Protection

Hawaii Court Imposes $834 Million Judgment on Pharmaceutical Companies for Plavix

• Hawaii AG Clare Connors obtained a judgment against pharmaceutical company Bristol-Myers Squibb Company and three U.S.-based subsidiaries of French pharmaceutical company Sanofi and related individuals (collectively “BMS”) after a circuit court found that BMS used deceptive tactics and false advertising to market the blood-thinning drug Plavix in violation of Hawaii’s Unfair and Deceptive Acts or Practices statute.
• The complaint alleged and the court found that BMS claimed in its marketing that Plavix afforded protection against heart attacks and strokes, without any discussion of populations for which it may not be effective, even though studies done years before Plavix came on the market showed that it may not work for a majority of East Asians and Pacific Islanders who comprise roughly half of Hawaii’s population.
• The judgment imposes $834 million in total civil money penalties, split equally between Bristol-Myers Squibb and the Sanofi defendants.
• As previously reported, in 2019, West Virginia AG Patrick Morrisey reached a $3.2 million settlement with the same companies over similar allegations of deceiving consumers about the effectiveness of Plavix.

Student Loan Servicer Settles Allegations of Interfering with Borrowers’ Ability to Seek Loan Forgiveness

• Massachusetts AG Maura Healey reached a settlement with federal student loan servicer Pennsylvania Higher Education Assistance Agency d/b/a FedLoan Servicing (“PHEAA”) over allegations that it deprived eligible student borrowers of relief they were entitled to under federal programs that offered loan forgiveness and grants for public-service jobholders in violation of state and federal consumer protection laws.
• The complaint alleged, among other things, that PHEAA prevented student borrowers from making qualifying monthly payments required for loan forgiveness under the Public Service Loan Forgiveness program, misprocessed Income Driven Repayment plans designed to make monthly payments more affordable, and erroneously converted Education Assistance for College and Higher Education (“TEACH”) grants into loans.
• Under the terms of the settlement agreement, PHEAA is required to undergo an audit that would allow borrowers to submit a claim for a detailed account review, and also is required to correct all servicing errors or misrepresentations uncovered by such a review. If an account correction is not possible because the loan was already forgiven, PHEAA will be required to pay monetary relief based on the dollar value of a borrower’s lost months progressing towards loan forgiveness. PHEAA is also required to implement enhanced quality assurance review practices to identify and prevent future servicer errors, among other things.

Michigan Attorney General Seeks State Supreme Court Review of a Michigan Consumer Protection Act Exemption

• Michigan AG Dana Nessel filed an amicus brief in the Michigan Supreme Court urging it to reconsider its denial of an appeal in Cyr, et al. v. Ford Motor Co., and revisit its interpretation of an exemption contained in the Michigan Consumer Protection Act (“MCPA”).
• Plaintiffs sued Ford Motor Co. (“Ford”) for, among other things, violating the MCPA over allegations of defective transmissions in some of its vehicles. The trial court denied Ford’s motion for summary disposition of plaintiff’s MCPA claims, in which it argued that its activities fell under long-standing precedent from the Michigan Supreme Court interpreting the MCPA as providing an exemption to any industry that is “generally regulated.” Ford appealed and the appellate court overturned the trial court’s decision. The Michigan Supreme Court declined to hear the case, and plaintiffs filed a motion for reconsideration, which AG Nessel’s amicus brief supports.
• The brief urges the Supreme Court to revisit its interpretation of the exemption, arguing, among other things, that the Michigan Supreme Court’s precedential decisions erroneously exempt a wide array of industries from the MCPA and negate the MCPA’s purpose by foreclosing the ability of consumers to obtain relief for unfair and deceptive trade practices.

FTC Bans Payday Lenders from Engaging in Lending Activities

• The Federal Trade Commission (“FTC”) reached a settlement with payday lending company Lead Express, Inc. and related companies and individuals (collectively “Lead Express”) to resolve allegations that they used deceptive marketing practices and unauthorized bank withdrawals to overcharge consumers millions of dollars on payday loans in violation of the FTC Act, the Telemarketing Sales Rule, the Truth in Lending Act and its implementing regulation, Regulation Z, and the Electronic Funds Transfer Act and its implementing regulation, Regulation E.
• As previously reported, the complaint alleged, among other things, that Lead Express used deceptive marketing tactics on websites and through telemarketing to convince consumers that they were signing up for loans with a fixed number of payments. In fact, consumers often found that Lead Express applied their payments to finance charges only without reducing the loan’s principal, and that it continued to withdraw regular finance charge payments after the promised term of the loan had ended.
• Under the terms of the proposed stipulated order, Lead Express is subject to a $114.3 million judgment, which is partially suspended due to inability to pay. In addition, any consumer loan made by Lead Express will be considered as paid in full if the principal payment and one interest payment have been made. Furthermore, the order permanently bans Lead Express from engaging in lending activities.
• One of the defendants in the FTC’s complaint, La Posta Tribal Lending Enterprise, is not a party to this settlement and the FTC is continuing its case against it.

Securities

GM Settles Allegations it Misled Investors over Cost of Ignition Switch-Related Recall

• California AG Xavier Becerra reached a settlement with General Motors LLC (“GM”) to resolve allegations that it made false and misleading statements to investors regarding the costs associated with curing the defective ignition switches installed in some of its cars in violation of the California False Claims Act and the Corporate Securities Law of 1968.
• According to the AG’s office, GM recalled over nine million vehicles in the U.S. over faulty ignition switches, which have reportedly led to hundreds of fatalities and injuries. Despite its knowledge of the need for the recalls, GM allegedly concealed the scale of the problem from investors and failed to build reserves for the anticipated losses, causing California investors, including the California Public Employees’ Retirement System, to lose millions of dollars.
• Under the terms of the settlement agreement, GM will pay $5.75 million, of which $3.85 million will constitute restitution to eligible investors.