The New York State Assembly and Senate recently passed legislation proposed by the New York Attorney General (“NYAG”) establishing a six-year statute of limitations for claims brought under the Martin Act and New York Executive Law § 63(12). This legislation comes almost exactly one year after a landmark decision by the New York Court of Appeals holding that Martin Act and Executive Law § 63(12) actions were subject to a three-year statute of limitations.

Thanks to media attention to the case Attorney General Letitia James brought against former President Donald J. Trump, an obscure statute first enacted in 1956 has become a major point of interest for businesses operating in New York. New York Executive Law § 63(12) grants the Office of the Attorney General broad authority to investigate and regulate “repeated fraudulent or illegal acts” and “persistent fraud or illegality in the carrying on, conducting or transaction of business…” Recently, the Attorney General has employed the power of § 63(12) against nursing homes, debt relief companies, and businesses with little or no consumer contact such as in the Trump case. In 2022, for instance, the Attorney General provoked national headlines by using § 63(12) to file a lawsuit generally alleging that President Trump and other defendants submitted inflated financial statements to financial institutions to receive favorable interest rates. As in the Trump case, the sweeping authority granted to the Office of the Attorney General by § 63(12) can have detrimental effects on a business, including disgorgement of gains, prohibitions on loan applications, cancellation of business certificates, and limits on an individual’s ability to serve as a corporate o

It suggests that the NYAG may view the Sherman Act, after Leegin, as inhospitable to claims regarding RPM, and likewise may reveal a reluctance on the part of the NYAG to raise a similar challenge under the Donnelly Act, which has long been construed in light of federal precedent. Instead, the Complaint seeks relief under New York Executive Law § 63(12) (“Section 63(12)”), which permits the NYAG to obtain equitable relief where the defendant is “engage[d] in repeated fraud or illegal acts.” The NYAG asserts that it is entitled to relief under Section 63(12) because Tempur-Pedic, by promulgating and enforcing an RPM policy, violated New York General Business Law § 369-a (“Section 369-a”), which, according to the NYAG, “provides that a vendor or producer cannot set the minimum price at which its product can be resold.”

The CFPB and the New York Attorney General recently filed suit against a large money transfer company, alleging that the company failed to timely make international money transfers (remittance transfers) available to recipients; provided inaccurate data to consumers; and failed to address consumer complaints about their remittance transfers, thereby violating the Remittance Rule of the Electronic Fund Transfer Act (EFTA), the Consumer Financial Protection Act (CFPA), Regulation E, and New York Executive Law §63(12). The CFPB alleges that it previously conducted an examination of the money transfer company at which time it identified violations and directed the company to take specific compliance actions, and that the company’s violations continued after that examination.

For this reason, it is not appropriate to disclose the AOD in Item 3 of the FDD. An AOD is a creature of New York Executive Law Section 63(15), which provides in part as follows: “In any case where the attorney general has authority to institute a civil action or proceeding in connection with the enforcement of a law of this state, in lieu thereof he may accept an assurance of discontinuance of any act or practice in violation of such law from any person engaged or who has engaged in such act or practice.” An AOD entered into pursuant to New York Executive Law Section 63(15) should not be disclosed in Item 3 because the AOD is not an injunction or restrictive order or decree resulting from an action brought by a public agency.

New York AG Letitia Jamesentered into an Assurance of Discontinuance (“AOD”) with the owners, operators, management company, landlords, and associated entities of four nursing homes managed by Centers for Care LLC, d/b/a Centers Health Care (collectively, “Centers Health Care”) to resolve allegations of financial fraud, chronic understaffing, and severe neglect of residents.According to theAOD, Centers Health Care allegedly engaged in multiple fraudulent schemes, including submitting false Medicaid claims, diverting taxpayer funds through collusive real estate arrangements, inflated loans, and phony fees paid to affiliated companies. The facilities were also accused of chronic understaffing and providing inadequate resident care, violating New York Public Health Law, New York Executive Law §§ 63-c and 63(12), the New York State False Claims Act, and other statutes.Under the terms of the AOD, Centers Health Care will pay $45 million in total monetary relief. This includes $36 million allocated to improving staffing levels and resident care, $8.75 million to reimburse the state Medicaid program, and $250,000 to cover the state’s investigative costs. Additionally, Centers Health Care must implement staffing increases and further reforms under the supervision of an Independent Health Care Monitor. The organization’s finances will also remain under the oversight of an Independent Financial Monitor.

In February 2024, a New York federal jury returned a split verdict in the New York attorney general’s lengthy battle against Quincy Bioscience, finding that certain of Quincy’s efficacy and establishment claims for a dietary supplement called Prevagen were materially misleading. Quincy advertises that Prevagen improves memory through an active ingredient derived from jellyfish.The Federal Trade Commission (FTC) and the New York AG jointly brought the case against Quincy in 2017, alleging its marketing of Prevagen was unfair, deceptive, or false advertising in violation of Sections 5 and 12 of the Federal Trade Commission Act, and New York General Business Law Sections 349 and 350, and for repeated fraudulent acts under New York Executive Law section 63(12). The New York AG sought injunctive relief and restitution from Quincy, and the FTC sought injunctive relief. The FTC’s claim is still pending and was not a part of the New York jury trial. The FTC/AG tag team has become common after the AMG decision, and the FTC recently discussed this in its report to Congress on cooperation with AGs.The Efficacy and Establishment Claims at IssueThe New York AG’s case involved two types of claims: efficacy claims and establishment claims. An efficacy claim suggests that the product either “performs the advertised functions or yields the advertised benefits” but does not include suggestions of scientific proof. An establishment claim suggests that the product’s effectiveness “has been scientifically established.” The AG was required to prove Prevagen’s efficacy claim was false and that the establishment claim lacked adequate substantiation. At trial, the New York AG was required to prove that:Quincy made the alleged claims about PrevagenThe efficacy c

r powers to the New York attorney general but also may result in a wave of potential consumer class actions, given the private right of action provision.3. District court denies media company’s bid to remove New York attorney general’s consumer protection suit to federal courtThe New York attorney general’s petition alleges that Sirus XM automatically renews subscriptions to its service and makes cancellation of service excessively burdensome by requiring customers to speak with customer service agents. The New York attorney general asserted that 578,000 customers gave up on cancellation attempts after waiting on hold to connect to a customer service agent. Then, once connected, the customer service agents were allegedly instructed not to allow customers to decline to hear additional offers and were trained using scripts designed to frustrate customer attempts to cancel the service. The petition alleges Sirius XM committed fraud under New York’s General Business Law § 349 and violated New York Executive Law § 63(12), as well as ROSCA.On January 19, 2024 Sirius XM sought to remove a New York state lawsuit brought by the New York attorney general for alleged violations of the Restore Online Shoppers Confidence Act (ROSCA) against Sirius XM relating to the company’s subscription cancellation policies and practices. In opposing removal, the New York attorney general argued that Sirius XM did not identify a federal question in dispute and that no claim of federal law was included within New York state’s claim for relief.On February 23, 2024, the Honorable Jed Rakoff of the Southern District of New York rejected Sirius XM’s bid to remove the case to federal court, siding with the New York attorney general. Judge Rakoff rejected Sirius XM’s arguments that the New York attorney general’s action raised federal questions and relied on the federal Electronic Fund Transfer Act as “essential” to the state claims.This litigation is another reminder that litigants will have an uphill battle when seeking to chal

commitment to be ‘Net Zero by 2040.'”According to the complaint, “[i]n a recent proceeding defended by the JBS Group, the National Advertising Division (NAD) of the Better Business Bureau determined that the JBS Group’s “Net Zero by 2040″ marketing claim is unsubstantiated and misleading to consumers and recommended that the JBS Group stop making that claim.” The complaint alleges that the National Advertising Review Board, NAD’s appellate body, upheld that decision, and that “[d]espite these industry admonishments, the JBS Group has continued to make the same or similar claims to consumers … .”The five-count lawsuit brings claims under Sections 349 and 350 of the New York General Business Law. The former prohibits deceptive acts or practices in the conduct of any business, trade, or commerce in New York. The latter prohibits false advertising in the conduct of any business, trade, or commerce or in the furnishing of any service in New York. The suit also alleges fraud in violation of Section 63(12) of the New York Executive Law.James’ lawsuit asks the court to enjoin JBS USA from making the challenged marketing claims; to require the company to disgorge profits, funds, and assets traceable to the challenged conduct; impose a $5,000 per violation penalty under Section 350 of the New York General Business Law; impose a $1,000 per violation penalty under Section 349 of the New York General Business Law; and to order JBS USA “to perform and provide to the State six-month and 12-month independent audits of all consumer-facing publications to ensure compliance with” New York consumer protection laws.Why It MattersNew York’s lawsuit against JBS USA represents an extension of state AGs’ increasingly prevalent use of their broad authority under state consumer protection laws to bring enforcement actions based on corporate representations related to climate change. While previous suits have focused on the fossil fuel industry’s alleged downplaying of the role that greenhouse gas emissions have played in climate change

On March 5, New York Attorney General Letitia James released a verified petition against 27 lenders accusing them of a “large-scale, predatory lending” operation in which they allegedly misrepresented themselves in order to issue small businesses short-term loans at “sky-high interest rates” in violation of New York Executive Law §63(12). According to the petition, the 27 lenders (Respondents) have issued “illegal, usurious” and fraudulent loans in the form of Merchant Cash Advances (MCAs), which imposed triple-digit interest rates as high as 820 percent. The NYAG noted such rates are beyond both the maximum civil usury interest rate (16 percent) and the maximum criminal usury interest rate (25 percent). The petition also alleged the Respondents misrepresented their transactions in court, making the court an “unwitting part of their illegal scheme.”The petition asked the court to permanently enjoin Respondents from committing any further fraudulent or illegal practices, cease all MCA collection payments, and void and rescind all MCAs. The NYAG also will seek and order that the Respondents disgorge all profits and award civil penalties of $5,000 for each fraudulent MCA transaction and $2,000 in costs from each Respondent.