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

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.

s for injuries allegedly caused by the effects of interstate and international greenhouse-gas emissions on the global climate.”Assuming the Supreme Court agrees to hear the case, briefing and oral argument will likely take place later this year, with a decision to come in 2025. How much discovery will have occurred in the Massachusetts case (and perhaps in others) and how impactful the results of that discovery will be remains to be seen. If discovery uncovers smoking guns, will that prompt others – insurers included (potentially in subrogation actions to be filed following the next major natural catastrophe) – to sue energy companies?NEW YORK AG SUES BEEF COMPANY FOR DECEPTIVE ACTS AND ADVERTISINGAdditionally, in February 2024, New York Attorney General Letitia James sued the world’s largest beef processing company for making false claims that it would be “Net Zero by 2040.” The lawsuit alleges violations of two consumer protection statutes – General Business Law §§ 349 and 350 – and New York Executive Law §63(12). Persons who engage in “repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business” may be enjoined from so doing.While this litigation may be peculiar to New York (and putting aside the question of whether Attorney General James can succeed in proving that a company with a GHG footprint that is the same size as Ireland’s cannot become net zero within the next 16 years), there is no shortage of other greenwashing suits. Insurers that have significant Scope 1, 2 and/or 3 GHG emissions and are making net zero claims should continue to be vigilant. And if the insureds are publicly traded and making climate change disclosures, there is the SEC to worry about.SEC ENFORCEMENT ACTIVITYIn another development from February 2024, Director of the SEC’s Division of Enforcement Gurbir Grewal delivered a speech in Ohio in which he reminded the audience that the SEC continues to look at companies’ ESG disclosu

orth America, Inc., alleging their single-use plastic bottles, bottle caps and snack food wrappers have “significantly contributed to” a public nuisance along the shores of the Buffalo River. New York v. PepsiCo, Inc., Index No. 814682/2023 (Erie County Supreme Court, filed November 15, 2023).In the complaint, James said because plastic does not biodegrade, the companies' packaging contaminates the river and public drinking water supplies, threatening public health and the environment. “PepsiCo has failed to abate the harm or warn the public that its plastic packaging is a potential source of plastic pollution and presents a risk of harm to human health and the environment,” she asserted in the complaint. “Instead, it has misled the public about its efforts to combat plastic pollution, while increasing its production and sale of single-use plastic packaging.” In addition to the public nuisance claim, James is asserting violations of Section 349 of the New York General Business Law and Section 63(12) of the New York Executive Law, and Strict Products Liability: Failure to Warn.The company told CNN in a statement that it is “serious about plastic reduction and effective recycling, and has been transparent in our journey to reduce use of plastic and accelerate new packaging innovation.”“This is a complex issue and requires involvement from a variety of stakeholders, including businesses, municipalities, waste-reduction providers, community leaders and consumers,” the spokesperson said, adding that the company has “worked effectively with a variety of communities across the country and remain[s] committed to doing so.”MEDIA COVERAGEAcademies Walk Back Appointments of Scientists Involved in Discredited Alcohol StudyTwo scientists who were part of a discredited alcohol study through the National Institutes of Health (NIH) will not take part in a committee preparing a report on alcohol and health that will be used to update the federal government’s guidelines on alcohol consumption, the New York Timeshas reported. T

buted, and sold by PepsiCo are collectively the most abundant forms of plastic waste along the shores of the Buffalo River.Plastic does not biodegrade in the environment but fragments into microplastic or nano plastic.The Buffalo River and public water supplies, along with public health, freshwater species, and the ecosystem are alleged to be endangered.A survey of plastic in the Buffalo River conducted by the AG in 2021 is stated to have indicated Pepsico’s plastic packaging exceeded other sources of identifiable waste.PepsiCo’s bottled beverages are stated to represent approximately 20% of the retail market for comparable beverages sold in the United States.PepsiCo has failed to abate the harm or warn the public that its plastic packaging is a potential source of plastic pollution.Causes of action alleged in the Complaint include:Public NuisanceStrict Products Liability: Failure to WarnViolation of New York General Business Law § 349Repeated and Persistent Illegality in Violation of New York Executive Law § 63(12)A copy of the Complaint can be downloaded here.

induce consumers to lend digital assets to the company and by failing to accurately disclose the true nature of the company’s investment strategies. The NYAG filed suit approximately six months before the Department of Justice (DOJ) indicted the former CEO and the company’s former chief revenue officer and the United States Securities and Exchange Commission (SEC) commenced its own suit against the former CEO.In August 2023, the court denied a motion to dismiss the NYAG’s action. The court concluded that the NYAG had sufficiently alleged that the accounts offered by the company were securities for the purposes of the Martin Act. The court also concluded that the NYAG had adequately pled that the alleged misstatements “related to” or were “in connection with” securities and commodities and that the alleged fraud and damages had been pleaded with sufficient particularity to defeat the former CEO’s efforts to dismiss the matter. The court also declined to dismiss the NYAG’s claims under New York Executive Law, Section 63(12) for the same reasons.The NYAG’s action against the former CEO, and its success defeating the motion to dismiss, suggests that it will continue to be a leader in regulating and bringing enforcement actions into the uncharted waters of digital assets and cryptocurrency. While legal debate continues to develop about how digital assets can and should be regulated under existing statutory schemes, this most recent NYAG case, combined with its other regulatory efforts in this area, highlight that Attorney General Letitia James and her office continue to be particularly active in his space.People of the State of New York, by Letitia James, Attorney General of the State of New York vs. Tyson Foods, Inc., Docket No. 2023-00125 (N.Y. App. Div. Jan 06, 2023).[View source.]

ent’s caregivers, and other administrative jobs on behalf of patients.” Patients can choose the caregiver of their choice, including a family member or a friend, and naturally, tend to pick the fiscal intermediary that pays a higher hourly wage.To compete with one another in the market to “recruit and retain patients and their selected caregivers,” fiscal intermediaries must not enter into unlawful, no-poach agreements. AG James’s investigation found that an Affordable executive entered into an unlawful no-poach agreement with its competitor Marks Homecare Agency — an entity with which AG James already reached a similar $500,000 settlement. The agreement prevented both companies from taking each other’s existing patients, and they also shared information about the hourly rates they paid caregivers to reduce competition. This prevented patients from switching to a provider that could pay their caregivers more, and it violated New York General Business Law Section 343 (Donnelly Act) and New York Executive Law Section 63(12).In addition to the financial penalty, Affordable and its executive cannot enter into any anticompetitive agreements that restrict patient options. Affordable also must “administer an antitrust compliance program with training for its management and executive personnel.” Finally, Affordable must provide annual reports to the AG’s office regarding its compliance for the next five years.Why It MattersNot limited to the New York AG’s office, no-poach agreements and clauses already fall under intense scrutiny from federal and state regulators. In fact, Washington AG Ferguson released a report in 2020 on his two-year investigation, eliminating no-poach practices nationally at 237 corporate franchise chains with three or more locations in Washington. Also, the Federal Trade Commission recently pushed to ban noncompete clauses, highlighting the significance of no-poach agreements and the importance of complying with laws and regulations. As such, companies must take these issues seriously to