The State AG Report - Volume 7, Issue 27 | July 2021

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FTC’s New Rule Aims to Crack Down on False “Made in the USA” Label

  • The Federal Trade Commission(“FTC”) finalized the Made in the USA Labeling Rule, which codifies the FTC’s long-standing enforcement policy statement regarding false, unqualified U.S.-origin claims.
  • The rule applies to labeling claims and prohibits marketers from including unqualified “Made in the USA” claims on product labels unless: (1) final assembly or processing occurs in the United States; (2) all significant processing for creating the product occurs in the United States; and (3) all or virtually all ingredients or components of the product are made and sourced in the United States.
  • The rule also codifies a broader range of remedies against marketers who make false U.S.-origin claims, including enabling the FTC to seek civil penalties of up to $43,280 per violation of the rule as well as allowing the FTC to seek redress, damages, and other penalties.

New Republican Candidate Joins Open-Seat Race for Kansas Attorney General

  • State Senator Kellie Warren declared her candidacy for the Republican nomination in the 2022 race for Kansas AG, running against former Kansas Secretary of State Kris Kobach.
  • As previously reported, incumbent Republican AG Derek Schmidt is not seeking re-election and is running for the Republican nomination for Kansas Governor in 2022.
  • To “meet” the state AGs across the nation and read more AG election news and insights, visit The State AG Report.

Broadcom Accused of Illegal Monopolistic Behavior in Semiconductor Chip Markets

  • The FTC reached a settlement with semiconductor chip manufacturer Broadcom Inc. to resolve allegations that it illegally monopolized several markets for specific types of chips.
  • The complaint alleges that Broadcom illegally monopolized markets for chips used in television set-top boxes as well as broadband internet access devices by entering long-term anticompetitive exclusivity and loyalty agreements with original equipment manufacturers (“OEMs”) and with service providers to whom the OEMs supply devices with Broadcom chips. The agreements allegedly prevented OEMs and service providers from purchasing chips from Broadcom’s competitors, creating insurmountable barriers for other chip manufacturers trying to compete with Broadcom.
  • The terms of the proposed consent order will prohibit Broadcom from entering into certain types of exclusivity or loyalty agreements with buyers of its chips. Broadcom will also be prohibited from conditioning access to its chips or favorable supply terms on customers’ exclusivity or loyalty commitments. Moreover, the consent order will prohibit Broadcom from retaliating against customers who buy chips from its competitors. The order is subject to a 30-day public comment period commencing after the publication of the consent agreement in the Federal Register.

Democratic Attorneys General Support EPA’s Proposed Cap-and-Trade Program for HFCs

  • A group of 14 Democratic AGs led by Massachusetts AG Maura Healey sent a comment letter to the U.S. Environmental Protection Agency (“EPA”) to support to Agency’s proposed rule under the American Innovation and Manufacturing Act (“AIM Act”) to use a cap-and-trade system to phase out the production and consumption of hydrofluorocarbons (“HFCs”), potent greenhouse gases commonly used in refrigerators, air conditioners, and many other applications.
  • The letter endorses the EPA’s proposal as faithfully implementing the AIM Act, which directs the EPA to reduce the manufacture and consumption of 18 HFC chemicals by 85% by 2036. The letter also notes that HFCs are significant contributors to climate change and endanger public health.
  • The letter urges the EPA to study and minimize any potential harms to environmental justice communities in its finalization of the proposed cap-and-trade program.

Appeals Court Urged to Let North Dakota’s Laws Regulating Pharmacy Benefit Managers Stand

  • A bipartisan group of 34 AGs, led by Minnesota AG Keith Ellison, filed an amicus brief in the U.S. Court of Appeals for the Eighth Circuit in support of North Dakota’s position in Pharmaceutical Care Management Association (“PMCA”) v. Wehbi, where North Dakota argued that states have the right to regulate pharmacy benefit managers (“PBMs”) and that this right is not preempted by either the Employee Retirement Income Security Act (“ERISA”) or by Medicare.
  • As previously reported, the U.S. Supreme Court, in Rutledge v. Pharmaceutical Care Management Association, held that ERISA did not preempt Arkansas’s law regulating the prices at which PBMs reimburse pharmacies because it did not relate to or have an impermissible connection with an ERISA plan and was just a form of cost regulation that applied to PBMs regardless of whether they managed an ERISA plan or not. The Supreme Court remanded the Wehbi case to the Eighth Circuit, directing it to reconsider its previous decision that ERISA preempts North Dakota’s law regulating PBMs in light of its Rutledge
  • The amicus brief argues, among other things, that the states have an interest in preserving each state’s authority to regulate companies doing business in their states and protecting residents from abusive business practices. The brief also argues that state regulation is necessary to prevent PBMs from imposing self-serving protections that reduce reimbursement rates to pharmacies and maximize rebates to PBMs and that ERISA does not preempt North Dakota’s laws because these laws do not alter the substantive coverage of benefit plans.

Truck Leasing Company and its Inspectors Accused of Fraudulently Issuing Passing Inspection Certificates for Its Trucks

  • Massachusetts AG Maura Healey sued national truck rental company Penske Leasing and Rental Company, LP and six of its inspectors (collectively “Penske”) over allegations that it allegedly issued fraudulent passing inspection certificates to some of its vehicles in violation of the Massachusetts Clean Air Act and regulations governing its Motor Vehicle Inspection Program, the Massachusetts Inspection and Maintenance Act, and the Massachusetts Consumer Protection Act.
  • According to the AG’s office, Penske allegedly failed to properly conduct 189 safety and emissions inspections on trucks that it rents and leases for commercial use. Its inspectors allegedly failed to fully inspect the trucks before certifying that they were safe to operate and use for commercial purposes.
  • The complaint seeks injunctive relief, civil money penalties, and attorneys’ fees and costs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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