MoFo’s State + Local Government Enforcement Newsletter

Morrison Foerster’s State and Local Government Task Force is pleased to provide our bimonthly newsletter summarizing some of the most important and interesting developments from state attorneys general (State AGs) across the country and local government agencies and legislative bodies, with links to primary resources. This month’s topics include the following:

• Bipartisan coalition of State AGs supports FCC Robocall Database reforms
• Twenty-three State AGs challenge class action settlement over facial recognition database
• Democratic State AGs gear up to challenge incoming administration on diversity issues
• Eleven State AGs bring antitrust lawsuit against ESG climate investors
• New York and California to enact bans on PFAS in textiles and apparel effective January 1, 2025

1. Bipartisan coalition of State AGs supports FCC Robocall Database reforms

On November 14, 2024, a bipartisan coalition of 47 State AGs[1] submitted a comment letter to the Federal Communications Commission (FCC) in support of its proposed rules designed to protect consumers from illegal robocalls.  The new rules are aimed at improving the effectiveness of the Robocall Mitigation Database (the “Robocall Database” or RMD) by closing what the coalition calls “an unmonitored loophole.”

Since the Robocall Database was established in 2021, all voice service providers operating in the United States are required to register on the Robocall Database and provide information regarding their caller-ID authentication system and a detailed robocall-mitigation plan to minimize illegal call traffic.  The State AGs reported in their letter that the Robocall Database has been abused by bad actors who file inaccurate, false, misleading, or otherwise incomplete information

The letter further outlined the coalition of State AGs’ support for FCC proposals that include “procedural measures that the Commission could adopt to promote the highest level of diligence when providers submit required information to RMD; technical solutions that the Commission could use to identify and require correction of data discrepancies in filings; measures the Commission could implement to increase accountability for providers that submit inaccurate and false information to the RMD or fail to update their filings when the information they contain changes; and other procedural steps the Commission could require to increase the effectiveness of the RMD as a compliance and consumer protection tool.

In response, on December 10, 2024, the FCC announced proposed new rules to tighten filing requirements for the RMD to better ensure widespread compliance and heightened awareness of provider responsibilities. The new rules require timely updates to company information, fines of $10,000 for submitting false or inaccurate information, and fines of $1,000 for failing to keep information current

The same day, the FCC released an order alleging that nearly 2,500 providers had submitted deficient information to the RMD.  Any providers identified in the order were required within 14 days to cure the identified deficiencies or otherwise explain to the FCC why they should not be removed from the RMD. The order also emphasized that removal from the Robocall Database means that other providers would be prohibited from accepting call traffic from the removed providers.

Additionally, the FCC announced that the Anti-Robocall Multistate Litigation Task Force, comprised of 51 State AGs, had resolved numerous investigations of several voice service providers that had been transmitting suspected illegal robocall traffic. The coordinated action against illegal providers demonstrates State AGs’ focus on protecting consumers from illegal robocalls.

2. Twenty-three State AGs challenge class action settlement over facial recognition database

On December 16, 2024, an Illinois federal judge allowed 22 State AGs[2] to challenge an AI company’s settlement for automatic collection of biometric facial data online.  The State AGs asked the Court for permission to file an amicus brief stating that the settlement undermined consumers’ fundamental right to privacy.  In response, the plaintiffs argued that the State AGs had lodged their arguments too late as they had not filed objections to the settlement within the timeline set by the Court and thus the arguments in their motion to file an amicus brief should not be granted. The Court agreed with the State AGs and granted their motion to file an amicus brief opposing the settlement.

The underlying suit was first brought by an Illinois resident against an AI company under the Biometric Information Privacy Act (BIPA), which establishes the standards for how companies must handle consumers’ biometric data in Illinois.  The suit was then consolidated with 11 other class actions filed against the same company in five different districts; each of those cases was brought on behalf of individuals who allege that their privacy rights were violated under BIPA and other state laws.  The proposed settlement announced in June 2024 was comprised of damages for class members based on the value of the company if it goes public or is liquidated through a merger or sale.  According to the AI company, the unique structure of the settlement was necessary due to its financial condition.

In objecting to the settlement, the State AGs claimed that the settlement gave class members “an unknown financial stake in the very company that harmed them.”  Moreover, the State AGs claimed there was no evidence that an initial public offering or acquisition of the AI company was likely to occur, thus making any financial payment conditioned on either event illusory.  Additionally, they claimed that the AI company had not shown sufficient proof that it lacks the funds to pay damages to the plaintiffs.  They also asserted that the attorneys’ fee award sought for class counsel was significantly higher than what courts would typically approve.

While the Court “recognize[d] the significant interest and unique perspective Amici States have in the proposed class action settlement,” the court also noted the “burden” on counsel, given that the amicus brief was filed “so close to the scheduled deadlines for the final approval of settlement motion.” The Court, therefore, extended the deadline for final approval of the settlement to allow counsel to respond to the arguments raised by the State AGs’ amicus brief. The final approval hearing is now scheduled for January 30, 2025.

As the use of AI continues to proliferate and impact privacy concerns, State AGs will continue to be active in this space. This matter is also significant as it demonstrates the potential influence that State AGs can have on private class action settlements.

3. Democratic State AGs gear up to challenge the incoming administration on diversity issues

As President Donald Trump is expected to revive many policies that faced legal challenges during his first term, Democratic State AGs have announced that they stand ready to challenge those policies again. Indeed, in the first President Trump administration, Democratic State AGs challenged federal policies 160 times, nearly double the number of challenges to federal law brought during President Obama’s administration.

One area of particular projected activity is increased activism around diversity, equity, and inclusion policies. The U.S. Supreme Court decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College[3] striking down affirmative action in higher education is expected to be an area of focus for the incoming presidential administration.  For example, in June 2024, Democratic and Republican State AGs sent dueling letters to the American Bar Association, arguing over the legality of law school diversity programs and the reach of Students for Fair Admissions.

Multistate challenges to federal laws and regulations will likely continue to be common in the upcoming administration, as they were under President Biden’s administration as well as President Trump’s first administration. State AGs can be expected to rely on their vast experience working together and pooling their resources in the incoming administration to aggressively challenge any perceived regulatory rollbacks and proactive lawmaking across industries.

4. Eleven State AGs bring antitrust lawsuit against ESG climate investors

On November 27, 2024, a group of 11 State AGs[4] filed an antitrust lawsuit against three major investment management companies. The complaint alleges that these companies colluded with coal producers to reduce coal output and thereby drive up prices and diminish competition, in violation of the Clayton Act.

The State AGs claim that the investment management companies “leveraged their holdings and voting of shares to facilitate an output reduction scheme, which has artificially constrained the supply of coal, significantly diminished competition in the markets for coal, increased energy prices for American consumers, and produced cartel-level profits for Defendants.” The complaint further alleges that this coordinated reduction was aimed at advancing the companies’ ESG goals, while simultaneously misleading investors by marketing certain funds as “non-ESG” despite pursuing ESG-driven strategies.

This case underscores the ongoing effort by many Republican State AGs to challenge ESG initiatives that they argue conflict with market principles.  These issues will remain a topic of interest for State AGs on both sides of the aisle in 2025. 

5. New York and California to enact bans on PFAS in textiles and apparel beginning on January 1, 2025

Beginning on January 1, 2025, California and New York will phase in bans on textile articles and apparel containing perfluoroalkyl and polyfluoroalkyl substances (PFAS). California’s Assembly Bill (AB) No. 1817[1] prohibits the manufacture or sale of any new textile articles containing regulated PFAS within the state.

There are exceptions to the definition of “textile articles” under AB No. 1817, which include:

• Carpets and rugs;
• Treatments containing PFAS for use on converted textiles or leather;
• Filtration media and filter products used in industrial applications, including chemical or pharmaceutical manufacturing, and environmental control technologies;
• Textile articles used in or for laboratory analysis and testing; and
• Aircrafts and their component parts.

New York’s ban prohibits intentionally added PFAS in apparel after January 1, 2025. New York’s law is notably less broad than California’s law and excludes certain kinds of professional uniforms and outdoor apparel.  By January 1, 2028, the current exception for outdoor apparel will be phased out.

The regulation of PFAS will continue to be an area of increased interest to State AGs and there are already other states considering similar bans. Starting in 2026, several states will implement similar PFAS prohibitions in textile articles, including Maine, Vermont, Rhode Island (starting in 2027), Colorado (starting in 2028), and Connecticut (for apparel, starting in 2028).  While an increasing number of states contemplate legislation and regulations addressing PFAS in textile goods and apparel, the size of the California and New York markets will likely impact national strategies for these types of products. Companies that manufacture or sell textile articles or apparel should continue to monitor the growing patchwork of PFAS prohibitions and requirements.

[1] The letter was signed by the State AGs of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming, and the District of Columbia.

[2] The State AGs that joined in challenging the settlement were Vermont, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Indiana, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, Oregon, Rhode Island, Tennessee, Washington, and the District of Columbia

[3] 600 U.S. 181 (2023).

[4] The suit was brought by the State AGs of Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, Texas, West Virginia, and Wyoming.