State AG Updates: Massachusetts, New York, District of Columbia, Connecticut and Multistate Settlements

In this edition of Faegre Drinker’s State Attorneys General Update, we discuss:

• Google’s $391.5 million multistate settlement relating to its location tracking practices
• Experian’s multistate settlement relating to not warning affected consumers that an identity thief had accessed, and was using, their information
• The Massachusetts AG’s settlement with a Dunkin’ franchise relating to alleged child-labor violations
• The New York AG’s:
  • Settlement with CBS and its former CEO over allegations it concealed allegations of sexual assault by the CEO
  • Lawsuit against a nursing home for alleged fraud
• The District of Columbia AG’s settlement with alcohol-delivery vendor Drizly relating to alleged nonpayment of tips to drivers and allegedly unpaid taxes
• The Connecticut AG’s investigation into Optimum regarding its internet service

Google Enters $391.5 Million Multistate Settlement Resolving Allegations Relating to Its Location Tracking Practices

Google agreed to pay $391.5 million to resolve an investigation by 40 state AGs relating to its location tracking practices. Specifically, the AGs alleged that Google created a confusing user interface for its Android phone software that made users wishing to disable location tracking believe they had disabled such tracking by turning it off in a “Location History” account setting when, in fact, they needed to disable location tracking in a separate “Web & App Activity” account setting, as well, in order to disable all location tracking. As part of the settlement, Google agreed to provide additional information to users accessing location-related account settings and provide detailed information about how Google collects and uses location data at a location technologies website. The investigation resulted from a 2018 news article. The settlement follows an $80 million settlement that Google entered in October with the Arizona AG relating to the same practices.

Experian Enters $1 Million Multistate Settlement Relating to a Data Breach

A group of 40 state attorneys generals announced a multistate settlement with Experian Data Corp (EDC) for failing to warn affected consumers that an identity thief was illicitly retrieving sensitive personal information from a database owned by EDC. In 2012, the U.S. Secret Service notified EDC of the identity thief and that he was accessing information from the database. According to the announcement, however, EDC failed to notify affected consumers of the identity thief’s actions. Since that time, the identity thief has pleaded guilty to a variety of criminal charges. Pursuant to the settlement, EDC will pay $1 million and:

• Improve its vetting and oversight of third parties that it allows to access personal information;
• Investigate and report data security incidents to state attorneys general;
• Maintain a “Red Flags” program to detect and respond to potential identity theft; and
• Implement certain safeguards and controls, including encryption, or its equivalent, for personal information on EDC’s network and while the information is in transit.

The Massachusetts AG Settles With a Dunkin’ Franchise Over Alleged Child Labor Law Violations

The Westford Group, Inc., as well as its senior officers, will pay $145,000 to resolve 1,200 alleged child-labor law violations at 14 Dunkin’ stores it operates in Massachusetts. According to the AG, the violations included “failing to obtain a work permit for minor workers; failing to supervise minors past 8 p.m.; employing a 16- or 17-year-old minor to work before 6:00 a.m. or after 10:00 p.m.; employing a minor under the age of 18 for more than nine hours in a single workday; and employing a minor under the age of 16 before 6:30 a.m. or after 7:00 p.m. and for more than eight hours in a single workday.” A copy of the AG’s press release is available here.

The New York AG Enters Settlement with CBS Relating to Allegations of Concealing Alleged Sexual Assaults by the Company’s Former CEO

CBS and its former CEO, Leslie Moonves, agreed to pay $30.5 million to resolve allegations that they concealed allegations of sexual assault by Mr. Moonves, misled investors about those allegations, and engaged in insider trading. According to the New York AG, a Los Angeles police officer informed a CBS executive and, in turn, Mr. Moonves of a confidential sexual assault complaint. The company then allegedly worked to prevent the complaint from becoming public. (In the press release, the AG also alleges the officer interfered with the investigation of the sexual assault complaint.) As part of those efforts, Mr. Moonves publicly stated he was not aware of any workplace harassment issues. Further, the company failed to disclose these allegations in its SEC filings, despite identifying Mr. Moonves as a key employee upon whom the business depended. Additionally, the company authorized its former chief communications officer, who was aware of the complaint, to sell millions of dollars of CBS stock in the weeks leading up to the assault allegations becoming public. According to the AG, CBS’s conduct violated New York’s Martin Act, which is a securities law that bars fraud in the offer, sale or purchase of securities.

Pursuant to the settlement, CBS will pay $22 million to its shareholders and $6 million to the AG for use in investigations of sexual harassment and assault. Additionally, the company’s chief legal officer will approve every stock trade by senior executives going forward. Mr. Moonves must pay $2.5 million to shareholders. Copies of the AG’s press release and the settlement agreement are available here.

The New York AG Files a Lawsuit Against a Nursing Home for Alleged Fraud and Mistreatment of Patients

The New York AG filed a lawsuit seeking restitution, disgorgement, penalties and injunctive relief against a nursing home, The Villages of Orleans Health and Rehabilitation Center (The Villages), its owners, its landlord, its administrative services vendor and a related entity that received financial transfers from The Villages. The AG alleges a complicated scheme that involved concealing the identities of the true owners and operators of The Villages, diverting additional funds to those owners in the form of “rent,” and chronic understaffing resulting in grossly deficient patient care. According to the AG, this resulted in various fraudulent acts, including: converting Medicare and Medicaid payments for personal use; improper self-dealing through lease agreements; failing to obtain required New York Department of Health (DOH) approvals for withdrawals and transfers from The Villages; submitting false or misleading documents to DOH; failing to provide regulatorily required minimum levels of care; and improperly disposing of Medicare and Medicaid funds in violation of the state’s Tweed law, which allows the AG to seek recoupment of misused public funds. In addition to a monetary recovery, the AG is seeking a variety of injunctive relief, including the appointment of a receiver to oversee The Villages’ financial operations and an independent health care monitor to oversee The Villages’ health care operations. Copies of the AG’s press release and petition are available here.

The District of Columbia AG Enters a $6 Million Settlement With Drizly

The Washington, D.C., AG announced that “Drizly, an alcohol delivery company, will be required to pay an estimated total of $6.46 million to resolve allegations that it failed to ensure delivery drivers received tips left by consumer and failed to pay required taxes.” According to the AG — contrary to consumer expectations — “tips consumers left through Drizly’s platform often did not affect driver pay. Instead, Drizly passed these ‘tips’ to its retail partners with no meaningful restrictions or requirements that the money be paid to drivers.” Further, Drizly allegedly did not pay millions of dollars in sales and use taxes to the District on sales made through its platform and, in particular, on delivery and service charges Drizly charged to consumers. Pursuant to the settlement, Drizly will:

• Pay $1.95 million to affected delivery drivers;
• Pay $3.2 million in sales taxes and interest;
• Pay $750,000 to the District for costs connected to its investigation;
• Release any objections to $465,833 in previous tax payments; and
• Stop describing gratuity funds collected through the Drizly platform as “tips” and stop preselecting a gratuity option for consumers during checkout.

Copies of the AG’s press release and the settlement agreement are available here.

The Connecticut AG Announces an Investigation Into Atlice Optimum After Receiving Hundreds of Complaints Relating to Its Internet Service

The Connecticut AG opened an investigation into Atlice Optimum for possible violations of the state’s Unfair Trade Practices Act. Specifically, the AG is investigating nearly 500 consumer complaints relating to slow internet speeds, purportedly hidden fees and unacceptable technical support. A civil investigative demand he sent to the company “seeks detailed records of consumer complaints dating back to January 2017” and records of how the company “marketed its internet speeds, any analysis or records regarding the speed and quality of internet they ultimately delivered, records showing [company’s] knowledge of various factors impacting the speed and quality of their internet service, [and] records showing how [the company] invested revenue from their ‘Network Enhancement Fee.’” The AG’s press release is available here.