State Attorneys General Update – April 2021

April.06.2021

Brian Moran Returns to Orrick’s State Attorney General and White Collar Teams

Brian Moran, who most recently served as United States Attorney for the Western District of Washington, has returned as a partner in Orrick’s Seattle office. Brian joins the Public Policy group and will also work closely with the Orrick White Collar team.

Brian has a long and distinguished record of public service and has earned the deepest respect of that community as well as the Seattle business community. He guided the U.S. Attorney’s Office in Seattle through the challenges of the COVID-19 crisis, earning bipartisan support for his leadership. Moreover, he built a team that rivaled any U.S. Attorney’s Office in its diversity. Prior to that, he served for seven years in the Washington Attorney General’s office, including as the State’s chief deputy attorney general under then-Attorney General Rob McKenna, shaping policy in areas such as consumer protection, privacy and data breach investigations and financial regulation. Before that, Brian served as the Attorney General’s chief criminal prosecutor for eight years. Since leaving office, he has been appointed by bipartisan leadership to serve on the Western District of Washington’s federal judicial selection committee.

Brian will work closely with Orrick’s Public Policy, State AG and White Collar teams, helping Orrick’s clients navigate today’s fast-changing regulatory environment. He brings valuable experience as the veteran of more than 100 trials. 

Federal Law Challenges by State Attorneys General

Attorneys General Challenge “Tax Mandate” Portion of American Rescue Plan

On March 11, 2021, President Joe Biden signed into law the $1.9 trillion “American Rescue Plan Act of 2021” that provided funding for numerous programs in response to the COVID-19 pandemic. The legislation provides the states billions of dollars. Under a provision of the plan known as the “Tax Mandate,” states are barred from using the money to “directly or indirectly” offset tax cuts or reduce taxes.

Shortly after the law was enacted, Ohio Attorney General Dave Yost filed a preliminary injunction in federal court seeking to enjoin the provision. According to the complaint, the conditions contained in the federal legislation present the states with the option of either accepting the stimulus funds or rejecting the money and keeping “their sovereign authority to set tax policy.” The complaint alleges the provision violates the Spending Clause, Article I, § 8 c.1., of the U.S. Constitution. According to the complaint, while Congress has substantial powers to govern the nation directly, the U.S. Constitution does not “confer upon Congress the ability to require the States to govern according to Congress’ instructions.” The complaint further alleges that Congress exceeded its authority in passing the Tax Mandate and thus should be enjoined from enforcing the provision.

On March 31, 13 more states, led by West Virginia Attorney General Patrick Morrisey, filed a separate lawsuit against the Biden administration. The lawsuit alleges the federal tax mandate violates Article 1 of the Tenth Amendment to the U.S. Constitution.

State Attorneys General Sue Biden Administration’s Moratorium on Oil and Gas Leases on Federal Lands

On January 27, 2021, President Joe Biden signed Executive Order 14008, which, among other things, imposes a moratorium on all oil and natural gas leasing activities on public lands and offshore waters.

On March 24, Louisiana Attorney Jeff Landry and 12 other state AGs filed a lawsuit in the federal district court in Louisiana. The lawsuit alleges the executive order violates the federal Administrative Procedure Act by causing unreasonable delay, failing to provide notice and comment of the proposed action, contrary to existing law, and is arbitrary and capricious. 

According to the lawsuit, “The Outer Continental Shelf Lands Act and Mineral Leasing Act set out specific statutory duties requiring executive agencies to further the expeditious and safe development of the abundant energy. In compliance with those statutes, the Department of the Interior has for decades issued leases for the development of oil and natural gas on public lands and offshore waters.”

In a press release, General Landry stated, “For decades, Congress has embraced responsible development of our natural resources as a means of achieving energy independence—a matter of national security,” continued Attorney General Landry. “They have discarded vulnerable dependence on foreign oil, which is why the court should reject the Biden Ban.”

Price Gouging

Texas AG Paxton Sues Hotel for Alleged Price Gouging During 2021 Winter Storm

Attorney General Ken Paxton filed a lawsuit against the owner of the La Quinta San Antonio Brook Everyoung Hospitality LLC, d/b/a La Quinta San Antonio Brook City Base, accusing the company of price gouging during the February 2021 winter storm emergency.

According to the complaint, “while more than four million Texans… suffered without power and heat during the coldest days” in over a half century, La Quinta BCB “took advantage” of the severe weather disaster by “leasing its hotel rooms at exorbitant or excessive prices.” Specifically, the complaint alleges the hotel charged occupants $74 the first night, and then increased the price to $199 a night and then threatened to check them out if they didn’t pay the increased amount.

Texas’s consumer protection law prohibits taking advantage of consumers during a declared disaster by the governor by demanding, selling and/or leasing fuel, food, medicine, or other necessity at an exorbitant or excessive price. DTPA §§ 17.46(b)(27)(A) and (B).

The complaint seeks civil penalties of up to $10,000 per violation. In addition, the complaint seeks penalties of up to $250,000 per violation when the act or practice “that acquired or deprived money or other property” occurred against individuals 65 years of age or older.

Oregon Attorney General Obtains Settlements in Price Gouging Lawsuits During 2020 Wildfires

Oregon Attorney General Ellen Rosenblum announced settlements with four different hotels and motels in Oregon for alleged price gouging during and in the aftermath of the 2020 wildfires in Oregon. General Rosenblum obtained $105,600 in settlements from the companies.

On September 9, 2020, General Rosenblum requested Gov. Kate Brown declare an abnormal disruption to the marketplace after receiving complaints regarding steep prices for lodging during the wildfires.

Under Oregon’s price gouging statute, the governor may declare an abnormal disruption of the market by proclamation as part of a state of emergency. If the governor makes such a declaration, it is unlawful for a merchant or wholesaler to sell or offer to sell essential consumer goods or services for an amount that “represents an unconscionably excessive price.” A price is considered “unconscionably excessive” if:

  • "The amount charged for essential consumer goods or services exceeds by 15 percent or more the price at which the goods or services were sold or offered for sale by the merchant or wholesaler in the usual course of business immediately prior to or during a declaration of an abnormal disruption of the market, or
  • The amount charged for essential consumer goods or services exceeds 15 percent or more the price at which the same or similar consumer goods or services were readily obtainable by other consumers in or near the geographical area covered by the declaration of an abnormal disruption of the market." ORS 401.965(3)(a)-(b).

Consumer Protection

State AGs Announce $188.6 Million Settlement With Boston Scientific Corp. for Deceptive Marketing Practices

Forty-seven state AGs announced a settlement with Boston Scientific Corporation regarding alleged deceptive marketing of its surgical mesh products for women. The complaint alleged the company violated the states’ unfair and deceptive acts or practices (UDAP) statutes by failing to disclose the full range of potentially serious and irreversible complications caused by surgical mesh.  

Texas AG Paxton Sues Griddy Energy Under Texas Deceptive Trade Practices During Winter Storm

Texas Attorney General Ken Paxton sued energy company Griddy, LLC for violating the Texas Deceptive Trade Practices Act for false, misleading, and deceptive advertising and marketing practices. According to General Paxton’s complaint, as energy companies failed to withstand the historic February winter storm, Griddy passed on “skyrocketing energy costs to customers with little to no warning, resulting in consumers paying hundreds or even thousands of dollars each day for electricity.”

Subsequent to the storm and the lawsuit, Griddy filed for Chapter 11 bankruptcy. General Paxton worked with Griddy to ensure that the bankruptcy plan releases approximately 24,000 former customers who owe $29 million in unpaid electric bills.