We are quite busy here today, so we will let other folks do the infotainment.
The wonderful legal haiku at f/k/a will inform you about Eliot Spitzer.
And the inestimable SCOTUSblog will give you an updated synopsis of the ever-unravelling Master Settlement Agreement and the AGs’ cert. petition.
Pretend, for a moment, that the system of AG lawgic applied universally. Suppose the Attorney General of Manitoba wanted to enforce a hypothetical new Manitoba law that banned certain cell phones (because, for the purposes of this thought experiment, they might cause cancer if used improperly). All manufacturing of these phones would stop in Manitoba and no distributor would sell the phones there. But, of course, the USA would still have the prerogative of sovereignty and, wise or unwise, could choose to continue to allow the “bad” cell phones to be made and distributed within its own borders.
Because these US-made “bad” cell phones would be perhaps slightly less expensive—though potentially carcinogenic—some enterprising scofflaw would sneak some of the USA phones into Manitoba and some ne’er-do-well would sell them. Now, would the US company be liable by the Manitoba statute for making US phones compliant with US law for sale in the US? Could the Manitoba AG sue the US company for, say, $2.25M?
California Attorney General Bill Lockyer took $2.25M from Pepsi over the weekend because scofflaw retailers in California sold soda that had been bottled in Mexico according to Mexican regulations and for Mexican consumption. The absence of legal affiliation (beyond the goods and services provided contracts) between the bottlers, distributors, retailers, and PepsiCo further convolutes the situation. In brief, Pepsi sold soda syrup; after that, they did not control the product. Individual retailers put this stuff on shelves and this stuff did not comply with California’s Prop 65. But Lockyer went after the deep pockets.
Now, Mr. Lockyer and you and AG Watch may agree or disagree with Mexico’s regulatory policies, and maybe we could convince the FTC to get in a dialogue with Mexico about those regulations. Or maybe Mr. Lockyer could spend more time policing the soda machines in his state—though that would require Californians to bear the burden of the California regulation and wouldn’t hit many deep pockets.
But we think Mr. Lockyer has found his optimal solution already: arbitrage lawsuit settlements through the regulatory imbalance created by Prop 65. What the heck does he care if the rest of the country (and world) pays the price of his litigulatory thought-experiments.
As Jim Hood learns (the hard way) that words are not his forte, California Attorney General Bill Lockyer and the other AGs may be learning (the hard way) that lawsuits are not their forte. General Lockyer sued Big Tobacco again. The Big Tobacco-States Cartel didn’t work out perfectly after the first lawsuit, as the Biggies have lost market share and placed some of their payments to the states in a “Dispute Escrow.” So Lockyer filed a second suit to clarify some of the issues from the settlement of the first suit.
(Aside: Not all of the Biggies used the Dispute Escrow. Philip Morris paid the states in full. Lockyer sued them anyway. Perfect.)
Iowa Attorney General Tom Miller, co-chair of the National Association of Attorneys General tobacco committee, wants to help clear up the confusion too: “At the end of the day, we’ll get the money back. States were doing their best with ineffective escrow statutes.”
In what way were those statutes ineffective? Reuters summarizes Miller: “Cigarette-makers who signed the accord will likely be back with fresh claims to reduce payments because they lost market share in 2004, Miller said, but he added that these firms won back market share in 2005 and so far in 2006.” In other words, the statutes were ineffective because they didn’t PROTECT Big Tobacco.
But hey, a deal with the devil may be necessary if it is for a good purpose like getting people to quit smoking and to pay for medical care, right? That is the logic of the MSA, right?
Not so say Missouri Attorney General Jay Nixon and Missouri State Auditor Claire McCaskill. Mr. Nixon ripped his state for blowing their tobacco money (which now totals over 1 Billion Dollars) on everything but smoking. According to the Missouri Auditor, only two-tenths of one percent of Missouri’s tobacco money has gone toward tobacco-related programs.
But hey, surely they’ll get it straight this time around, right? Or maybe the next? What is the learning curve on de-facto-national-regulatory-cartel-lawsuit-settlement lawsuits?
Mississippi Attorney General Jim Hood fought another War of the Words and lost again. Last week, Mr. Hood said that insurance companies are “in lockstep like Nazis locking arms.” This week he interpreted his comments, “I did not equate the insurance companies with Nazis. I said that they took their marching orders in lockstep like Nazis. I am not going to get into a war of words.”
Ladies and gentlemen, Jim Hood! The top attorney in Mississippi and the man who would interpret your insurance contracts, in his own words.
Florida Attorney General Charlie Crist is on the clock. His office has one week to “show cause why this court should not impose sanctions against it and its counsel of record,” according to an order issued by Leon County Circuit Judge Thomas H. Bateman. Judge Bateman said that Crist’s office was a “non-party interloper” impeding the court.
We might have written, “AG, what you are doing is unnecessary and wastes our resources. Buzz off,” but the judge’s formulation works well enough.
Too bad a judge didn’t intervene similarly in Massachusetts. There, Attorney General Tom Reilly released this gem of a statement,
“Although a review of the Fleet Bank account closures and other information Fleet provided did not show a pattern of discrimination against customers with Arab and South Asian descent, Bank of America has agreed to inform three of the four complainants that they are welcome to reopen their accounts. Bank of America will also pay AG Reilly’s office $50,000 to create a brochure and video on consumer and financial awareness geared toward the Arab-American and Muslim communities.”
Let’s get this straight: Reilly blew a wad of taxpayer cash to review and confirm that nothing was happening and then took $50,000 from honest bank users to ensure that something that wasn’t happening continued to not happen?
Thank you for interloping, Misters Attorney General. We didn’t know what to do with that money and time, the indecision makes us nauseated, and we probably would have just squandered all on gamblin’ and whiskey-drinkin’. You’ve proved the old saying true, “Waste it before it gets wasted.”
The Massachusetts legislature has a innovative idea: craft a law that applies to pending litigation. A year and a half ago, AG Tom Reilly, perhaps tired of receiving gift cards from lazy relatives, sued the Indiana company Simon Property Group over the fees associated with their cards. At the time, Reilly alleged that the company had violated standing Massachusetts law. While that suit was pending, NY AG Eliot Spitzer nabbed some settlement bling from Simon and the US Office of the Comptroller of Currency gave consent to state gift card regulations.
So things were not going Simon’s way before the MA state senate got involved. And, hey, why should they? After all, Simon failed to look into their state compliance-litigation crystal ball before complying with federal regulations. And they should pay Big Time for that, right?
But in case anyone had any doubts about the final act of this thing (coming soon under “S,” for settlement, in The Twilight Zone) the lawmakers of Massachusetts got a bill started. State Senator Michael W. Morrissey, describing the bill’s effect on Simon Group’s defense, says, “‘’It’s like driving a knife through their heart. If we pass this, we will definitely make the attorney general’s job easier.”
Good, good. If one can’t go back in time or make laws with foresight of future concerns, ex pending facto lawtigation is the next best option. Let the AG start suing and then work out laws that apply to the lawsuits. Can’t miss. Best litigation strategy ever.
Trust us; we’re on the plan too. We heard about Massachusetts plan and immediately got to work. Already we have fashioned a very good New Year’s Resolution for 1996 and have decided to arrange our tax documents in time for April 15, 2004.
New York Attorney General Eliot Spitzer accused the FCC of a “substantial evisceration” of his ongoing Payola investigation. The FCC has begun negotiations with suspect radio companies and, as Spitzer alleges, is offering more lenient settlement terms than Spitzer would.
Spitzer also said that he “asked [the FCC] several times to participate and they have not only not done that, but they are now furtively going out there negotiating behind our backs.” To this, FCC spokesman David Fiske responded, “The commission has always taken its responsibilities to enforce the laws seriously. For many months we have been actively pursuing allegations of payola on the part of radio broadcasters. We appreciate cooperation with the New York Attorney General’s office and look forward to working with the New York attorney general in the future.”
The question is not only who leads and who follows. As the AP’s Devlin Barrett notes, “Even if the radio companies strike their own arrangements with the FCC, such deals would not prevent Spitzer’s office from continuing to press his cases.” That is, the radio companies may be fighting a two-front battle, regardless of what federal regulators say.
The answer to this preemption question, and many more, will have to wait until at least April 27th and 28th, 2006, when The Federalism Project holds a two-day conference on federal preemption (to which you, loyal reader, are cordially invited). For more information, and to register, please follow the link.