Notable Cases

Here are a few of the major cases of interest within the state Attorneys General community that are receiving significant press coverage. 

U.S. and States Say Facebook Illegally Crushed Competition

On December 9, following their independent investigations over more than a year, the U.S. Federal Trade Commission and 46 state Attorneys General, the District of Columbia and Guam, led by New York Attorney General Letitia James, filed separate bipartisan antitrust lawsuits against Facebook, accusing the social media giant of anti-competitive behavior in multiple forms. The complaints allege that in its quest for dominance, Facebook was driven to buy – rather than compete against – innovative up-and-coming competitors, focusing on its decision years earlier to buy Instagram and WhatsApp. Proposed remedies include calling for Facebook’s divestiture of assets, compliance with additional restrictions when considering future acquisitions, and a ban on anti-competitive business practices toward third-party developers. Facebook’s leadership team understandably denies such anti-competitive claims, while crediting the company’s own ingenuity for its successful transformation of the two apps. Given the very, very thin legal basis for the state Attorney Generals' claims, coupled with the court of public opinion of the three billion Facebook users, this promises to be a high-water case for Big Tech as Facebook should ultimately prevail in both arenas.   

OxyContin maker Purdue Pharma pleads guilty in criminal case

On November 24, 2020, Purdue Pharma, maker of the opioid painkiller OxyContin, pled guilty to three criminal charges as part of an $8.3 billion settlement of criminal and civil charges with the Department of Justice announced last month. Note that the company will owe just a small fraction of this amount to the federal government if it proceeds with a settlement with state and local governments and other entities that are in federal bankruptcy court. The Sackler family, which owns Purdue Pharma and whose members held past director roles, has denied any wrongdoing, while agreeing to pay a $225 million civil settlement. The larger bankruptcy plan includes the proposal for the company’s dissolution, the Sackler family’s ownership in it, and its conversion into a for-profit public trust corporation. 

30 AGs Back $465M J&J Verdict In Landmark Opioid Trial

In late November, 30 bipartisan AGs filed an amicus brief urging the Oklahoma Supreme Court to reject Johnson & Johnson’s appeal to last year’s $465 million judgment against the pharmaceuticals company for its role in deceptively marketing prescription opioids, as alleged by Oklahoma Attorney General Mike Hunter. In their brief, the AGs supported an Oklahoma district judge’s finding that the company created a "public nuisance" through its role in fueling the opioid crisis, while disputing that the state’s public nuisance statute imposes a property requirement. Even so, the AGs noted that last year’s judgment found that a property requirement would be satisfied in the form of doctors’ offices. The AGs also rebuffed J&J’s argument that Oklahoma’s public nuisance law doesn’t give courts the authority to demand payments from defendants in connection with such nuisances. In October, J&J offered $5 billion to end most of the litigation it is facing in state courts and federal multidistrict litigation.

AGs Defend Ky. Over Amazon Seller Price-Gouging Probes

In late September, over 30 attorneys general filed an amicus brief in support of Kentucky Attorney General Daniel Cameron’s Sixth Circuit appeal to a preliminary injunction that has blocked the state from applying its price-gouging statutes and pursuing related investigations or cases against third-party Amazon resellers. In their argument, the AGs addressed why the Commerce Clause shouldn’t apply to state price-gouging rules, asserting that sellers have the ability to comply with different states’ varying price hike rules. U.S. District Judge Gregory F. Van Tatenhove, in granting the injunction to the Online Merchants Guild, ruled that such state regulations would essentially determine the prices "these Kentucky-based entities can charge outside of Kentucky." Judge Van Tatenhove said that the state had "alternative measures" to combat price-gouging during the pandemic, including regulating Amazon.

Montana attorney general announces tobacco settlement worth $100M

On November 16, 2020, Montana Attorney General Tim Fox announced a record settlement with “Big Tobacco,” resolving the state's multi-year lawsuit that claimed the companies had wrongfully withheld funds owed to the state under the 1998 Master Settlement Agreement (MSA). Under that agreement, tobacco companies whose products are approved for sale as part of Montana’s tobacco register, are required to make an annual payment to the state – generally between $3 million to $4.5 million – to help compensate for the resulting public health harms. The estimated $100 settlement value is based on back payments since 2005 and assurance that the state will receive approximately $4.5 million in future annual payments through 2030.

Apple, U.S. states reach $113 million settlement on iPhone throttling

A coalition of 33 state attorneys general and the District of Columbia, led by Arizona, Arkansas and Indiana, have agreed to a $113 million settlement with Apple over allegations that the company slowed the speed of certain iPhone models to compensate for technical problems with their batteries and to spur users to purchase new devices. The states claimed that Apple acted deceptively in 2016 by updating the software on these phones, causing them to slow down in order to avoid otherwise unexpected shutdowns, which nevertheless affected millions of users. Apple, which has denied wrongdoing, had previously publicly apologized and slashed prices on battery replacements after acknowledging the impact of its update. In March, Apple reached a proposed settlement that will pay affected iPhone owners up to $500 million.

AG Brnovich Secures $71 Million in Ticket Refunds for Arizona Events Impacted by COVID-19

On October 27, 2020, Arizona Attorney General Mark Brnovich announced an agreement with Ticketmaster to refund consumers more than $71 million for ticket purchases to 650 in-state live events that have been impacted – cancelled, postponed or rescheduled – by COVID-19. Last April, following the start of the pandemic, the attorney general’s office contacted Ticketmaster expressing concerns over the company’s change in its stated refund policy, which no longer offered automatic refunds for postponed or rescheduled events, only cancelled ones. While expressing sensitivity for the “plight of artists and venues impacted by COVID-19,” AG Brnovich said companies nevertheless have to honor their refund representations, and acknowledged good-faith negotiations with Ticketmaster and event organizers for the positive outcome. 

NY AG says 7 states may join DOJ's lawsuit against Google in coming weeks

Following the U.S. Department of Justice (DOJ)’s announcement of an antitrust lawsuit against Google, New York Attorney General Letitia James announced on October 20 that her state, along with Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah, may decide to join the federal government’s case. Their decision is expected to be made as they conclude aspects of their own ongoing investigation into Google’s alleged anti-competitive business practices in online search and related industries. If the states' coalition chooses this approach, their stated plan is to file a motion to consolidate their case with the DOJ’s, in order to cooperatively litigate, with a nod to the landmark Microsoft antitrust case of the late 1990s. In September 2019, James announced the launch of a bipartisan investigation into Google that included nearly every state Attorney General. That same month, she also announced a bipartisan, multistate investigation into Facebook for antitrust concerns.

Attorney General Tong Leads Coalition Filing 3rd Complaint in Ongoing Antitrust Price-Fixing Investigation into Generic Drug Industry

On June 10, 2020, Connecticut Attorney General William Tong led a coalition of 51 states and territories in filing a lawsuit against 26 corporate defendants and 10 individual defendants for an alleged conspiracy to fix prices and allocate markets for a wide range of topical dermatological drugs. The complaint marks the third lawsuit filed by states as part of its ongoing antitrust investigation into how generic drug manufacturers may have engaged in a larger conspiracy to reduce competition, control prices and restrain trade. AG Tong’s statement refers to comprehensive and direct evidence of unlawful agreements that were made to reach such ends. To help restore competition within the generics marketplace, the lawsuit seeks damages, civil penalties and actions by the court. The states’ earlier generics price-fixing complaints were filed in 2016 and 2019, respectively, and are both pending in the U.S. District Court in the Eastern District of Pennsylvania.

Honda To Pay $96M To Resolve States' Air Bag Defect Probe

On August 25, 2020, car manufacturer Honda announced a settlement with most U.S. states to resolve an investigation into allegedly defective air bags within its vehicles from long-time supplier Takata Corp. that caused consumer injury and death over nearly a decade. Honda, which denied any wrongdoing in a statement, has agreed to pay $85 million to the states and territories and $11.3 million to California as part of a separate deal. It also pledged to improve its methods for ensuring the quality of its suppliers’ products and to prevent misleading advertising on its own part. Honda’s settlement with the states follows its related $600 million civil litigation settlement in 2018, and comes amid ongoing multidistrict litigation involving multiple other automakers.

Anthem to pay $39M to state AGs to settle landmark 2015 data breach

On September 30, 2020, health insurance company Anthem agreed to a $39.5 million settlement with a coalition of more than 40 state Attorneys General and the District of Columbia in connection with a 2015 cyberattack on its systems that is considered the largest-ever breach in the healthcare industry. The agreement closes the last open investigation into the incident that exposed the personal information of as many as 80 million individuals, including customers and employees. In a statement, Anthem said it did not believe that its data security protocol had violated the law and noted its immediate action after the breach to collaborate with the FBI and a security organization as part of its own investigation. The state AG settlement follows Anthem’s earlier settlements with the Department of Health and Human Services (HHS) Office of Civil Rights and a class action by impacted consumers in California.

AG Rosenblum Announces $5.5 Million Settlement from Johnson & Johnson and Ethicon, Inc.

On October 16, 2020, Oregon Attorney General Ellen Rosenblum announced a settlement with Johnson & Johnson and its subsidiary Ethicon, Inc. for deceptive marketing to patients and physicians of their transvaginal surgical mesh device. Following its investigation, Oregon found that the companies violated state consumer protection laws, alleging that they did not disclose the "possible serious medical complications" associated with the product. Under the terms of the settlement, the state will receive $2 million and J&J will distribute the remaining millions in funds to five non-profit medical clinics that provide health care to women in the state. Oregon had earlier declined to join a related $117 million settlement that J&J reached in October 2019 with 41 states and the District of Columbia.

Attorney General Moody Secures More Than $11 Million to Address Ocwen Mortgage Servicing and Foreclosure Issues

On October 15, 2020, Florida Attorney General Ashley Moody announced an agreement with Ocwen, a provider of residential and commercial mortgage loan servicing, valued at more than $11 million in relief for Floridians who were harmed by the company’s alleged servicing failures that included untimely payments of borrowers’ insurance premiums, improper imposition of lender-placed insurance and overcharging for property preservation inspections. The agreement encompasses payments to borrowers, debt forgiveness through the execution of loan modifications, and additional terms, including an enhanced complaint review process. The proposed consent judgment resolves litigation that Florida had initially filed in federal court in 2017.

AG Balderas Joins National Initiative to Crack Down on Debt Collectors

New Mexico Attorney General Hector Balderas announced that debt collectors who unlawfully target state residents will be pursued for their illegal practices as part of a nationwide law enforcement and outreach initiative called Operation Corrupt Collector. The Federal Trade Commission and over 50 federal and state law enforcement partners will cooperate to protect consumers from the collection of debts they don’t own as well as other abusive debt collection practices. AG Balderas has already filed lawsuits against three companies in connection with the operation. In addition to enforcement actions, the initiative is focused on educating consumers, while the FTC has created a dashboard to log complaints from those who have been targeted by predatory debt collectors.  

Attorney General Mark Brnovich Files Lawsuit against Google over Deceptive and Unfair Location Tracking

On May 27, 2020, Arizona Attorney General Mark Brnovich filed a consumer fraud lawsuit against Google LLC, accusing it of deceptive and unfair practices used to obtain users’ location data for the purposes of geo-targeted advertising. The allegations claim that Google doesn’t enable its users to opt of its location surveillance mechanisms, as they were led to believe, by disabling the Location History setting. The state also said that its investigation revealed that Google employs unfair practices to maximize its collection of user information more broadly, while making it difficult for users to grasp how Google leverages their data. Having begun its consumer fraud investigation of Google in August 2018, the state of Arizona is seeking to stop such purported deceptive collection of user data and to obtain monetary relief.

Additional links to recent notable cases:

DoorDash is paying $2.5 million to settle a lawsuit that accused the food delivery company of stealing drivers' tips

Home Depot reaches $17.5 million settlement over 2014 data breach

$26 Billion Settlement Offer in Opioid Lawsuits Gains Wide Support

Two Officials Charged for ‘Deadly Decision' at Holyoke Soldier's Home

Nearly 1,100 Former ITT Tech Students In Maryland Will Get Debt Relief Following Settlement

Connecticut sues Exxon for deceiving consumers about climate change

$11 million settlement reached, charges filed against two former Hacienda HealthCare leaders

D.C. sues Washington Sports Club over claims it misled customers on pandemic-related cancellation policies

 

December 15, 2020 | Issue No. 3
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