The State AG Report Weekly Update April 2019 #4

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Consumer Financial Protection Bureau

CFPB Changes Policies Regarding Civil Investigative Demands

  • The Consumer Financial Protection Bureau (“CFPB”) announced changes to its policies regarding civil investigative demands (“CIDs”)—investigational subpoenas issued when the CFPB is investigating potential violations of law—to provide more information to the CID recipient about the conduct under investigation.
  • According to the CFPB, the updated policies require that CIDs provide additional information about the laws that allegedly may have been violated, and specify the business activities subject to the CFPB’s investigatory authority or that the investigation is necessary to determine the extent of the CFPB’s authority over a relevant activity, where applicable.
  • According to the CFPB, these policy changes reflect recent court decisions regarding notifications of purpose in investigations, and comments received in response to Requests for Information issued by the CFPB in 2018 seeking feedback about various aspects of CFPB operations.

Consumer Protection

Pennsylvania Attorney General Settles with Pest Control Company Over Allegedly Deceptive Door-to-Door Solicitation

  • Pennsylvania AG Josh Shapiro reached a settlement with pest control company Aptive Environmental, LLC (“Aptive”) to resolve allegations that it engaged in deceptive door-to-door solicitations in violation of the state’s Unfair Trade Practices and Consumer Protection Law.
  • According to the assurance of voluntary compliance (“AVC”), Aptive allegedly engaged in door-to-door solicitation of contracts for pest control services without permits required under local ordinances, failed to provide consumers with copies of their contracts and notices of cancellation, and disregarded consumers’ cancellation requests.
  • Under the terms of the AVC, Aptive must pay $57,635 in restitution, $23,795 in civil penalties, and $20,000 in costs to the state, and revise its business practices to comply with state and local law.

Washington Legislature Passes Bill Prohibiting Manufacturing and Possession of 3D-Printed “Ghost Guns”

  • The Washington state Legislature passed a bill requested by Washington AG Bob Ferguson that would prohibit manufacturing and possession of 3D-printed “ghost guns”—partially assembled guns that are sold with the parts needed to create a fully-operational firearm.
  • The bill, SHB 1739, would prohibit manufacturing 3D-printed ghost guns with the intent to sell, possessing 3D-printed ghost guns, or sending a 3D-printable gun file to an individual who is ineligible to possess firearms, and designates 3D-printed ghost guns as contraband.
  • The bill is pending Governor Jay Inslee’s signature.
  • As previously reported, in July 2018, AG Ferguson led a coalition of AGs in obtaining a nationwide restraining order blocking publication of instructions for at-home 3D printing of firearms, and New Jersey AG Gurbir Grewal separately issued a cease and desist letter to online, open-source digital firearm developer Defense Distributed.

FDA Sends Warning Letters to Companies Selling Dietary Supplements Containing Unapproved Ingredients

Data Privacy & Security

Washington Legislature Passes Bill Expanding Data Breach Notification Law

  • The Washington state Legislature passed a bill requested by Washington AG Bob Ferguson that would expand the state’s data breach notification law to include additional categories of consumer information that would trigger notification requirements if subject to unauthorized access.
  • The bill, SHB 1071, would expand the definition of “personal information” to include birth dates, health insurance identification numbers, health and genetic information, student and military identification numbers, passport numbers, usernames and passwords, biometric data, and electronic signatures; would reduce the deadline to notify consumers to 30 days from 45 days; and would require companies to notify the AG’s office within 30 days of discovery of a data breach.
  • The bill is pending Governor Jay Inslee’s signature.

Environment

21 Democratic Attorneys General Oppose EPA Proposed Revised Finding on Regulating Air Pollution from Coal-Fired Power Plants

  • 21 Democratic AGs, the Maryland Department of the Environment, two counties, and three cities, led by Massachusetts AG Maura Healey, submitted a comment to the U.S. Environmental Protection Agency (“EPA”) opposing its Proposed National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review (“Proposed Revised Finding”), which would reverse the EPA’s previous determination that it is appropriate and necessary under the federal Clean Air Act to regulate mercury and other toxic air pollution from coal plants.
  • In the comment, the AGs argue that the Proposed Revised Finding is unlawful because the EPA lacked authority to reconsider whether regulation was appropriate and necessary and because the EPA failed to consider the health implications of the reversal, and that issuance of the Proposed Revised Finding does not comport with the EPA’s duties under the Clean Air Act.
  • The AGs urge the EPA to withdraw the Proposed Revised Finding and uphold its prior determination.
  • As previously reported, 21 Democratic AGs and seven cities and counties submitted a comment to the EPA in March 2019 opposing a similar agency-proposed rule, Proposed Review of Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units, which would replace the carbon dioxide performance standards for coal-fired power plants currently in effect.

Health Care

Washington Attorney General Settles with Medical Product Manufacturers Over Alleged Deceptive Practices Related to Surgical Mesh Product

  • Washington AG Bob Ferguson reached a settlement with medical device manufacturers Johnson & Johnson, Ethicon, Inc., and Ethicon US, LLC (collectively, “J&J”) to resolve allegations that it deceptively marketed a surgical mesh product in violation of the state’s Consumer Protection Act.
  • According to the complaint, J&J allegedly misrepresented the safety of its surgical mesh product, which was designed to treat pelvic floor conditions in women, and failed to inform patients and physicians of potential complications and risks associated with use of its product.
  • Under the terms of the consent decree, J&J must pay $9.9 million to the state and submit to compliance monitoring of its marketing of surgical mesh products, among other things.
  • As previously reported, AG Ferguson and former California AG Kamala Harris filed separate complaints against J&J over these allegations in May 2016, and Kentucky AG Andy Beshear filed a complaint against J&J over similar allegations in August 2016.

Labor & Employment

Massachusetts Attorney General Issues Civil Citations to Cleaning Company for Allegedly Misclassifying Workers

  • Massachusetts AG Maura Healey issued four civil citations against janitorial services company United Services Group Inc. and its president (collectively, “USG”) over allegations that it misclassified its workers as independent contractors in violation of the state’s Earned Sick Time Law.
  • According to the AG’s office, USG allegedly misclassified its workers as independent contractors, paid workers through a shell company, failed to maintain an earned sick leave policy, and failed to furnish suitable pay stubs or maintain accurate payroll and timekeeping records.
  • According to the AG’s office, the civil citations require USG to pay $335,000 in restitution and penalties.

Michigan Attorney General Establishes Payroll Fraud Enforcement Unit

  • Michigan AG Dana Nessel announced the creation of a Payroll Fraud Enforcement Unit within the AG’s office.
  • According to the AG’s office, the Unit will investigate complaints of payroll fraud and worker misclassification, with the assistance of other departments and agencies, and will take appropriate actions to seek remedies for workers.

Washington Legislature Passes Bill Strengthening Wage Theft Laws

  • The Washington state Legislature passed a bill requested by Washington AG Bob Ferguson that would amend certain provisions of the state’s wage theft laws regarding prevailing wages.
  • The bill, ESSB 5035, would increase the maximum penalty for violation of prevailing wage regulations—which prevent a “race to the bottom” for government contractors seeking to lower worker pay to outbid each other—to $5,000 or 50% of the violation, whichever is greater; provide workers who experience wage theft at least 1% monthly interest in addition to their stolen wages; and eliminate a loophole that allows violators to avoid a penalty or sanction if they respond to a complaint by returning stolen wages before the state takes legal action, among other things.
  • The bill is pending Governor Jay Inslee’s signature.

Pharmaceuticals

Connecticut Attorney General Files Amended Complaint Adding Defendants to Opioid Lawsuit

  • Connecticut AG William Tong filed an amended complaint adding Russell Gasdia, former Vice President of Sales and Marketing for Purdue Pharma Inc. and Purdue Pharma L.P. (collectively, “Purdue Pharma”), and Sackler family-held entities Purdue Holdings L.P., PLP Associates Holdings L.P., BR Holdings Associates L.P., Rosebay Medical Company L.P., and Beacon Company (collectively, “Sackler-held entities”) to a December 2018 lawsuit filed against Purdue Pharma and company officers—including members of the Sackler family—over allegations that they engaged in deceptive marketing and misrepresented the risks of prescription opioids in violation of the state’s Unfair Trade Practices Act.
  • According to the amended complaint, Gasdia allegedly proposed that Purdue Pharma use deceptive marketing practices, such as recommending the prescription of opioids for longer periods of time than necessary, and directed sales representatives to use marketing materials that omitted the risks of long-term opioid use, and the Sackler-held entities were allegedly used as vehicles to fraudulently transfer funds from Purdue Pharma to members of the Sackler family.
  • The amended complaint seeks declaratory and injunctive relief, penalties, restitution, disgorgement, and attorney’s fees and costs, among other things.

State AGs in the News

North Dakota Attorney General Issues Formal Opinion on Use of Discovery Process in Obtaining Records for Pending Lawsuits

  • North Dakota AG Wayne Stenehjem issued a Formal Opinion analyzing whether law enforcement agencies violated the state’s open records law by denying requests for records relating to ongoing litigation involving the agencies.
  • In Formal Opinion 2019-O-06 AG Stenehjem explains that under North Dakota law, the discovery process, as opposed to the state’s open records law, must be utilized to fulfill requests for records relating to ongoing litigation.
  • Accordingly, the Formal Opinion concludes that law enforcement agencies did not violate the state’s open records law by denying requests for records related to ongoing litigation.

Utilities

Illinois Attorney General Supports Bill Amending Public Utilities Act

  • Illinois AG Kwame Raoul held a news conference at which he urged the state General Assembly to support a bill that would amend the state’s Public Utilities Act to increase oversight of alternative retail energy suppliers.
  • The Home Energy Affordability and Transparency (“HEAT”) Act, SB0651, would prohibit public funds from being spent on higher prices charged by alternative retail energy suppliers, require suppliers to include price comparisons on marketing materials and on consumers’ utility bills, require suppliers to notify consumers and obtain consent before increasing rates, and require suppliers to report rates to the Illinois Commerce Commission and the AG’s office.
  • The bill is currently pending a third reading in the state Senate.

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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