STATE ATTORNEYS GENERAL AND THE RESPONSE TO THE 2007 RECALLS OF CHILDRENS’ TOYS
PART I: THE PROVENANCE OF DANGEROUS TOYS AND THE YEAR OF THE RECALL
The United States imports a great variety of consumer products from overseas, many from developing countries, particularly China. Toys, games, and jewelry directed at children make up a considerable amount of total imports. Unfortunately, not all of these children’s products meet U.S. safety standards. Imports constitute over eighty-five percent of recalled products. While defective toys do not, of course, solely originate in China,  this paper focuses in large part on the imported children’s products from China for two reasons.
First, China dominates the supply of imported toys. China is the primary trade partner of the United States. Total U.S.-China trade rose to $387 billion in 2007. According to the CPSC, forty percent of all consumer products imported into the United States last year were manufactured in China, totaling $246 billion worth of goods. From 1997 to 2004, the CPSC noted that the share of all U.S. imports of consumer products from China more than quadrupled, a trend that is likely to continue. China’s dominance has been particularly strong in the production of toys: In 2007, China accounted for 89% of toys imported into the U.S.
This economic reality is, in part, due to China’s ability to mass produce cheap consumer products. Chinese manufacturers can significantly undercut the prices offered by their foreign competitors. China’s practice of currency manipulation allows their products to appear relatively cheaper than those from other countries, fueling export-led growth. The cost of manufacturing goods in China is also significantly less than it is in the United States. In China, unions are practically nonexistent and the poor labor conditions under which these toys are frequently produced have been well documented. Low wages and excessive hours in the production of toys go far in reducing some manufacturer’s costs. Together, cheap labor and currency manipulation, coupled with massive state investment in infrastructure and manufacturing has allowed China to come to dominate the toy market in the United States. Chinese-manufactured products of all types have had their problems. In sum, 95% of jewelry recalled since 2005 has come from China. More than 40% of recalls conducted by the CPSC, including 79% of toys in 2006 and 98% in 2007, involved products from China. In 2007, the “year of the recall,” millions of toys manufactured in China were recalled for design defects as well as the presence of dangerous of amounts of lead. Second, regulatory enforcement of safety standards in China is significantly less stringent than enforcement in the United States. This is partially due to the diffuseness of production. The Chinese production system is unique in its reliance on a great number of specialized producers: On average, it takes China seventeen different parties to produce a product that would take three parties to complete in the United States. The varied production chain hinders direct oversight of the manufacturing process, and makes it unlikely that a substandard component part used at one of many production points will be noticed. A particular problem concerns products containing lead, which is inherently difficult to detect, that may be produced in China and unknowingly shipped to the United States. On-line advertising and specialized commodity trading websites both increase pressure to lower prices and make it easier for Chinese-manufactured components of products to slip through the cracks and be incorporated into children’s products. A U.S.-based importer usually deals only with the primary supplier in what is oftentimes a huge supply chain in the production of a good like a toy. Even if a U.S. toy company sought to have its toys constructed in Cambodia, that manufacturing company would probably have to source paint or screws from a Chinese manufacturer. To further augment the problem of supervising the manufacturing process, Chinese companies supplying the U.S. toy market usually do not have assets in the U.S., and cannot be made subject to the U.S. legal system. China’s rise to prominence in the export trade is not solely a product of currency manipulation and low production costs, but can be also be attributed to lax oversight regarding manufacturing regulations. China has had difficulty enforcing both international and domestic law, particularly in the manufacturing realm. When a regulatory law is passed in Beijing, mayors and governors, who are primarily being judged on the economic success of their region, have a vested interest in looking the other way. To do otherwise and enforce the law would raise the costs associated with production and would decrease the profit margins upon which political support is predicated. While fiscal and administrative decentralization helps spur economic growth, the inability of the central governmental to effectively enforce enacted laws, coupled with the incentives of regional governors to achieve economic growth, inevitably leads to the skirting of best practices and undermining of international legal agreements. The judicial system in China is also ill-equipped to provide a check against regional interests. Not only is there an insufficient number of judges, but the system itself suffers from a lack of independence and professionalism.
This Part discusses the origins of the problem toys in China and elsewhere, and why regulators in the United States necessarily play a reactive role, where their main goal is to detect defective products as quickly as possible. It further highlights why the primary mechanisms in place to protect domestic consumers of children’s products are ineffective or inadequate, thus leaving a safety enforcement vacuum that has been partially filled by state attorneys general (Part II), and further augmented by the CPSIA (Part III).
Addressing China’s lax regulation and emphasis on profits would require improving China's food and product safety at the source. This is not, unfortunately, a primary focus of U.S.-China trade relations. U.S. lobbying efforts have focused more on getting China to open its markets to U.S. goods and increasing intellectual property protections. The U.S. has largely relied on importers to monitor and be responsible for the fitness of children’s products. The effectiveness of this strategy has suffered from obvious limitations, namely the strong countervailing pressure to produce goods quickly and at low cost. As a result, there are less than ideal incentives on producers to maintain high product standards while reducing their costs. Coupled with relatively lax oversight in the producing region, this requires enhanced regulation in the U.S. to ensure that a reasonable level of import safety is reached.
A. Detecting Dangerous Toys and Jewelry in the U.S.
The CPSC is the sole federal agency charged with protecting the American public from unreasonable risks of death and injury of consumer projects. The CPSC was created in 1972 by the Consumer Product Safety Act (CPSA) to identify and act on a wide range of consumer products hazards. The CPSC administers six other consumer protection laws. The CPSC’s budget in 2007 was $62 million to regulate the $1.4 trillion product industry.
The focus of the CPSC is necessarily on detecting dangerous toys and getting them off the shelves rather than stopping the dangerous production at the source. The CPSC does not regularly perform inspections of manufacturers at home or abroad: U.S. manufactures sent toys that do not meet domestic safety standards abroad. The CPSC is small by design. Rather than relying on an army of inspectors, the CPSA requires that firms report dangerous products to the CPSC. Prior to the 2007 recalls and CPSIA, the CPSC maintained only fifteen inspectors at U.S. ports. Fewer than 100 inspectors have responsibility for the rest of the country. For the first time, in 2008, the CPSC hired permanent, full-time investigators at key ports of entry in the U.S. The total staff of the CPSC was approximately 400 in 2007, roughly half of the 800 staff employed by the Agency in the 1980s. These relatively small numbers of inspectors are unable to examine a meaningful percentage of products that are imported into the United States.
Due to its small size, the CPSC is necessarily a “data-driven” agency. When first enacted, the CPSA provided the CPSC with two primary methods of enforcement: the ability to promulgate mandatory product safety standards and the ability to initiate product recalls. The CPSC has issued only fifteen such standards in its existence, instead relying far more on its ability to recall dangerous products. The Agency’s primary source of information is the companies themselves. Companies must report to the CPSC if they find that one of their products is dangerous within twenty-four hours of learning about the condition. Companies need not report all hazards: The CPSC requires companies to report potential hazards only if a reasonable person would conclude that the product poses an unreasonable risk of serious injury of death. In addition to requiring companies to report dangerous products to the CPSC, the CPSC uses the collection of information from hospitals and field investigators to identify product hazards. The CPSC has been working with Customs and Border protection to develop best practices, and has begun to share information.
Even when it identifies risks, the CPSC is able to investigate only 10 to 15 percent of reported injuries and deaths related to consumer goods. After the hazard has been reported, the CPSC will not automatically recall the product, instead it will work with the company to determine whether a recall is necessary. The CPSC may also bring civil and criminal enforcement actions against companies that fail to voluntarily inform the Agency when they discover that their toys are unsafe.  Prior to the 2007 recalls, this amount was capped at $1.83 million, a relatively small sum compared with the potential for millions of dollars in daily sales achieved by some companies like Mattel.
Even when this information is reported to the CPSC, it may not reach the public until after there is evidence of a sufficient risk to warrant a recall. When faced with a Freedom of Information Act (FOIA) request, the CPSC has a “reverse-FOIA” provision that limits its ability to release information about dangerous products to the public. The statute requires that the Commission’s public disclosure of any information be “accurate,” and “fair in the circumstances and reasonably related to effectuating the purposes of” the Act. This protection is in addition to that of trade secrets or other data submitted to the CPSC under the Act with the understanding that it would not be publicly disseminated. Whenever the CPSC plans to release data on its own initiative or in response to a FOIA request, it must notify manufacturers at least 30 days before disclosing information relating to their products. During the 30 day period the company is entitled to review any material that references it, submit comments to the CPSC, and seek to have the information withheld. This process is often used by companies, making it difficult to uncover information about potential risks prior to the determination by the CPSC to undertake a recall.
Further compounding the challenge of protecting children is the difficulty of determining whether a product contains a potentially poisonous chemical like lead. The presence of lead was the second leading cause of recalled China-related consumer products in 2007. Even if the product is tested when it is initially produced, lead tainted products may still make it into toys. While a manufacturer may be able to oversee some of its subcontractors, the supply of other component parts may be sourced from other producers. As a result, individualized testing of all parts of a representative sample of all goods is very difficult. Though goods may be tested at the start of production, they may not be tested again as repeated batches are produced. Together, this makes it virtually impossible to determine where individual components of each toy are from, and it makes it very difficult to test the entire toy beforehand.
Thus, it often takes a tragedy before the CPSC becomes aware of the dangerous condition. For example, Reebok charm bracelets that contained 99% lead were offered as gifts with the purchase of children’s shoes for nearly two years. In the Reebok recall, the charm bracelet was only tested after a child died of lead-induced brain swelling after ingesting a piece of the bracelet. Hospital and newspaper reports of such tragedies are often required before such a dangerous condition comes to the attention of the CPSC.
Though additional funding for the CPSC is included in the CPSIA, there is little chance that the role of the CPSC in preemptively detecting dangerous products will substantially increase. This is largely a result of the extraterritorial regulation required to prevent the manufacture of dangerous products in the first place. Extraterritorial inspection is, of course, extremely expensive as it requires inspectors to travel overseas. It also usually requires the cooperation of the country where the inspectors are visiting the factories, which has not been readily forthcoming in China. In the absence of such cooperation, there is nothing compelling manufacturers to grant inspectors access. Even if the government inspectors were to detect a problem, they are legally unable to demand anything from the firms they are inspecting. Thus, the CPSC remains a largely reactive agency that must rely on market incentives, its agents, other law enforcement bodies, companies, and individual complainants when regulating dangerous toys and jewelry.
Individual suits brought by injured victims provide an additional important backdrop to consumer protection in addition to informing the CPSC about dangerous products. Private suits can serve a regulatory function in their own right. Some commentators have argued that but for torts, it is unlikely that any toys would be recalled at all. Yet there is reason to doubt the efficiency of tort suits in regulating product safety. Not all individuals who are injured typically file a claim. The injuries involved may not be significant enough to prompt an individual plaintiff to bring suit. The Class Action Fairness Act of 2005 further limited the effectiveness of consumer product class actions as a means of regulation. Furthermore, a great many of these cases end in settlement, oftentimes with confidentiality as a required provision. As such, key information concerning public health and safety may be kept from government regulators and from the scientific community, removing important consumer issues from the scrutiny of the judicial system.
Further, the effectiveness of torts suits to highlight dangerous toys is undermined by the problem of proving causation. In the case of lead poisoning in particular it can be difficult to determine where the exposure originated from. Also difficult to prove is the injury itself, which includes loss of mental function and developmental delay. With the sizeable presence of lead paint in homes, schools, playgrounds, and other public areas, it can be difficult to prove a causal link between lead paint on a toy and the subsequent harm. Lead paint in homes remains the principle method of exposure, further complicating the process of identifying the source and holding the corporation ultimately responsible.
B. 2007: The Year of the Recall
These theoretical concerns manifested themselves in a number of prominent recalls of children’s products in 2007. The identification of dangerous components in toys imported from China drew national attention to the problem of safety concerns related to imported products. In the United States, increased scrutiny led to the identification of more classes of tainted Chinese products. These included dangerous fish products; pet food ingredients; lead-tainted toys; car tires, and children’s toys; all pulled off of the shelves.
The toy recalls were the most publicized and prominent of the 2007 recalls. On June 13, 2007, RC2 Corp. voluntarily recalled 1.5 million Thomas the Tank railway toys whose surface paint contained lead. Later, in November of 2007, JSSY Ltd. was forced to recall poisonous toy beads that were marketed in North America and Europe. When the beads were ingested, the glue ingredient broke down in the body into GHB, the illegal date rape drug that can cause unconsciousness and death. Other recalls included propane grills, high chairs, computer batteries, lawn trimmers, children’s jewelry, and tool kits.
Perhaps the most illuminating recalls in 2007 involved those facing the popular American toy company Mattel. Mattel was plagued by two principle recalls, each driven by a very different flaw—the first was the presence of lead in toys, the second was the existence of a dangerous design defect. Taken together however, the two recalls each represent the difficulty of curbing dangerous products when they are produced overseas and imported abroad. Without an efficient oversight body, the disparity in the root causes of product flaws—whether due to faulty operations of the foreign manufacturer or the misguided design developed by a domestic company—is irrelevant. The point is that any product flaws are likely to persist because there is no one charged with detecting dangerous products at the source when a good is manufactured abroad.
The first recall faced by Mattel came on August 2, when approximately one million Sesame Street, Dora the Explorer, and other toys were voluntarily recalled due to the presence of lead. On August 14, an additional 250,000 toy cars were also recalled for excess levels of lead in the surface paints. These recalls are indicative of a breakdown in the well-defined division of labor that has helped drive China’s export success. The company that produced the toys recalled on August 2 was a longtime supplier for Mattel run by an owner who had operated his factory for over a decade and had a good record for treatment of his employees. Mattel’s vendors were contractually required to use paint that was either preapproved by Mattel or independently tested. The owner accepted the lead paint from a neighboring paint factory without testing it, and applied it to the toys.
The second recalls followed shortly thereafter, on August 14, 2007, when the first batch of 7.3 million Polly Pocket dolls were recalled by Mattel due to small magnets that could dislodge from the dolls and be swallowed by children. Similar magnets were used on a number of Mattel toys prompting a total of 18.2 million recalled toys for the dangerous magnets. The magnets were so strong that if two were swallowed together, they could seriously injure a child’s intestines. This recall did not occur until three children had been hospitalized after ingesting the magnets. The presence of dangerous detachable magnets have nothing to do with shoddy parts or poor assembly, but rather with the design flaw of including such strong yet small detachable magnets. Ultimately, in order to salvage their relationship with the Chinese government, where Mattel produces approximately two thirds of their toys, Mattel was required to publicly apologize to the Chinese people for their design error that led to the negative publicity associated with the recalls. The presence of lead paint is representative of the use of substandard, dangerous components in overseas manufacture. The detectable magnets are indicative of both design failure. Together, the detection of these risks represents the principle problem faced by the CPSC.
C. The Federal Response to the 2007 Recalls in China and the U.S.
1. China’s Response.
China quickly and publicly responded to the negative publicity surrounding the recalls. In the immediate aftermath, the Chinese government sought to shore up its image by conducting inspections, increasing standards, and revoking licenses of underperforming companies. China’s General Administration for Quality Supervision, Inspection and Quarantine imposed an export ban on the company behind the August 2 Mattel recall. Ultimately, 700 trade licenses were revoked. A strong message was sent to government regulators who had been perceived as lax and corrupt when the former Chief of the Chinese FDA was executed for corruption, ostensibly for accepting bribes to relax standards. These changes, along with increased demands from importing companies, have sharply increased costs facing Chinese producers. Following the recalls of 2007, the testing fees required to get an export license in China increased by approximately 25%. Whether these changes will lead to overall safety improvements remains to be seen. As it stands, over 50% of the country’s toy exporters shut down in 2008. Trade policy both at home and abroad, as well as the appreciation of yuan and decreased demand in the United States and Europe, contributed to this decline.
There has also been some preliminary movement towards joint U.S.-China cooperation designed to increase scrutiny of goods as they are produced. On September 11, 2007, the CPSC and its Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine, signed a Joint Statement on enhancing consumer product safety. This agreement embodies a ban on lead, which has been in effect in the U.S. since 1978, but does little beyond outlining general principles, such as the need to take steps to increase understanding of U.S. standards and an agreement to hold regular product safety talks, including monthly discussions of recall activity and trends, between U.S. and Chinese regulators. Chinese authorities have been reluctant or unwilling to take on some of the systemic problems in the toy manufacturing industry. While symbolic steps abound, regulation nonetheless remains weak or largely symbolic. For example, according to a foreign ministry spokesman, the Chinese government now asks toy manufacturers to check for flaws in the designs provided by foreign buyers. There is little oversight in place to ensure that companies comply with this new mandate, no defined steps a company can take if it does detect a design defect to mediate the potential harm, and no effective guidance as to what constitutes a design defect at all. In terms of lead, China’s problem runs far deeper than toys, including leaded gasoline and a range of other consumer products. There are little signs of the comprehensive reform required to address these problems.
In the long run, if these problems persist, major toy companies will either outsource to other countries or take more control of the plants in China. Still, many of the component parts will likely come from China for the foreseeable future, regardless of where the final product is assembled. Even if China was able to dramatically increase its regulatory ability and crack down on faulty assembly and the use of lead paint or other toxic chemicals, many dangerous products would still enter the U.S. owing to the general problem of lack of effective supervision, oversight, and communication between the two countries. Even if the lead were removed, the U.S. would still face a problem of dangerous toys due to design defects. Over 75% of the 550 recalls occurring since 1988 have been attributed to dangerous design flaws. The total amount of recalls only appears to be increasing. Beyond the difficulty of enacting and enforcing international safety standards, there is little motivation for individual domestic companies to heavily regulate the products they import into the U.S. Though Mattel had to recall millions of toys, a recent study conducted by NERA concluded that economic impact of the recalls and related events had no impact on Mattel’s stock price. Thus, there seems little hope that the total number of unsafe products being imported into the U.S. will decrease any time soon.
2. CPSC’s Response.
Despite the apparent breakdown in the consumer product safety net, the CPSC was initially reluctant to engage in large-scale reform. The CPSC did request additional funding, but planned to cut its staff by an additional 18 members prior to congressional involvement. The CPSC seemingly wanted to maintain the status quo of an honor system, with companies testing their own products for contaminants and setting their own safety standards.
Thus, there products continue to be produced overseas and there persists a danger that they will be imported without being checked. As it stands, toys are not regularly inspected by regulators for dangerous conditions as they enter the country. Whether by design defect, shoddy manufacturing, substandard component parts, the presence of lead, or any number of risk factors, some of those being imported will be dangerous when used by children. As a result, the CPSC largely operates in a post-hoc fashion. The agency must detect a systemic pattern of injuries or deaths before a product is recalled, thereby ensuring that a great number of units are already in use before a recall may begin. The end result is that the U.S. is largely constrained from impacting the safety of goods throughout the production process.
PART II: THE STATE ATTORNEYS GENERAL AND DANGEROUS CHILDREN’S PRODUCTS
The principle problem that emerged from the recalls of 2007 was the lack of sufficient incentives to ensure that all toys imported into the United States were safe, and the unlikelihood that there would be increased enforcement moving forward. One group, however, did have the ability and initiative to attempt to hold Mattel accountable for the imposition of risk. State attorneys general, acting in different states, together pursued an action against Mattel, ultimately achieving a settlement that included an agreement to abide by higher standards than those that emerged in the CPSIA, and a cash settlement for the states to further combat lead ingestion. This settlement was the outgrowth of the common law powers of the State Attorneys General, who, acting in concert, stepped into the regulatory void left by the federal government and private bar. The CPSIA, discussed in Part III, seeks to augment the powers of the state attorneys general by allowing them to enforce the CPSA in federal court. In this section, I will discuss the already-present tools in the state attorney general toolbox when dealing with dangerous children’s products, as well as how these powers manifested themselves in the Mattel settlement. I will then turn to the CPSIA in Part III to consider whether allowing state Attorneys General to enforce the federal law substantially adds to their enforcement power, thereby making consumers safer in the long run.
A. The Common Law Powers of the State Attorney General
The state Attorney General is the chief law enforcement officer in her state.  As such, she is responsible not only for advising and defending state agencies and officials, but also for representing the citizenry in any suit where the state is a real party in interest. The state attorney general’s authority to litigate in the public interest has its roots in English common law. Though ostensibly members of the executive branch, state attorneys general have long maintained a limited independence. This is partly because the state attorney general is a popularly elected position in the majority of states. Such traditional autonomy from the executive branch has allowed the state attorney general to maintain her ultimate duty to protect the interests of the people of her state and ensure that justice is done. However, this power is not limitless: While the state attorney general’s powers and duties at common law are largely left undefined, they can be limited by legislative action. Virtually all state attorneys general are responsible for enforcing the consumer protection statutes enacted in their state. State attorneys general have only recently become leading consumer protection advocates. The state attorney general’s ability to set and enforce state product standards is an area rife for conflict with the legislature and governor of a state. Indeed, in light of separation of powers concerns, a minority of states constrict the state attorney general’s ability to file suits independently of the rest of the executive branch. Protecting consumers from dangerous toys takes up a relatively small amount of already scarce state attorney general resources.
The doctrine of parens patriae provides standing for a state to sue on behalf of its own citizens. This allows the state attorney general to bring suit when its quasi-sovereign interests have been infringed. The violation must be of an “interest apart from the interests of particular private parties” in order for parens patriae to apply. These interests have been defined as an “interest in the health and well-being-both physical and economic-of its residents in general.” In a parens patriae suit, the harm alleged must be borne by society as a whole. State attorneys general are able to sue products manufacturers as “super plaintiffs” on behalf of the residents of the state if the harm is significant enough that the state’s quasi-sovereign interests are implicated. The role of the state attorney general is to protect the public, so their goal may be achieve through the public awareness by bring the case at all rather than just monetary recovery.
B. State Attorney General Enforcement Authority
Where not preempted by federal law, a state attorney general can also bring a consumer protection action under the Unfair or Deceptive Acts and Practices (UDAP) statutes that exist in every state and the District of Columbia. UDAP statutes generally give broad authority to the attorney general to combat virtually any type of behavior that injures consumers in the state. States have not, for the most part, crafted detailed statutes that define unfairness, leaving it up to the state attorney general. States were able to extend the definition of “unfair acts and practice” to encompass breach of an implied warranty, failure to protect customers from unnecessary dangers, and violations of existing laws. Courts have acquiesced to the state attorneys general’s definition of “unfairness” that applies to the sale of defective products. Some states have statutes that define unsafe children’s products as those that violate federal standards for the purposes of UDAP actions.
If enacted, state attorneys general are also able to bring actions based on specific hazard statutes. In the realm of children’s products, such statutes can only exist in areas not preempted by federal regulations. In response to the perceived lack of federal action, legislators in twenty-one states recently passed laws raising standards for lead, phalates, and other dangerous chemicals in children’s products. Should the state standard conflict with the federal standard, it would necessarily be preempted unless the state was purchasing the material itself or had obtained a waiver from the CPSC.
Despite the general statutory authorization, consumer protection actions in the children’s products arena are relatively uncommon. This may be explained, in part, by the ability of state Attorneys General to instigate civil investigative demands (CID). This allows the attorney general to serve subpoenas and obtain discovery prior to filing any complaints. The notification of the possibility of a full investigation and subsequent filing of charges provides some measure of deterrent. Such actions are, by their nature, limited to in-state manufacturers and retailers. This form of voluntary recall further poses no penalties and is therefore not ideal for the dangers presented by defective toys.
One of the principle ways state attorneys general have been able to regulate entire industries is through the use of UDAP statutes in multistate litigation. Multistate litigation has been called the “most significant development in state consumer protection enforcement.” The consumer protection statutes enacted in most states provide a foundation for a significant amount of multistate litigation. The state attorneys general’s parens patriae standing allows them to amalgamate the claims of individual victims. These cases became more prevalent in the 1980s, as underfunded state attorneys general began prosecuting large, well-funded corporations. In each participating state, assistant attorneys general file similar complaints against a corporation, all alleging similar deceptive or unfair conduct. The threat of pending litigation in multiple states provides an extremely strong incentive for companies to settle. State attorneys general were notably able to achieve major regulation of the tobacco industry through the use of multistate litigation. State attorneys general attained a milestone settlement with the major tobacco companies, a gain that was previously unimaginable when the claims were filed. In addition to recovering millions of dollars, the states achieved major concessions, including the prohibition of marketing to children and other limitations on tobacco advertising. Indeed, the educational and public sanctioning effect of the tobacco settlement has had further ancillary benefits.
Still, the victory over tobacco has not translated into success in other areas of public product regulation. Enforcement actions brought under UDAP have limited effectiveness when applied to products that are sold nationally. Federal law preempts the States from regulating many consumer products. While the Consumer Product Safety Act exempts some products from coverage, many of these are still regulated by other comprehensive federal schemes. Thus, product safety standards are largely driven by the determinations of federal agencies. Though the broad UDAP statutes are largely able to avoid preemption challenges, in practice their use is largely limited to conspicuous actions on behalf of sellers and manufacturers that rise to the level of fraud. On a fundamental level, because “unfair and deceptive” is so broadly defined, in practical terms courts will only apply it to the most egregious conduct--like that of the tobacco industry’s years for misinforming consumers about the threats of smoking cigarettes. Furthermore, the rules that emerge from adjudication are oftentimes specific to the facts of the case rather than a clear articulation of a single standard. As with torts suits, adjudication is necessarily backwards-looking. While adjudication can act as a deterrent, basic civil procedure ensures that only the parties before the court are bound by the immediate decision. 
More than half of the state attorneys general are also able to promulgate rules and regulations under these statues in addition to bringing government enforcement actions. This rulemaking process does provide more certainty than ad hoc enforcement, but likewise suffers from some important limitations. The rulemaking process, on both the state and federal level, is time consuming and costly. An inherent aspect of rulemaking is the notice and comment process to ensure the fairness of promulgated rules. This allows the participation of all those affected, not just the parties to a specific dispute. This is, however, very expensive. As it stands, virtually every state attorney general lacks the necessary resources to develop their own cases under their own statutes. Most attorneys general hold popularly elected offices. With the inevitable reelection campaign, it is difficult to sacrifice current enforcement for prospective results. Due to the necessary time constraints of rulemaking, unless the process is started at the beginning of the attorney general’s term, there is no guarantee that they will still be in office to reap the benefits of any ensuing regulations.
There are several distinct disadvantages to this reallocation of authority to state attorney generals. First, one of the proffered benefits of rulemaking is that it takes standard setting ability from judges, who are not politically accountable or possess any measure of expertise in the regulated agency, and places it in the hands of administrative agencies. Though they are usually politically accountable, attorneys general are unlikely to be experts in the particular field in which they are regulating. Second, the “political question” doctrine has been used to dismiss some regulatory rulemaking that sought to increase regulatory standards. For example, in American Shooting Sports, the Attorney General of Massachusetts sought to impose strict performance and safety requirements on handguns sold in the commonwealth. The court noted:
[t]he Attorney General may not use his regulatory authority to pursue general policy goals or public issues that limit or ban the sale of lawful products under the general rubric that purchasers of the products, or third parties who may come into contact with them, would be better off if the products were not marketed at all. Questions concerning whether such products should be sold, or their sales restricted, are primarily legislative in character.
Thus, the Attorney General’s power was limited to regulating deceptive and unfair practices of products that “fail fundamental requirements of safety and performance.” Third, the power of attorneys general is inherently limited to areas where standards do not already exist. If another agency on the state or federal level has acted in a particular area, most state attorneys general are precluded to act. Fourth, private plaintiffs may be able to use regulatory violations as proof in private UDAP claims. Unlike in the federal system, state laws generally do not reject a private right of action. However, state attorney general enforcement of federal law addresses many of these concerns as discussed in Part.III infra.
C. State Attorney General Enforcement in Action
The Mattel settlement provides an example of state attorneys general working together to achieve a multistate settlement. State attorneys general launched a sixteen month investigation of circumstances surrounding the recalls. In this multistate litigation Massachusetts led an Executive Committee, consisting of Assistant Attorneys General from Arizona, Florida, Kentucky, Missouri, Ohio, Pennsylvania and Vermont. In sum, 39 state Attorneys General joined in the settlement, with the potential for more states to join as they evaluate the claims. The complaints filed by the state Attorneys General included claims of unfair and deceptive trade practices. After some of the products were tested, it emerged that some of the paint in the toys was up to 11% lead, a gross violation of the then federal standard of 0.06% lead. The “unfair and deceptive” practice occurred when the defendants allowed a deceptive “Certificate of Compliance” indicating that the toys met federal standards as required by federal law, to be issued. Because this certificate was based on a single past test, it was unfair and misleading in regard to all the batches of toys that were imported after it was issued, but which it nonetheless purportedly represented. The complaint further alleged that the introduction of products that contained lead, the failure to have adequate safeguards in place or conduct adequate investigations, and the issuance of the faulty certificate further violated the UDAP statutes.
The terms of the settlement not only obtained money for the states, but also required Mattel to agree to abide by additional product safety standards. Ultimately, Mattel had to pay $12 million, to be divided among the participating states, to reimburse investigative costs and to fund consumer education on the issue. The greatest impact of the negotiated settlement lies in the standards Mattel has henceforth agreed to follow. Mattel agreed to what amounts to a strict liability standard for future violations where Mattel is required to phase in more stringent standards than those in the CPSIA for all toys manufactured after November 30, 2008. Mattel must also keep records on file for at least four years concerning the manufacturing of surface coatings and substrates used on its products, report to the Attorneys General within three days if it discovers lead in its products, and work with the state Attorneys General to remedy such violations. All of this was agreed to without the existence of proof of a single injury directly caused by the toys.
The terms of this settlement virtually ensure that should Mattel experience another recall event, the information will not be confined to the CPSC. Indeed, because this is a consent judgment, the higher standards will not be subject to the preemptive force of the new regulations required by the CPSIA. While this settlement represents a solid victory in the fight against lead, the other threat of toy magnets remains unregulated by the agreement. Though toy magnets represented approximately 90% of the recalled products by Mattel, the state Attorneys General only brought claims based on the lead-tainted toys. Unlike the faulty issuance of a certificate and the clear standards prohibiting lead paint, there is no law limiting the sale of toys with strong magnets. Magnets fall into the vague description of a design defect, but have still proven to be a persistent problem. Thus, the states focused on the clear-cut case, and did not attempt to argue that there was something unfair or deceptive about selling toys with strong magnets. It is also notable that this settlement is limited to Mattel and its subsidiary Fisher-Price. The higher standard agreed to will not apply to any other toy producers, thus limiting its regulatory impact.
There are, however, some additional limitations to the success of state Attorney General offices pursuing consumer products actions under their own statutes. A concern is that other States may not have the laws or the will to bring a similar action. For example, in 2007, Consumer Reports tested a number of children’s toys and found that the popular Fisher-Price toy blood pressure gauge strap contained 10,000 ppm of lead, and cautioned parents to take it away from their children. The state Attorney General office in Illinois began an investigation into this product and found that the cuffs contained seven to nine times more than the allowable amount of lead. As this lead was in the armband itself, it was not considered a surface coating and therefore not preempted by federal law. Illinois law ostensibly differed with the implication of the federal standard that if the lead was not accessible, then it was not dangerous. That the band itself contained the large amounts of lead was sufficient to violate the Illinois statute.
In response to the investigation by the Illinois Attorney General’s office, Mattel recalled the toy in Illinois December of 2007. Though Mattel accepted the cuffs back from all consumers nationwide, they did not recall the toy throughout the country, nor publicize it as they would be required to in a national recall. As the cuffs did not violate the federal standard and no other states sought to hold Mattel responsible, potentially dangerous blood pressure cuffs remain on the market. Consumer protection advocates would argue that even if lead does not exist on surface paint, there is still a chance that a young child will chew on the arm band, thereby exposing herself to lead. Business advocates could conversely argue that when only a small number of states impose a regulation that is not preempted by federal regulation, patchwork problems may result leaving manufacturers uncertain about what standards apply, and effectively driving a “race to the top,” where potentially the strictest standards are the ones enforced. Had Fisher-Price not agreed to the corrective action and a court found that the absence of action by the CPSC did not entail preemption of the standard, the Illinois Attorney General could have commenced litigation in state court alleging a violation of Illinois law. Mattel would thus be faced with the choice of pulling its product from Illinois, having a separate production operation just for Illinois and other similarly situated states, or producing all of its products at the highest standard. While consumer protection advocates may be pleased, the end result is that a single state can affect nationwide commerce. This results in an inherent patchwork problem that the creation of a national enforcement agency was supposed to correct. Understandably, courts have been willing to find that such state standards are preempted when conflicting with a federal standard. In sum, despite the substantial power of SAGs to protect their citizens, when it comes to products that are increasingly sold in the national market, there is reason to be believe that state Attorney General enforcement alone will not result in optimal protection for consumers of children’s products.
PART III: STATE ATTORNEY GENERAL ENFORCEMENT UNDER THE CPSIA
Though the failures of the system are not in dispute, the best way to repair the holes in the consumer product safety net have been much debated. The recall system as it stands is not enough to ensure that unsafe toys get off the shelf. As recalls are necessarily reactive, the ultimate goal of the CPSC and other enforcement groups is to stop the production of unsafe toys in the first place. That will require additional cooperation and enforcement on behalf of developing countries like China that is not readily forthcoming. In light of the regulatory reality, one the main focuses of Congress has been increasing product safety standards and the ability of regulators to enforce these on a national level.
A. CPSIA Debate: Whether State Attorneys General Should Enforce Federal Law
After the recalls of 2007, it became clear that new legislation reauthorizing the CPSC was required. After all, the CPSC was created in 1972 precisely because of the perceived failure of the marketplace, couple with private litigation and the then-existing federal rules, to keep consumers safe. The CPSC’s stated mission is to “protect the public against unreasonable risks of injury associated with consumer products.” After the 2007 recalls it became clear that it was not able to do so. In July of 2007, President Bush created the Interagency Working Group on Import Safety to “ensure that the executive branch takes all appropriate steps to promote the safety of imported products.” In a congressional hearing investigating the origins of the recalls, Thomas Moore, the Commissioner of the CPSC, stated:
[The 2007 recalls] brought to light, especially for Congress, the woeful state of the agency’s resources, from its declining staffing levels to its aging and inadequate laboratory facilities. For too many years the agency had been forced to put a brave face on its situation by claiming it could do more with less. When we stopped getting enough resources to meet our basic needs that claim began to ring hollow and the agency was left without the necessary tools to properly police the consumer product marketplace.
As a result, the CPSC faced change unique in government, with significant budget increases and comprehensive reauthorization on the horizon, coupled with unprecedented national attention. In the run-up to the CPSIA, consensus soon emerged that the agency would receive additional funding and enforcement authority. In response to these concerns, Congress passed the Consumer Products Safety Improvement Act of 2008. The Act notably includes higher standards for lead content, whistleblower protection, creation of a database for sharing of safety information, and increased penalties for failure to report, among other things. The CPSIA also mandates third party testing and accreditation. The empowerment of state Attorneys General to enforce actual provisions of the act was one of the more controversial aspects of the CPSIA. It did not appear in every version of the act passed by the House and Senate, and remained controversial in the debates of the Act.
Opponents argue that the ramifications of state enforcement extend beyond the state’s boundaries, thereby fostering the inconsistent application of federal law. The fear is that even more significant patchwork problems would result, instigating an effective “race to the top” that would usurp legislative functions in deciding the optimal level of regulations—in this context, overregulation is problematic because it would stifle industry and innovation. A major reason why the National Association of Manufacturers (NAM) supported the initial CPSA in 1972 was grounded in the frustration of having to contend with myriad and complex state laws. The current proposal was strongly lobbied against by NAM. Their principle concern was that enabling state Attorneys General to bring lawsuits for failure to comply with the federal law would create a new field of litigation and threaten the industry’s history of cooperation with the CPSC. An ancillary concern is that confusion could arise if different state attorneys general had different interpretations of the law. The Executive Branch also opposed this increase in state attorney general enforcement power. In a letter to the Senate Committee considering the Bill, the White House argued that “allowing individual states to enforce the statutes on their own will cause significant uncertainty in the marketplace as the safety status of individual products may vary depending on the jurisdiction.” Even the acting chairman of the CPSC, Nancy A. Nord, opposed the provision enabling state Attorneys General to enforce aspects of the federal law. Nord wrote to Congress that such empowerment of state attorneys general would “undoubtedly lead to the inconsistent application of federal law . . . where states may effectively develop their own unique product safety systems and standards."
In general, proponents of this law and others like it argue that enabling state Attorneys General to enforce federal law allows fifty-one enforcement offices to police consumer safety issues and eradicates the need to rely solely on a single centralized enforcement office. This provision to have state Attorneys General monitor compliance with federal law was vocally supported by consumer advocacy groups, such as the Consumer Federation of America. Such groups reasoned that in the face of a failed domestic policy, allowing state Attorneys General to enforce the federal law would strengthen the safety scheme where the CPSC would not. Giving the power to state attorneys general further appealed to some members of Congress in that it allowed for greater enforcement without requiring additional appropriations of taxpayer money. Some Senators also note that states and state attorneys general are better situated to learn about and act on potential product threats in light of the well-documented flaws in the recall system. Though an item has been recalled, it is virtually impossible to ensure that it is entirely removed from the marketplace. For example, in a 2006 recall, Twentieth Century Fox Home Entertainment offered a free DVD to people who returned silver-coated metal charms that contained lead. Fifteen months after Fox’s recall of the 746,621 charms, only about 50,000 charms, amounting to 6.7 percent, were sent back. Though it is likely that many of the charms were thrown away, some of the unaccounted for charms surely remain on dressers and in jewelry boxes. Others may continue to be sold in second-hand stores. The potential for products to remain for sale on the shelves of discount stores is greater when a single centralized office is in charge of enforcement. The CPSC’s focus, as a data driven agency, is necessarily on uncovering the next product needed to be recalled, not scouring the shelves for already past recalls. They simply do not have the resources to do both. An assistant state attorney general will understandably be better able to learn about and act upon such persistent problems.
This debate regarding state attorney general enforcement of federal standards is a microcosm of a larger debate about the role of the state attorney general in the legal system. Some argue that the role of state Attorney General should be limited to defending state agencies in court and providing legal advice. They argue that by regulating through lawsuits, the state attorneys general have usurped the power of state legislatures and Congress to make law. If the state attorney general is entitled to forge regulations on her own, she is free from the checks and balances inherent in traditional law making to the detriment of interstate commerce.
Proponents argue that this regulation is a natural extension of the traditional powers of the state attorneys general. Faced with poor enforcement in the children’s products areana, some state Attorneys General have relished and expanded upon their role as defender of the public’s interests. It is the state Attorneys General’s job to defend the health, safety, and welfare of the people. That responsibility is at the heart of her powers in parens patriae. It is well established that the state Attorney General is no ordinary advocate; rather, she serves as a constitutional officer with a duty to both the people and to serve justice. There was no guarantee that Congress would pass the CPSIA, as well as a significant time lag between congressional action funding and authorizing the CPSC to fulfill its duty and when those gains would be seen. State attorneys general have expanded upon their traditional powers to fill a void created by lack of a federal regulatory presence.
It is important to note that this debate occurred during the prolonged “year of the recall.” Practical concerns related to detecting dangerous children’s products make the prospect of having “more cops on the beat” particularly attractive. The process of consumer protection is primarily driven by consumer complaints.  A key concern is how to enable consumers to efficiently register complaints, allow that information to be processed by the appropriate agency, and then acted upon by the appropriate regulatory body. For example, if a child choked on a small button her parents could contact the CPSC if they knew it existed, the manufacturer of the toy, the Better Business Bureau (to complain about the store who sold them the toy), their state attorney general, or even the local police or prosecutor’s office. There is a possibility that the parents may not link the isolated incident to a larger design defect that may potentially affect many children around the country. In this scenario, the more eyes on the ground with the ability to coordinate information, the more effective the response will likely be.
In light of increased demands placed on the CPSC in the CPSIA, there is a chance that the agency will actually be able to screen fewer products, at least in the short term. Despite the increase in authority and budget, there is some doubt that the CPSC will be able to respond quickly to the challenges facing it. The bill itself will require the CPSC to implement a host of new requirements and regulations. With the current staffing of full time employees at approximately 400 members, the CPSC will be required to hire, by its estimate, 125 additional full-time employees. This additional staff requirement is on top of the attrition of many of the top people after years of reduced funding and neglect. The apex of CPSC staffing came in 1980 when the Agency employed 978 people. The CPSC had only 420 full-time employees during 2007. This number was set to decline further to 400 employees prior to the publicized recalls and passage of the CPSIA. Furthermore, as the CPSC’s budget is largely dependent on Congress, so there is a possibility that a future Congress could reinstitute the shrinking of the Agency that has occurred in the past eight years.
B. The CPSIA Compromise
Ultimately, the House and Senate passed the CPSIA with a compromise: endowing state Attorneys General with some limited authority to enforce the provision of the act. This provision empowers state Attorneys General to seek injunctive relief to prevent the sale of dangerous products:
“[A] State, as parens patriae, may bring a civil action on behalf of its residents . . . whenever the attorney general of the State has reason to believe that the interests of the residents of the State have been or are being threatened or adversely affected by a manufacturer, distributor, or retailer entity that violates this Act.”
This power to seek an injunction is somewhat constrained in that state attorneys general are required to provide the CPSC with at least 30 days notice unless the State determines that it must protect the residents of its State from a “substantial product hazard” that must be acted upon immediately. The CPSC further has the right to become a party to any suit filed by the state attorneys general under the Act. State attorneys general cannot file a duplicative suit if a suit has already been filed by the CPSC, except in very limited circumstances. Together, these provisions provide a limited empowerment for state attorneys general, while maintaining CPSC oversight over the litigation. In its final form, the CPSIA offers a unique compromise to some of the potential problems of State enforcement. First, States are only able to seek “appropriate injunctive relief” for violations of the Act. Monetary damages may not be collected by States under the Act. States must also give the CPSC advance notice of their intention to initiate such an action before it is filed, unless faced with a “substantial product hazard” that must be immediately addressed. Should the state action conflict with a federal policy, the Act provides that the CPSC the right to intervene in any action filed by states under the Act. This ensures that enforcement will be uniform throughout the country as the CPSC may intervene if one state pushes the envelope too far. Additionally, if the CPSC already has a pending action against a company, states may not file a separate suit. Finally, on its terms, the act does not limit state Attorneys General from bringing the traditional actions discussed in Part II.B. According to Thomas Moore, a Commissioner of the CPSC, the Agency “will always be at a disadvantage in policing this huge import market,” but can “do a better job” than they currently do with more resources. The further empowerment of the state Attorneys General reflects the will to add to those resources. Furthermore, having state attorneys general assist federal agencies in enforcement of their power is not a novel concept. In light of the clear failure to adequately protect consumers, Congress erred on the side of empowering state attorneys general while avoiding the potential for the “patchwork” problems with some CPSC oversight. This compromise was essential to gaining bi-partisan support for this provision of the CPSIA. Importantly, however, the CPSIA left the state Attorneys General empowered to pursue the common-law remedies that had developed organically in the absence of strong federal regulation, thus begging the question of whether this new power will substantively add anything to that of state Attorneys General at all.
C. A Lasting Solution or More of the Same?
While the CPSIA adds another tool to the proverbial toolbox of a state Attorney General when facing a report of a dangerous children’s product, a separate question is whether the state Attorney General will actually use this injunctive power when all of her traditional tools are still available under state law. Some commentators believe that the state attorney general enforcement provision will not substantively add to the tools available to state attorneys general. They argue that the injunctive power embodied in the statute does not change how state attorneys general will fundamentally conduct product safety actions. As it stands, states may not enforce regulatory standards that are inconsistent with federal standards, but are allowed to enforce identical standards under state laws; nothing in the CPSIA changes this ability. State attorneys general will instead file actions in state court as they are more familiar with doing. Where there remains a regulatory vacuum, states will remain free to create new regulations.
There is some potential that enforcement under the CPSIA could evolve along the lines of state attorney general enforcement with the FTC. For example, in response to consumer complaints, more than twenty States compiled “Do Not Call” databases in the 1980s to prevent unwanted telemarketer calls. Residents could indicate that they did not want to receive calls from any companies. In order to make calls in the state, companies were required to access these lists and refrain from calling anyone on them. During this period, the size of the FTC was cut in half and the Agency saw the amount of fraud cases it brought dwindle. In this environment, state attorneys general stepped up their enforcement to compensate for the lack of federal presence. In the early 1990s, Congress passed the ineffective Telephone Consumer Protection Act (TCPA). This was a company specific list that proved to be less effective than individual state action.
When federal regulation seriously takes on a problem, state Attorneys General can be effectively utilized to enforce it efficiently. A national “Do Not Call” registry was not implemented until 2003. Unlike the TCPA, the new registry was structurally similar to those that states had been implementing for the past decade. The FTC coordinates the list, making determinations such as who qualifies as a “solicitor,” the times telemarketers can call, and the use of autodialing technology. The FTC has since had a successful history of working with the state attorneys general and generally welcomes their support. Though states are allowed to maintain their own lists, since the creation of the national registry more than thirty states have signed on and merged their lists with that of the FTC. The FCC, FTC, and the states are all able to enforce its provisions. State Attorney General offices are able to, and sometimes do, obtain nationwide injunctive relief. Like the sale of dangerous toys, telemarketing fraud is not confined to a particular state. An integrated state approach is far more efficient than waiting for federal action or proceeding on a state by state basis. Together, states and the FTC have virtually reduced unwanted telemarketer calls for those who opt-in to the program. Unlike determinations of telemarketing fraud, it is far less clear what about to a “substantial product hazard.” The injunctive power granted to state Attorneys General does not require the 30-day notice if the complaint alleges a “substantial product hazard.” CPSA § 15(a) defines a “substantial product hazard” as a failure to comply with an applicable consumer product safety rule which creates a substantial risk of injury to the public, or a product defect which creates a substantial risk of injury to the public. While the state attorney general must still notify the CPSC about such a determination, the filing of such an action and its attendant publicity does involve a substantial increase in power for a state attorney general. This increase in power threatens to undermine the limitation, embodied in the CPSIA, that allows state attorneys general to issue injunctions only with requisite notice to the commission. In light of the relatively few rules and standards enacted by the CPSC in its history, this power has been used by the Agency as its primary means of regulating manufacturers, importers, and vendors.
Some state attorneys general have been critical of the CPSC’s failure to use this power in the past. For example, Illinois Attorney General Madigan’s office identified hundreds of recalled bassinets that were still available on Craig’s List. Madigan chided the CPSC for the Agency’s slow response and not doing more to publicize the recall. Now, were the state Attorney General in Illinois to file a claim against the company, she could bring both the state and federal claims together, thus affecting a nationwide boycott while protecting consumers in her state.
Ultimately, the CPSIA did more than leave the organic evolution of the role of the state attorneys general intact. It further validated their role as key players in regulating children’s products by explicitly not preempting their common-law powers and enabling them to enforce the injunctive authority under the CPSIA. At the heart of the state attorney general enforcement of federal law is the relationship between the federal and state regulators. As sources of information of potential risks, particularly after a risk has been identified and a recall has been issued, the collaborative efforts of state Attorneys General working with the CPSC will put the U.S. in a better position to catch dangerous products.
In the long run, the best solution would be to stop the dangerous products from being manufactured in the first instance. Stronger and more consistent regulations in the places where the products are produced and designed are needed.[249 The heightened standards and penalties on manufacturers, vendors and importers represent a good first step. A major additional step involving the CPSC would be for Congress to pass legislation that would provide the Agency with more authority to work with the Chinese government. As the somewhat fragile trade relationship with China continues to develop, the U.S. must focus on working together with the Chinese to enact thorough standards. That, however, remains a long-term solution. In the short run, greater penalties, more enforcement, and increased publicity will provide a strong economic incentive for business to become as diligent as possible.
Until this can happen, the CPSIA is a solid first step towards empowering the CPSC to fully carry out its responsibilities. How the provision for state attorney general enforcement will work in practice remains to be seen. It could go follow either of two paths: state attorneys general could form a cooperative relationship with the CPSC like that with the FTC, or the provision may not be used at all as state attorneys general choose to stay with the organically developed common law actions they have been using to make up for the perceived void in federal regulatory presence, actions that remain largely isolated to their individual states or require the time, effort, and expense for cooperation. If the state attorneys general are able to make use of their new injunctive power along with the common-law action, then the benefits of local protection and deterrence may be coupled with nationwide publicity and effectiveness. For the benefit of consumers, greater cooperation and coordinated enforcement will pave the way towards increasing product safety and avoiding another “year of the recall.”
1 See The Office of Trade and Industry Information, TradeStats Express, at http://tse.export.gov/ for analysis of U.S. trade partnerships.
2 See U.S. Census Bureau and U.S. Bureau of Economic Analysis, U.S. International Trade in Good and Services, October 2008, available at http://www.census.gov/foreign-trade/Press Release/current_press_release/ft900.pdf. In total, the U.S. imported $29,909,000,000 worth of “toys, games and sporting goods” from January, 2008 to October, 2008. Id. at 13. This represents a substantial increase from the $28,528,000,000 imported during the corresponding period in 2007, although one can speculate that the economic troubles that emerged in October and November of 2008 will mean that fewer of these goods will actually be consumed. It would be premature to presume that the economic troubles would lead to fewer imports from China. Indeed, the strengthening dollar and ongoing economic turmoil may make importing goods from China even more attractive than it previously was.
3 U.S. Consumer Product Safety Commission, 2009 Performance Budget Request, at 14 (February 2008), available at http://www.cpsc.gov/cpscpub/pubs/reports/2009plan.pdf [hereinafter CPSC Budget Request].
4 In 2007 the U.S. imported more that $2 trillion worth of products. They entered the U.S. through more than 300 points of entry, and were transmitted by approximately 825,000 importers. Interagency Working Group on Import Safety, Import Safety—-Action Plan Update, Introductory Letter to President Bush (July 2008), available at http://www.importsafety.gov/report/actionupdate/actionplanupdate.pdf [hereinafter Import Safety Action Plan].
5 See The Office of Trade and Industry Information, TradeStats Express, at http://tse.export.gov/. The U.S. imported $321,507,785,000 worth of goods from China in 2007.
6 Wayne M. Morrison, Cong. Research Serv., RL32165, U.S.-China Trade Issues, May 22, 2008, [hereinafter Morrison, Trade Issues].
7 CPSC Budget Request, supra note 3, at 14.
f9. Morrison, Trade Issues, supra note 6, at 9.
10 See The Coming China Wars at 2, New York: FT Press, (2007).
11 See Charles B. Rangel, Moving Forward: A New, Bipartisan Trade Policy That Reflects American Values, 45 Harv. J. on Legis. 377, 409 (2008). China was able to accomplish this by devaluing their currency relative to the U.S. dollar, and then intervening in exchange markets to ensure that the value stayed at the level prescribed.
12 See National Labor Committee, Nightmare on Sesame Street, available at http://www.nlcnet.org/admin/media/document/China/KNEX_2008/SESAME_WEB_071508.pdf.
14 Peter Engardio (ed.), Chindia: How China and India Are Revolutionizing Global Business, at 60 (2006).
15 Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007.
16 Lucy P. Allen, et. al., China Product Recalls: What’s at Stake and What’s Next, NERA Working Paper, at 2, Feb. 20, 2008, available at http://www.nera.com/image/PUB_ChinaProductRecalls_2.08_FINAL.pdf.
17 Jyoti Thottam, The Growing Dangers of China Trade, Time Magazine, Jun 28, 2007.
18 Morrison, Trade Issues, supra note 6, at 9.
19 Jeremy Haft, The China Syndrome, Wall St. J., July 16, 2007, at A12.
20 In this context, lead is an especially difficult problem as it is hard to detect and can enter the production stream in a number of ways. A recent study conduct at Ashland University found that lead-containing electronic waste is finding its way into Chinese produced consumer products such as toys and jewelry. See Jeffery D. Weidenhamr and Michael L. Clement, Leaded Electronic Waste is a Possible Source Material for Lead-Contaminated Jewelry, 69 Chemosphere 1111, 1111—15 (2007), available at doi:10.1016/j.chemosphere.2007.04.023 (finding that recycled circuit board solders are being used to produce some of the heavily leaded imported jewelry sold in the United States). The recycling process allows Chinese manufacturers access to low cost electronic component parts and provides an outlet for disposed of U.S. electronics. While both China and the United States may benefit from U.S. companies sending recycled electronics goods to China for extraction and use, the negative externalities are born by relatively defenseless third parties: the Chinese workers who produce the goods and the children who use the dangerous, lead contaminated toys. See Heather L. Drayton, Note, Economics of Electronic Waste Disposal Regulations, 36 Hofstra L. Rev. 149, 158 (2007) (arguing “negative transboundary externalities” exist from trade of recyclable materials to less developed countries). When these components contain lead or other toxins, there is a risk of death when ingested by children or handled by factory workers.
21 David Barboza, When Fakery Turns Fatal, N.Y. Times, June 5, 2007 (discussing the origins of melamine-contaminated pet food). A Chinese company shipped melamine-contaminated ingredients to middlemen in North and South America, who used the ingredients in manufacturing pet food. Melamine is difficult to test for and was not detected until after numerous pet fatalities.
22 Joe Nowlan, Distributors Eye Mattel Recalls; Experts Say Due-Diligence and Attention to Detail Are Vital When Developing Private-Label Programs With Overseas Partners, Indus. Distribution, Oct. 1, 2007.
23 See Shu-Ching Jean Chen, Trapped in the Chinese Toy Closet, Forbes, Aug. 21, 2007.
25 See Monique Hawthorne, Comment: Confronting Toxic Work Exposure in China: The Precautionary Principle and Burden Shifting, 37 Envtl. L. 151, 164 (2007) (Arguing that toy factories violate regulations for toxic substances in order to decrease costs).
26 See Gregory H. Fuller, Economic Warlords: How Defacto Federalism Inhibits China’s Compliance with International Trade Law and Jeopardizes Global Environmental Initiatives, 75 Tenn. L. Rev. 545, 553 (2008) (describing how diverse interests of China’s large population, localism, and de facto federalism make complying with international accords difficult).
28 Id. at 576. Fuller argues that “comprehensive reform” is required to reverse the process of increased economic fragmentation within China.
29 Chun-Hsien Chen, Enforcement Rates of Intellectual Property Protection in the United States, Taiwan, and the People’s Republic of China, 10 Tul. J. Tech & Intell. Prop. 211, 253 (2007). Chen’s article discusses a similar difficulty in enforcing intellectual property laws in China. Though stronger IP laws have been enacted in the past ten years, the presence of these regulations has not significantly reduced the prevalence of violations or the widespread availability of counterfeit products. Chen concludes that the level of IP protection is affected by multiple factors, with the factors relating to socio-economic development the most decisive. Id. at 257—58.
30 Jyoti Thottam, The Growing Dangers of China Trade, Time, Jun 28, 2007.
31 Chen, supra note 28, at 252—53.
32 Thottam, supra note 29.
33 Julia A. Phillips, Does “Made in China” Translate to “Watch Out” for Consumers? The U.S. Congressional Response to Consumer Product Safety Concerns, Penn St. Int’l L. Rev. 217, 226 (2008).
34 U.S. Consumer Product Safety Commission, 2008 Performance and Accountability Report, at 3 (Nov. 2008), available at http://www.cpsc.gov/cpscpub/pubs/reports/2008par.pdf [hereinafter CPSC Performance Report].
35 CPSC Budget Request, supra note 3.
36 The CPSC administers the Federal Hazardous Substances Act, the Flammable Fabrics Act, the Poison Prevention Packaging Act, the Refrigerator Safety Act, the Pool and Spa Safety Act, and the Children’s Gasoline Burn Prevention Act. CPSC Performance Report, supra note 33, at 3.
37 Eric Lipton, Safety Agency Faces Scrutiny Amid Changes, NY. Times, Sep. 2, 2007.
38 Renae Merle, Products that Miss Safety Standards Sent Overseas by U.S. Companies, Wash. Post, Sept. 1, 2007. This practice will be banned by the CPSIA.
39 CPSC Budget Request, supra note 3
40 See CPSA §15(b).
41 Michael Weisskopf, Who Regulates America’s Toymarkers?, Time, Aug. 18, 2007.
43 CPSC Budget Request, supra note 3, at vi.
44 Stephen Labaton, Senate Votes to Strengthen Product Safety Laws, N.Y. Times, Mar. 7, 2008.
45 15 U.S.C. §§2056, 2057.
46 See Glen Kaplan & Charles Barry Smith, Patching Holes in the Consumer Product Safety Net: Using Unfair Practices Laws to Make Handguns and Other Consumer Goods Safer, 17 Yale J. on Reg. 253, 255 (2000).
47 16 C.F.R. §1115.14(e).
48 David G. Wix & Peter J. Mone, Planning For and Implementing a Product Recall, 74 Def. Couns. J. 220, 229 (2007).
49 CPSC Budget Request, supra note 3, at 5. The IT budget is approximately $7 million, including twenty-seven CPSC IT staff members. The focus on IT is expected to grow as the electronic sharing of information has increased both internally and externally.
50 Import Safety Action Plan, supra note 4, at 7.
51 Lipton, supra note 36.
53 See Kenneth A. Bamberger & Andrew T. Guzman, Keeping Imports Safe: A Proposal for Discriminatory Regulation of International Trade, 96 Cal. L. Rev. 1405, 1412 (2008).
54 See Michael Weisskopf, Who Regulates America’s Toymakers?, Time, Aug. 18, 2007.
55 15 U.S.C. § 2055(b)(1) (2008). See Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 111—12 (“The CPSA gave the Commission broad powers to gather, analyze, and disseminate vast amounts of private information. In granting the Commission such authority, Congress adopted safeguards specifically designed to protect manufacturers’ reputations from damage arising from improper disclosure of information gathered and received by the Commission.”).
56 15 U.S.C. § 2055(b)(1) (2008).
57 Id. at § 2055(a)(2).
58 See 15 U.S.C. § 2064(b); see also Reliance Elec. Co. v. Consumer Product Safety Com’n, 924 F.2d 274, 276 (D.C. Cir. Jan 22, 1991) (stating basis of Reliance Co.’s objections to FOIA request).
59 Id. See also GTE Sylvania, Inc., 447 U.S. at 105.
60 E. Marla Felcher, Product Recalls: Gaping Holes in the Nation’s Product Safety Net, 37 J. of Consumer Affairs 170, 173 (2003) (describing experience submitting FOIA requests to the CPSC and ramifications on regulation).
61 Allen, et al., supra note 15, at 7. In the end, design defects were responsible for the most recalls.
62 See Lipton & Story, supra note 17.
63 See Chris Reidy, Reebok Recalls Bracelets After Boy Dies, Boston Globe, March 24, 2006. The safety threshold for lead content in jewelry is 0.06 percent.
64 See U.S. Consumer Product Safety Commission, Reebok Recalls Bracelet Linked to Child’s Lead Poisoning Death, Release #06-119, March 23, 2006, available at http://cpsc.gov/cpscpub/prerel/prhtml06/06119.html.
65 See Bamberger & Guzman, supra note 52, at 1420.
67 Id. Though the U.S. could condition access to its market upon the allowance of inspections, the prospects for this are remote in light of higher priorities regarding trade with China.
68 Marc R. Stanley, When Bad Companies Happen to Good People, 56 Drake L. Rev. 517, 526 (2008) (arguing against tort reform by noting, in part, that the CPSC has “too few inspectors, investigators, and scientists . . . and too little enforcement authority”).
69 See Alec Johnson, Vioxx and Consumer Product Pain Relief: The Policy Implications of Limiting Courts’ Regulatory Influence Over Mass Consumer Product Claims, 41 L.A. L. Rev. 1039, 1071—84 (2008).
70 James E. Rooks, Jr., Settlements and Secrets: Is the Sunshine Chilly?, 55 S.C. L. Rev. 859, 861—62 (2004).
71 See U.S. Dept. of Health and Human Services, Centers for Disease Control and Prevention, Lead Poisoning Prevention Program, Frequently Asked Questions, available at http://www.cdc.gov/nceh/lead/default.htm.
72 The Center for Disease Control and Prevention’s Lead Program indicates that some consumer products through which children may be exposed to lead include artificial turf, candy, ceramic ware, folk medicine, Sindoor (a food additive) in addition to toy jewelry and toys. See Id.
73 Prior to 2007, recalls of dangers children’s toys and jewelry occurred on a yearly basis, some involving millions of pieces, with generally less publicity. See e.g. U.S. Consumer Products Safety Commission, CPSC Announces Recall of Metal Toy Jewelry Sold in Vending Machines: Firms agree to stop importation until hazard is eliminated, originally issued July 8, 2004 revised on March 1, 2006 available at http://www.cpsc.gov/CPSCPUB/PREREL/PRHTML04/04174.html (announcing the recall of 150 million pieces of jewelry in an agreement with four importers); The Diddle Kingdom: Chinese Manufacturing, Economist, July 7, 2007.
74 See Patrick Woodall, Senior Policy Analyst, Food & Water Watch, Testimony Before the U.S.-China Economic and Security Review Commission Hearing on Chinese Seafood Imports: Safety and Trade Issues, (April 24, 2008) (testifying that publicity surrounding toy recalls led to increased scrutiny of fish imports).
75 See David Barboza, China Food Mislabeled, U.S. Says, N.Y. Times, May 3, 2007 (pet food); Andrew Martin, Chinese Tires Are Ordered Recalled, N.Y. Times, June 26, 2007 (defective tires); Louise Story & David Barboza, Mattel Recalls 19 Million Toys Sent From China, N.Y. Times, August 15, 2007 (children’s toys). 100 people in Panama died from drinking cough syrup tainted with diethylene glycol, a component of car antifreeze, that was produced in China. Subsequent tests in the U.S. found the same toxin in discount toothpaste.
76 See U.S. Consumer Product Safety Commission, RC2 Corp. Recalls Various Thomas & Friends™ Wooden Railway Toys Due to Lead Poisoning Hazard, Release #07-212, (June 13, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07212.html. The affected toys were produced from 2005 to 2007 in China. This was particularly unsettling to some because Thomas the Tank Engine toys are generally seen as “high-end” toys, and cost between $10 and $100 per piece. See Angel Jennings, Thomas the Tank Engine Toys Recalled Because of Lead Paint, N.Y. Times, June 15, 2007.
77 See U.S. Consumer Product Safety Commission, Spin Master Recalls Aqua Dots – Children Became Unconscious After Swallowing Beads, Release #08-074, (Nov. 7, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml08/08074.html.
78 Keith Bradsher, Producer of Poisonous Toy Beads Issues Apology, N.Y. Times, Nov. 30, 2007.
79 See Lipton, supra note 36.
80 CSCP, Fisher-Price Recalls Licensed Character Toys Due To Lead Poisoning Hazard, Release #07-257, (Aug. 2, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07257.html. The products were recalled by Fisher-Price, a subsidiary of Mattel.
81 CPSC, Mattel Recalls “Sarge” Die Cast Toy Cars Due To Violation of Lead Safety Standard, Release #07-270, (Aug. 14, 2007) available at http://www.cpsc.gov/CPSCPUB/PREREL/prhtml07/07270.html.
82 See supra notes 12—13, and accompanying text.
83 Shu-Ching Jean Chen, Subcontractor at Heart of Fisher-Price Toy Recall is Apparent Suicide, Forbes, Aug. 13, 2007 [hereinafter Chen, Subcontractor] The proprietor, Zhang Shuhong, died of an apparent suicide shortly after the recall.
84 Gabriel Allen, Get the Lead Out: A New Approach For Regulating the U.S. Toy Market in a Globalized World, 36 Ga. J. Int’l & Comp. L. 615, 620 (2008).
85 Chen, Subcontractor, supra note 82.
86 U.S. Consumer Prod. Safety Comm’n, Additional Reports of Magnets Detaching from Polly Pocket Play Sets Prompts Expanded Recall by Mattel, Release # (Aug. 14, 2007), available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07273.html.
87 Shu-Ching Jean Chen, A Blow to Hong Kong’s Toy King, Forbes, Aug. 15, 2007.
88 See Geoff Dyer, et. al, Mattel Apologises to “the Chinese People”, Fin. Times, Sep. 21, 2007.
89 See Half of China’s Toy Exporters Out of Business, Xinhua News Agency, Oct. 14, 2008, available at http://www.china.org.cn/business/news/2008-10/14/content_16611295.htm.
90 Chen, Subcontractor, supra note 82.
91 See 700 Toys Export Licenses Revoked, China Daily, June 10, 2008, available at http://www.china.org.cn/business/news/2008-06/11/content_15736795.htm.
92 See Joseph Kahn, China Quick to Execute Drug Official, N.Y. Times, Jul. 11, 2007, available at http:// www.nytimes.com/2007/07/11/business/worldbusiness/11execute.html.
93 See 50% of Toy Firms ‘Gone in 2 Years’, China Daily, Oct. 21, 2008, available at http://www.china.org.cn/business/2008-10/21/content_16641477.htm.
95 See Wayne M. Morrison, U.S.-China Trade Issues, CRS Report for Congress, RL 33536, available at http://ncseonline.org/NLE/CRSreports/08Mar/RL33536.pdf . at 11. Steps included increased inspections, educational programs for Chinese manufacturers, bilateral technical personal exchanges and training, informational exchanges with U.S. officials, and the development of a product tracking system.
96 See U.S. Consumer Product Safety Commission, U.S. and Chinese Product Safety Agencies Announce Agreement to Improve the Safety of Imported Toys and Other Consumer Products, Release #07-305, Sept. 11, 2007, available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07305.html. See also Associated Press, China Signs Pact to Ban Lead Paint in Export Toys, N.Y. Times, Sept. 12, 2007.
97 Nicole J. Kaplan, Analyzing the Recall of Chinese-Made Products: Understanding the Problems and Creating Effective Solutions, 4 Bus. L. Brief (Am. U.) 39, 40 (2007).
98 See Toy-Makers Advised to Check Foreign Design Flaws, Xinhua News Agency, Nov. 26, 2008, available at http://www.china.org.cn/business/news/2008-11/26/content_16832904.htm.
99 By definition a design defect from a risk that emerges from regular use of the product. There is no reason to think that a manufacturer would be better situated than a product designer or tester to uncover a defect.
100 Joe McDonald, China’s Lead Problems Go Beyond Toys, USA Today, Aug. 16, 2007. Researchers have found that up to one-fifth of Chinese children tested have unsafe levels of lead in their blood.
101 Barboza, supra note 75. Mattel produces about half of its toys in plants that it operates, while the other half—typically holiday toys and other limited run items—are produced by subcontractors.
102 See supra note 23 and accompanying text.
103 Paul W. Beamish & Hari Bapuji, Toy Recalls and China: Emotion v. Evidence, 4 Management and Organization Review 197, 202 (2008) (discussing their analysis of toy recalls in the U.S. between 1988 and 2007). This further indicates that the public outcry against Chinese-manufactured goods is disproportionate as the designs for the goods overwhelmingly originate in the United States. This mistake was not helped by the media’s reporting of the 2007 recalls. Reports were litter with inflammatory article titles, see e.g. Shu-Ching Jean Chen, Trapped in the Chinese Toy Closet, Forbes, Aug. 21, 2007, and basic factual mistakes, see e.g. Joe McDonald, China’s Lead Problems Go Beyond Toys, USA Today, Aug. 16, 2007 (claiming that the 18.2 million toys recalled by Mattel were for lead paint, not a design defect).
105 Allen et. al, supra note 15, at 10—11.
106 See infra Part III.A
107 Stephanie Desmon, Rising Tide of Unsafe Imports: Reform is Sought at Federal Level, Balt. Sun, Aug. 15, 2007.
108 See Bamberger & Guzman, supra note 52, at 1416.
109 Felcher, supra note 59, at 174.
110 See Part II.D infra.
111 Justin Davids, State Attorneys General and the Client-Attorney Relationship: Establishing the Power to Sue State Officers, 38 Colum J. L. & Soc. Probs. 365 (2005).
112 See State ex rel. Shevin v. Exxon Corp., 526 F.2d 266 (5th Cir. 1976). As the Fifth Circuit noted, “[t]he office of the attorney general is older than the United States.” Id. at 268 n.4.
113 Id. See also William P. Marshall, Break Up the Presidency?: Governors, State Attorneys General, and Lessons from the Divided Executive, 115 Yale L.J. 2442, 2446 (2006).
114 Nat’l Ass’n of State Attorneys Gen., State Attorneys General: Powers and Responsibilities 15 (Lynne M. Ross ed., 1990) [hereinafter State Attorneys General]. The Attorney general is elected in forty-three states and appointed by the governor in five states (Alaska, Hawaii, New Hampshire, New Jersey, and Wyoming). Id. The AG of Main is elected by the legislature and the AG of Tennessee by the supreme court. Id.
115 See State v. Lead Industries Association, Inc., 951 A.2d 428, 470-72 (S.C. R.I. 2008). In Lead Industries, the court analogized the responsibilities of the state attorney general to that of a federal prosecutor: “It is the duty of the Attorney General to see to it ‘that justice shall be done’ not only in the context of criminal prosecutions, but also while he or she carries out all the functions of that high office—including engagement in litigation in the civil arena.” Id. See also State Attorneys General, supra note, at 6.
116 Shevin, at 268-69. See also State Attorneys General, supra note 113, 31-35 (discussing state constitutional and statutory underpinnings of attorney general power).
117 State Attorneys General, surpa note 113, at 207.
118 Steven Paul Mahinka & Kathleen M. Sanzo, Multistate Antitrust and Consumer Protection Investigations: Practical Concerns, 63 Antitrust L.J. 213, 214. See also State Attorneys General, supra note 113, at 207.
119 See Marshall, supra note 112 at 2456 (giving as an example a governor who ran for office by promoting the creation of a strong business climate but once elected finds himself hampered by an aggressive state Attorney General who is aggressive in maintaining consumer actions).
120 State Attorneys General, supra note 113.
121 According to a recent survey of complaints conducted by the Consumer Protection Project of the National Association of Attorneys General (NAAG), “retail sales” were ranked eighth and “internet sales” ninth. NAAG Consumer Protection Project, National Top 10 List of Consumer Complaints for 2007, NAAGazette, at http://www.naag.org/naag-issues-national-top-10-list-of-consumer-complaints.php (last visited Nov. 10, 2008). The unscientific study reflects a compilation of reports filed by office of the Attorneys General around the country. The most reported complaint was for debt collection, followed by auto sales, home repair/construction, telecommunications/slamming/cramming, automotive (general), telemarketing/do-not-call, and financial/investments. Of the reported complaints, only contests/sweepstakes/promotions generated fewer complaints than sales. In light of the low emphasis on consumer product enforcement, NAAG’s training institute recently created a “Consumer Protection Fellowship Program.” According to the project director, it was created shortly after the 2007 recalls to address “emerging consumer issues,” such as “product safety,” in order to produce research and policy advocacy from the Attorney General perspective. But for this newly enacted fellowship, the only other source for research and policy develop is the National State Attorneys General Program at Columbia Law School, “which the NAGTRI/State Center Consumer Protection Fellow’s research would complement.” See Dennis Cuevas, NAAG, NAGTRI Announces New Consumer Protection Fellowship, NAAGazette, at http://www.naag.org/nagtri-announces-new-consumer-protection-fellowship-program.php (last visited Nov. 10, 2008).
122 State of Fla. ex. rel Shevin v. Exxon Corp., 526 F.2d 266, 2268—70 (1976). See also Donald G. Gifford, Impersonating the Legislature: State Attorneys Generals and Parens Patriae Product Litigation, 49 B.C. L. Rev. 913, 934 (2008).
123 Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 607 (1982). See also State Attorneys General, supra note 113, at 92.
124 Snapp, at 607. See also Missouri v. Illinois, 180 U.S. 208, 240-241 (1901) (finding jurisdiction when the “substantial impairment of the health and prosperity of the towns and cities of the state” are threatened).
125 Gifford, supra note 121, at 934. Gifford notes that this line of argument forecloses strict products liability, negligence, implied warranty among other more common products liability theories. Id.
126 Id. at 939
127 See Allan S. Brown and Larry E. Hepler, Comparison of Consumer Fraud Statutes Across the Fifty States, Comparison of Consumer Fraud Statutes Across the Fifty States 55 Fed’n Def. & Corp. Couns. Q. 263 (Spring 2005) (presenting an analysis of each state’s consumer fraud and deceptive business practice acts). California’s Unfair Competition Law, Cal. Civ. Code § 17200, is one of the most well know. It is available online at http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=17001-18000&file=17200-17210. § 17200 is indicative of the relaxed requirements of UDAP actions relative to traditional common-law tort claims. There was no standing requirement nor a requirement that the plaintiff show particularized injury. Brown & Hepler at 266. All that had to be shown was that the public was likely deceived by the conduct in question. In 2004, Proposition 64 amended the Statute to require the showing of a particularized injury. The contours of reliance are still being litigated in California. See In re Tobacco II Cases, 142 Cal. App. 4th 891 (2006). The California Supreme Court has since granted review. Other statutes are based federal acts like Uniform Deceptive Trade Practices Act, the Uniform Consumer Sales Practices Act, or the Federal Trade Commission Act, but vary substantially from State to State in terms of what particular activities are prohibited. Id.
128 See Gifford, supra note 121, at 939. The broad statutes that combat fraud are universally supplemented by more specific legislation that empowers Attorneys General to investigate and litigate particularly troublesome industries.
129 Kaplan & Smith, supra note 45, at 315. See also Travis P. Nelson, Trends in Subprime Lending, 17-AUG Bus. L. Today 27, 28 (2008) (“Plaintiffs may allege that a lender’s practices are immoral, unethical, oppressive, or unscrupulous, and offensive to public policy—generally, an ‘unfair’ practice. Plaintiffs may also argue that the terms of a given loan are deceptive or confusing to an average consumer, such as offering very-short-term ‘teaser’ rates, advertising that rates ‘may’ increase when in fact they undoubtedly will, or providing exotic ARMs that are too complex for the borrower to comprehend—generally, a ‘deceptive’ practice.”).
130 Kaplan & Smith, supra note 45, at 293.
131 Kaplan & Smith, supra note 45, at 277.
132 See Unsafe Children’s Products Prohibition, VT. Stat. Ann. tit. 9, Ch. 63 § 2470b, available at http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=063&Section=02470b. This statute requires the department of health to create and maintain a comprehensive list of children’s products that do not conform to federal standards, have been recalled, or have had a warning issued about their use which constitutes a safety hazard. The statute further defines as an “unfair or deceptive act or practice” the act of selling any product that appears on that list. Vermont’s UDAP statute is VT. Stat. Ann. tit 9, §2453, and is available at http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=09&Chapter=063&Section=02453.
133 Doug Farquhar, 2007-2008 State Environmental Public Health Legislation, 71 Journal of Environmental Health 54, 55 (Oct. 2008). An example of permissible state action is making CPSC voluntary recalls mandatory. For an example of an Act that limits lead content in children’s products see S. 152 2008 Vt. Acts, Act 193, available at http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/acts/ACT193.HTM (lowering the allowable amount of lead in children’s products).
134 The CPSA provides that “no State or political subdivision of a State shall have any authority either to establish or to continue in effect any provision of a safety standard or regulation which prescribes any requirements . . . unless such requirements are identical to the requirements of the Federal standard.” 15 U.S.C. 2075(a) (2008).
135 It is of note that the CPSIA authorizes the CPSC to authorize stricter state standards so long as they do not unduly burden interstate commerce. The CPSIA also allows states to continue to enforce state standards for toys and children’s products that were in effect before August 13, 2008. See, John B. O’Loughlin Jr., Consumer Product Safety Improvement Act: Not the Last Word on Preemption, 36 Product Safety & Liability Reporter 1037, 1039 (2008).
136 See supra notes and accompanying text.
137 State Attorneys General, supra note113, at 208.
138 Id. This power, or its equivalent in a client agency, is available in all jurisdictions except Nevada, Utah, and Puerto Rico. Id. at 208.
139 The CPSC also uses this tactic on the federal level. The potential cost of recalls and product redesign has allowed the CPSC to use “suggestions” to effect large scale voluntary industry compliance. See Kaplan & Smith, supra note 45, at 259.
140 State Attorneys General, supra note 113, at 215.
141 See Jason Lynch, Note, Federalism, Separation of Powers, and the Role of State Attorneys General in Multistate Litigation, 101 Colum. L. Rev. 1998, 2024 (2001).
142 See supra notes and accompanying text.
143 Lynch, supra note 140, at 2003—04
144 NAAG has often helped coordinate these efforts by helping develop strategy, providing logistical support such as model complaints, and holding meetings of serving Attorneys General and their deputies.
145 See Gifford, supra note 121, at 915—16.
146 See Ricard Ieyoub & Theodore Eisenberg, State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae, 74 Tul. L. Rev. 1859 (2000). See also Martha A. Derthick, Up in Smoke (2002).
147 See Robert L. Rabin, The Tobacco Litigation: A Tentative Assessment, 51 Depaul L. Rev. 331 (2001).
148 Id. at 351.
149 American Shooting Sports Council, Inc. v. Attorney Gen, 711 N.E.2d 899, 903 (Mass. 1999).
150 American Shooting Sports, at 903 n.8. (listing examples of other regulatory schemes that limit states’ ability to regulate despite exemption from preemption by CPSA).
151 Kaplan & Smith, supra note 45, at 257—58.
152 Lynch, supra note 140, at 2024.
153 See David Shapiro, The Choice of Rulemaking or Adjudication in the Development of Administrative Policy, 78 Harv. L. Rev. 921 (1965).
154 Peter L. Strauss, Administrative Justice in the United States, 259 (2d. ed. 2002).
155 Id. at 260—61.
156 Kaplan & Smith, supra note 45, at 295.
157 American Standard, Inc. v. U.S., 602 F.2d 256, 267 (Ct. Cl. 1979).
158 Shapiro, supra note 152, at
159 James F. Barger, Jr. et al., States, Statutes, and Fraud: An Empirical Study of Emerging State False Claims Acts, 80 Tul. L. Rev. 465, 485 (2005).
160 Strauss, supra note 153, at 259.
161 Giffin, supra note, at 47.
162 American Shooting Sports, at 903.
163 Id. at 904. In this case, the court found that the Attorney General had not overstepped his bounds by imposing strict regulations on handguns.
164 Kaplan & Smith, supra note 45, at 309. For an example of a consumer fraud rule issued by a SAG, see Vermont CF 120: Representations of Vermont Origin, available at http://www.atg.state.vt.us/upload/1225834225_Representations_Of_Vermont_Origin_CF_120.pdf (regulating representations and company names indicating food products are of Vermont origin).
165 Though state Attorneys General do not generally have the authority to litigate on behalf of individual consumers, in some cases a state may be able to bring suit as a subrogee of a resident’s claim against a manufacturer. See State Attorneys General, supra note, at 210. Subrogation is a traditional tort doctrine by which a State can bring a claim on behalf of its residents. Unlike suits in parens patriae, the state is constrained by the inherent limitations of the client’s case in subrogation actions. See American Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 936 (7th Cir. 2003) (“It is settled that, as a general rule, an insurer steps into the shoes of the insured and “acquires no greater or lesser rights than those of the insured.”) (Internal quotations and citations omitted). See also R. Keeton & A. Widiss, Insurance Law § 3.10(a)(1) (1988) (The subrogee steps “into the shoes” of the subrogor). For example, in pursuing tobacco litigation, Attorneys General did not use subrogation suits because they wanted to avoid traditional defenses such as assumption of risk. See Michael Debow, The State Tobacco Litigation and the Separation of Powers in State Governments: Repairing the Damage, 31 Seton Hall L. Rev. 563, 571-72 (2001). The subrogation power is better suited to claims where the defendants are unable to afford a private attorney or their potential recovery is not enough to inspire a contingency fee lawyer to take their case than the typical products liability tort. Instead, subrogation is more often used by the state Attorneys General to seek reimbursement from a tortfeasor whose actions harmed a Medicaid recipient or when an insurer brings claims on behalf of their insured to recover payments. At the state level, these suits are statutorily authorized both under the federal statutes governing Medicaid and similar state statutes. Id. at 25-26. Subrogation suits are also common as accompaniments to criminal actions. Many states authorize the Attorney General to bring suit to recoup compensation paid from crime victims’ funds. See e.g. Missouri Revised Statutes §595.040(1).
166 Kaplan & Smith, supra note 45, at 310.
167 See Office of the Attorney General of Massachusetts, Massachusetts Attorney General Martha Coakley and 38 Other AGs Reach $12 Million Settlement with Mattel Regarding Toys Recalled for Excessive Lead Paint, Press Release, Dec. 15, 2008, available at http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&f=2008_12_15_mattel_multistate_agreement&csid=Cago.
168 The states were Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. See Final Judgment By Consent, State of Mississippi ex rel Jim Hood v. Mattel, Inc., filed Dec. 15, 2008, Chancery Court of Hinds County, MS, available at http://www.ago.state.ms.us/images/uploads/forms/matteljudgement.pdf [hereinafter Mattel Consent Judgment]. California also took part in negotiations, reached a separate agreement under its Safe Drinking Water and Toxic Enforcement Act. California alleged that Mattel had violated Proposition 65, the state’s safe drinking water and toxic enforcement law by failing to warn about the risk of lead.
169 See e.g. Complaint, State of Mississippi ex rel Jim Hood v. Mattel, Inc., filed Dec. 15, 2008, Chancery Court of Hinds County, MS, available at http://www.ago.state.ms.us/images/uploads/forms/mattelcomplaint.pdf [hereinafter Mississippi Complaint]; Complaint, Milgram v. Mattel, Inc., filed Dec. 15, 2008, Superior Court of New Jersey, Chancery Division, Mercer County, available at http://www.nj.gov/oag/newsreleases08/121508-mattel-complaint.pdf [hereinafter New Jersey Complaint]. It is of note that the complaints differ in the particular authorizing statutes, parties, and overall format. The two complaints do have the same substantive language in some sections. See “Background” in Mississippi Complaint and “Statement of Facts” in New Jersey Complaint. The Mississippi Complaint alleges a violation of that state’s unfair and deceptive trade practices law, whereas the New Jersey Complaint alleges a violation of its law prohibiting unconscionable commercial practices, illustrating differences in the UDAP statutes reference supra.
170 Jayne O’Donnell, Mattel Toys’ Lead Was 180 Times the Limit, USA Today, Sep. 18, 2007.
171 Mississippi Complaint, at ¶22.
172 Id. at ¶¶25—26.
173 Mattel Consent Judgment, supra note 167, at ¶4.0. Massachusetts, the lead state, will receive $625,000. Most of the money will be used for lead prevention. The state Attorney General will work with the DPH to issue grants to community groups to test homes and toys and increase the number of referrals of children who were exposed to lead. See Attorney General of Massachusetts Press Release, supra note 166
174 See Mattel Consent Judgment, supra note 167, at ¶3.1.
175 See Mattel Consent Judgment, supra note 167, at ¶¶3.2—3.4.
176 See Mississippi Complaint, supra note 169.
177 See Center for Disease Control, Morbidity and Mortality Weekly Report, available at http://www.cdc.gov/mmwr/ (Dec. 8, 2006).
178 Consumer Reports, Lead in Children’s Products Report, What We Found, at http://www.consumerreports.org/cro/babies-kids/child-safety/indoors/kids-and-lead/lead-in-childrens-products-12-07/what-we-found/test-findings.htm (last visited Jan. 2, 2008). By contrast, the new federal standard embodied in the CPSIA for lead in children’s products is 600ppm.
179 Office of the Illinois Attorney General, Attorney General Warns Consumers of Potential Lead Poisoning Hazard in Fisher Price Toy Kits, Press Release, Dec. 3, 2007, available at http://www.illinoisattorneygeneral.gov/pressroom/2007_12/20071203.html [hereinafter Cuff Recall Press Release]. See also O’Loughlin, supra note 134, at 1042.
180 It is of note that the CPSIA implemented a federal standard of 600 ppm for led content in similar products.
181 Cuff Recall Press Release, supra note 178.
182 Louise Story, Lawmakers Say Mattel Broke Word on Lead, N.Y. Times, Jan. 30, 2008.
183 O’Loughlin, supra note 134, at 1043.
184 One attorney advocates using the Alien Tort Claims Act to bring suits alleging a violation of international law for injuries caused by the production and dissemination of hazardous products from China. See Joel Slawotsky, Liability for Defective Chinese Products Under the Alien Tort Claims Act, 7 Was. U. Global Stud. L. Rev. 519, 541(2008).
185 In response to the 2007 recalls, a spokesman for the CPSC told the New York Times, “We want to get to a point of not having to do recall after recall, and simply make the marketplace safe.” Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007.
186 Nancy A. Nord, Acting Chairman, U.S. Consumer Product Safety Commission, Testimony, Submitted to the Subcommittee on Financial Services and General Government, House Committee on Appropriations, March 11, 2008, available at http://www.cpsc.gov/pr/nord03112008.pdf. [hereinafter Nord, Testimony]
187 15 U.S.C. § 2051(b)(1).
188 See Action Plan, supra note 4; Exec. Order No. 13439, 72 Fed. Reg. 40,053 (July 18, 2007). See also Interagency Working Group on Import Safety website at http://www.importsafety.gov/.
189 Thomas Moore, Commissioner, Consumer Product Safety Commission, Statement Submitted to the Senate Subcommittee on Financial Services and General Government, Senate Committee on Appropriation, April 30, 2008, available at http://www.cpsc.gov/pr/moore04302008.pdf.
190 Nord, Testimony, supra note 186.
191 See Action Plan, supra note 4;
192 Pub. L. 110-314, 122 Stat. 3016 (2008) [hereinafter CPSIA]. An additional indication of Congressional concern is that for the 2008 financial year, the CPSC’s budget was increased by 28% to $80 million. Bruce Mulock, Consumer Product Safety Commission: Current Issues, CRS Report for Congress, RS 22821, at 3, June 17, 2008.
193 CPSIA § 101. The lead paint limit will be lowered to 90 ppm on August 14, 2009. The lead content limit of 600ppm for all children’s products goes into effect on February 10, 2009. It will be lowered to 300ppm on August 14, 2009.
194 CPSIA § 219.
195 CSPIA § 212. The specifics on what this database will include, how information will be uploaded, and how it will be monitored are not definite yet. Some commentators have raised concerns that it will be abused by plaintiff’s lawyers. See William A. Ruskin, CPSC’s New Database: An Opportunity for Abuse?, to Toxic Tort Litigation Blog, http://www.toxictortlitigationblog.com/ (Oct. 31, 2008).
196 CPSIA § 217. The CPSIA does not change the requirement that any company that manufactures, distributes, imports or sells consumer products in the US must notify the CPSC if it obtains information that reasonably suggests a product fails to comply with an applicable consumer product safety regulation, contains a defect that could create a substantial product hazard to consumers, or creates an unreasonable risk of serious injury or death. See supra note and accompanying text. The CPSIA does increase potential fines for failure to report to $100,000 with a cap of $15 million.
197 CPSIA § 102. This section of the Act requires that third party testing be conducted and safety certification for certain children’s products. See U.S. Consumer Product Safety Commission, 16 CFR Part 1110, available at http://www.cpsc.gov/businfo/frnotices/fr09/certification.pdf (requiring for international products the importer to issue the certificate required by § 14 of the CPSA). See also U.S. Consumer Product Safety Commission, Third Party Conformity Assessment Body Accreditation Requirements for Testing Compliance with 16 C.F.R. Part 1501 (Small Parts Regulations), Nov. 4, 2008, available at http://www.cpsc.gov/library/foia/foia09/brief/smallparts.pdf (CPSC staff memorandum discussing accreditation requirements). There is some doubt about the potential success of these “self-regulatory” initiatives. Such plans have had success only where there has been a credible threat of government regulation to provide industry groups with an incentive to act. Such pressure has almost uniformly been lacking in the children’s product safety context. See Bamberger & Guzman, supra note 52, at 1428—32.
198 S. 2045 would have authorized giving state attorneys general the right to seek injunctive relief for unsafe products. This authority was not initially included in H.R. 4040. Mulock, supra note 192, at 6.
199 Mulock, supra note 192, at 1—2.
200 Consumer Product Safety Commission Reform Act 2007: Hearing on S. 2045 Before S. Commerce, Science and Transportation Comm., 110th Cong. (2007) (testimony of Joseph M. McGuire, President of the Association of Home Appliance Manufacturers on behalf of NAM).
202 Letter from Allan B. Hubbard, Assistant to the President for Economic Policy and Director, National Economic Council to Daniel Inouye, Chairman, Committee on Commerce, Science, and Transportation, U.S. Senate (Oct. 29, 2007).
203 Letter from Nancy A. Nord, Acting Chairman, CPSC to Daniel K. Inouye, Chairman, Committee on Commerce, U.S. Senate, and Mark Pryor, Chairman, Subcommittee on Consumer Affiars, Insurance, and Automotive Safety, U.S. Senate (Oct. 24, 2007).
204 See testimony of Rachel Weintraub before the House Committee on Energy and Commerce, May 15, 2007.
205 See Gabriel Allen, Get the Lead Out: A New Approach for Regulating the U.S. Toy Market in a Globalized World, 36 Ga. J. Int’l & Comp. L. 615, 640 (2008).
206 154 Cong. Rec. S1570 (2008) (statement of Sen. Pryor).
207 See Office of the Illinois Attorney General, Press Release, Madigan Calls on CPSC to Create Secondary Market Recall Strategy (Oct. 1, 2008), available at http://www.illinoisattorneygeneral.gov/pressroom/2008_10/20081001.html.
208 Eric Lipton & Louise Story, Bid to Root Out Lead Trinkets Falters in U.S., N.Y. Times, Aug. 6, 2007. The Fox charms were manufactured in China.
209 See 154 Cong. Rec. S1670 (2008) (statement of Sen. Pryor).
210 See Hans Bader, The Nation’s Top Ten Worst State Attorneys General, at 22, Competitive Enterprise Institute, Jan 24, 2007. This argument, as it is here, is usually crouched in orignalist terms, such as the “historical function” of the state attorney general. While this subservient role has been that of the Attorney General of the United States, State attorneys general have traditional possessed much more authority and autonomy. See supra notes and accompanying text.
211 Bader, supra note, at 22.
213 For example, in 1907 Missouri Attorney General Herbert S. Hadley called a meeting of his fellow State AGs to coordinate a strategy to challenge the monopolistic behavior of Standard Oil. This meeting, and subsequent enforcement strategy, was in part a response to a perceived lack of effort by the federal government. Hadley believed that together, state Attorneys General could be as effective as the federal government in enforcing actions in the public interest.
214 Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 266 (5th Cir. 1976).
215 See supra notes and accompanying text.
216 State v. Lead Indus. Ass’n, 951 A.2d 428, 471 (S.C. R.I. 2008) (“In view of the grave responsibilities of attorneys general vis-a-vis the public, the holder of that high office, as distinguished from the usual advocate, has a special and enduring duty to ‘seek justice.’”)
217 See supra Part II.
218 David Adam Friedman, Reinventing Consumer Protection, 57 DePaul L. Rev. 45, 51 (2007).
220 Nord, Letter, supra note 203.
221 Thomas Moore, Commissioner, Consumer Product Safety Commission, Statement Submitted to the Subcommittee on Commerce, Trade, and Consumer Protection House Committee on Energy and Commerce, November 6, 2007 [hereinafter Moore, Statement] (“We have lost many experienced and talented people in the last few years—people who knew instinctively when they saw a product whether it was badly designed or if it was just plain a bad idea from a safety standpoint. We have increased our information technology spending as a way to compensate for the reduction in the size of our staff, but no computer that I am aware of can look at a product and know that it should be removed from the marketplace. Only experienced, trained people can do that. The real backbone of the agency is its staff: our toxicologists, our pharmacologists, our mechanical engineers, our human factors specialists, our chemists, our investigators and yes, even our lawyers. We need to retain our current employees and recruit additional staff. They are the key to the agency’s ability to fulfill its role as protector and enforcer. This bill will allow us to rebuild our staff and should send a signal to current employees that the agency will be around for a long time and that they should stay and rebuild with us.”)
222 Mulock, supra note 192, at 3.
225 CPSIA § 218. State Attorneys General may stop the sale of products that violate CPSC issued safety standards; recalled products as announced by the Commission; banned hazardous substances; children’s products that have not been certified as tested by third-party laboratories once those certification requirements go into effect; children’s products that lack tracking labels once that requirement goes into effect; and stop the sale of products with safety marks if the use of those marks is unauthorized. State Attorneys General may also enforce the prohibitions against stockpiling products in advance of regulatory changes. See CPSIA § 218(a).
226 Moore, Statement, supra note 221.
227 For example, the Fair Credit Reporting Act, the Telephone Disclosure and Dispute Resolution Act, the Children’s Online Privacy Protect Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Credit Repair Organizations Act, the Controlling the Assault of Nonsolicited Pornography and Marketing Act, and a section of the Truth in Lending Act all provide for State attorneys general to have a role in enforcement.
228 Popular movements based on a recent publication that call attention to a particular issue are sometimes the impetus behind the institution of regulatory regimes. See Kaplan, supra note 96 (citing the publication of The Jungle by Upton Sinclair as “spearhead[ing] a grassroots movement that brought about reform in the United States”).
229 See 154 Cong. Rec. H7586 (2008) (statement of Rep. Whitfield).
230 See O’Loughlin, supra note 134, at 1043. Mr. O’Loughlin provides a strong practical summary of how he believes the enforcement of the CPSIA by state attorneys general will work once enacted.
233 See Lynch, supra note 140, at 2005.
234 Id. See also David J. Morrow, Transporting Lawsuits Across State Lines, N.Y. Times, Nov. 9, 1997.
235 Pub. L. No. 102-243, 105 Stat. 2395 (1991). See generally Robert R. Biggerstaff, State Courts and the Telephone Consumer Protection Act of 1991: must States Opt-in? Can States Opt-out? 33 Conn. L. Rev. 407 (2001).
236 See e.g. Timothy J. Muris, Prepared Statement of the Federal Trade Commission Before the Subcommittee on Commerce, Justice, State, the Judiciary and Related Agencies of the Committee on Appropriations, United States House of Representatives (Apr. 10, 2002), available at http:// www.ftc.gov/os/2002/04/041002budgettestimony.htm (state attorneys general used by FTC to help fight internet fraud).
237 Do-Not-Call Implementation Act of 2003, Pub L. 108-10, 117 Stat. 557 (2003). See generally Jacquelyn Trussell, Is the Can-Spam Act the Answer to the Growing Problem of Spam?, 16 Loy. Consumer L. Rev. 175 (2004).
238 See Prepared Statement of the FTC on The Joint Federal-State Enforcement Model Established by the Telemarketing and Consumer Fraud and Abuse Prevention Act, Before the Subcommittee on Highways and Transit of the Committee on Transportation and Infrastructure, U.S. House of Representatives (July 12, 2001).
240 See Press Release, Fed. Trade Comm’n, National Do Not Call Registry Celebrates One-Year Anniversary (June 14, 2004), http:// www.ftc.gov/opa/2004/06/dncanny.shtm.
241 CPSIA § 218(a)(2)(C).
242 CPSA § 15(a).
243 CPSIA § 218(a).
244 See supra note 46, and accompanying text.
245 See Illinois AG Press Release, supra note 207.
246 Id. See also Maurice Possley, “Missteps delayed recall of deadly cribs,” Chicago Tribune, Sept. 24, 2007.
247 See supra note and accompanying text.
fn248.According to the FTC Commissioner Pamela Jones Harbour, “Relations between state and federal enforcement officials regarding vertical restraints have been characterized by conflict and, at times, outright hostility.  More recently, federal and state vertical enforcement philosophies substantially have converged. Relations between federal and state enforcers, while not perfectly tranquil, now seem both cordial and mutually productive. As a former state antitrust enforcement official, I am among those who lived through the most tumultuous years. I remember when federal-state relations degraded from enthusiastic cooperation to straight-out antagonism, then witnessed their improvement to studied indifference and, finally, grudging respect and cooperation.” See Pamela Jones Harbour, Vertical Restraints: Federal and State Enforcement of Vertical Issues, ALI-ABA Course of Study Product Distribution and Marketing (March 18-20, 2004), available at http://www.ftc.gov/speeches/harbour/0403vertical.pdf.
249 See Laurel R. Hyle, et. al, International Legal Developments in Review: 2007 Public International Law, International Health Law, 42 Int’l Law. 745, 754 (2008).
250 See Phillips, supra note 32, at 268 (27 Penn St. Int’l L. Rev. 217)
251 See Bryan Bachner, Bull in a China Shop, 4 Bus. L. Brief (Am. U.) 4, 10 (2008).
252 Kaplan, supra note 96, at 42.
Attorney General Reaches Settlement Agreement with Dannon Over Advertising Practices
TALLAHASSEE, FL – Attorney General Bill McCollum, along with the Federal Trade Commission (FTC) and 38 Attorneys General across the country, today filed agreements with The Dannon Company, Inc. settling allegations of deceptive advertising practices related to the sale of Activia and DanActive products. Under the multistate settlement, Dannon will pay $21 million to the Attorneys General to settle allegations that Dannon made unsubstantiated marketing claims concerning these products. Florida will receive more than $800,000 towards litigation costs and consumer education. The $21 million settlement is the largest payment to date in a multistate settlement with a food producer.
Pursuant to the settlement, the lawsuit alleged that Dannon made claims in advertising, marketing, packaging, and selling Activia yogurts and DanActive dairy drinks that were not substantiated by competent and reliable scientific evidence at the time the claims were made. The investigation centered on claims that consuming Activia yogurts would help regulate the digestive system based largely on the presence of a bacterial strain with purported probiotic benefits that Dannon trademarked under the name Bifidus Regularis. However, Dannon did not have competent and reliable scientific evidence to support those claims at the time those claims were made.
Dannon, which also produces and distributes DanActive dairy drinks, also represented that DanActive provided consumers with “immunity” and cold and flu prevention benefits. As with Activia, Dannon’s advertising and marketing emphasized that DanActive contains a probiotic bacterial strain. In DanActive’s case, Dannon trademarked the bacterial strain under the name L. casei Immunitas. The Attorneys General alleged that Dannon lacked adequate substantiation to support those claims at the times those claims were made.
The settlement terms limit the claims that Dannon can make regarding the covered products; specifically, Dannon may not represent that these Dannon products can prevent, treat, cure or mitigate disease. Additionally, Dannon must possess competent and reliable scientific evidence to support otherwise permissible claims about the health benefits, performance, efficacy or safety of its probiotic food products. Dannon cooperated with the multistate investigation and denies the factual allegations asserted in the lawsuit.
In addition to Florida, the 38 states involved in today’s settlement are Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Tennessee, Vermont, Washington, West Virginia and Wisconsin, and the State of Hawaii, Office of Consumer Protection. Today’s settlement is pending judicial approval.
Dannon Settles With F.T.C. Over Some Health Claims
By Timothy Williams
The Dannon Company agreed to settle Federal Trade Commission charges that it had improperly claimed that some of its popular yogurt and dairy drinks could help prevent common illnesses and relieve irregularity, the commission announced Wednesday.
As part of a long-running national advertising campaign, Dannon had asserted that a single daily serving of its Activia yogurt could ease irregularity and that its DanActive dairy drink could reduce a person’s likelihood of catching a cold or the flu.
Dannon said it had scientific evidence to back up its assertions, but the commission said that Dannon lacked sufficient medical evidence to make those claims.
The commission said it had worked with 39 state attorneys general in its investigation that Dannon had agreed to pay $21 million to those states to settle the charges.
“Consumers want and are entitled to accurate information when it comes to their health,” Jon Leibowitz, commission chairman, said in a statement. “Companies like Dannon shouldn’t exaggerate the strength of scientific support for their products.”
The commission said Dannon would no longer be allowed to make such health claims unless they were approved by the Food and Drug Administration, even though the commission noted that such review was not typically required.
The requirement, the trade commission said in the statement, “will give Dannon clearer guidance going forward and help ensure that it complies with the settlement order.”
In a statement, Dannon, which is based in White Plains, said it would be more precise in making product claims, particularly in making it clear that three servings each day of Activia was required for relief of irregularity.
“After the comprehensive review with regulators of Dannon’s scientific substantiation, consistent with the F.T.C. standards, Dannon agreed to more clearly convey that Activia’s beneficial effects on irregularity and transit time are confirmed on three servings per day,” the company said. “Dannon also agreed that DanActive will not be marketed as a cold or flu remedy, which Dannon maintains it has never done.”
The statement added that “the essence of Dannon’s advertising remains unchanged and will continue to be truthful and in compliance with all laws and regulations.”
In September 2009, Dannon announced it had settled a class-action lawsuit related to its advertising of the two products. As part of the settlement, the company created a $35 million fund to reimburse consumers and agreed to make changes to the labeling and marketing of Activia and DanActive products.
STATE ENFORCEMENT OF FEDERAL LAW
Margaret H. Lemos
The law in the books is different from the law in action. Enforcement determines the distance between the two. Studies show that only a fraction of people with litigable grievances sue. Federal agencies go after an even smaller proportion of offenders. Imagine if that changed overnight and every arguable violation resulted in some form of enforcement action. The law as we know it would mean something very different. The words that appear in statutes and in judicial decisions would be the same, but their practical effect would be transformed by the shift in enforcement practices.
If enforcement controls the effective meaning of the law, it matters a great deal who controls enforcement. Virtually all federal civil statutes vest enforcement authority in a federal agency; some also create private rights of action that permit private parties to sue to enforce federal law. Decades of commentary on the choice between public and private enforcement have generated a remarkably stable set of arguments about the strengths and weaknesses of each type. But the conventional wisdom tells only part of the story, as it ignores variations within the category of public enforcement.
In fact, there are two types of public enforcement. Many federal statutes authorize civil enforcement by both a federal agency and the states, typically through their attorneys general. State-enforcement provisions appear most frequently in federal laws designed to protect consumers, including the recent Dodd-Frank financial overhaul bill. Proponents of state enforcement emphasize its potential to buttress federal efforts, bringing more “cops to the beat.” But state enforcement does not just intensify public enforcement of federal law, it changes it. State and federal enforcement serve different principals and empower different agents. The first distinction should be obvious: the public interest to be promoted by state enforcement is the interest of the state and its citizens, while federal enforcement purports to serve the broader national interest. More subtle, but no less significant, are the differences between the agents who control the exercise of enforcement authority at each level. Elected, generalist state attorneys general share little in common with the appointed, specialist agency officials who typify federal enforcement. The result is a brand of public enforcement that differs markedly from the more familiar federal model.
Despite its prevalence, we lack an account of state enforcement of federal law—what it is and how it affects citizens, states, and the federal system. This Article seeks to fill those gaps, exposing state enforcement as both a unique model of enforcement and a unique form of state power. Enforcement has been neglected in the federalism literature to date, which equates state power with state law. As I show, however, enforcement authority can serve as a potent means of state influence, enabling states to adjust the intensity of enforcement and to press their own interpretations of federal law. Although enforcement authority usually follows from regulatory authority, state enforcement of federal law disrupts that pattern, empowering state enforcers even in areas where state law is preempted or state regulators have chosen not to act. Enforcement also employs a distinct set of state representatives. Just as state attorneys general differ from federal agencies as agents of enforcement, they differ from other state actors as agents of federal-state interaction. Unlike the specialist state agencies that administer cooperative federalism schemes, attorneys general have broad jurisdictions and political incentives to challenge federal orthodoxy. And attorneys general in most states are independent from the state legislature and governor, representing different constituencies. Enforcement authority therefore opens up new outlets for state-centered policy, empowering actors whose interests and incentives distinguish them from the state institutions that dominate other channels of federal-state dialogue.
This analysis has important implications for current debates. First, attention to state enforcement reveals the limitations of the standard discourse on models of enforcement. State enforcement blurs the lines between public and private enforcement, drawing features from both categories. The hybrid nature of state enforcement makes it a valuable tool in areas where policymakers are concerned about the possibility of over-enforcement, yet reluctant to rely exclusively on a federal agency. Like private enforcement, state enforcement offers a hedge against the possibility that federal agencies will abdicate on enforcement due to capture, bureaucratic pathologies, political influence, or resource limitations. But unlike private enforcement, state enforcement has built-in safeguards that reduce the risk of overenforcement. State enforcers are limited in number and must ration their own scarce resources. Existing institutional arrangements further discourage state-federal conflict and over-enforcement by states by promoting consultation and cooperation between state enforcers and their federal counterparts. Thus, state enforcement can serve as a compromise between broad private rights of action and a federal monopoly on enforcement.
State enforcement of federal law also holds new lessons for federalism. Federalism scholars tend to see preemptive federal law as the end of the battle over states’ rights. That view is mistaken. While preemption prevents states from making and enforcing their own laws, it need not extinguish all state authority. On the contrary, states can continue to exert influence through enforcement of federal law. Such state enforcement is capable of generating many of the democratic and epistemic benefits commonly associated with state regulatory authority. Decentralization is not an unqualified good, as state-level variation in enforcement (as in regulation) can produce inefficient and undesirable policy outcomes. But state enforcement and state regulation generate different costs and benefits to the federal system, making state enforcement power appropriate even in some areas where state law is properly preempted. State enforcement of federal law, moreover, is not a one-size-fits-all proposition. Congress can calibrate state enforcement through procedural mechanisms that reduce the risks of disuniformity and over-enforcement, while still promoting the values of federalism.
This Article unfolds in three parts. Part I surveys the literature on public and private enforcement of federal law, then introduces state enforcement as a third option. Part II explores the distinctive features of state enforcement authority, differentiating it both from federal enforcement and from other types of state authority. Part III takes up the question whether this unique form of state power is valuable from a federalism perspective, isolating the conditions that render state enforcement of federal law more or less desirable. A brief conclusion follows.
I. THREE CATEGORIES OF ENFORCEMENT
A. Public and Private Enforcement
The academic literature on enforcement authority recognizes two categories of enforcement: public enforcement—defined as “the use of public agents . . . to detect and sanction violators of legal rules”—and private enforcement by nongovernmental individuals and groups. Most of the commentary analyzes enforcement from an economic perspective. Viewed through that lens, the central goal of any system of law enforcement is to promote the right level of deterrence as efficiently as possible. A large part of that task is identifying the most suitable enforcer or combination of enforcers, which in turn demands an inquiry into the interests, incentives, and capabilities of both public and private actors.
The conventional account of public enforcement emphasizes its capacity to translate broad legal commands into sensible operating rules that promote optimal deterrence. First, public enforcement can be “monopolistic” in the sense that decisionmaking is centralized in a single body. Some degree of centralization is necessary to ensure that enforcement, in all of its guises, conforms to a stable set of principles. Second, public enforcers have no inherent incentive to maximize enforcement by taking action on every colorable offense. The salaries of government lawyers and other officials usually are not tied to the number of enforcement actions they undertake. And, while public enforcers may be rewarded in various ways for successful enforcement, “good” enforcement is not the same thing as maximum enforcement. Given expansive liability rules and limited resources, uncompromising enforcement will rarely be the path to success for a public official. Third, public enforcers are charged with representing the public interest, which in the case of federal enforcement agencies means the interests of the nation as a whole. That broad perspective allows public enforcers to take into account the full range of costs and benefits from enforcement, including the expense of litigation for all involved and the risk of discouraging valuable conduct.
Although public enforcement is capable of promoting optimal deterrence, various factors can skew it away from the public interest. Limited resources may prevent public enforcers from uncovering and pursuing violations. Politicians may drive down public enforcement efforts by slashing budgets or replacing agency personnel. Public enforcers may take bribes or be captured by the targets of the law. Government attorneys’ individual interests may lead them to shy away from difficult or controversial cases, focusing instead on low-stakes enforcement with relatively little public payoff. Alternatively, public enforcers may take an unduly aggressive approach to enforcement in certain contexts, engaging in predatory prosecutorial tactics or overreacting to well-publicized scandals.
Private enforcement offers policymakers a different set of tradeoffs. By disrupting the public monopoly on enforcement, private enforcement may nullify any centralized enforcement strategy. Private parties seek to advance their own, private interests. They tend to ignore the costs and benefits to others, which can result in either more or less enforcement than is socially desirable. Especially when the benefits of enforcement are high—for example, where multiple or punitive damages are available—private enforcement is prone to over-deter. On the other hand, when litigation will have a valuable deterrent effect but offer little reward to the plaintiff, private enforcement may lead to under-deterrence.
Despite these drawbacks, private enforcement has some valuable features. One is compensatory: allowing injured parties to sue offenders directly provides a means of transferring wealth from violators to victims. Yet even where deterrence is the primary goal, private enforcement can offer a critical supplement to public efforts—particularly in areas where over-enforcement is not a concern. Private parties’ profit motives create built-in incentives to enforce that public enforcers may lack. Private parties also may have ready access to information—for example, knowledge of who harmed them—that would be costly for public enforcers to uncover. And the decentralized nature of private enforcement operates as a failsafe mechanism, reducing the risk that entire classes of violations will go unremedied. Precisely because private enforcers tend to be a diverse and disorganized group, they cannot be captured by industry or controlled by politicians.
Thus, neither public nor private enforcement is perfect in every circumstance: each can result in under- or over-enforcement, depending on a variety of contextual factors. Moreover, neither category of enforcement can be assessed in a vacuum. Policymakers can shape enforcement through legal rules that exploit—and perhaps adjust—the distinctive incentives and abilities of public and private enforcers. For example, private enforcement may be encouraged or discouraged by raising or lowering the available recovery for the plaintiff, and political control over public enforcement may be enhanced or diminished by vesting authority in independent or executive agencies. Commentators long have debated how to design such legal interventions to achieve the most efficient results. Behind the debates, however, lies widespread consensus about the basic tendencies of public and private enforcement.
B. State Enforcement
The conventional account outlined above pits centralized public enforcement against the individualistic efforts of private plaintiffs. But matters are more complicated than that. The image of “public” enforcement reflected in the literature is not just public—it is federal. Public enforcement assumes a different shape at the state level, revealing some features typically associated with private enforcement and others that do not fit neatly into either of the familiar models. State enforcement is worthy of independent study regardless of whether the law at issue is state or federal. But the unique attributes of state enforcement—and their ramifications for federalism—are particularly striking when state and federal actors share authority to enforce the same federal laws.
States have no inherent power to enforce federal statutory law. As is true of private parties, states’ authority to sue under any given statute is a question of congressional intent. Many federal civil statutes explicitly provide for state enforcement. Those statutes single out the state attorney general as the primary agent of state enforcement and empower him or her to bring a civil action to obtain specified remedies. Notably, most state enforcement provisions specify that state attorneys general must sue in federal court, thereby departing from the default presumption that state courts retain concurrent jurisdiction over federal causes of action. And most provisions require state enforcers to notify the relevant federal agency in advance of filing a complaint, permit the federal agency to intervene in the case, and restrict states from suing on violations that are the subject of a pending federal enforcement action.
Express provisions for state enforcement appear largely (though not exclusively) in the field of consumer protection. For example, state attorneys general may sue to obtain compliance with federal standards regarding flammable fabrics, hazardous substances, packaging of household substances, and consumer products. Other federal consumer protection statutes allow states to sue as parens patriae to obtain either damages or injunctive relief on behalf of their residents for violations of rules governing credit repair organizations, credit reporting agencies, pay-per-call services, telemarketers, professional boxing matches, sports agents, children’s online privacy protection, email spam, and the delivery and transportation of household goods. States have similar authority to enforce federal antitrust laws.
Other statutes do not contain stand-alone provisions governing state enforcement but nevertheless authorize states to sue under citizen-suit provisions that permit actions by interested “person[s]” and define that term to include states. Such provisions are common in federal environmental statutes. In addition, some courts have allowed states to sue as parens patriae under federal statutes that create broad private rights of action but are silent as to states. Examples include the Americans with Disabilities Act, the Fair Housing Act, and Title VII of the Civil Rights Act of 1964. When a state sues as parens patriae, it acts as the representative of its citizens. Therefore, courts have reasoned, Congress’s authorization of private suits by the citizens themselves implicitly extends to states suing on their citizens’ behalf.
State authority to enforce federal law is a relatively recent phenomenon, though it has roots in older practices. Many state attorney general offices grew exponentially during the 1980s, partially as a response to Reagan-era devolution and a decline in enforcement by federal agencies. As state attorneys general assumed new prominence, provisions for state enforcement began to proliferate in Congress. New provisions have been enacted by virtually every Congress in the last two decades. There is no obvious correlation between party control of Congress, or divided versus unified government, and a preference for state enforcement.
Indeed, state enforcement has been relatively uncontroversial in Congress. The most common argument in its favor—usually raised in the context of statutes that permit both state and private enforcement—is a need to enhance enforcement for reasons of compensation, deterrence, or both. As the next Part will show, one of the differences between state and federal public enforcement is that state attorneys general often sue to recover damages on behalf of citizens. Like private litigation, then, state enforcement may be driven by a desire to compensate victims, and legislators and lobbyists sometimes invoke that goal as a reason for empowering both states and private parties. More frequently, state enforcement is justified as a means of ensuring compliance with federal law through a “multilayered approach to enforcement” that “bring[s] more allies into the fight.” When objections arise, they tend to be voiced by legislators and industry groups who oppose the substantive project of the statute.
A second recurrent theme in the relevant legislative histories is that states need authority to enforce federal law because enforcement actions under state law will be ineffective. As one attorney general, speaking on behalf of the National Association of Attorneys General (NAAG), explained to Congress in hearings on a bill targeting pay-per-call services:
bq. Federal court access to the States would substantially reduce the jurisdictional difficulties and maximize the effectiveness of each case brought by any one office. It would carry with it nationwide service of process and also increase the ability of an attorney general in one State to secure a defendant’s assets which are located in another state.
Thus, part of the appeal of state enforcement of federal law (from the perspective of its supporters, at least) is that it facilitates states’ efforts to reach out-of-state defendants.
Although states’ authority to enforce federal law sometimes operates as a supplement to enforcement of their own laws, that is not always the case. In some cases, attorneys general are empowered to enforce federal rules that have no state analogue, either because state law has been preempted or because the state has chosen not to legislate. It is important, therefore, to separate the question of state enforcement from that of state regulatory authority. Typically, the two go hand in hand: a government creates laws and then enforces them. But state enforcement of federal law breaks that link by authorizing state actors to enforce the law of a different sovereign. As a result, state attorneys general may have enforcement authority in areas where state legislatures have not acted or are powerless to act.
Similarly, state enforcement of federal law must be distinguished from the implementation of federal objectives by states. Consider the Clean Air Act, which instructs states to create and enforce “state implementation plans” governing emissions from stationary sources within the state, provided that total emissions satisfy federal standards. Federal standards set the floor; states may opt for more stringent standards if they wish, and they retain substantial discretion in determining how to achieve their goals. Other federal environmental statutes follow a similar approach.
The model employed by the Clean Air Act, in which states regulate at the direction of the federal government, is well known in the literature on cooperative federalism. Students of federalism have emphasized the various ways that states can exercise regulatory authority in areas of concurrent state-federal authority. For these scholars, preserving state regulatory authority is the primary goal of federalism. Although cooperative schemes like the Clean Air Act limit the autonomy of states in various ways, they leave important room for interstate variation. Accordingly, while states implementing the Clean Air Act and similar statutes certainly engage in enforcement, the rules they are enforcing may vary from state to state. As the consumer protection and other statutes described above illustrate, however, enforcement authority can exist independent of regulatory authority. That is, even where Congress has denied states any regulatory autonomy, it may offer them a role in enforcing federal law.
II. STATE INFLUENCE THROUGH ENFORCEMENT
State enforcement of federal law complicates conventional accounts of public and private enforcement, exposing gaps in prevailing theories of enforcement. State enforcement is different from federal enforcement in several significant respects. State enforcement is largely decentralized, and states act on behalf of a set of interests that diverge in important ways from those represented by federal enforcers. State enforcement also empowers a different set of agents—elected, generalist attorneys general. Differences between the institutions in charge of enforcement at the state and federal levels translate, in turn, into differences in enforcement outputs. Enforcement therefore creates new channels for state-federal dialogue and, perhaps, discord. This Part explores state enforcement as a form of state influence, first sketching the distinctive features of state enforcement and then illustrating how enforcement can serve as an instrument for state policymaking.
A. State and Federal Enforcement Compared
1. Decentralized Enforcement
Public enforcement at the federal level is marked by centralization and political control. Most federal civil statutes vest public enforcement authority in a single federal agency. And all federal agencies operate under the supervision of Congress or the President or both. The President appoints agency heads and, with the exception of so-called independent agencies, can remove them from office. Congress can steer agency policymaking through oversight hearings and informal interactions with agency decisionmakers. By adjusting agencies’ budgets, moreover, the political branches can calibrate the level of agency activity, including enforcement efforts.
Public enforcement at the state level lacks an equivalent mechanism of centralized national control, creating the potential for more than fifty different approaches to the exercise of enforcement discretion. As noted, most federal statutes that provide for state enforcement require state attorneys general to notify the relevant federal agency prior to filing suit and permit the federal agency to intervene in the case. Such provisions enable federal enforcers to keep tabs on the states and to present their own views regarding enforcement to reviewing courts. But federal enforcers cannot prevent the states from acting in ways that conflict with the federal enforcement strategy.
Similarly, while state enforcers can and do coordinate with their federal counterparts and with each other, cooperation is voluntary and tends to break down in the face of sustained disagreement. For example, state-federal cooperation over antitrust enforcement policy has waxed and waned in the last three decades as state and federal approaches have come into and out of alignment. Indeed, state enforcement tends to ramp up precisely when—and because—federal enforcers have determined to cut back on enforcement.
Interstate coordination likewise has worked best at bringing like-minded states together. States frequently work together in multistate actions that target a single defendant or group of defendants. Those actions rarely involve all fifty states, however, and there is no centralized lever akin to presidential control to pull wayward states into line with the rest. The most that can be said is that multiple enforcers are capable of synchronization when they agree on a common goal. When interests diverge, so too does enforcement.
2. Local Interests, Local Knowledge
Divergent approaches to the exercise of enforcement discretion are not just possible, they are likely. One of the core tenets of federalism is that decentralized decisionmaking will yield different results from policymaking at the national level. While the point usually pertains to regulatory authority, it applies with equal force to decisions about enforcement. Rarely does the distribution of interests in one state mirror those in other states or in the nation as a whole. Interests with little voice on the national stage can be heard loud and clear by state government. And different interests wield power in different states. State enforcement in any given state is likely to respond to interests and concerns that would be overlooked by other states and the federal government. In the antitrust context, for example, state enforcers report that they “typically focus on enforcement cases that have significant specific legal or regional impact upon their states, their consumers, and their public institutions.” As discussed in more detail below, elected state attorneys general have strong incentives to serve their local constituencies. State enforcers also are likely to have a better understanding of local conditions than their federal counterparts, simply by virtue of living and working in the state rather than in Washington, D.C. States may have an investigatory or enforcement apparatus in place—a local police force, for example—that would be costly for the federal government to replicate. And state enforcers’ relative closeness to local citizens gives them access to information federal enforcers may not have or lack the capacity to address. Thus, as supporters of state enforcement of federal consumer protection law argued, “the attorneys general in all of the States know, perhaps more urgently and more rapidly [than the federal Consumer Product Safety Commission], when a product is defective.”
3. Political and Professional Incentives
State enforcement also is likely to diverge from public enforcement at the federal level because of differences in the agents of enforcement. The prototypical federal civil enforcer is a specialist agency headed by political appointees. Similar agencies exist at the state level. Yet when federal law authorizes enforcement by states, it bypasses state agencies in favor of state attorneys general. Unlike their federal equivalent, most state attorneys general are independently elected. Many have aspirations to higher office, usually the governor’s seat or Congress. And, unlike agency officials, state attorneys general are policy generalists.
A familiar theme in commentary on state enforcement is that state attorneys general are heavily motivated by political considerations. Critics describe attorneys general as “ambitious politicians more interested in making headlines than consistent, viable policy,” suggesting that politics are the primary driver behind state enforcement decisions. That view is almost certainly overstated. Nevertheless, even states’ defenders concede that “state attorneys general are responsive to political factors in ways that the federal agencies are not.” Although each state’s experience will be different, all elected attorneys general have incentives to take actions that will respond to the interests of their constituents. And the available empirical evidence—while limited—provides some support for the notion that elected attorneys general “tend to be more aggressive while appointed ones adhere more to the ‘ministerial functionary’ role of the attorney general.”
Contrast federal agency heads and attorneys, many of whom follow a career path that leads them to the private sector after a brief stint in government. As others have argued, “[a]gency attorneys who plan to go into private practice have strong incentives to ‘sell out’ their agencies in order to curry favor with private-sector attorneys.” Such attorneys tend to avoid difficult or complicated cases, focusing instead on developing trial experience and a winning record. Other attorneys seek out agency jobs because of a sincere commitment to the agency’s substantive mission. But even those who hope to stay in government service may have reasons to avoid controversy and risk-taking. And the highest-ranking agency policymakers—those in a leadership position akin to that of a state attorney general—are unlikely to have landed in their jobs because of a longstanding passion for the agency’s project. Instead, “those rewarded by political appointments tend to be those whose prior political loyalty demonstrates some kind of philosophical commitment to a party’s or candidate’s platform; political principles seem especially likely to inform their understanding of their own roles and missions.” Those principles may weigh in favor of strong enforcement, but that result is hardly inevitable. Political appointees often carry marching orders to do less, not more.
State attorneys general also differ from federal agencies in terms of the breadth of their jurisdiction. Research shows that elected generalists are more likely than appointed policy specialists to take risks or initiate major reforms. Professor Roderick Hills explains that
bq. [b]ureaucrats’ authority rests on their expertise, specialized training, and experience dealing with particular interests defined by authorizing statutes. Therefore, bureaucrats rarely try to form new interest groups but instead broker between those groups with which they are familiar. Bureaucrats also tend to resist or at least be indifferent to broad policy considerations or claims of abstract justice that do not fall squarely within their regulatory specialty. . . . Politicians’ authority, by contrast, springs out of their capacity to organize and inspire voters.
Hills describes state and local politicians as “natural policy entrepreneurs who can significantly influence what sorts of conditions are publicly recognized as problems.” Although his focus was regulation rather than enforcement, the argument holds for state attorneys general. As the name suggests, attorneys general enjoy a broad (“general”) jurisdiction to promote the public interest. Such expansive authority carries with it important opportunities for agenda-setting, allowing attorneys general to pursue far-reaching policy initiatives through their enforcement efforts.
Whatever the reason—be it politics, the professional setting in which attorneys general work, the personalities of those who are attracted to the office, or a combination of those and other factors—there is ample evidence of aggressive, entrepreneurial state enforcement. Take, for example, former New York Attorney General Eliot Spitzer’s groundbreaking campaign against Wall Street. Spitzer dusted off a “long-dormant” state statute that “had been used in the past to pursue boiler-room operations and Ponzi schemes.” With it, he launched a wideranging investigation into the relationship between investment banks and stock analysts. Spitzer began by subpoenaing email from Merrill Lynch. When he discovered “‘smokinggun’” evidence that the bank’s analysts were using stock recommendations to attract investment-banking business rather than to educate investors, he publicized his findings at a press conference and accused Merrill’s research analysts of “‘an outrageous betrayal of their trust and a shocking abuse of the system.’” Soon after, “Harvey Pitt, the chairman of the Securities and Exchange Commission and a stout believer in industry self-regulation, announced that he had changed his mind and ordered an investigation of his own.” For its part, Merrill agreed to pay a $100 million fine, apologize, and change the way it paid its analysts. Spitzer then led a multi-state effort, joined by the SEC, to subpoena email from twelve other banks. Ultimately the banks agreed to a comprehensive settlement under which they would pay about $1.4 billion in fines and other penalties.
Spitzer was similarly aggressive in other areas within the SEC’s jurisdiction. In a recent study, Eric Zitzewitz, an economist at Dartmouth College, examined twenty large settlements between the SEC and firms accused of market timing and late trading violations. New York was involved in some, but not all, of those settlements. The research shows that “New York’s involvement had a significant effect on the outcome of settlement negotiations,” raising the ratio of restitution-to-harm ten-fold, from 0.07 to 0.77. After controlling for other case characteristics, Zitzewitz concluded that New York was not simply choosing cases that were destined for large settlements, but rather that Spitzer and others in his office were more aggressive in their negotiations than the SEC. Zitzewitz offers several possible explanations for the divergence in approach. One is that state and federal enforcers disagreed on the appropriate metric for calculating harm to shareholders. Another possibility is that Spitzer’s “political career concerns led him to be aggressive” while “the SEC staff’s career concerns [led] them to take pro-industry positions.” Zitzewitz’s take on Spitzer is hardly unique. Spitzer’s work as attorney general was repeatedly criticized as motivated by political ambition, and his eventual (and successful) run for Governor surprised virtually no one.
Nor was Spitzer unique as an attorney general. Other examples of entrepreneurial enforcement include state-led campaigns against the tobacco industry, makers of lead-based paint, prescription drug marketing programs, student lending practices, handgun manufacturers, and, most recently, the mortgage-servicing industry. In the context of federal law enforcement, state attorneys general have gained notoriety in the antitrust context for pursuing practices—such as resale price maintenance and vertical restraints—that have been deemphasized by the federal enforcement agencies. Indeed, NAAG’s guidelines on vertical restraints “openly ‘counter’” Department of Justice guidelines in the same field.
To be sure, the patterns sketched here will not hold across the board. First, federal enforcement is not always specialized, and state enforcement will not always be controlled by generalist attorneys general. Particularly in large states, offices of the attorneys general may be divided into bureaus that handle certain issues, and the attorney general may have little day-to-day involvement in most enforcement actions. Nevertheless, the attorney general will play a central role in setting the agenda for the office as a whole—identifying priorities, crafting strategies, and so on. To some extent, the same is true at the federal level, though the effect is quite different. Many federal civil enforcement actions are handled by theDepartment of Justice (DOJ) rather than by a specialized agency. Although DOJ lawyers do specialize to some extent, they are more generalist in their orientation than the agencies they represent, and they answer to the (generalist) U.S. Attorney General. The influence of DOJ generalists is unlikely to inspire federal agencies to adopt a broader or more entrepreneurial enforcement agenda, however. The DOJ may decline to pursue an enforcement action proposed by an agency, but it does not initiate civil enforcement on its own. As Neal Devins and Michael Herz have explained, “[s]hould DOJ learn of possible violations warranting investigation, it forwards the information to the agency; an actual civil action will not go forward without a referral from the agency to DOJ.” Thus, to the extent DOJ participation influences federal enforcement, it tends to operate as a brake rather than an accelerant.
Second, federal enforcement will not always be weak and state enforcement always strong. Federal agencies sometimes will be inspired to act aggressively, particularly when federal policymakers scramble to respond to highly salient events. Similarly, the quest for electoral support sometimes will push state attorneys general away from aggressive enforcement. State enforcers are subject to capture by local business or other interests and may shy away from enforcement when the targets are local. Yet it bears repeating that the set of interest-group pressures will be different at the state and federal levels and from state to state. State enforcers’ elected status gives them incentives to tailor enforcement to their constituents’ interests—whatever they are. Just as political trends at the federal level may provoke more or less federal agency enforcement, attorneys general’s commitments may lead them to champion some causes and ignore others. The results will vary from state to state.
Finally, while federal politicians can sell deregulation and non-enforcement to voters on an “anti big-government” platform, it is difficult to imagine the same strategy working for most attorney generals. One need not subscribe to the cynical view that attorneys general choose cases based solely on political considerations in order to conclude that their elected status gives them incentives to act, and to act in public ways. It should come as no surprise, then, that attorneys general from both parties take pains to advertise their accomplishments to voters. The issues may differ—for example, Republican attorneys general running for reelection or higher office in 2010 emphasized issues like combating child pornography, while Democrats were more likely to highlight the environment—but the theme is action rather than inaction.
4. Financial Incentives
A final difference between state and federal enforcement concerns the role of money. No enforcer can ignore money. Litigation is expensive, and even the most public-spirited enforcer needs funds. Nevertheless, a conventional—if imperfect—way to distinguish public from private enforcement is by reference to financial incentives. Private enforcement is often profit-driven; public enforcement is not. Private parties and their attorneys stand to benefit directly from successful enforcement efforts; public enforcers do not. While public enforcers may seek hefty penalties in order to punish or deter violators, they rarely have an immediate financial stake in the case.
State enforcers have incentives to pursue monetary recoveries that destabilize these familiar distinctions between public and private enforcement, further distinguishing state enforcement from the federal model. First, states may sue to vindicate what are essentially private interests. For example, states enforce federal antitrust law against firms whose anticompetitive conduct harmed the state government in its capacity as a purchaser. Similarly, states enforce federal securities law on behalf of large public pension plans. In such instances, the state’s interest is largely the same as that of a private purchaser or investor, as is the state’s desire for compensation.
Second, federal law often authorizes states to sue as parens patriae on behalf of private parties. In those cases, the state attorney general plays a role akin to that of private counsel. Although state enforcers lack private attorneys’ strong incentive to maximize their own fees, they may benefit in various ways from large damage (and fee) recoveries. Big recoveries are good for business. Much as private attorneys use hefty damage recoveries to build their reputations and lure new clients, state enforcers trumpet their successes to the public in order to garner electoral support. And, while success can mean many things, recovering money for the citizens themselves is a particularly impressive feat for an elected official. Although compensating citizens features prominently among the justifications for parens patriae authority under federal law, injured citizens do not always enjoy a direct financial benefit from state enforcement actions. Cy pres distributions, in which the proceeds of enforcement are turned over to charities that serve as rough proxies for the individuals injured by the defendant’s conduct, are common. The attorney general may have substantial discretion over the ultimate destination of such funds, raising concerns about a possible political quid pro quo.
In other cases, monetary recoveries end up in the state’s own coffers. Of course, to say that “the state” keeps the money is different from saying that the attorney general turns a profit. Nevertheless, financial recoveries deliver important advantages to state enforcers. Especially in small states, large damage awards can make an important difference to the state budget. Consider the master tobacco settlement, in which tobacco companies agreed to pay states more than $200 billion over twenty-five years. Though the money was intended for health- and smoking-related initiatives, several states announced that they would use it to balance their general budgets. If nothing else, such budgetary windfalls give attorneys general powerful bragging rights.
State enforcers may reap an even more direct reward from enforcement, because the arm of the state that retains money earned in litigation is often the attorney general’s office itself. Many federal statutes that authorize state enforcement also explicitly provide for the payment of fees and costs to successful attorneys general. Attorneys general also may retain funds paid as damages or civil penalties. As with fees, the ultimate destination of those funds depends on state law, but it is sometimes the attorney general’s office or a revolving fund devoted to a certain category of enforcement. The consequence of this “‘eat what you kill’ approach” is that state enforcement may be largely self-financing.
Finally, the lawyers in charge of state enforcement may in fact be private attorneys. State attorneys general frequently reach out to private counsel to assist with the state’s business, including enforcement of federal law. Fee arrangements vary, but private counsel sometimes work for states on a contingency-fee basis. Plainly, such attorneys have a strong incentive to maximize damage recoveries. While the attorneys general themselves do not collect contingency fees, they may gain additional political support from powerful local attorneys.
State enforcers’ ability to recover funds for their constituents, political supporters, state treasuries, and their own offices affects their incentives to enforce. State enforcers may not pursue financial penalties with the single-minded focus that theorists associate with private parties, but neither are they immune to their pull. The prospect of financial recoveries may lead state attorneys general to choose different cases than their federal counterparts. Even when state and federal enforcers go after the same defendant, states may be looking for something different—money. And states’ ability to fund enforcement from enforcement means that state enforcement can proceed even when the public resources devoted to enforcement are limited.
B. The Power of Enforcement
We have seen that state enforcement differs in important respects from public enforcement by federal agencies. To some extent, the divergence between state and federal enforcement maps onto the divergence between state and federal law: we can expect states to act differently because they represent different sets of interests. Yet the analogy between enforcement and regulation only goes so far. State enforcement is distinguished not only by the familiar divisions between state and federal interests, but also by features that are peculiar to enforcement: the characteristics of elected attorneys general compared to specialist federal agencies and the influence of financial incentives.
Enforcement authority also is different from regulatory authority as a channel for state influence. Enforcement has gone largely unnoticed by students of federalism, who tend to “identif[y] preserving state regulatory autonomy as central to the project of federalism.” When viewed from that perspective, the omission is understandable. After all, states are enforcing federal law. But the differences between state and federal enforcement described above do not depend on variations in the underlying law. On the contrary, enforcement opens up avenues for state influence even when state actors are enforcing a federal rule. States can influence policy by adjusting the level of enforcement and by pressing novel interpretations of federal law. And states’ choices regarding enforcement can have important practical consequences both within each state and nationwide, as courts, federal enforcers, and regulated entities respond to states’ efforts. Enforcement therefore warrants attention as a distinct source of state power—a power that can exist even where states do not have, or have not exercised, regulatory authority.
1. Policymaking Through Enforcement
To see how enforcement can operate as an instrument for state-level policymaking, consider the Consumer Product Safety Improvement Act (CPSIA). Enacted in 2008, the Act aims to strengthen federal consumer product safety standards, in part by adding a provision for state enforcement. Among other things, the CPSIA banned the manufacture and sale of children’s toys containing “concentrations of more than 0.1 percent” of certain chemicals, known as phthalates, used to soften plastic. Although there are questions at the margins about what constitutes a children’s toy, there is a core set of products to which the ban clearly and unequivocally applies. Even in those circumstances where the federal rule operates unambiguously, enforcement authority allows states to influence policy by adjusting the intensity of enforcement and hence the degree to which manufacturers are deterred from using phthalates. States with a strong commitment to consumer protection can devote resources to identifying and pursuing violations, while those that wish to court business from toy manufacturers can abstain from enforcement. Indeed, there is some evidence to suggest that the decision by an elected attorney general to take action in the consumer-protection field is influenced by citizen ideology: attorneys general from “liberal” states do more, while those from “conservative” states do less.
The range of enforcement discretion increases when there is room for debate about the meaning of federal law. For example, states have expressed disagreement with federal regulators’ interpretations of the scope of the phthalates ban. The statute provides that, as of February 10, 2009, “it shall be unlawful for any person to manufacture for sale [or] offer for sale” products containing phthalates. The federal Consumer Product Safety Commission issued an advisory opinion letter stating that it would not enforce the ban against products manufactured before the effective date, even if they were sold after it. Several non-profit advocacy groups successfully challenged the CPSC’s interpretation as contrary to the Act. Connecticut Attorney General Richard Blumenthal filed an amicus brief in support of the plaintiffs, arguing that the federal agency had misinterpreted the statute and offering a contrary assessment of Congress’s intent. Blumenthal later issued a press release trumpeting the plaintiffs’ win and vowing to “take whatever steps are necessary to ensure that this phthalate ban is enforced.”
The potential for divergence between state and federal approaches to enforcement is even greater in areas where federal law is written in broad terms—and particularly where no federal agency has authority to narrow and clarify the law through binding regulations. Antitrust is an example. As noted in the previous Section, states have adopted guidelines on vertical restraints that depart from the standards followed by the federal enforcement agencies. States also have taken a distinctive approach to antitrust merger enforcement. Although state and federal merger enforcement differ in several respects, perhaps the most prominent disagreement centers on the relevance of a proposed merger’s impact on local jobs. The NAAG Horizontal Merger Guidelines recognize that, in addition to competitive consequences, mergers “may also have other consequences that are relevant to the social and political goals of section 7 [of the Clayton Act]. For example, mergers may affect the opportunities for small and regional businesses to survive and compete.” Those consequences, the Guidelines continue, “may affect the Attorneys General’s ultimate exercise of prosecutorial discretion.” The federal guidelines make no mention of such considerations. Critics argue that states’ concern about the loss of local businesses and jobs is inconsistent with the statutory text and congressional intent, while the states’ defenders insist that “preserving the competitive process requires preserving separate competitors, and jobs are part of preserving that separate decision maker.” Such a fundamental disagreement about the basic goals of federal law is made possible by the nature of the relevant statute, which defines prohibited mergers in vague terms and relies on courts rather than an agency to flesh out the details.
As some of these examples suggest, enforcement authority creates opportunities for states to influence policy not only within their own borders, but on a national scale. State enforcement may change the federal “law in the books” by generating judicial decisions that clarify the scope of the law. In the 1980s, for example, nineteen states banded together to sue a group of domestic and foreign insurers and reinsurers, alleging collusive activity in violation of federal antitrust law. The states had urged the Department of Justice to pursue similar claims, but federal enforcers took the view that “collusion is highly unlikely in unconcentrated industries like the property and casualty insurance industry.” Nevertheless, the states’ lawsuit was successful and resulted in a Supreme Court decision defining the extent of the insurance exemption and establishing “an expansive scope for U.S. antitrust enforcement against foreign conduct by foreign parties.” The decision has been described as one of the “ten milestones in 20th century antitrust law,” and federal enforcers rely on its precedent in many international cartel cases today.
State enforcement also may have wide-ranging effects when state practices prompt a shift in enforcement by federal agencies. For example, one commentator has suggested that the FTC’s decision to reconsider its use of restitution as a remedy for antitrust violations was spurred by states’ pursuit of monetary remedies. Similarly, states’ enforcement efforts may have nationwide consequences because of their impact on the regulated community, even if the law on the books remains the same. One state’s aggressive enforcement can prompt potential defendants to change their practices across the board. The impact is amplified when multiple states work together.
2. Enforcement as a Distinct Form of State Authority
I have argued that enforcement authority enables states to shape policy at both the state and national level. That is not to say, however, that enforcement is a substitute for regulatory authority. States unquestionably enjoy more power when they are able to write the rules as well as enforce them. Nevertheless, it would be a mistake to view enforcement as nothing more than a watered-down version of legislation or implementation of a federal scheme that leaves room for state regulation. Enforcement authority may be available in areas where regulatory authority is not. Enforcement also empowers different actors, creating new opportunities for state influence.
As explained in the previous Section, federal statutes that authorize state enforcement typically name the state attorney general as the relevant state actor. By contrast, federal statutes that provide for state implementation tend to rely on a specialist state agency to partner with the relevant federal agency. Indeed, such statutes often contain “single agency” requirements that “essentially force state governments to delegate responsibility for administering a federally funded program to a single state agency that specializes in the program.” Scholars have shown that state bureaucracies share much in common with their federal counterparts; their mutual specialization may outweigh federal-state differences. This idea is captured by the metaphor of a picket fence, where appointed state and federal agency specialists are represented by the vertical fence posts and elected state and federal generalists by the horizontal rails. As the image suggests, state agencies may be defined more by their subject-matter specialization—a feature they share with a federal agency—than by their affiliation with state government.
State attorneys general represent a different breed of state actor. While attorneys general and their staff may have connections with certain federal agencies, those connections seldom resemble the interdependent web that marks many federal-state agency relationships. As generalists, attorneys general must develop positions on a range of policy issues, negotiating among competing initiatives. And, as elected officials, attorneys general have ample incentive to make a name for themselves by challenging federal orthodoxy. State attorneys general also may differ politically from other state actors, such as legislators and governors. It is not uncommon for a state’s attorney general to hail from a different political party than both the governor and the majority of state legislators. That political diversity increases the range of viewpoints that may be represented by “the state” in its interactions with the federal government. Indeed, the same may be true even in the absence of political party differences. As one commentator has explained, “even when from the same party, the [attorney general and governor] can be, and often are, divided by personal rivalries or ideological differences. And even when the two officers agree on a particular issue, they may compete with each other to be the most aggressive in addressing the issue to curry favor with a particular constituency.”
By empowering state attorneys general, federal law facilitates such competition among state actors. The most obvious example is where federal law authorizes the state attorney general to enforce rules that the state legislature could have enacted on its own—but did not. This possibility is not merely hypothetical: several federal statutes that permit state enforcement were enacted precisely because state law was lacking. But even where other state actors already play a role in enforcing a rule, the state attorney general may choose a different approach. Consider the multi-state litigation against coal-burning power plants in the Midwest. In 1999, New York’s attorney general, Democrat Eliot Spitzer, adopted a “novel legal strategy aimed at reducing smog and acid rain in the Northeast,” announcing his intention to sue plants in several other states under an “untested provision” of the federal Clean Air Act. New York’s Department of Environmental Conservation—which “operate[d] at the pleasure of Gov. George E. Pataki, a Republican”—took a different approach to the same problem. Rather than going after plant owners directly, the state agency had petitioned the federal Environmental Protection Agency to act. The EPA’s efforts had been hampered by a series of legal challenges by Midwestern states and utilities. Six weeks after Spitzer’s announcement, however, the EPA used Spitzer’s new legal theory to launch an “unprecedented” enforcement initiative against more than 100 plants. New York and several other northeastern states intervened in the EPA’s suit, which eventually yielded “the biggest settlement—in dollar terms, as well as promised reduction in pollutants—in the . . . history of the 1970 Clean Air Act.”
Thus, enforcement authority may open up unique outlets for federal-state dialogue and state-driven policy. The federalism literature, with its heavy emphasis on state regulation, has ignored this feature of state enforcement. But state enforcement offers states an opportunity for influence—and a distinctive form of influence—quite apart from regulatory authority.
III. ENFORCEMENT AUTHORITY AND THE VALUES OF FEDERALISM
The question remains whether state influence of this sort promotes the values commonly associated with decentralized decisionmaking in a federal system. This Part explores the virtues and vices of enforcement authority from a federalism perspective. Although the conventional arguments for federalism focus on the advantages of regulatory competition, I show that competition over enforcement authority yields similar benefits. It does not follow, of course, that state enforcement of federal law will always be desirable. Decentralized regulatory authority creates risks as well as rewards, as regulations tailored to state interests may interfere with the broader national interest. So too for enforcement. State enforcement of federal law poses a threat to uniformity and may result in over-enforcement. Those are valid concerns, but they do not apply with equal force to all exercises of state enforcement power, and in most cases they can be accommodated through careful structuring of state-enforcement provisions.
A. Enforcement Authority and the Benefits of Decentralized Decisionmaking
Properly understood, federalism is a means to an end. A federal system is desirable not for its own sake, but because decentralized decisionmaking is thought to have various desirable consequences. First, federalism “increases opportunity for citizen involvement in democratic processes” by locating decisionmaking authority in multiple, smaller units of government. Second, federalism operates as “a check on abuses of government power” by distributing power among various sovereigns. Finally, interstate competition over regulatory authority produces better policies, particularly when citizens can “vote with their feet” by moving from state to state. Competition creates incentives for state-level decisionmakers to tailor policy to fit local circumstances and preferences. Because “preferences for government policies are unevenly distributed among the various localities, more people can be satisfied by decentralized decision making than by a single national authority.” Regulatory competition also permits states to experiment with innovative new policies, serving—as Justice Brandeis famously put it—as “laborator[ies]” for the rest of the country.
1. Promoting Democracy
The first justification for decentralized power—promoting participatory democracy—translates easily from regulation to enforcement. Enforcement has significant practical effects on the lives of citizens. As such, it is an important site for democratic input. By authorizing enforcement by state attorneys general as well as a federal agency, Congress enhances citizens’ ability to influence public enforcement of federal law. State enforcers may be more accessible and responsive than federal agencies, both because states are smaller units of government and because state attorneys general tend to be elected rather than appointed. To the extent that federal agencies are accountable to the people, it is by virtue of their relationship with elected officials such as the President. State enforcement removes the middle man.
State enforcement of federal law also opens up additional channels for democratic input within the state. As noted above, federal statutes can and sometimes do empower state attorneys general to enforce rules that state legislatures could have created under state law but did not. In these areas, federal policymakers have recognized the value of state-level treatment of an issue, but state regulators have not acted. At first blush, such statutes may seem pernicious from a federalism perspective, a failure to respect the state’s preference for inaction. But attention to enforcement as a distinct form of state authority underscores the importance of breaking open the black box that represents “the state” to reveal the diverse group of state actors within. Independently elected attorneys general may represent different constituencies from other elected state officials because of political differences, and they may “hear” different citizen voices because of the distinctive ways their offices are set up to gather and respond to citizen complaints. As a result, state attorneys general may pursue initiatives that the legislature and the governor overlook or affirmatively reject.
This is a virtue of the existing system, not a vice. To begin with, the failure of the state legislature to adopt a particular rule is not reliable evidence of legislative intent. There are many reasons why legislation may not be enacted even if a majority of legislators and their constituents favor it. Indeed, the legislature may not even have considered the rule in question. But enforcement by the attorney general may be appropriate even if it were clear that a majority of state legislators would vote against the relevant federal rule. State law recognizes various representatives in the judicial, legislative, and executive branches of state government—including the attorney general. Absent some indication from state law, there is no a priori reason to favor state legislatures as the “real” representatives of the states’ citizens.
In any event, the attorney general’s authority to enforce federal law is best understood as a default rule that the state legislature could change, either by foreclosing any state enforcement of federal law or by designating a different state actor. Some federal statutes are explicit in this respect, stating that attorneys general can sue on behalf of the state unless the state enacts contrary legislation. Those statutes reverse the preexisting default, under which the legislature’s failure to act also foreclosed enforcement by the attorney general. Such a reversal seems entirely proper when the citizens’ federal representatives and their attorney general have both deemed the issue important enough to warrant action. Given that state enforcement provisions appear primarily in federal statutes designed to protect consumers, the targets of state enforcement are likely to be business interests that are capable of making themselves heard in the state legislature should the need arise. By shifting the burden of inertia onto such groups, federal law can help promote democratic debate at the state level, ensuring that a statewide policy in favor of non-enforcement is made by the citizens’ representatives (either the attorney general or the legislature) rather than by default.
2. Preventing Tyranny and Abuse
Things become more complicated when we move to the second of the traditional defenses of federalism: preventing tyranny. As the Supreme Court has explained, “[j]ust as the separation and independence of the coordinate branches of the Federal Government serve to prevent the accumulation of excessive power in any one branch, a healthy balance of power between the States and the Federal Government will reduce the risk of tyranny and abuse from either front.” Whether the same argument can be applied to enforcement depends, in large part, on how one defines “tyranny and abuse.” Enforcement authority creates a statelevel check against under-enforcement by federal agencies. Thus, if the federal government ignores certain violations for illegitimate reasons—targeting Republicans but not Democrats, for example, or African Americans but not Caucasians—the states can level the playing field through their own enforcement efforts. States can provide a similar corrective for underenforcement by other states. And the potential for such gap-filling by individual states should reduce the likelihood of non-enforcement to begin with.
Note, however, that the ratchet only moves in one direction: toward more enforcement. States can increase enforcement, thereby reducing the risk of discriminatory non-enforcement and under-deterrence. But state enforcement does not create an effective check against abusive over-enforcement by the federal government or other states. Each state can forego enforcement itself, but it cannot prevent other enforcers from acting.
This problem is not unique to enforcement authority. For example, states lack the power to repeal the federal ban on marijuana possession, even if their own laws permit such possession for medical purposes. Nevertheless, the presence of more permissive state laws can exert a powerful influence on public opinion—and, by extension, on federal decisionmakers. The same can be said of enforcement. States can object to federal enforcement practices through private communications with federal agencies or in public statements, press releases and amicus briefs. Of course, states can voice such objections regardless of whether they are empowered to enforce the relevant law. Yet the fact that a state attorney general has authority to enforce federal law in a given circumstance but has chosen not to lends a certain gravitas to state-based objections. The existence of enforcement authority both validates states’ connection to the statute and permits state enforcers to gain the expertise necessary to be taken seriously.
3. Improving Policy
The next set of arguments for federalism focuses on the policy benefits of decentralized decisionmaking. The conditions in Montana—social, political, economic, agricultural, and so forth—are different from the conditions in Florida, and state actors are better positioned than national legislators or bureaucrats to appreciate the fine points. State law, moreover, “can be adapted to local conditions and local tastes, while a national government must take a uniform—and hence less desirable—approach.” Citizens can choose among the resulting policy packages by moving from state to state, opting for the one that best fits their preferences. And states, which compete with each other for “productive assets” and “desirable people,” have incentives to create attractive policies. The upshot is that federalism offers a way to satisfy more citizen preferences than centralized national rule.
State enforcement captures some of these benefits of decentralized regulatory authority. Citizens of different states may have different tastes for enforcement, and state enforcement can reflect those variations. Similarly, a local perspective may inform state enforcers’ interpretations of federal law, generating different approaches in different states and at the federal level. And state enforcers’ familiarity with local conditions enables them to identify violations that their federal counterparts might miss. As with regulation, therefore, state enforcement authority can help match enforcement policy to the preferences of local citizens.
Although a “citizen choice” justification for state enforcement has significant appeal, it is important not to overstate the case. One limitation is the one-way-ratchet problem identified above. While enforcement allows for some variation from state to state, states will find it difficult to satisfy the preferences of citizens who would prefer little or no enforcement, because they cannot prevent other states or the federal government from stepping in. Jurisdictional limitations may preclude states from using state law to reach out-of-state defendants, but those limitations evaporate when states are empowered to enforce federal law. This factor—often emphasized by states as an argument in favor of state enforcement provisions in federal statutes —reduces the value of enforcement authority as a vehicle for citizen choice. A second difficulty with the “citizen choice” rationale as applied to enforcement is that the effects of state enforcement frequently spill over state lines. The decisions of one or a few states can effectively shape policy nationwide by generating judicial decisions that limit the range of enforcement choices going forward, inspiring a change in federal law or enforcement practices or influencing private behavior.
Again, these critiques are not limited to enforcement but apply with equal force to regulation. One state’s demanding labeling requirements may affect products nationwide, and another state’s lax environmental standards may increase pollution in neighboring states. Bigger and more powerful states may have an advantage over smaller states in these respects, raising concerns about “horizontal aggrandizement.” The key point for present purposes is that state enforcement authority—like state regulatory authority—has the potential to improve citizen choice, not that it always will.
Finally, state enforcement can function as a “laboratory,” allowing states to “try novel social and economic experiments without risk to the rest of the country.” Concededly, states’ experiments with enforcement will not always be confined within state boundaries. State enforcement that affects out-of-staters by changing judicial interpretations of federal law nationwide, or by inducing regulated entities to alter their behavior, does not occur “without risk to the rest of the country.” But not all interstate effects are incompatible with the concept of states-as-laboratories. On the contrary, the theory assumes that successful state experiments will often be adopted at the national level. To the extent that experience with state enforcement persuades federal agencies to change their own enforcement practices—as may have been the case with FTC’s approach to monetary remedies in competition cases, for example—state enforcement fits neatly with this famous justification for federalism.
An additional epistemic benefit of state enforcement of federal law is that it provides opportunities for experimentation with respect to the institutions of enforcement themselves. Concurrent enforcement authority means that there are more than fifty governmental agencies capable of enforcing a given federal rule at any time. Those state and federal agencies differ along various axes, including their size, resources, degree of specialization, transparency, political affiliation, and so on. Thus, divergent enforcement practices by various states and a federal agency generate useful information not only about possible policy approaches, but also about possible ways to structure public enforcement.
From the perspective of federalism, therefore, state enforcement shares many important features in common with state regulation. Both types of state authority provide opportunities for democratic input, operate as a check on abuses by the federal government, improve the range of citizen choice, and create valuable information about different approaches to the use of government power. Although state regulation has received the lion’s share of attention to date, state enforcement authority deserves consideration as an additional site for decentralized decisionmaking.
B. Assessing Interstate Variation in Enforcement
I have argued that state enforcement authority can advance the project of federalism, generating many of the same benefits of decentralized decisionmaking that state regulation provides. Yet decentralized decisionmaking is not always a force for the good. Few scholars argue that “state regulation per se adds value to national policy.” Instead, most recognize that state regulation will be advantageous in some instances and not in others. Where decentralized regulatory authority is likely to result in parochialism or set off a destructive race to the bottom, for example, a national solution is appropriate even if it means sacrificing state creativity.
Like regulation, state enforcement may promote state interests at the expense of the broader public interest. Indeed, state enforcement may be problematic precisely because it is different from federal enforcement. Legislators and industry groups opposed to state enforcement frequently cite the specter of “50 different interpretations of federal law,” creating a “confusing patchwork” of requirements that “complicate the compliance obligations of legitimate business to operate in a regional or multi-State environment.” In areas where uniformity is particularly important, the costs of interstate variation may well outweigh the benefits.
State enforcement also may be undesirable in areas where the optimal level of enforcement lies somewhere below maximum enforcement. Over-enforcement is possible in any enforcement regime, but the risk is particularly pressing in areas where the relevant liability rule is written in broad terms, capturing conduct that lawmakers “did not in fact want to forbid.” A federal agency with a monopoly on enforcement could engage in “discretionary non-enforcement,” ignoring certain technical violations in favor of others it deems more important. But that strategy will not work when enforcement authority is scattered among fifty different enforcers with no mechanism for centralized control. And decentralized enforcement will tend toward more rather than less enforcement because of the one-way ratchet effect discussed above. States can make up for under-enforcement by other states or the federal government by increasing their own efforts. However, because no state can prevent another from enforcing in any given instance, none can dictate the overall level of enforcement.
States may be particularly prone to over-enforcement, moreover, due to the self-financing nature of some state enforcement schemes and the states’ ability to export the costs of enforcement to other states. State enforcers may be too quick to go after out-of-state defendants, since many of the ultimate costs of enforcement (for example, lost jobs or higher prices) will be borne by non-residents. And political ambitions may encourage attorneys general to adopt a more entrepreneurial and aggressive brand of enforcement than typically is observed at the federal enforcement agencies.
It is impossible to determine in the abstract when interstate variation in enforcement will “add value to national policy”—or, in other words, when the benefits of state-level decisionmaking will outweigh the potential costs of disuniformity and over-enforcement. Striking the correct balance requires answering a series of context-specific empirical questions regarding the actual practices of state, federal, and private enforcers and the effects of enforcement on regulated entities. Perhaps more importantly, reasonable minds will often disagree on what the “right” answer is. For example, one who believes, as a policy matter, that dangers to children’s health should be avoided at all costs will not be concerned by the possibility that states might take an aggressive approach to enforcing the CPSIA’s ban on phthalates, whereas one who is committed to fostering small business will see a greater risk of excessive state enforcement. Similarly, one’s assessment of whether state-to-state variation in enforcement reflects valuable localism or parochial interference with national policy will depend heavily on one’s view of the merits of the national policy at issue. Those who broadly support the policy will not be troubled by the possibility that some states will enforce it more stringently than the federal agency, whereas those who deem it critical to cabin the national policy carefully will see creative state enforcement in a different light.
It should come as no surprise, then, that existing debates about state enforcement—both in Congress and in academic commentary—tend to conflate critiques (or defenses) of the substance of the relevant federal law with critiques (or defenses) of state enforcement. That approach is understandable, but it is not inevitable. A trans-substantive analysis of state enforcement of federal law reveals several recurring considerations that bear on the risks of disuniformity and over-enforcement. As the remainder of this Part will show, the significance of those risks hinges on three common factors: the status of state law, the role of federal courts and agencies, and the nature of the federal rule to be enforced. While the desirability of state enforcement in any area will depend on both objective empirical fact and subjective policy judgment, attention to the factors highlighted here will sharpen the inquiry—and will make clear that concerns about disuniformity and over-enforcement can be accommodated in many cases while leaving meaningful room for state participation in the enforcement of federal law.
State enforcement of federal law is easiest to defend against charges of disuniformity in areas where states also can enact and enforce their own laws. Many federal statutes that provide for state enforcement do not purport to preempt state law on the subject. Congress’s decision to permit state lawmaking (and enforcement of state law) reflects a judgment that the benefits of decentralized decisionmaking outweigh the possible costs to uniformity. That judgment may of course be mistaken—that is, there may be state laws that ought to be preempted but currently are not—but it would be odd to identify state enforcement of federal law as the primary target of reform in those areas. Where disuniformity is a problem, the effects of fifty different approaches to enforcing federal law will pale in comparison to the effects of fifty different approaches to enforcing fifty different laws.
Although the costs of state enforcement of federal law are minimal in areas where states can make and enforce their own laws, the benefits are still present. By authorizing states to enforce federal law, Congress can harness state enforcers’ local perspectives in the development and application of federal law. Similarly, state enforcement of federal law provides rare opportunities for insight into possible enforcement strategies, as citizens and policymakers can compare the efforts of more than fifty government institutions with authority to enforce the same rule. Competition in public enforcement also reduces the likelihood that powerful offenders will be able to escape penalties for federal violations by exerting influence on a single responsible agency and can spur both state and federal enforcers to act more forcefully and efficiently. And state enforcement of federal law may be significantly more efficient than the alternative—enforcement of state law—because multiple states can sue together in one federal court rather than filing duplicative actions in separate state courts.
The harder question is whether state enforcement of federal law can be justified on federalism grounds in areas where state law is—or ought to be—preempted. One might reasonably conclude that state-level variations in the enforcement of federal law will always be undesirable in such circumstances, since a decision to preempt state law suggests the need for a uniform national policy. That view has some force, but it ignores important differences between regulation and enforcement. Here the relative weakness of enforcement authority becomes a strength. When states take a divergent approach to enforcement of federal law, they are simply expressing a view on how to interpret and apply a rule that was adopted by Congress or a federal agency. The range of possible outcomes may be quite broad, but it is more narrow than if states were free to adopt and enforce different rules. State-to-state variation, then, is necessarily cabined.
Congress can further reduce the risk of disuniformity by giving federal courts exclusive jurisdiction over state enforcement actions. Channeling state enforcement through the federal courts helps ensure that the law develops in a coherent fashion. To see the importance of federal-court control, consider what we know about so-called “mirror” statutes—state statutes that replicate federal law but are enforced by states and private parties in state courts. For example, many states have enacted “little FTC Acts” that mirror the language of the federal act prohibiting “unfair or deceptive acts or practices” and specify that “due consideration should be given” to the FTC’s and federal courts’ interpretations of federal law. Despite the similarity in the relevant statutory commands, the state statutes have drifted away from the federal model. The prohibition on “unfair” practices provides a ready illustration. In 1980, the FTC adopted an interpretation of the federal statute that keyed unfairness to a cost-benefit analysis focused on “unjustified consumer injury”—an interpretation that was later endorsed by the federal courts and Congress. Meanwhile, states and private parties acting under state law persuaded state courts to adopt divergent interpretations of unfairness, reaching an increasingly wide range of conduct “adjudged unfair under current commercial mores.” As a result of that judicial gloss, many state “mirror” statutes today bear little resemblance to the federal reflection.
A final factor that bears on the potential for disuniformity is the breadth of the relevant federal rule. While many federal statutes are written in sweeping terms, that is not always the case—as the phthalates ban discussed in the previous Part demonstrates. And much state enforcement of federal law entails enforcement of agency regulations, which on the whole tend to be more specific than the statutes that inspire them. The few scholars who have taken notice of state enforcement have focused primarily on antitrust law. But antitrust is an extreme and unusual example, not only because of the breadth of the relevant statutory language, but also because it is an area where no federal agency has the authority to adopt binding regulations clarifying the statutory text. That scenario is not unique, but it is fairly rare. To return to the FTC example above, the FTC Act’s prohibition of “unfair” practices is quite broad. The FTC’s interpretation of the prohibition, embodied in the 1980 Policy Statement and later codified in the statute, is far more limited. Should state attorneys general be given authority to enforce the FTC Act in federal court (as NAAG has suggested), they would be constrained by the FTC’s interpretations and by the body of caselaw that has developed in response to FTC enforcement efforts. Both limitations differentiate state enforcement of federal law from state enforcement of state law and help explain why the former may be tolerable even when the latter is preempted.
In sum, state enforcement authority need not entail a significant amount of interpretive discretion. Concerns about disuniformity recede when states are called upon to enforce a relatively precise federal statute or regulation. Such enforcement authority represents a way to secure the values of local knowledge and citizen input even in areas where it is important to have a uniform substantive rule. States that wish to increase the level of enforcement over the federal baseline can devote their own resources to the effort and can experiment with different approaches, but the law’s core prescription remains the same.
Much of the foregoing discussion applies with equal force to the question of overenforcement. As with disuniformity, concerns about over-enforcement do not justify jettisoning state enforcement of federal law in areas where state law is not preempted. If socially valuable activity will be deterred by overly aggressive enforcement, state enforcement of federal law seems significantly less threatening than states’ ability to create and enforce legal standards that are stricter than the federal model. Again, the more challenging case for state enforcement is where state attorneys general disrupt what would otherwise be a federal monopoly on public enforcement. And again, the risk of overenforcement in that context expands and contracts with the breadth of the federal rule being enforced. When state enforcement is confined to federal court—and particularly when it is linked to agency regulations—the possibility that state enforcers will target behavior that federal policymakers have condoned is significantly reduced.
Interstate variations in the intensity of enforcement may still be problematic if the federal agency has made a considered decision about how to secure the optimal level of deterrence and state enforcement will push over that line. But that is a big “if.” The same features that make states more prone to over-enforcement than federal agencies also suggest that state enforcement will be less likely to result in under-enforcement than a federal monopoly on enforcement. Consider the consumer-protection field, the most common site for state enforcement provisions. Attorneys general will have varying incentives regarding enforcement, depending on local conditions and their own commitments. But protecting constituents from harm—whether defined as unsafe products or internet spam or unfair lending practices or elder fraud—is likely to rank high on any ambitious attorney general’s list of priorities. And many statutes that authorize state enforcement of federal consumerprotection law permit states to recover damages for their citizens, which may strengthen their incentive to act. In short, consumer protection statutes are likely candidates for aggressive state enforcement. Whether that is a problem depends on a variety of context-specific considerations, including the optimal level of enforcement and the level of enforcement already provided by federal agencies. Most consumer protection statutes with provisions for state enforcement fall within the jurisdiction of either the CPSC or the FTC. As Amy Widman has shown, the history of the CPSC has been one of “massive regulatory failure.” And the FTC, “although one of the smallest administrative agencies, . . . is charged with policing an enormous amount of activity.” Empirical research is necessary to answer the question conclusively, but the existing record does not suggest an imminent risk of overenforcement of all or even most federal consumer protection law.
On the other hand, state enforcement may be less prone to over-enforcement than the other alternative: private enforcement. States are more likely than private parties to coordinate effectively with federal enforcers. Coordination is made possible not only by the limited number of state enforcers but also by existing relationships that lay the groundwork for negotiations between state and federal enforcers. And coordination is further encouraged by statutory provisions that require states to notify their federal counterparts about enforcement actions and permit intervention by the relevant federal agency. Effective state-federal cooperation is by no means inevitable, as the previous Part explained. Nevertheless, the web of ties between attorneys general and their “federal partners” creates a kind of friction against state-federal conflict and over-enforcement by states.
More crucially, state attorneys general face resource constraints that limit the scope of possible enforcement actions. Fifty state attorneys general comprise a relatively small group. Even if each state takes an aggressive approach to enforcement, the volume of litigation will almost certainly be smaller than private plaintiffs would generate. And while both state and private enforcement can create negative externalities, state enforcers represent a wider range of interests and can internalize more of the costs of enforcement. I argued in the previous Part that state enforcers may benefit in various ways from financial recoveries. Yet they lack the immediate monetary stake in litigation that private parties and their attorneys enjoy. State enforcement may therefore operate as a compromise between federal and private enforcement—a way to intensify enforcement above the level provided by the federal agency without opening the floodgates entirely.
To see the potential value of state enforcement as a compromise mechanism, consider the federal CAN SPAM Act, which prohibits various forms of email spam. Spam is annoying, but it is surprisingly difficult to pin down exactly how—or to what extent—it harms those who receive it. The CAN SPAM Act accordingly provides for statutory damages rather than requiring proof of actual injury in each case. But the availability of statutory damages creates a risk that private parties will sue even if they have not, in fact, suffered any real harm. And, with statutory damages linked to each illegal email, the price tag can add up quickly. The Act responds to this risk by creating a limited private right of action, available only to the providers of internet access service. Enterprising plaintiffs have found ways to evade that limitation, however, by creating domain names and providing email service to friends and family and then letting the spam pile up. State enforcement may offer a better solution. If citizens are truly bothered by email spam, attorneys general will surely hear about it. States can then use their own authority under the CAN SPAM Act to seek damages or injunctive relief. Indeed, state enforcement may be particularly valuable in areas like this, where federal law targets conduct that creates uncertain or intangible harms. It is of course possible that state attorneys general would exploit their enforcement authority in order to obtain windfall recoveries for state treasuries or their own offices. But given limited resources—and in the absence of a significant outcry from the states’ citizens—there is reason to doubt that such a strategy would be politically productive.
Finally, it bears emphasis that Congress can adopt measures that further reduce the risk of over-enforcement by states. The recent Dodd-Frank bill, for example, effectively precludes states from pooling their resources in multistate actions by requiring that any state enforcement action take place “in any district court of the United States in that State or in a State court that is located in that state and that has jurisdiction over the defendant.” And federal antitrust law effectively precludes states from employing private attorneys on a contingency-fee basis by excluding from the definition of “state attorney general” any person “employed or retained on a contingency fee based on a percentage of the monetary relief awarded.” Those measures—like the provisions for notice to and intervention by the relevant federal agency, the prohibitions on state actions when a federal action is pending, and the requirements that state enforcement cases proceed in federal court—represent ways to cabin state enforcement without squandering its benefits.
Other commentators have proposed more stringent controls on state enforcement, such as requiring state enforcers to obtain pre-approval from the relevant federal agency before undertaking an enforcement action or enabling federal enforcers to effectively “veto” state enforcement efforts. But many of the federalism-related benefits of state enforcement outlined here would be lost if state enforcement were limited to the class of cases that federal enforcers would pursue. When viewed from the perspective of federalism, it becomes clear that state enforcement of federal law offers systemic advantages that go beyond co-opting state resources into service of a federal enforcement strategy. Much of the value of state enforcement lies in the fact that state enforcers are likely to make different choices than their federal counterparts—not because state attorneys general are angels, but because their incentives and capabilities differentiate them from the prototypical federal agency enforcers. States, moreover, are not strangers to the federal rules they enforce. Scholars have argued for decades that states have significant leverage in the federal legislative process: these are the famous political safeguards of federalism. Enforcement authority confirms states’ shared ownership of federal rules, offering a hedge against the possibility that the federal government will occupy the field legislatively or administratively and then abdicate on enforcement. The Supreme Court recognized a similar principle in Massachusetts v. EPA, where it emphasized preemption of state law as a reason to permit states to challenge a federal agency’s failure to regulate. Yet courts have steadfastly refused to give states and private parties the power to compel federal enforcement. Direct enforcement authority operates as a form of self-help for states, guaranteeing them a limited role in policy areas that are otherwise dominated by the federal government.
Concededly, the costs of interstate variations will in some cases outweigh the benefits that can be derived from state participation in enforcement. But concerns about disuniformity and over-enforcement should not be overstated or taken on blind faith. As this Section has shown, such concerns have relatively little purchase in most of the areas where state enforcement exists today. At the very least, policymakers and commentators should recognize that state enforcement can accomplish more than enhancing enforcement according to a federal plan and should consider the values of federalism before restricting state choice in the name of centralization and control.
This Article has sought to expose and explain the growing trend of state enforcement of federal law. State enforcement cannot be understood as a mere supplement to public enforcement by federal agencies. Enforcement by state attorneys general is different from federal enforcement in several important respects. It is unique, mixing familiar features of public and private enforcement with others that are distinctive to states.
Enforcement authority also is different from other forms of state authority. Like state regulation, enforcement offers a way for states to influence policy within their boundaries and nationwide. But enforcement authority is both more narrow and more broad than regulatory authority. It is narrower because states are limited to enforcing a federal law; it is broader because enforcement authority can exist in areas where regulatory authority does not—or should not. Enforcement, moreover, empowers state actors whose incentives and abilities distinguish them from other participants in the state-federal dialogue.
Understanding what state enforcement is is the first step to assessing its proper place in the federal system. I have argued that state enforcement can promote the goals of federalism by opening up new opportunities for decentralized decisionmaking outside the regulatory realm. Decentralization has both virtues and vices, and state enforcement will be undesirable in circumstances where uniformity is critical in both law and enforcement. But that limitation leaves ample room for state enforcement of federal law, even in areas where state law is preempted.
1 Cf. ROSCOE POUND, LAW IN BOOKS AND LAW IN ACTION (1910), reprinted in AMERICAN LEGAL REALISM 39, 39–40 (William W. Fischer III, Morton J. Horwitz & Thomas A. Reed eds., 1993).
2 David Luban, A Flawed Case Against Punitive Damages, 87 GEO. L.J. 359, 377 (1998) (“[A]part from automobile-related injuries, Americans are extremely reluctant to sue. A large ICJ study found that claims were made in 44% of motor vehicle injuries, 7% of work-related injuries, and 3% of other injures—all in all, in about one accidental injury in ten.”); see also Kevin M. Clermont & Theodore Eisenberg, Litigation Realities, 88 CORNELL L. REV. 119, 136 (2002) (discussing results of survey of more than five thousand households and reporting that “even for . . . substantial grievances, litigation is by no means a knee-jerk or common reaction in America, as overall only about 5% of the survey’s grievances ultimately resulted in a court filing”).
3 For example, in the 1990s the audit rate for individual tax returns was 1.7 percent and the probability of arrest for drunk driving was about 0.003. A. Mitchell Polinsky & Steven Shavell, The Economic Theory of Public Enforcement of the Law, 38 J. ECON. LIT. 45, 71 n.77 (2000) (citing James Andreoni et al., Tax Compliance, 36 J. ECON. LIT. 818 (1998), and Donald S. Kenkel, Do Drunk Drivers Pay Their Way? A Note on Optimal Penalties for Drunk Driving, 12 J. HEALTH ECON. 137 (1993)).
4 See infra Part I.A.
5 See infra Part I.B. This Article focuses on direct state enforcement of federal civil law. States may participate in various ways in the enforcement of federal criminal law as well, for example by arresting individuals for federal offenses. But states lack power to enforce federal criminal law directly, such as by prosecuting federal offenders themselves in state or federal court. States play a similar role with respect to federal immigration law. Under Section 287(g) of the Immigration and Naturalization Act, states or localities can sign a Memorandum of Understanding with the federal government to deputize officials to enforce federal immigration law “in relation to the investigation, apprehension, or detention of [noncitizens] in the United
States.” 8 U.S.C. § 1357(g). Deputized state officials obtain federal training from the federal Immigration and Customs Enforcement agency (ICE) and work under ICE’s supervision. See Jennifer M. Chacon, A Diversion of Attention? Immigration Courts and the Adjudication of Fourth and Fifth Amendment Rights, 59 DUKE L.J. 1563, 1582–86 (2010) (discussing Section 287(g) arrangements). States also contribute to the enforcement of criminal immigration law by investigating and arresting offenders, though again they lack the authority to prosecute offenders directly. See 8 U.S.C. § 1252c (authorizing state and local law enforcement officials to arrest and detain certain illegal aliens “for such period of time as may be required for the [ICE] to take the individual into Federal custody for purposes of deporting or removing the alien from the United States”); United States v. Santana-Garcia, 264 F.3d 1188, 1193–94 (10th Cir. 2001) (recognizing implicit authority for state police to detain suspects for civil immigration violations); Gonzales v. City of Peoria, 722 F.2d 468, 474–75 (9th Cir. 1983) (holding that state and local police may arrest suspects for violations of criminal, but not civil, provisions of federal immigration law). The current controversies regarding Arizona’s immigration laws concerns efforts by the state to increase its role in implementing federal immigration rules in ways that are not authorized by federal statute. See Chicanos Por La Causa, Inc. v. Napolitano, 558 F.3d 856 (9th Cir. 2009) (rejection preemption challenge to Arizona law authorizing attorney general to sue employers who hire illegal aliens in violation of federal law), cert granted sub nom, Chamber of Commerce of U.S. v. Candelaria, 130 S.Ct. 3498 (2010); United States v. Arizona, 703 F. Supp. 2d 980 (D. Ariz. 2010) (enjoining portions of Arizona law authorizing police officers to check individuals’ federal immigration status and to arrest individuals where there is probable cause to believe that they committed offenses that make them removable from United States). As such, they are distinct from the questions explored here, which involve state enforcement of federal law pursuant to explicit congressional authorization.
6 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 1042.
7 See infra notes 66–67 and accompanying text (discussing congressional debates and hearings).
8 Forty-three states provide for popular election of the attorney general. In the remaining states, the attorney general is appointed: in Maine, by the legislature; in Tennessee, by the state Supreme Court; and in five states (New Jersey, New Hampshire, Hawaii, Alaska, Wyoming), by the governor. William P. Marshall, Break Up the Presidency? Governors, State Attorneys General, and Lessons from the Divided Executive, 115 YALE L.J. 2446, 2448 & n.3 (2006) (noting that only two states—Alaska and Wyoming—permit governor to remove attorney general at will).
9 Some scholars have analyzed state enforcement of federal law in a specific legal context, most notably antitrust. For critiques of state antitrust enforcement, see, for example, Michael S. Greve, Cartel Federalism? Antitrust Enforcement by State Attorneys General, 72 U. CHI. L. REV. 99 (2005), and Richard A. Posner, Federalism and the Enforcement of Antitrust Laws by State Attorneys General, in COMPETITION LAWS IN CONFLICT: ANTITRUST JURISDICTION IN THE GLOBAL ECONOMY 252 (Richard A. Epstein & Michael S. Greve eds., 2004). For defenses, see Stephen Calkins, Perspectives on State and Federal Antitrust Enforcement, 53 DUKE L.J. 673 (2003), Carole R. Doris, Another View on State Antitrust Enforcement—A Reply to Judge Posner, 69 ANTITRUST L.J. 345 (2001), Harry First, Delivering Remedies: The Role of States in Antitrust Enforcement, 69 GEO. WASH. L. REV. 1004 (2000), and Ronald L. Hubbard & James Yoon, How the Antitrust Modernization Commission Should View State Antitrust Enforcement, 17 LOY. CONSUMER L. REV. 497 (2004). As I explain, antitrust is an extreme and unusual case for state enforcement. See infra notes 271–272 and accompanying text (distinguishing antitrust). It would be a mistake, therefore, to generalize from the antitrust context to the many other areas in which states enforce federal law. Scholars have begun to focus their attention on other specific instances of state enforcement outside the antitrust context. See Amanda M. Rose, The Multienforcer Approach to Securities Fraud Deterrence: A Critical Analysis, 158 U. PA. L. REV. 2173 (2010) (critiquing state enforcement of state and federal securities law); Amy Widman, Advancing Federalism Concerns in Administrative Law Through a Revitalization of Enforcement Powers—A Case Study of the Consumer Product Safety And Improvement Act of 2008, 29 YALE L. & POL’Y REV. __ (forthcoming 2010) (praising state enforcement of Consumer Product Safety and Improvement Act (CPSIA)).
10 See infra notes 76–77 and accompanying text. Amy Widman’s study of state enforcement of the CPSIA is an important exception. See Widman, supra note 9, at 10–11 (identifying state enforcement of federal law as valuable form of “uncooperative federalism” in areas where law is under-enforced by federal agencies (quoting Jessica Bulman-Pozen & Heather K. Gerken, Uncooperative Federalism, 118 YALE L.J. 1256 (2009))).
11 Some scholars have argued that the anti-commandeering doctrine—which prohibits the federal government from compelling states to participate in the implementation of federal law—should be abandoned if the alternative is preemption. See Neil Siegel, Commandeering and its Alternatives: A Federalism Perspective, 59 VAND. L. REV. 1629, 1635 (2006) (“[C]ommandeering should be held constitutional as far as the Tenth Amendment is concerned when preemption constitutes a feasible alternative in the short run and such preemption would reduce state regulatory control relative to the commandeering at issue, the federal mandate is fully funded or relatively inexpensive to carry out, and the federal government takes effective measures to maintain lines of accountability . . . .”).
12 Polinsky & Shavell, supra note 3, at 45.
13 For a sampling, see RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 6341–46 (6th ed. 2003), STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW 389–539 (2004), Gary S. Becker & George J. Stigler, Law Enforcement, Malfeasance, and Compensation of Enforcers, 3 J. LEGAL STUD. 1 (1974), William M. Landes & Richard A. Posner, The Private Enforcement of Law, 4 J. LEGAL STUD. 1 (1975), A. Mitchell Polinsky, Private Versus Public Enforcement of Fines, 9 J. LEGAL STUD. 105 (1980), Polinsky & Shavell, supra note 3, and Steven Shavell, The Fundamental Divergence Between the Private and the Social Motive to Use the Legal System, 26 J. LEGAL STUD. 575 (1997).
14 See Shavell, supra note 13, at 581 (“[T]he social objective is simply minimization of the sum of social costs: the harm from injury to victims, plus the costs of precautions, plus the costs associated with use of the legal system—these comprising victims’, injurers’, and the state’s legal costs.”).
15 Landes & Posner, supra note 13, at 38 (“The existence of a public monopoly of enforcement in a particular area of the law is a necessary . . . condition of discretionary non-enforcement.”).
16 See id. at 15 (emphasizing that “public enforcer[s are] not constrained to act as … private profit maximizer[s]”).
17 The same is often true even when liability rules are carefully specified. Imagine a police chief who institutes a zero-tolerance policy toward all traffic infractions, so that every violation results in a ticket. Such a move is unlikely to be a career builder.
18 Richard B. Stewart & Cass R. Sunstein, Public Programs and Private Rights, 95 HARV. L. REV. 1193, 1214 (1982) (“Public enforcement is . . . frequently inadequate because of budget constraints . . . .”).
19 See Kenneth W. Dam, Class Actions: Efficiency, Compensation Deterrence, and Conflict of Interest, 4 J. LEGAL STUD. 47, 67 (1975) (“[W]hen the budget is determined by the political process, there is no reason to believe that the rate of enforcement would be economically optimal.”); see also Amanda M. Rose, Reforming Securities Litigation Reform: Restructuring the Relationship Between Public and Private Enforcement of Rule 10b-5, 108 COLUM. L. REV. 1301, 1341 (2008) (arguing that SEC “is subject to political whims (particularly with respect to its budget)”); infra notes 83–84 and accompanying text (discussing political control of federal agencies).
20 See Polinsky & Shavell, supra note 3, at 73 (“[E]nforcement agents may be corrupted: they may accept bribes, or demand payments, in exchange for not reporting violations.”); see also POSNER, supra note 13, at 633 (explaining that bribes are potential problem with public enforcement because offender’s potential penaltyis greater than enforcer’s potential gain from enforcement).
21 See, e.g., A.C. Pritchard, The SEC at 70: Time for Retirement?, 80 NOTRE DAME L. REV. 1073, 1089–92 (2005) (discussing problem of capture at SEC). For an overview of the “capture” literature, see Nicholas Bagley & Richard L. Revesz, Centralized Oversight of the Regulatory State, 106 COLUM. L. REV. 1260, 1284–92 (2006).
22 See Jonathan R. Macey & Geoffrey P. Miller, Reflections on Professional Responsibility in a Regulatory State, 63 GEO. WASH. L. REV. 1105, 1116–18 (1995) (discussing risks of “career-building” by government attorneys); Michael Selmi, Public vs. Private Enforcement of Civil Rights: The Case of Housing and Employment, 45 UCLA L. REV. 1401, 1404 (1997) (“[O]n average, the government seeks and obtains less monetary relief for plaintiffs than does the private bar and fails to address cutting edge issues, choosing instead to concentrate its efforts on small, routine [civil rights] cases.); cf. POSNER, supra note 13, at 637–38 (explaining that agencies will prefer to pursue cases that are “relatively unimportant to the defendant” and therefore cheaper and easier to win).
23 See Aron Harel & Alex Stein, Auctioning for Loyalty: Selection and Monitoring of Class Counsel, 22 YALE L.& POL’Y REV. 69, 107 (2004) (identifying predatory prosecution as a potential risk of public enforcement).
24 See Pritchard, supra note 21, at 1076 (identifying “cyclical pattern of neglect and hysterical overreaction” in Congress and at SEC).
25 See William E. Kovacic, Private Monitoring and Antitrust Enforcement: Paying Informants to Reveal Cartels, 69 GEO. WASH. L. REV. 766, 781 (2001) (“Robust private participation, especially independent rights of action that eliminate a public prosecutorial monopoly, reduce or eliminate the ability of government enforcement officials to use prosecutorial discretion as a nonlegislative tool for altering the law.”).
26 Shavell, supra note 13.
27 See Landes & Posner, supra note 13, at 15 (explaining “overenforcement theorem”).
28 See Shavell, supra note 13, at 594 (acknowledging compensation as one goal of private enforcement, but arguing that social insurance system is more efficient mode of distribution).
29 See Landes & Posner, supra note 13, at 31–32 (explaining that private enforcement is optimal in areas where violators face high probability of apprehension and sanction, and where available penalty is equal to harm caused by violation plus costs of enforcement).
30 Becker & Stigler, supra note 13, at 13.
31 See SHAVELL, supra note 13, at 578–79 (“Suppose that victims or potential victims of harm from dangerous acts, or perhaps other parties, can identify the violators with little or no effort. Then a private role in law enforcement is apparently desirable, for it is advantageous for society to harness the information that private parties have rather than to spend the resources on public enforcement to uncover violations.”).
32 Id. at 591–92.
33 See generally Pritchard, supra note 21 (discussing consequences of insulating enforcement from presidential control through use of independent agency).
34 I express no view on states’ authority to sue to vindicate constitutional interests in federal court absent statutory authorization. See Pennsylvania v. Porter, 659 F.2d 306, 317 (3d Cir. 1981) (citing cases permitting states to bring parens patriae actions in federal court to enforce Fourteenth Amendment).
35 See, e.g., Alexander v. Sandoval, 532 U.S. 275, 286 (2001) (emphasizing that Congress must make choice whether to create private right of action).
36 See, e.g., Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 263–64 (1972) (insisting on “clear expression of a congressional purpose” before states may sue as parens patriae to recover damages to its general economy under Section 4 of Clayton Act); Connecticut v. Health Net, Inc., 383 F.3d 1258, 1262 (11th Cir. 2003) (emphasizing that states may sue as parens patriae to enforce federal law only if there is evidence that Congress “intended that the states be able to bring actions in that capacity”); Connecticut v. Physicians Health Services of Conn., Inc., 287 F.3d 110, 120–21 (2d Cir. 2002) (“When determining whether a state has parens patriae standing under a federal statute, we ask if Congress intended to allow for such standing.”).
37 See infra notes 40–55 (citing statutes).
38 See, e.g., Tafflin v. Levitt, 254 U.S. 51, 55 (1920) (noting that state courts are “presumptively competent to adjudicate claims arising under the laws of the United States” and “have concurrent jurisdiction where it is not excluded by express provision, or by incompatibility in its exercise arising from the nature of the particular case” (internal quotation marks omitted)).
39 See infra notes 41–54 (citing statutes).
40 See, e.g., 18 U.S.C. § 248 (authorizing states to sue in federal court to enforce federal rules regarding access to abortion clinics).
41 15 U.S.C. § 1194(a). The statute authorizes states to sue for injunctive relief, subject to the procedural requirements of 15 U.S.C. § 2073. Section 2073 provides that the attorney general or other authorized officer of a state may bring an action in federal court to obtain appropriate injunctive relief and must provide written notice to the Consumer Protect Safety Commission at least 30 days before the initiation of such an action. State enforcement is precluded if, at the time the suit is brought, the same alleged violation is the subject of a pending civil or criminal action by the United States. 15 U.S.C. § 2073(b). The same limitations apply to private actions. Id. § 2073(a).
42 15 U.S.C. § 1264(d) (same).
43 15 U.S.C. § 1477 (same).
44 15 U.S.C. § 2073(b)(1) (same).
45 For an overview of parens patriae actions, see Richard P. Ieyoub & Theodore Eisenberg, State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae, 74 TUL. L. REV. 1859, 1863–71 (1999), and Jack Ratliff, Parens Patriae: An Overview, 74 TUL. L. REV. 1847 (1999).
46 15 U.S.C. § 1679h©(1) (authorizing states to sue in any court for damages or injunctive relief; states must give prior notice to Federal Trade Commission (FTC) and cannot sue defendant for violation that is already subject of civil action by FTC).
47 15 U.S.C. § 1681s© (authorizing states to sue in any court for injunctive relief or actual or statutory damages; states must give prior notice to FTC “or the appropriate Federal regulator” and cannot sue defendant for violation that is already subject of civil action by federal agency; FTC “or appropriate Federal regulator” may intervene in any state action and will have right to be heard, to remove action to federal court, and to file petition for appeal).
48 15 U.S.C. § 5712 (authorizing states to sue in federal court for damages or injunctive relief; states must give prior notice to FTC and cannot sue defendant for violation that is already subject of civil action by FTC).
49 15 U.S.C. § 6103 (same); 47 U.S.C. § 227(f) (authorizing states to sue in federal court to enjoin any “pattern or practice” of unlawful telephone calls or other transmissions to residents of state, and/or to obtain actual or statutory damages for each violation, which may be trebled by court order; states must give prior notice to Federal Communications Commission (FCC) and cannot sue defendant for violation that is already subject of civil action by FCC).
50 15 U.S.C. § 6309© (authorizing states to sue in federal court for injunctive relief, fines, or “such other relief as the court may deem appropriate”).
51 15 U.S.C. § 7804 (authorizing states to sue in federal court for damages or injunctive relief; states must give prior notice to FTC and cannot sue defendant for violation that is already subject of civil action by FTC).
52 15 U.S.C. § 6504 (authorizing states to sue in federal court for damages or injunctive relief; states must give prior notice to FTC and cannot sue defendant for violation that is already subject of civil action by FTC; FTC may intervene in any state action and will have right to be heard and to file petition for appeal).
53 15 U.S.C. § 7706(f) (authorizing states to sue in federal court for injunctive relief or actual, statutory, or treble damages; states must give prior notice to FTC “or the appropriate Federal regulator” and cannot sue defendant for a violation that is already subject of civil action by federal agency; FTC “or appropriate Federal regulator” may intervene in any state action and will have right to be heard and to file petition for appeal).
54 49 U.S.C. § 14711 (authorizing states to sue for injunctive relief in federal court; states must give prior notice to Surface Transportation Board or Secretary of Transportation, which may intervene in action and be heard on all matters and file petitions for appeal). Section 14711(b)(4) specifies that the Secretary of Transportation and/or the Surface Transportation Board “shall be considered to have consented to any civil action of a State under this section if the Secretary or the Board has taken no action with respect to the notice within 60 calendar days after the date on which the Secretary or the Board received the notice.” The implication is that the federal enforcers have the authority to preclude a state enforcement proceeding, although nothing in the statute says so explicitly.
55 15 U.S.C. § 15c (authorizing states to sue in federal court to secure treble damages on behalf of their citizens). States also have authority to enforce the federal Commodities Exchange Act, 7 U.S.C. § 13a-2, as well as federal statutes governing debt relief agencies, 11 U.S.C. § 526, online drug sales, 21 U.S.C. § 882, the provision of health-related services, 42 U.S.C. § 1320d-5, energy-efficient products, 42 U.S.C. § 6304, and odometer tampering, 49 U.S.C. § 32709. States enforce the federal Securities Exchange Act in a shareholder capacity, usually on behalf of large state pension plans. See infra note 148 and accompanying text. And the attorneys general of Oregon and Washington are authorized to sue in any court for an injunction or other order to prevent the unlawful use of certain scenic lands. 16 U.S.C. § 544m(b)(1)(B).
56 See 33 U.S.C. § 1910 (Act to Prevent Pollution from Ships); 42 U.S.C. § 7604 (Clean Air Act); 33 U.S.C. § 1365 (Clean Water Act); 42 U.S.C. § 9659 (Comprehensive Environmental Response, Liability, and Cleanup Act); 33 U.S.C. § 1515 (Deep Water Port Act); 30 U.S.C. § 1427 (Deep Seabed Hard Mineral Resources Act); 42 U.S.C. § 11046 (Emergency Planning and Community Right to Know Act); 16 U.S.C. § 1540(g) (Endangered Species Act); 42 U.S.C. § 6305 (Energy Conservation Program for Consumer Products); 33 U.S.C. § 1415(g) (Marine Protection, Research and Sanctuary Act); 42 U.S.C. § 4911 (Noise Control Act); 42 U.S.C. § 9124 (Ocean Thermal Energy Conservation Act); 43 U.S.C. § 1349(a) (Outer Continental Shelf Lands Act); 42 US.C. § 8435 (Powerplant and Industrial Fuel Use Act); 42 U.S.C. § 6972 (Resources Conservation and Recovery Act); 42 U.S.C. §300j-8 (Safe Drinking Water Act); 30 U.S.C. § 1270 (Surface Mining Control and Reclamation Act).
57 By contrast, courts have rebuffed state efforts to sue under statutes that contain only a narrow private right of action. For example, courts have refused to permit state suits under the Employee Retirement Income Security Act (ERISA) on the ground that carefully listed the types of plaintiffs who could bring suit—participants, beneficiaries, or fiduciaries of ERISA-regulated plans—but did not mention states. See Connecticut v. Health Net, Inc., 383 F.3d 1258, 1261–62 (11th Cir. 2004) (denying state standing under ERISA); Connecticut v. Physicians Health Services of Conn., Inc., 287 F.3d 110, 120–21 (2d Cir. 2002) (same). Courts have taken a similar approach to statutes that create a cause of action for persons “injured in their business or property.” See Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 263–64 (1972) (insisting on “clear expression of a congressional purpose” before state may sue as parens patriae to recover damages to its general economy under Section 4 of Clayton Act); People of State of Ill. v. Life of Mid-America Ins. Co., 805 F.2d 763, 777 (7th Cir. 1986) (holding that state lacks standing to enforce Racketeer Influenced and Corrupt Organizations Act because, “even if the complaint did sufficiently allege an injury to the state in its quasi-sovereign capacity, it is not clear . . . that Congress, in enacting the RICO statute, intended to permit such a parens patriae proceeding”); California v. Frito-Lay, Inc., 474 F.2d 774 (9th Cir. 1973) (holding that state may not sue on behalf of its citizens under Section 4 of Clayton Act because, “if the state is to be empowered to act in the fashion here sought that authority must come not through judicial improvisation but by legislation and rule making”).
58 See, e.g., People by Vacco v. Mid Hudson Medical Group, P.C., 877 F. Supp. 143, 146 (S.D.N.Y. 1995) (interpreting 42 U.S.C. § 12117(a)).
59 See, e.g., Support Ministries for Persons with AIDS v. Village of Waterford, 799 F. Supp. 272 (1992) (interpreting 42 U.S.C. § 3613), modified on other grounds, 718 F.2d 22 (2d Cir. 1983) (en banc).
60 See, e.g., E.E.O.C. v. Federal Express Corp., 268 F. Supp. 2d 192, 196–98 (E.D.N.Y. 2003) (interpreting 42 U.S.C. § 2000e-5).
61 See, e.g., Federal Express Corp., 268 F. Supp. 2d. at 197 (citing Connecticut v. Physicians Health Services of Connecticut, Inc., 287 F.3d 110, 121 (2d Cir. 2002)); see also Com. of Mass v. Bull HN Info. Syst., Inc. 16 F. Supp. 2d 90, 103 (D. Mass. 1998) (reasoning that state attorney general has statutory standing to sue under Age Discrimination in Employment Act as “‘legal representative’ of the people of the [state] for purpose of this action” (quoting 29 U.S.C. § 630(a))); State of Minn. by Humphrey v. Standard Oil Co., 568 F. Supp. 556, 565–66 (D. Minn. 1983) (permitting state to sue as parens patriae under Section 210 of Economic Stabilization Act of 1970, which permitted suit by “persons,” because “when a state acts in its quasi-sovereign capacity in a parens patriae action, the state becomes, in effect, the embodiment of its citizens. A harm to the individual citizens becomes an injury to the state, and the state in turn becomes the plaintiff.”). Other courts have ignored the question of congressional intent, focusing instead on the prudential requirements for parens patriae standing—that is, that the state assert a “quasi-sovereign interest” and allege an injury to a “sufficiently substantial segment of its population.” Alfred N. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 607 (1982); see also People by Abrams v. 11 Cornwell Co., 695 F.2d 34, 38–40 (2d Cir. 1982) (permitting state to sue to enforce federal conspiracy statute); Support Ministries, 799 F. Supp. at 277–79 (permitting state to sue under Fair Housing Act); People v. Peter & John’s Pump House, Inc., 914 F. Supp. 809, 811–14 (N.D.N.Y. 1985) (holding that state may sue as parens patriae to enforce Title II of Civil Rights Act of 1964). That approach fails to distinguish between the question of parens patriae standing and the question of statutory standing. See Connecticut v. Health Net, Inc., 383 F.3d 1258, 1262 (11th Cir. 2003) (properly distinguishing between two types of standing); see also Standard Oil, 405 U.S. at 259 (“The question in this case is not whether Hawaii may maintain its lawsuit on behalf of its citizens, but rather whether the injury for which it seeks to recover is compensable under s 4 of the Clayton Act. Hence, Hawaii’s claim cannot be resolved simply by reference to any general principles governing parens patriae actions.”); People of the State of N.Y. by Abrams v. Seneci, 817 F.2d 1015, 1017 (2d Cir. 1987) (reasoning that, if state had asserted “injury to a quasi-sovereign interest of the state itself . . . common law parens patriae standing would undoubtedly exist. We would then be called on to decide whether the RICO statute authorized recovery for that harm”).
62 See Harold J. Krent, Executive Control Over Criminal Law Enforcement: Some Lessons from History, 38 AM. U. L. REV. 275, 303–09 (1988) (discussing early state enforcement of federal criminal law).
63 See Cornell W. Clayton, Law, Politics, and the New Federalism: State Attorneys General as National Policymakers, 56 REV. POL. 525, 538 (1994) (“During the 1980s the rate of growth in the budget of the attorney general’s office or state department of law outpaced increases in general government spending in every single state, in some states many times over.”); Andrew I. Gavil, Reconstructing the Jurisdictional Foundation of Antitrust Federalism, 61 GEO. WASH. L. REV. 657, 661–62 (1993) (suggesting that increased level of state enforcement activity in antitrust and consumer protection areas was in part response to perceived inadequacy of federal enforcement).
64 During the George H.W. Bush administration, executive officials took the view that “direct state enforcement provisions may be unconstitutional because they involve the exercise of significant authority pursuant to the laws of the United States by persons not selected in accordance with the Appointments Clause.” S. 471, The 900 Services Consumer Protection Act of 1991, and S. 1166, the Telephone Consumer Assistance Act: Hearing before the Subcomm. on Communications of the S. Comm. on Commerce, Science, and Transportation, 102nd Cong. 16 (1991) (statement of Barry Cutler, Director, Bureau of Consumer Protection of the Federal Trade Commission); see also Statement by President George Bush Upon Signing S. 605, 26 WEEKLY COMP. PRES. DOC. 1842 (Nov. 19, 1990) (raising same concern regarding state enforcement of Flammable Fabrics Act). Subsequent administrations have abandoned the complaint. For an analysis of the constitutional issues raised when states perform functions within the province of the federal executive branch, see Evan Caminker, The Unitary Executive and State Administration of Federal Law, 45 U. KAN. L. REV. 1075 (1997). For an argument that the enforcement of federal criminal law by state prosecutors may violate the Appointments and Take Care Clauses of Article II of the Constitution, see Michael G. Collins & Jonathan Remy Nash, Prosecuting Federal Crimes in State Courts 55-62 (unpublished manuscript on file with author), available athttp://ssrn.com/abstract=1696076.
65 See, e.g., Susan Beth Farmer, More Lessons from the Laboratories: Cy Pres Distributions in Parens Patriae Antitrust Actions Brought by State Attorneys General, 68 FORDHAM L. REV. 361, 377 (1999) (“The legislative history of the [Hart Scott Rodino] Act demonstrates that Congress sought to achieve three goals: (1) the compensation of victims of antitrust violations; (2) disgorgement of profits by offenders; and (3) deterrence of future anticompetitive actions.”); see also Hearing on H.R. 4040 Before the Subcomm. on Commerce, Trade, and Consumer Protection of the H. Comm. of Energy and Commerce, 110th Cong. (2007) available at 2007 WL 3306882 (F.D.C.H.) (testimony of Rachel Weintraub, Consumer Federation of America) (arguing in congressional testimony that state authority to enforce federal consumer products safety law “will be a critical tool that will help buttress the CPSC’s limited enforcement capabilities, help consumers to obtain redress for harms they have suffered, and deter wrongful conduct”).
66 149 CONG. REC. 25,522 (2003) (statement of Sen. McCain) (regarding CAN SPAM Act of 2003).
67 153 CONG. REC. H16,882 (daily ed. Dec. 19, 2007) (statement of Rep. DeLaurio) (regarding state enforcement under CPSIA); see also Consumer Product Safety Commission Reauthorization: Hearing Before the Subcomm. on Commerce, Consumer Protection, and Competitiveness of the H. Comm. on Energy and Commerce, 101st Cong. 65 (1989) (statement of Dr. Widome, Professor of Pediatrics) (regarding Flammable Fabrics Act, arguing that state enforcement “would build a needed redundancy and failsafe provision into the [Consumer Products Safety] Commission and help assure that some of these products get off the market”); Consumer Product Safety Commission Reauthorization (Part 2): Hearing on H.R. 3343 and H.R. 3443 Before the Subcomm. on Commerce, Consumer Protection, and Competitiveness of the H. Comm. on Energy and Commerce, 100th Cong. 236 (1987) (statement of PIRG) (regarding CPSIA, arguing that state enforcement “would multiply by fifty the number of officials available to help ensure the safety of products that are distributed throughout the country”); 153 CONG. REC. S15,990 (daily ed. Dec. 19, 2007) (statement of Sen. Pryor) (arguing that CPSIA “ensures that [state attorneys general] can act as real cops on the beat, looking out for consumers and restoring confidence in the marketplace”); 149 CONG. REC. 25,526 (2003) (statement of Sen. Wyden) (“What is going to be important is for those who are charged with enforcement . . . to bring a handful of actions very quickly to establish that for the first time there is a real deterrent . . . . When the bill takes effect, for the first time those violators are going to risk criminal prosecution, Federal Trade Commission enforcement, and million-dollar lawsuits by the State attorneys general and Internet service providers.”); id. at 25,548 (statement of Sen. Cantwell) (“By allowing enforcement by State attorneys general and by Internet service providers, we have increased the odds of successful enforcement against the worst spammers.”); 137 CONG. REC. 30,822 (1991) (statement of Sen. Hollings) (regarding common carrier regulation, describing state enforcement as response to questions about “the will of the FCC to enforce the bill rigorously”).
68 See, e.g., 154 CONG. REC. S7872 (daily ed. July 31, 2008) (statement of Sen. Coburn) (arguing that state and private enforcement of CPSIA “provides false incentives for overzealous attorneys general and would run precisely counter to the CPSC’s policy of carefully balancing cost and benefit in making safety regulations”); 140 CONG. REC. 10,173 (1994) (statement of Sen. Hatch) (“Because [the Freedom of Access to Clinic Entrances Act] delegates an astonishing amount of what is in essence prosecutorial authority to State attorneys general and to private parties . . . and because it offers them the bonanza of substantial monetary penalties, it is a virtual certainty that innocent persons . . . will be targeted and pursued.”); see also infra notes 249–251 and accompanying text.
69 Telemarketing Fraud and Consumer Abuse: Hearing Before the Subcomm. on Transportation and Hazardous Materials of the H. Comm. on Energy and Commerce, 102nd Cong. 51 (1991) (statement of Bonnie Campbell, Att’y Gen. of Iowa and Vice-Chair, Consumer Protection Committee, National Association of Attorneys General (NAAG)); see also Telemarketing Fraud and Consumer Abuse: Hearing Before the Subcomm. on Transportation and Hazardous Materials of the H. Comm. On Energy and Commerce, 102nd Cong. 53 (1991) (resolution of NAAG) (“State jurisdictional boundaries impose restraints on the ability of one attorney general effectively to stop the operations of a fraudulent telemarketer victimizing consumers in more than one State; and . . . under current law, the sole means of effectively stopping a multistate fraud is for each attorney general to file separate, and identical actions; and . . . the ability of the attorneys general to proceed against telemarketing fraud in a Federal court would eliminate the need for wasteful duplication of State resources.”); 149 CONG. REC. 25,546 (2003) (statement of Sen. Leahy) (regarding CAN SPAM Act: “Some 30 states now have anti-spam laws but it is difficult to enforce them.”); id. at 25,526 (statement of Sen. Wyden) (“I believe a State-by-State approach cannot work in this area.”); 139 CONG. REC. 3907 (1993) (statement of Rep. Swift) (regarding 900 number fraud: “State and local enforcement agencies . . . have initiated actions against fraudulent telemarketers only to be frustrated by state law jurisdictional limits. These jurisdictional limits make it difficult to prosecute or obtain relief from fraudulent telemarketers who locate their operations outside the states in which their victims are located or move frequently to avoid detection and prosecution under state law.”).
70 See, e.g., Mail Fraud: Hearing Before the Subcomm. on Postal Operations and Service of the H. Comm. on Post Office and Civil Service, 103rd Cong. 163 (1993) (statement of NAAG) (bemoaning “artificial constraints of jurisdictional boundaries”); 139 CONG. REC. 3910 (1993) (statement of Rep. Moorehead) (regarding Telemarketing Consumer Fraud Prevention Act: “We in California especially appreciate the need for a concerted, multi-State offensive against these con artists. Thousands of Californians have been victimized by boiler room operations based in neighboring States-beyond the reach of our State authorities. I am therefore pleased that a major theme of this bill is a broad-based partnership of the Federal Trade Commission with State attorneys general to attack telemarketing scams wherever they may be based.”).
71 For examples of statutes that permit state enforcement of federal law while preempting state law, see: 7 U.S.C. § 16(e) (preempting some state laws governing commodities); 11 U.S.C. § 526(d) (preempting inconsistent state law regarding debt relief agencies); 15 U.S.C. § 1681t (preempting inconsistent state law regarding credit transactions); 15 U.S.C. § 5722(a) (preempting inconsistent state laws governing pay-per-call services); 15 U.S.C. § 6502(d) (preempting inconsistent state law regarding children’s online privacy protection); 15 U.S.C. § 7707(b) (preempting most state law regulating spam); 15 U.S.C. § 2065b(h); 49 U.S.C. § 32711 (preempting inconsistent state laws regarding odometer tampering).
72 See, e.g., 149 CONG. REC. 25,546 (2003) (statement of Sen. Leahy) (regarding CAN SPAM Act, noting that “some 30 states” have anti-spam laws of their own); 149 CONG. REC. 13,748 (2003) (statement of Rep. Stearns) (describing the provision for state enforcement of Sports Agents Responsibility and Trust Act as “basically a bill to give a little bit more support to the States, particularly those States . . . where they do not have any law, and give those state attorneys general the opportunity to prosecute these unscrupulous sports agents”); 149 CONG. REC. 10,294 (2003) (statement of Rep. Osborne) (regarding SPARTA: “Currently . . . there are only 15 States that have tough laws regulating actions by sports agents. There are 17 States . . . that have no laws at all regulating sports agents, and then there are 18 States remaining that have some laws. . . . So this provides a uniform Federal backstop.”); 140 CONG. REC. 17,842 (1994) (statement of Rep. LaFalce) (regarding telemarketing fraud: “State attorneys general will be authorized to bring actions against fraudulent schemes in federal courts—something that is very important for states, such as New York, which do not have their own telemarketing regulatory procedures.”).
73 42 U.S.C. § 7410. State implementation plans must be approved by the EPA. Id. § (a)(3); (k).
74 See John Dwyer, The Practice of Federalism Under the Clean Air Act, 54 MD. L. REV. 1183, 1198 (1995) (“The authority to allocate emissions to industry gives states an opportunity to pay a significant political role in controlling air pollution and making related decisions about land use and economic development—an opportunity that the vast majority of states have taken.”).
75 See David R. Hodas, Enforcement of Environmental Law in a Triangular Federal System: Can Three Not Be a Crowd When Enforcement is Shared by the United States, the States, and Their Citizens?, 54 MD. L. REV. 1552, 1571 (1995) (“[E]ssentially all the modern major environmental laws provide uniform, minimum national standards with the states ‘deputized,’ to a greater or lesser degree, to do the permitting and enforcing for the federal government.”).
76 See Gillian E. Metzger, Administrative Law as the New Federalism, 57 DUKE L.J. 2023, 2038 n.54 (2007) (“The CAA embodies a cooperative regulatory framework under which states bear responsibility in the first instance for devising plans to ensure that air pollutant emissions within their borders meet federal air quality standards.”). For overviews of and citations to the cooperative-federalism literature, see Bulman-Pozen & Gerken, supra note 10, at 1262–63 & nn.14–16 (2009), and Roderick M. Hills, The Political Economy of Cooperative Federalism: Why State Autonomy Makes Sense and “Dual Sovereignty” Doesn’t, 96 MICH. L. REV. 813, 815 & nn.1–2 (1998).
77 See Metzger, supra note 76, at 2026 n.4 (using “federalism” “to refer primarily to protecting the ability of the states to exercise meaningful regulatory power in their own right”); Neil Siegel, International Delegations and the Values of Federalism, 71 LAW & CONTEMP. PROBS. 93, 94 n.7 (2008) (“By ‘federalism,’ this article refers to a constitutional regime that aims to vindicate certain values . . . by affording significant protection to the regulatory autonomy of subnational states.”); cf. Bulman-Pozen & Gerken, supra note 10, at 1259 (discussing instances of “uncooperative federalism,” where “states use regulatory power conferred by the federal government to tweak, challenge, and even dissent from federal law”). The emphasis on regulation also is evident in the vast and ever-growing literature on preemption. For a small sampling, see generally William W. Buzbee, Asymmetrical Regulation: Risk, Preemption, and the Floor/Ceiling Distinction, 82 N.Y.U. L. REV. 1547 (2007), Brian Galle & Mark Seidenfeld, Administrative Law’s Federalism: Preemption, Delegation, and Agencies at the Edge of Federal Power, 57 DUKE L.J. 1922 (2008), Roderick M. Hills, Against Preemption: How Federalism Can Improve the National Legislative Process, 82 N.Y.U. L. REV. 1 (2007), Nina Mendelson, Chevron and Preemption, 102 MICH. L. REV. 737 (2004), and Catherine M. Sharkey, Federalism Accountability: “Agency-Forcing” Measures, 58 DUKE L.J. 2125 (2009).
78 Federal criminal enforcement may be somewhat less centralized because of the discretion vested in the ninety-three U.S. Attorneys’ Offices. See Daniel C. Richman, Federal Criminal Law, Congressional Delegation, and Enforcement Discretion, 46 UCLA L. REV. 757, 781 (1999) (explaining how “federal prosecutorial authority is . . . famously fragmented”). But cf. Rachel Barkow, Federalism and Criminal Law: What the Feds Can Learn from the States 8 (2010) (discussing efforts to give Main Justice more centralized authority over federal criminal enforcement), available at http://ssrn.com/abstract=1559251.
79 See Margaret H. Lemos, The Other Delegate: Judicially Administered Statutes and the Nondelegation Doctrine, 81 S. CAL. L. REV. 405, 448–49 (2008) (discussing various means of political control of agencies); see also Neal Kumar Katyal, Internal Separation of Powers: Checking Today’s Most Dangerous Branch from Within,115 YALE L. J. 2314, 2326 (2006) (“[A] strong President can stymie two agencies almost as easily as he can stymie one.”).
80 See Wood, supra note 79, at 822 (finding that “[t]he leadership of an agency is the most frequent mechanism for changing agency behavior”).
81 See Peter H. Schuck, Delegation and Democracy: Comments on David Schoenbrod, 20 CARDOZO L. REV. 775, 785 (1999) (“While the nature, quality, and intensity of legislative oversight vary from committee to committee, it is often used to signal congressional preferences on agency policy issues and to extract policy commitments from agency officials.”).
82 See Cynthia R. Farina, Statutory Interpretation and the Balance of Power in the Administrative State, 89 COLUM. L. REV. 452, 509–10 (1989) (“Agency action can be publicly castigated on the House or Senate floor, and members of Congress or their staffs can importune agency decision makers.”).
83 See Haoran Lu, Presidential Influence on Independent Commissions: A Case of FTC Staffing Levels, 28 PRESIDENTIAL STUD. Q. 51 (Winter 1998) (showing that “presidents do use budget, specifically staff level, to influence independent agencies”); Terry Moe, Regulatory Performance and Presidential Administration, 26 AM. J. POL. SCI. 197, 201 (1982) (discussing presidential influence over budgets through executive Office of Management and Budget); Schuck, supra note 81, at 785 (“The appropriations process sharply constrains the authority and discretion of agencies.”).
84 See Hugh Davis Graham, The Politics of Clientele Capture: Civil Rights Policy and the Reagan Administration, in REDEFINING EQUALITY 103, 106 (Neal Devins & Davison M. Douglas eds., 1998) (noting that Reagan administration “slowed regulatory activity by cutting the agency budgets”); MICHAEL E. MILAKOVICH & GEORGE J. GORDON, PUBLIC ADMINISTRATION IN AMERICA 373 (10th ed. 2009) (“Ronald Reagan, from the very start of presidency, used a comprehensive assault on the national government budget as the key to his attempt to reshape the national bureaucracy. Reagan demonstrated convincingly that the most direct way (if not always the easiest politically) to control an agency is to cut—or increase—its budget.”). Studies show that public enforcement by federal agencies changes with shifts in presidential and congressional politics. See, e.g., Moe, supra note 83 (finding variation in enforcement efforts of National Labor Relations Board, Federal Trade Commission, and Securities and Exchange Commission based on presidential administration in office); Selmi, supra note 22, at 1440–41 (“Since the passage of the Civil Rights Acts in the 1960s, each shift in political party has brought significant change in civil rights enforcement.”); B. Dan Wood & Richard Waterman, The Dynamics of Political Control of the Bureaucracy, 85 AM. POL. SCI. REV. 801 (1991) (finding significant executive influence on behavior of seven agencies, especially those situated within executive departments).
85 The number of non-federal enforcers typically exceeds fifty, as it may include the District of Columbia as well as the Commonwealths of Puerto Rico and the Northern Marina Islands, and the territories of American Samoa, Guam, and the Virgin Islands. See http://www.naag.org/about_naag.php. For the sake of simplicity, this Article will focus on enforcement by the fifty states.
86 See infra notes 249–251 and accompanying text (discussing complaints by legislators and lobbyists that state enforcement will produce disuniformity in federal law).
87 See, e.g., 15 U.S.C. § 2073(b) (prescribing procedures for state enforcement of federal rules governing consumer products, including requirement of notice and federal agency’s right of intervention); 15 U.S.C. § 1264 (same, for state enforcement of federal rules governing hazardous substances); 15 U.S.C. § 1194 (providing for state enforcement of federal rules governing flammable fabrics and incorporating procedural requirements of section 2073).
88 See Rose, supra note 9, 2203 (explaining that when voluntary cooperation breaks down, “the enforcer concerned about under-deterrence will always stand in a position to thwart the efforts of the enforcer who is concerned about over-deterrence, leading to a potentially ill-advised ratcheting up of enforcement intensity”); Widman, supra note 9, at 11 (explaining that state-enforcement provisions “allow states to enforce [federal] regulations when the agency does not”).
89 See Stephen D. Houck, Transition Report: The State of State Antitrust Enforcement 3–4 (2009) (discussing state-federal cooperation—and lack thereof—under the Reagan, Bush I, Clinton, and Bush II administrations), available at http://www.naag.org/2009-antitrust-federalism-enhancing-the-federalstaterelationship.php.
90 See, e.g., Peter Brann, State Attorneys General Consumer Protection Under a New Administration: New Opportunities and New Challenges 8 (2008) (“As the [George W.] Bush Administration cut back on consumer protection efforts, the States have rushed in to fill the void.”), available at http://www.law.columbia.edu/center_program/ag/resources; Calkins, supra note 9, at 734 (“State perception of a lack of federal will is the most common stimulus to expansive state activity.”); Ralph H. Folsom, State Antitrust Remedies: Lessons from the Laboratories, 35 ANTITRUST BULL. 941, 954 (1990) (“The state attorneys general committed themselves to ‘filling the gap’ created by Reagan administration antitrust policies by increasing their state antitrust prosecutions.”); Dru Stevenson, Special Solicitude for State Standing: Massachusetts v. EPA, 112 PENN. ST. L. REV. 1, 39–40 (2007) (“[O]ne manifestation of a presidential policy of deregulation is agency action on the enforcement and rulemaking fronts. Ironically, the unintended consequence of this policy is an increase in litigation activity by the state AG’s in the very same area, which can prove just as daunting to the regulated industry as routine oversight by a federal agency.”); Brooke A. Masters, States Flex Prosecutorial Muscle, WASH. POST, Jan. 12, 2005, at __ (“[S]tate regulators and attorneys general are bringing legal action and launching investigations in . . . areas where they say federal regulators have fallen down on the job. ‘Our action is the result of federal inaction,’ said Connecticut Attorney General Richard Blumenthal, who has brought actions against drug companies, polluters, and the Environmental Protection Agency.”).
91 Although NAAG has adopted more than 100 policy positions in an effort to “promote uniformity in specific areas of law[,] . . . NAAG stresses that ‘[t]he autonomy of each Attorney General is carefully protected.’” Joseph F. Zimmerman, Interstate Cooperation: The Roles of the State Attorneys General, 28 PUBLIUS 71, 75 (Winter 1998) (quoting NAT’L ASS’N OF ATTORNEYS GEN., POLICY POSITIONS 7 (1993)).
92 See generally Jason Lynch, Note, Federalism, Separation of Powers, and the Role of State Attorneys General in Multistate Litigation, 101 COLUM. L. REV. 1998 (2001) (discussing multistate actions).
93 See Rose, supra note 9, at 2203 (“[V]oluntary coordination can break down if disagreements arise over the best enforcement approach. This is a realistic probability, even amongst well-incentivized enforcers, given the significant empirical uncertainty that will exist regarding the relative level of under- and overdeterrence costs.”); cf. Houck, supra note 89, at 17 (“[T]he main concern expressed by state [assistant attorneys general working in the antitrust area] relates to the perceived decline in the effectiveness of multistate working groups. There is a general perception that the multistate working groups are not run as effectively or efficiently as they should be, and have been historically.”); Judith Resnik, Joshua Civin & Joseph Frueh, Ratyfying Kyoto at the Local Level: Sovereigntism, Federalism, and Translocal Organizations of Government Actors (TOGAs), 50 ARIZ. L. REV. 709, 753 (2008) (discussing disputes within NAAG and formation of subgroup called Republican Attorneys General Association, which has taken positions different from those of NAAG on several issues).
94 Roundtable Conference with Enforcement Officials, 73 ANTITRUST L.J. 269, 296 (2005) (statement of Patricia Connors, Chair of NAAG’s Multistate Antitrust Task Force); see also Antitrust Modernization Commission: Supplemental Public Comment Submitted by the Attorneys General of Hawaii, Maine, and Oregon on State Merger Enforcement 6 (July 23, 2006) (explaining that state merger enforcement tends to focus on local industries, including “health care, retail gasoline, solid waste, supermarkets, movie theaters, banking, retail pharmacy, funeral homes, department stores, and asphalt”), available at http://govinfo.library.unt.edu/amc/public_studies_fr28902/enforcement_pdf/060723_suppl_state_merger_com.pdf; cf. Michael DeBow, State Antitrust Enforcement: Empirical Evidence and a Modest Reform Proposal, in COMPETITION LAWS IN CONFLICT: ANTITRUST JURISDICTION IN THE GLOBAL ECONOMY 267, 274 (Richard A. Epstein & Michael S. Greve eds., 2004) (discussing “quaint, Normal Rockwell-like quality” of state antitrust enforcement).
95 See Calkins, supra note 9, at 580 (“State attorneys general have a clear comparative advantage in understanding local markets.”).
96 154 CONG. REC. S7877 (daily ed. July 21, 2008) (statement of Sen. Hutchinson) (regarding CPSIA).
97 See supra note 8 (noting exceptions).
98 See Clayton, supra note 63, at 538 (“[T]he accumulation of highly visible functions made the office increasingly attractive to a younger, better educated, and more ambitious caliber of attorney. The new breed of attorneys general have included [those] who used the office to project themselves into national politics.”).
99 Marshall, supra note 8, at 2453 (“[T]he Office of the Attorney General has long been seen by many of its occupants as a stepping stone to the governor’s office . . . .”); accord Colin Provost, State Attorneys General, Entrepreneurship, and Consumer Protection in the New Federalism, 33 PUBLIUS 37, 40 (Spring 2003) (“[O]f the 166 attorneys general who served at least two years between 1980 and 1999, more than 70 ran for a governorship or a U.S. Senate seat. Another 20 ran for or were appointed to a lower court seat, a federal agency post, or another position in state government.”).
100 See, e.g., Posner, supra note 9, at 257–60 (arguing that state attorneys general are focused primarily on promoting their political careers, and proposing that attorneys general be appointed rather than elected).
101 Masters, supra note 90 (reporting complaints from business groups).
102 First, supra note 9, at 1036.
103 See Provost, supra note 99, at 38 (“Because they are elected in most states . . . and because the office often serves as a springboard into higher political positions, state attorneys general have strong incentives to build up their record of political accomplishments by helping consumers and pursuing high levels of enforcement.”); Eric Waltenburg & Bill Swinford, The Supreme Court as a Policy Arena: The Strategies and Tactics of State Attorneys General, 27 POL’Y STUD. J. 242, 248 (1999) (describing state attorneys general as “politically savvy individuals who recognize that policy ‘hay’ can be made by litigation actions”).
104 Provost, supra note 99 at 53. The incentives for aggressive, entrepreneurial enforcement likely are amplified for attorneys general with ambitions to higher office. Scholars have found links between ambition to higher office and risk-taking and innovation by politicians. See Rebecca Herrick & Michael Moore, Political Ambition’s Effect on Legislative Behavior: Schlesinger’s Typology Revisited, 55 J. POL. 765 (1993) (finding that House members with aspirations to Senate introduced more legislation, made more speeches, and had larger staffs than those who aspired to leadership positions within House); Provost, supra note 99, at 43 (arguing that attorneys general “with progressive ambition are more likely to prosecute businesses to gain the attention of consumers and voters”); David W. Rohde, Risk-Bearing and Progressive Ambition: The Case of Members of the United States House of Representatives, 23 AM. J. POL. SCI. 1, 14–15 (1979) (demonstrating relationship between risk-taking by House members and senatorial ambitions); see also Hills, supra note 77, at 24–25 (“It is not smart politics to play it safe against an incumbent who, almost by definition, will have greater name recognition and nonidiological good will . . . .”).
105 Selmi, supra note 22, at 1442.
106 Macey & Miller, supra note 22, at 1117.
107 POSNER, supra note 13, at 644 (“[L]awyers employed by an administrative agency may prefer to bring small cases because that will enable them to get trial experience during their brief tenure whereas a large case might not come to trial until after the had left . . . .”).
108 See Steven P. Croley, Public Interested Regulation, 28 FLA. ST. U. L. REV. 7, 29 (2000) (“[A]dministrators self-select into an employment pool consisting of individuals who share some kind of ideological commitment to a given agency’s mission. . . . Over time, . . . those who remain with an agency are those who tend to believe in its mission and who reap personal satisfaction from a sense that public service truly serves the public.”).
109 See Selmi, supra note 99, at 1444 (“For individuals who are interested in a government career, they need to take into account which cases are most likely to advance their careers. . . . [T]his often means avoiding controversy and avoiding a policy of choosing safe cases to which the government would not likely object or about which the government is unlikely to come under political scrutiny or pressure.”).
110 Croley, supra note , at 30.
111 See supra notes 63, 84, and 90 and accompanying text (discussing decline in federal agency enforcement under Reagan and second Bush administrations).
112 Hills, supra note 77, at 15–16.
113 Id. at 16.
114 See Provost, supra note 99 (studying entrepreneurial behavior by state attorneys general); cf. Harry First, Statement of Before the Antitrust Modernization Commission 14 (Oct. 26, 2005), available at govinfo.library.unt.edu/amc/commission_hearings/pdf/Statement-First.pdf [hereinafter First, Statement] (comparing state enforcers to “maverick firms” that “pursue divergent business strategies as a way of differentiating their offerings from those of more dominant firms with larger market shares”).
115 William B. Rubenstein, On What a ‘Private Attorney General’ Is—And Why it Matters, 57 VAND. L. REV. 2129, 2133 (2004) (“What puts the ‘general’ in ‘attorney general’ is not strength but scope: ‘general’ defines the ambit of the ‘power of attorney’ given to the lawyer in question, distinguishing . . . lawyers with general powers of attorney from those with particular or specific appointments.”).
116 Provost, supra note 99, at 40 (discussing New York’s 1921 Martin Act).
117 James Traub, The Attorney General Goes to War, N.Y. TIMES, June 16, 2002, at A6.
118 Adi Ignatius, Wall Street’s Top Cop, TIME, Dec. 30, 2002, available at http://www.time.com/time/magazine/article/0,9171,1003960,00.html, at __.
119 Traub, supra note 117.
121 See id.
122 Ignatius, supra note 118 (explaining that “[t]he SEC jumped in” after Spitzer’s $100 million settlement with Merrill, and participated with states in going after 12 other investment banks).
124 Eric Zitzewitz, An Eliot Effect? Prosecutorial Discretion in Mutual Fund Settlement Negotiations, 2003-7 (Jan. 2008), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1030135.
127 Id. at 30.
128 Id. at 30–31. See also Rachel E. Barkow, The Prosecutor as Regulatory Agency, in PROSECUTORS IN THE BOARDROOM: USING CRIMINAL LAW TO REGULATE CORPORATE CONDUCT 27 (Anthony Barkow & Rachel Barkow eds., available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428934 (attributing SEC inaction to capture).
129 See, e.g., William J. Holstein & Edward M. Kopko, Spitzer’s Climate of Fear, WALL ST. J., Nov. 23, 2004, at B2 (“Rather than engaging in careful formulation of policy, Mr. Spitzer seems to be building his political career by collecting trophies.”); Ignatius, supra note 118 (“The rap on Spitzer is that he’s ambitious, that he has his eye on a bigger prize. To his (off-the-record) critics on Wall Street, his pursuit of investment banks smacks of opportunism and grandstanding, of a public official out of control.”); John J. McConnell, Spitzer Spears the Truth, WALL ST. J., May 15, 2002, at A18 (accusing Spitzer of aggressively pursuing flimsy case against Merrill in order to “further his own career”).
130 For a detailed analysis of the states’ legal theory in the tobacco litigation, see Hanoch Dagan & James J. White, Governments, Citizens, and Injurious Industries, 75 N.Y.U. L. REV. 354, 382–406 (2000).
131 See generally Donald G. Gifford, Impersonating the Legislature: State Attorneys General and Parens Patriae Product Litigation, 49 B.C. L. REV. 913 (2008) (discussing and critiquing states’ novel claims against lead paint manufacturers).
132 See Stephen Paul Mahinka & Kathleen M. Sanzo, Multistate Antitrust and Consumer Protection Investigations: Practical Concerns, 63 ANTITRUST L.J. 213, 221–23 (1994) (discussing states’ controversial campaign against common marketing and compensation systems for prescription drugs).
133 See Robert A. Schapiro, Not Old or Borrowed: The Truly New Blue Federalism, 3 HARV. L. & POL’Y REV. 33, 42–43 (2009) (describing attorneys general campaign against lending industry, which “served to prod federal efforts” in same field); see also State of New York Attorney General Andrew Cuomo, Testimony Before the United States House of Representatives Committee on Education and Labor (Apr. 25, 2007), available at http://edlabor.house.gov/testimony/042507/AndrewCuomotestimony.pdf (“Part of the reason the practices we have uncovered have been able to flourish nationwide over the past several years is because the U.S. Department of Education has been asleep at the switch.”).
134 See William H. Pryor, Jr., A Comparison of Abuses and Reforms of Class Actions and Multigovernmental Lawsuits, 74 TUL. L. REV. 1885, 1902–03, 1908–09, 1915–16 (1999) (critiquing state-led litigation against gun manufacturers).
135 See Press Release, Columbia Law School, Expert Says Foreclosure Problems Should Serve as WakeUp Call for Banks to Cooperate with States (Oct. 13, 2010), available at http://www.law.columbia.edu/media_inquiries/news_events/2010/October2010/foreclosures-tierney (describing state-led investigation into practices of mortgage-servicing industry).
136 Folsom, supra note 90, at 953–54; see also Mahinka & Sanzo, supra note 132, at 216–17 (noting that while enforcement against resale price maintenance was “virtually nonexistent at the federal level[,] . . . state attorneys general have devoted considerable resources to this issue and have initiated a number of high-profile enforcement initiatives”).
137 Folsom, supra note 90, at 954. State and federal enforcers took different positions in a recent Supreme Court case concerning one form of vertical restraint, resale price maintenance. Compare Brief for State of New York et al. as Amici Curiae Supporting Respondent, Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 2007 WL 621851 (“The States have a particular interest in preserving the per se prohibition against the pricefixing practice challenged here – minimum resale price maintenance (“minimum RPM”). The States vigorously prosecute cases involving minimum RPM agreements.”), with Brief for United States as Amicus Curiae Supporting Petitioner, 2007 WL 173650 (“The per se rule against vertical minimum resale price maintenance (RPM) established in Dr. Miles is irreconcilable with this Court’s modern antitrust jurisprudence and cannot withstand analysis. That per se rule should be abandoned, and Dr. Miles should be overruled.”).
138 See, e.g., http://www.ag.ny.gov/our_office.html (listing specialized bureaus).
139 Some independent agencies have independent litigation authority, but most agencies must be represented by the DOJ if they go to court. See 28 U.S.C. § 516 (“Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of the Department of Justice, under the direction of the Attorney General.”). For exceptions, see Neal Devins, Unitariness and Independence: Solicitor General Control Over Independent Agency Litigation, 84 CAL. L. REV. 255, 264–65 (1994).
140 Neal Devins & Michael Herz, The Uneasy Case for Department of Justice Control of Federal Litigation, 5 U. PA. J. CONST. L. 558, 562–63 (2003).
141 See Pritchard, supra note 21, at 1076 (discussing “cyclical pattern of neglect and hysterical overreaction that typifies securities regulation emanating from both the SEC and Congress”).
142 For example, many of the states that initially refused to join the litigation against the tobacco industry were major tobacco producers. See MARTHA A. DERTHICK, UP IN SMOKE 163 (2002); cf. Barkow, supra note 128, at 17 (“[E]lected prosecutors will tend to under-regulate because they have competing concerns that favor industry. As the former AG in Massachusetts has observed, ‘“[y]ou rarely run for attorney general successfully by prosecuting the biggest corporations in your state, represented by the best law firms, with the best PR firms spinning it.”’” (quoting Nicholas Thompson, The Sword of Spitzer, LEGAL AFFAIRS 50 (June 2004) (quoting Scott Harshbarger, former Attorney General of Massachusetts))); Elizabeth A. Harris & Michael Barbaro, Hedge Fund Links Donors to Attorney General Nominee, N.Y. TIMES, Oct. 14, 2010 (reporting that 25% of contributions to Daniel M. Donovan, Jr., Republican candidate for attorney general in New York, could be traced to hedge fund “whose chief executive has emerged as a staunch and influential defender of Wall Street,” and noting that Donovan “has repeatedly promoted his cautions, nonconfrontational approach to Wall Street”).
143 See Hills, supra note 77, at 23 (“[State politicians] are captured by a different set of interests than those dominant in Washington, D.C., because state constituencies contain a different mix of interests than the nation as a whole.”). Moreover, the dynamics of regulatory capture may vary between specialized agencies and generalist attorneys general. See Jonathan Macey, Organizational Design and Political Control of Administrative Agencies, 8 J. LAW ECON. & ORG. 93 (1992) (arguing that “single purpose” agencies are more susceptible to regulatory capture than “general purpose” offices like that of attorney general).
144 If anything, the issue overlap between campaigning Republican and Democratic attorneys general is striking. See, e.g., http://www.terrygoddard.com (Arizona Democrat Terry Goddard emphasizes record combatting crime, methamphetamines, unfair lending and business practices, consumer and elder fraud, and deceptive advertising, and protecting Arizona’s environment); http://www.dustinmcdaniel.com/story (Arkansas Democrat Dustin McDaniel describes himself as “the state’s top consumer advocate” and identifies his priorities as “[f]ighting methamphetamine production and distribution, eliminating payday lenders, and assisting consumers through his health care bureau”); http://jerrybrown.org/jerry-brown-accomplishmnets-attorneygeneral (California Democrat Jerry Brown lists accomplishments as “cracking down on crime and fighting for fairness,” “fighting for public safety and against corporate abuse,” “fighting to keep California fair and pristine,” and “reducing the attorney general’s operating budget”); http://richardblumenthal.com/About (Connecticut Democrat Blumenthal lists accomplishments as “standing up to big tobacco,” “beating back unfair utility rate increases and skyrocketing costs of . . . energy,” “fighting environmental polluters and lawbreakers,” “taking on insurance companies’ abuses,” “fighting for consumers victimized by . . . subprime mortgage lenders”); http://www.beaubiden.com/about/accomplishments (Delaware Democrat Beau Biden highlights “record of standing up for kids and families,” combating senior abuse and crime, and acting as a “watchdog for consumers”); http:/myfloridalegal.com (Florida Republican Bill McCollum emphasizes efforts to combat online child predators, developing a statewide gang reduction strategy, consumer protection, combating Medicaid fraud, improving the state’s security against terrorist threats, and fighting crimes against the elderly); http://mikecox2010.com (Michigan Republican Mike Cox emphasizes that he “has already made a name for himself as a strong leader who is willing to make bold moves, cut spending and produce record-setting results.”); http://jonbruning.com/index.php?PID=4&TYPE=DEFAULT (Nebraska Republican Jon Bruning reports that “[h]is efforts have increased Nebraska consumer recoveries from just under $500,000 total to nearly $1 million annually”); http://www.tomcorbettforgovernor.com/meet-the-team/tom-corbett/ (Pennsylvania Republican Tom Corbett highlights “efforts to protect our children from internet predators, our seniors from fraud and abuse, our communities from gangs and the violence associated with illegal drugs . . . [and] to protect taxpayers’ hard earned money by going after predatory lenders, pharmaceutical companies and big oil companies that took advantage of consumers”); http://www.henrymcmaster.com/about (South Carolina Republican Henry McMaster boasts of “recover[ing] hundreds of millions of taxpayer dollars lost to fraud and abuse and [going] to court to prevent the misuse of millions more,” combating white collar crime and internet child predators, and challenging President Obama’s health care legislation.
145 See Rubenstein, supra note 115, at 2139–40.
146 See generally Max Minzner, Why Agencies Punish (unpublished manuscript on file with author).
147 Houck, supra note 89, at 5 (“The states play a prominent role in antitrust enforcement by virtue of their representation of state agencies, which are major direct purchasers of many commodities and frequent targets of bid-rigging and other price-fixing conspiracies.”).
148 See 15 U.S.C. § 77p (restricting private class actions but preserving the right of “a State or political subdivision thereof or a State pension plan [to] bring an action involving a covered security on its own behalf,
or as a member of a class comprised solely of other States, political subdivisions, or State pension plans that are named plaintiffs”). Ohio’s recent suit against Bank of America is an example of such an action. See News Release, Ohio Attorney General Richard Cordray, Consolidated Amended Complaint Filed in Shareholder Lawsuit against Bank of America (Sept. 28, 2009), available at http://ohioattorneygeneral.gov/BriefingRoom/News-Releases/September-2009. Ohio’s Attorney General Richard Cordray, who is running for reelection in 2010, has vowed to “hold Wall Street accountable for their actions in harming Ohio Investors, retirees, workers and families through violations of securities laws.” John Michael Spinelli, Ohio AG Cordray Readies AIG Case as House GOP Asks Him to Challenge Federal Health Care Proposal, COLUMBUS GOV’T EXAMINER,Feb. 20, 2010. His 2009 Annual Report boasts recoveries of more than $2 billion “for investors.” http://www.ohioattorneygeneral.gov/AnnualReport2009.
149 Cf. Rubenstein, supra note 115, at 2140 (explaining that compensation is conventionally conceived as private goal, and that “when the government pursues compensatory damages, it is typically seeking to be made whole for losses it has suffered in its more proprietary, not law-enforcement, functions”).
150 The FTC has similar authority under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to seek equitable monetary remedies for violations of any laws within its jurisdiction. In practice, the FTC has used that authority almost exclusively in consumer protection cases. See FED. TRADE COMM’N, ANNUAL REPORT 43 (April 2010) (“From March 2009 through March 2010, the FTC’s Redress Administration Office mailed redress checks to 2,598,799 consumers for a total of more than $63.9 million.”); see also Stephen Calkins, An Enforcement Official’s Reflections on Antitrust Class Actions, 39 ARIZ. L. REV. 413, 431 (1997) (discussing FTC’s sparing use of Section 13(b) in competition cases). In recent years—and perhaps as a result of competition with state attorneys general—the FTC has expanded its use of Section 13(b) to obtain restitution in antitrust cases, perhaps as a result of competition with state attorneys general. See infra note 194 and accompanying text.
151 Howard M. Erichson, Coattail Class Actions: Reflections on Microsoft, Tobacco, and the Mixing of Public and Private Lawyering in Mass Litigation, 34 U.C. DAVIS L. REV. 1, 4 (2000) (noting that “some . . . government lawsuits seek money damages for defendants’ injurious conduct toward citizens,” thereby “mix[ing] the roles of public and private lawyers.”).
152 Attorneys general regularly publicize any damage awards that are returned to citizens. See, e.g., http://ag.arkansas.gov/newsroom/index.php?do:newsDetail=1&news_id=304 (“Attorney General Dustin McDaniel presented a $25,000 check to the Arkansas Foodbank Network today . . . . The funding is from part of a 2006 settlement with Berkeley Premium Nutraceuticals, Inc., an Ohio-based company that is now out of business.”); http://ag.ca.gov/newsalerts/release.php?id=1618& (“Attorney General Edmund G. Brown Jr. today announced a landmark, multi-state settlement with Countrywide Home Loans . . . that is expected to provide up to . . . $3.5 billion to California borrowers.”); http:/www.ct.gov/ag/view.asp?A=2341&Q=462338 (“Attorney General Richard Blumenthal today announced that his office has mailed $60,000 in restitution checks to consumers who paid a Bridgeport company for headstones that were never delivered.”); http://www.beaubiden.com/about/accomplishments/ (“[Delaware Attorney General Beau Biden] has expanded the Victims Compensation Assistance Program’s (VCAP) operations to help victims of violent crime recover, reaching more Delawareans than ever before and awarding more than $2.3 million to victims so far this year . . . .”); http://www.myfloridalegal.com/newsrel.nsf/newsreleases/370FC8DA33D527C9852577380060920D (“Attorney General Bill McCollum today announced that his office has negotiated a settlement with Office Depot, Inc. . . . Under the settlement, Office Depot will pay approximately $4.5 million in refunds to eligible Florida customers . . . .”); http://www.marthacoakley.com/news/press_releases/details/2010-01-attorney-generalmartha-coakley-recovers-111-million- (“Attorney General Martha Coakley’s Office entered into settlements with [companies offering insurance for motorcycles] . . . , which return $11.1 million to consumers . . . .”); http://www.ag.state.mn.us/Office/AGBio.asp (“Attorney General Swanson’s lawsuits against insurance companies that sold unsuitable policies to senior citizens resulted in almost $1 billion in refund offers to consumers.”); http://www.ago.state.ne.us/your/jonbruning/biography.htm (“An average of more than $900,000 a year has been returned to victims of scams since Bruning took office.”); http://www.ag.ny.gov/media_center/2010/apr/apr26a_10.html (“Attorney General Andrew M. Cuomo today announced that his office is distributing more than $100,000 in restitution to customers of two auto dealerships in the Hudson Valley and Long Island that misrepresented used cars for sale.”).
153 See supra note 65 and accompanying text; see also First, supra note 9, at 1039–40 (emphasizing states’ comparative advantage at “delivering remedies” to consumers).
154 See Calkins, supra note 150, at 436 (“[D]espite the recovery by some state attorneys general of substantial monetary damage awards [in antitrust cases], individual consumers have received little in the way of monetary awards.”). For cases where consumers have received direct payments as a result of state enforcement, see Hubbard & Yoon, supra note 9, at 507 & n.47.
155 See generally Farmer, supra note 65 (describing cy pres distributions).
156 JEFFREY S. NIELSON & JEFFREY P. YUSHCHAK, CHAMBER OF COMMERCE INST. FOR LEGAL REFORM, REPORT ON POLICIES AND PRACTICES OF STATE ATTORNEYS GENERAL 3 (Oct. 24, 2007).
157 See Posner, supra note 9, at 258 (“I worry that state attorneys general will try to channel the moneys recovered in their suits to charitable uses that will advance their political agenda.”); Ann Davis, To Some, Santa Has a New Name: Spitzer; New York Attorney General Turns Settlement Funds into Gifts; Will it Grease an Election Sleigh?, WALL ST. J., Dec. 24, 2003, at C1 (noting that “the groups receiving the windfall [from Spitzer’s civil settlements] also represent voter constituencies that could be key to Mr. Spitzer’s widely expected Democratic run for governor in 2006”).
158 For example, $75 million in fines and penalties that New York collected in the Wall Street settlements, described in the previous section, went into the state’s general treasury. Davis, supra note 157; see also Nielson & Yushchak, supra note 156, at 15 (explaining that five of fourteen attorneys general surveyed reported that “settlement proceeds are generally deposited in the state’s general fund”).
159 Cf. Daryl J. Levinson, Empire-Building Government in Constitutional Law, 118 HARV. L. REV. 915, 926 (2005) (“Democratic representatives . . . have no obvious personal incentive to engorge governmental coffers since, absent the most blatant forms of corruption, they derive no immediate benefit from money flowing through the treasury.”).
160 See Dagan & White, supra note 130, at 371–73 (describing settlement). Not surprisingly, researchers have found that the decision to enter the litigation against the tobacco companies was influenced by the expected value of the recovery. Rorie L. Spill, Michael J. Licari & Leonard Ray, Taking on Tobacco: Policy Entrepreneurship and the Tobacco Litigation, 54 POL. RES. Q. 605, 616 (2001).
161 See Dagan & White, supra note 130 at 371–72.
162 See Provost, supra note 99, at 45 (arguing that “settlements [that] produce monetary benefits for the state and for consumers and voters . . . are significant accomplishments that attorneys general can advertise when they run for reelection or for higher office”). Attorneys general—particularly those who are facing upcoming elections—take pains to publicize damage recoveries. See, e.g., htpp://terrygoddard.com/record (website for Arizona Attorney General, who is running for governor in 2010, reports that, “[b]ecause of his strong belief in fiscal responsibility, Terry has directed his office in producing more than $267 million—last year alone—in settlements, restitution, penalties, and other recoveries for Arizona”); http://www.ag.state.il.us/about/index.html (website for the Illinois Attorney General, who is running for reelection in 2010, reports that “[i]n 2008, the Office of Attorney General Lisa Madigan . . . [c]ollected $1,000,945,708.06 on behalf of the People of the State of Illinois”); http://www.michigan.gov/ag/0,1607,7-164-19441-196796—,00.html (website for the Michigan Attorney General, who is running for governor in 2010, reports that, “[s]ince taking office, Mike Cox has recovered a record $3.2 billion for Michigan consumers, and saved Michigan taxpayers more than $1.7 billion in defense of state lawsuits”).
163 Attorneys general may also retain funds, collectively, through NAAG. See, e.g., Daniel Fisher, The House Tobacco Built, FORBES MAGAZINE, Sept. 1, 2008, at 98 (discussing $140 million fund administered by NAAG as a result of the tobacco litigation, and $2.8 million “milk fund,” named for a settlement of a schoolmilk case, used by NAAG to pay economists and other experts).
164 See, e.g., 15 U.S.C. § 15c(a)(2) (recovery of attorneys fees and costs for state antitrust enforcement); 15 U.S.C. § 1681s© (same for state enforcement of fair debt collection laws); 15 U.S.C. § 7706(f)(4) (same for state enforcement against internet spammers); 49 U.S.C. §§ 32709–10 (same for state enforcement regarding odometer tampering). Courts sometimes have interpreted statutes that are silent as to states as permitting fee awards as well. See, e.g., New York v. 11 Cornwell Co., 718 F.2d 22 (2d Cir. 1983) (holding that state may recover fees under 42 U.S.C. § 1988 when it sues as parens patriae under federal civil rights statute).
165 See First, Statement, supra note 114, at 11 (“Some states use ‘revolving fund’ appropriations which require agencies to self-fund their efforts through recovery of litigation fees in much the same way as private law firms do; others fund through general legislative appropriations.”). For example, several states have created antitrust revolving funds that are controlled by the attorney general and consist of a percentage of antitrust recoveries and—in some states—fee awards. See Ariz. Rev. Stat. § 41-191.01 (10 percent of antitrust recoveries); Cal. Bus. & Prof. Code § 16750 (10 percent of antitrust recoveries plus any fees rewarded); Kan. Stat. Ann. § 75-715 (20 percent of antitrust recoveries); Ohio Stat. § 109.82 (10 percent of antitrust recoveries plus fees and costs); Rev. Code Wash. Ann. § 43.10.215 (antitrust fees and funds transferred to the revolving fund pursuant to a court order or judgment in an antitrust action). Even in states that do not have an antitrust revolving fund, attorneys general may retain funds for antitrust enforcement pursuant to a court order. See, e.g., N.Y. St. Fin. L. § 121(1) (“Every state officer . . . receiving money for or on behalf of the state from fees, penalties, forfeitures, costs, fines, refunds, reimbursements, sales or property or otherwise, shall . . . pay into the state treasury all such moneys). For an example outside the antitrust context, see West’s Ann. Cal. Bus. & Prof. Code §§ 17206©, (d) (providing that funds recovered by the attorney general through consumer-protection litigation must be used to further enforce consumer protection law). See also Brann, supra note 90, at 5 (“In some states, the consumer protection division [of the attorney general’s office] is funded, often to a significant extent, by recoveries obtained from the division . . . .”).
166 Brann, supra note 90, at 5.
167 See Folsom, supra note 90, at 958 (“Public antitrust enforcement at the state and local levels is often perceived as ‘paying for itself.’ In many instances this is quite literally true.”).
168 Such arrangements gained notoriety in the context of the states’ litigation against the tobacco industry, in which 36 states employed private attorneys to assist in the litigation “because of the fear that the state legislature would not appropriate funds needed for suits against the major tobacco companies.” Zimmerman, supra note 91, at 84. For a thoughtful assessment of the use of contingency fee arrangements, see Leah Godesky, Note, State Attorneys General and Contingency Fee Arrangements: An Affront to the Neutrality Doctrine?, 42 COLUM. J.L. & SOC. PROBS. 587 (2009). See also County of Santa Clara v. Superior Court, 235 P.2d 21, 36 (Cal. 2010) (“[R]etention of private counsel on a contingent-fee basis is permissible in [publicnuisance] cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.”); State v. Lead Indus. Ass’n, 951 A.2d 428, 475 (R.I. 2008) (holding that contingency fee agreement between attorney general and private counsel is permissible in civil case, provided that attorney general retains “absolute and total control over all critical decision-making”).
169 See Erichson, supra note 151, at 36 (“In contrast to the government lawyer’s incentives, the contingent fee lawyer’s incentives are more entrepreneurial than political. Generally, the contingent fee lawyer’s primary incentive is to maximize the monetary recovery, which corresponds with the primary interest of most private plaintiffs.”).
170 See generally Peter W. Huber Guns, Tobacco, Big Macs—and the Courts, 107 COMMENTARY 32, 36 (1999) (“A state attorney general eyeing his next campaign for Senator or Governor can give his own political fortunes a boost by bringing home a billion or two from an out-of-state industry, and sharing 30 percent with prominent citizens back home.”); John Fund, Chamber of Commerce Inst. for Legal Reform, Cash In, Contracts Out: The Relationship Between State Attorneys General and the Plaintiffs’ Bar (citing numerous examples of attorneys general awarding contingency-fee contracts to campaign contributors).
171 See Erichson, supra note 151, at 21 (“Some commentators have criticized the state attorneys general for behaving too much like private plaintiffs’ lawyers. The Wall Street Journal complained of the ‘sue-thesocks-off-‘em compulsions’ of the state attorneys general, arguing that ‘the attorneys general increasingly have become little more than deputized posses running raids against the private sector.’” (quoting Editorial, Who’s Next, WALL ST. J., Apr. 4, 2000, at A26)); Folsom, supra note 90, at 958 (“[T]he self-supporting nature of state antitrust law enforcement . . . provides a ready argument for defense counsel that state enforcement actions are brought to fill the coffers of public prosecutors.”); Fund, supra note 170, at 15 (“The pattern set by state AGs and their plaintiff-lawyer allies is clear: First, find an industry with deep pockets, then make a squeeze play.”); Provost, supra note 99 at 44 (“[M]any allies of business have accused some attorneys general of filing frivolous lawsuits and using huge cash settlements to fill state coffers”).
172 See Mahinka & Sanzo, supra note 132, at 233 (“[T]he states have focused in settlement agreements on the recovery of civil penalties and administrative costs . . . [t]o a much greater degree than the federal antitrust and consumer protection agencies.”); see also First, supra note 9, at 1039 (“If there is one consistent threat to state antitrust enforcement in the past sixty years, it is the effort to collect money damages for violations of the antitrust laws.”); cf. Brann, supra note 90, at 5 (explaining that states in which consumer-protection enforcement is funded by recoveries tend to “place emphasis on settling cases, as opposed to engaging in lengthy, expensive, and uncertain, litigation” and that “settlements are then structured to make sure that they include a financial component”).
173 Metzger, supra note 76, at 2026 n.4.
174 For a comprehensive discussion of the CSPIA and the various agency failures that prompted its enactment, see generally Widman, supra note 9. Widman celebrates state enforcement of the CSPIA as a way for states to give effect to federal law in instances where the relevant federal agency under-enforces.
175 15 U.S.C. § 2057c(a) (“Beginning on the date that is 180 days after August 14, 2008, it shall be unlawful for any person to manufacture for sale, offer for sale, distribute in commerce, or import into the United States any children’s toy or child care article that contains concentrations of more than 0.1 percent of di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl butyl phthalate (BBP).”).
176 See Andrew Martin, Crackdown on Toy Safety Rules Proves No Fun for Toy Makers, N.Y. TIMES, Sept. 29, 2010, at A1 (discussing uncertainties about scope of CPSIA).
177 Provost, supra note 99, at 51.
178 15 U.S.C. § 2057c(a).
179 See http://www.crowell.com/PDF/CPSC-Phthalates-Opinion-Letter-and-Memorandum.pdf; see also Natural Resources Defense Council, Inc. v. U.S. Consumer Products Safety Commission, 597 F. Supp. 2d 370, 375 (S.D.N.Y. 2009) (describing CPSC’s interpretation). For a more detailed discussion of the battle over the pthalates ban, see Widman, supra note 9, at 17–18.
180 See Natural Resources Defense Council, 597 F. Supp. 2d at 390 (rejecting CPSC’s interpretation as “contrary to the language and structure of the CPSIA, and is inconsistent with the CPSA’s purpose and the CPSIA’s legislative history”).
181 Press Release, Conn. Attorney Gen. Office, Attorney General Praises Decision Blocking Manufacturers From Allowing Sale of Toxic Toys (Feb. 6, 2009), available at http://www.ct.gov/ag/cwp/view.asp?A=3673&Q=433514; see also Widman, supra note 9, at 25 (discussing additional clash between Blumenthal and CPSC). California Attorney General Jerry Brown has likewise expressed disagreement with the CPSC’s interpretation of the statute’s text and its reading of congressional intent. See Letter from Edmund J. Brown, Jr., Cal. Attorney Gen., to U.S. Consumer Product Safety Commission (March 25, 2009), available at http://www.learningresources.com/text/pdf/CalAGPhthalateLetter25Mar09.pdf.
182 See NAT’L ASS’N OF ATTORNEYS GEN., HORIZONTAL MERGER GUIDELINES, EXECUTIVE SUMMARY (1993) [hereinafter NAAG, HORIZONTAL MERGER GUIDELINES] (discussing various points of divergence); see also David A. Zimmerman, Comment, Why State Attorneys General Should Have a Limited Role in Enforcing the Federal Antitrust Law of Mergers, 48 EMORY L.J. 337, 349–59 (1999) (same).
183 NAAG, HORIZONTAL MERGER GUIDELINES, supra note 182, at § 2.
185 See U.S. DEP’T OF JUSTICE AND THE FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES (Aug. 19, 2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.html.
186 See Zimmerman, supra note 186, at 347 n.49 (“The protection of small business has been discussed as a goal of antitrust law since the Sherman Act, but scholars generally agree that such a goal is inconsistent with the legislative history of the antitrust laws and with sound public policy.”); see also DeBow, supra note 94, at 275 (discussing a “state merger case shot through with parochialism” in which the “district judge noted that ‘nothing in the Clayton Act or other federal antitrust laws addressed [the state’s] concern about [a local] plant closing’”).
187 Hubbard & Yoon, supra note 9, at 513.
188 15 U.S.C. § 18 (defining prohibited mergers as acquisitions whose “effect . . . may be substantially to lessen competition, or to tend to create a monopoly”).
189 Michael F. Brockmeyer, State Antitrust Enforcement, 58 ANTITRUST L.J. 169, 170 (1988) (internal quotation marks omitted).
190 Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993).
191 Robert A. Skitol & James A. Meyers, Ten Milestones in 20th Century Antitrust Law and Their Importance in the Decade Ahead, available at http://www.dbr.com/media_html.asp?id=522.
193 Kevin J. O’Connor, Is the Illinois Brick Wall Crumbling?, 15 ANTITRUST 34, 38 n.32 (2000). For other examples of pathbreaking antitrust decisions spurred by state action, see Hubbard & Yoon, supra note 9, at 516–20; and Jay L. Himes, Chief, Antitrust Bureau, Office of the Attorney Gen. of the State of N.Y., Federal “Unemption” of State Antitrust Enforcement, Remarks at the Antitrust, Competition and Trade Committee of LEX MUNDI 13–14 (May 14, 2004), available at http://www.abanet.org/antitrust/at-committees/atstate/pdf/publications/other-pubs/unemption.pdf.
194 First, Statement, supra note 114, at 14–15; cf. John C. Coffee, Jr., The Spitzer Legacy and the Cuomo Future, 329 N.Y.L.J. 5 (Mar. 20, 2008) (arguing that competition with Eliot Spitzer caused “the total amount of SEC-obtained restitution plus penalties . . . [to] rise hyperbolically”).
195 See Steven J. Cole, State Enforcement Efforts Directed Against Unfair or Deceptive Practices, 56 ANTITRUST L.J. 125, 133 (1987) (“Much of the remedies in state consumer protection actions really have been national in scope. One reason is simply the question of market necessity. So, a locally-imposed remedy by New York State in the case of Nutrasweet labeling on soda cans was applied nationally by 7-Up, Coca-Cola, and others.”); Posner, supra note 9, at 259 (“The danger is that interstate businesses will be forced to conform their business practices to the most restrictive state interpretation of federal antitrust law.”); Rose, supra note 9, at 29 (“[M]arket participants will predictably respond to the signals of the strictest enforcer with authority over them and conform their behavior accordingly.”).
196 See Thomas A. Schmeling, Stag Hunting with the State AG: Anti-Tobacco Litigation and the Emergence of Cooperation Among State Attorneys General, 25 LAW & POL’Y 429, 430 (2003) (“Acting together, the [state attorneys general] have won legal settlements or concessions from tobacco companies, auto manufacturers, toy makers, paint producers, and others, agreements that would have been quite unlikely if sought by individual [state attorneys general] acting alone.”); Waltenburg & Swinford, supra note 103, at 248 (“The states . . . have come to recognize that they actually can affect and shape national policy through coordinated law enforcement efforts . . . .”).
197 See supra notes 71-72 and accompanying text.
198 Hills, supra note 76, at 860 n.167.
199 Id. at 883 n.241 (discussing “picket-fence” federalism and citing TERRY SANFORD, STORM OVER THE STATES 80 (1967)); see also Sharkey, supra note 77, at 2158 n.128 (“[A] precondition for . . . cooperative federalism is likely the existence of intricately linked state and federal agencies, with built-in incentives and opportunities for communication as well as constructive collaboration.”).
200 It does not follow that state and federal agencies will always agree, of course. For examples of “uncooperative federalism,” including state-federal agency clashes, see Bulman-Pozen & Gerken, supra note 10, at 1271–84.
201 Marshall, supra note 8, at 2453.
202 See supra note 72 and accompanying text (listing examples).
203 Editorial, A Victory for Clean Air, N.Y. TIMES, Nov. 20, 2000, at A19. For a description of the relevant provisions of federal law, see Rachel Zafrann, New York’s Novel Strategy for Combating Air Pollution, 11 FORDHAM ENVTL. L.J. 59, 66–70 (1999).
204 Andrew C. Revkin, In New Tactic, State Aims to Sue Utilities Over Coal Pollution, N.Y. TIMES, Sept. 15, 1999, at A1.
205 See id.
206 See Bob Downing, Fatal Beauty, ACRON BEACON J., Nov. 17, 2009, available at http://www.ohio.com/lifestyle/downing/70327262.html (describing EPA’s regulatory efforts and industry responses); Revkin, supra note 204 (“A round of maneuvers in Federal Court by the states hosting the old coal plants has delayed new E.P.A. action to stanch the pollution flow”).
207 See Press Release, U.S. Dep’t of Justice, U.S. Expands Clean Air Act Lawsuits Against Electric Utilities (March 1, 2000), available at http://www.justice.gov/opa/pr/2000/March/090enrd.htm.
208 Editorial, supra note 203; see also $4.6B Pollution Payout Signals Major Shift, CBS NEWS, Oct. 9, 2007, available at http://www.cbsnews.com/stories/2007/10/09/business/main3346547.shtml (discussing later settlement by defendant in related case).
209 See Larry D. Kramer, Putting the Politics Back Into the Political Safeguards of Federalism, 100 COLUM. L. REV. 215, 223 (2000).
210 Scholars have debated whether a federal system in fact produces the benefits associated with decentralization. See, e.g., Edward L. Rubin & Malcolm Feeley, Federalism: Some Notes on a National Neurosis, 41 UCLA L. REV. 903 (1994) (questioning the value of federalism). I assume for purposes of this discussion that federalism is (or at least can be) a good thing and ask whether decentralized enforcement produces the same sorts of consequences as decentralized regulatory authority. In the next Section, I identify the circumstances under which those consequences will desirable from the perspective of the federal system.
211 Gregory v. Ashcroft, 501 U.S. 452, 458 (1991); see also Deborah J. Merritt, The Guarantee Clause and State Autonomy: Federalism for a Third Century, 88 COLUM. L. REV. 1, 7 (1988) (“The greater accessibility and smaller scale of local government allows individuals to participate actively in governmental decisionmaking.”).
212 Gregory, 501 U.S. at 458.
213 Cf. Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. POL. ECON. 416, 418–19 (1956) (“[T]he consumer-voter moves to that community whose local government best satisfies his set of preferences. The greater the number of communities and the greater the variance among them, the closer [he] will come to fully realizing his preference position.”). As others have recognized, there is good reason to question the premise of citizen mobility that underlies the metaphor of voting with one’s feet. See Barry Friedman, Valuing Federalism, 82 MINN. L. REV. 317, 387–88 (1997) (“People can and do move, but inertia is a large factor in why each of us lives where we do. Even when moves occur, they tend to be for reasons largely unrelated to government policy decisions: We move because our work takes us elsewhere, or because of marriage or some other personal need, or perhaps because of climate and health.”). As noted, supra note 210, my aim here is not to make the case for traditional defenses of federalism, but to investigate whether they make sense when applied to state enforcement rather than state regulation.
214 Michael W. McConnell, Federalism: Evaluating the Framers’ Design, 54 U. CHI. L. REV. 1484, 1494 (1987).
215 Id. at 1498–1500.
216 New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).
219 Scholars have made similar arguments about local prosecutors. See, e.g., Daniel C. Richman, Old Chief v. United States: Stipulating Away Prosecutorial Accountability?, 83 VA. L. REV. 939, 961 (1997) (”[S]ome formal mechanism is thought necessary to ensure that the “people” have a voice in how [prosecutors] deploy resources in their name.”); see also Angela J. Davis, Prosecution and Race: The Power and Privilege of Discretion, 67 FORDHAM L. REV. 13, 57 (1998) (“[T]he current system of choosing state and local prosecutors through the electoral process was established for the purpose of holding prosecutors accountable to the people they serve.”); William T. Pizzi, Understanding Prosecutorial Discretion in the United States: The Limits of Comparative Criminal Procedure as an Instrument of Reform, 4 OHIO ST. L.J. 1325, 1339 (1993) (“If someone is to decide which laws will be aggressively enforced, which laws will be enforced occasionally, and which laws will never be enforced, it makes sense that the person who has to answer to the voters will make those determinations.”).
220 See, e.g., Elena Kagan, Presidential Administration, 114 HARV. L. REV. 2245, 2331 (2001) (“[P]residential leadership establishes an electoral link between the public and the bureaucracy, increasing the latter’s responsiveness to the former.”); Matthew C. Stephenson, Optimal Political Control of the Bureaucracy, 107 MICH. L. REV. 53, 68 (2008) (“While bureaucratic policy preferences are not directly responsive to voter interests, the president—who is responsive to voter interests, at least in expectation—has a number of tools at her disposal to shift the bureaucracy’s ideal point.”).
221 Cf. Marshall, supra note 8, at 2475–76 (arguing that independent attorney general enhances accountability over federal model of unitary executive).
222 See Roderick M. Hills, Jr., Dissecting the State: The Use of Federal Law to Free State and Local Officials from State Legislatures’ Control, 97 MICH. L. REV. 1201, 1201 (1999) (“In discussions about American federalism, it is common to speak of a ‘state government’ as if it were a black box, an individual speaking with a single voice. . . . [A] ‘state’ actually incorporates a bundle of different subdividions, branches, and agencies . . . .”); Resnik, et al., supra note 93, at 728 (“States are themselves aggregates of entities and of persons holding different (and sometimes conflicting) views of what constitutes the state’s ‘interest.’”).
223 Cf. Bulman-Pozen & Gerken, supra note 10, at 1271 n.45 (“[A]scribing various state officials’ actions to the state itself highlights that many different actors can speak on behalf of the state. This diversity generates more channels for state dissent against federal policy and may be particularly important in the context of what we call the ‘administrative safeguards of federalism,’ where state ‘administrators’ of federal policy include not just bureaucrats, but legislators and executives as well.”).
224 Cf. Lemos, supra note 79, at 460 (discussing barriers to congressional action).
225 Federal antitrust law is an example. See 15 U.S.C. § 15h (stating that the provision for state parens patriae enforcement authority “shall apply in any State, unless such State provides by law for its nonapplicability in such State”). Other statutes specify the attorney general as the default state enforcer but make clear that states could empower different state actors. See, e.g., 15 U.S.C. § 5712(g)(2) (permitting enforcement of federal regulations governing pay-per-call services by other state actors authorized by State and FTC); 15 U.S.C § 7706(f)(1) (authorizing enforcement of federal anti-spam legislation by the attorney general “or an official or agency of the state”); 47 U.S.C. § 227(f) (authorizing enforcement of federal common carrier legislation by the attorney general “or an official or agency designated by a State”).
226 Cf. Hills, supra note 222 (defending presumption against preemption on ground that state lawmaking will elicit debate at national level by incentivizing powerful business interests to push for congressional override).
227 Gregory v. Ashcroft, 501 U.S. 452, 458 (1991).
228 See Widman, supra note 9, at 10 (explaining that enforcement authority enables states to step in when federal agencies fail to enforce).
229 By like token, the availability of both state and federal enforcement enables federal enforcers to provide a corrective against under-enforcement by states. Just as federal law may sometimes set a floor for state regulatory action, see supra note 74 and accompanying text, federal enforcement efforts establish a baseline level of enforcement that states are free to exceed. One could imagine a scenario, however, in which states had exclusive enforcement authority, serving as replacements for rather than supplements to federal agencies. Indeed, although every statute that currently authorizes state enforcement also empowers a federal agency enforcer, it may be the case that as a practical matter, states are the only real enforcers in certain areas. Where states’ enforcement powers are legally or functionally exclusive, the one-way-ratchet problem discussed in the text below largely disappears—but it is replaced by heightened concerns about the possibility of underenforcement by states.
230 See Posner, supra note 9, at 259 (discussing “one-way character” of state antitrust enforcement).
231 See Gonzales v. Raich, 545 U.S. 1 (2004) (upholding federal prohibition on marijuana possession as applied to possession of medical marijuana legal under California law).
232 See Press Release, Dep’t of Justice, Attorney General Announces Formal Medical Marijuana Guidelines (Oct. 19, 2009) (discussing federal enforcement guidelines that “make clear that the focus of federal resources should not be on individuals whose actions are in compliance with existing state laws”); cf. Merritt, supra note 211, at 5–6 (arguing that state governments can check federal authority through lobbying, litigation, and “by serving as a wellspring of political force,” even though they “can neither veto federal legislation nor declare it unconstitutional”).
233 McConnell, supra note 214, at 1493.
234 The classic statement of this claim is Tiebout, supra note 213.
235 Rubin & Feeley, supra note 210, at 920.
236 See supra notes 69–70 and accompanying text.
237 See supra notes 191–196 and accompanying text.
238 See Brann, supra note 90, at 9 (“As a practical matter, a relatively small number of States, which were usually larger states with greater resources, end up running most of the [multistate] Executive Committees.”).
239 Lynn Baker, Putting the Safeguards Back into the Political Safeguards of Federalism, 46 VILL. L. REV. 951, 955–56, 966–67 (2001).
240 New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting) (“It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”).
241 New State Ice Co., 285 U.S. at 311 (Brandeis, J., dissenting).
242 See SHAPIRO, supra note 217, at 77 (“[A] policy that may begin its development at the national level [may] assume a different complexion and shape in every state in which it is administered. Ultimately, the experiences of the range of states will reflect back on, and redefine, the policy itself.”).
243 See supra note 194 and accompanying text.
244 See Brann, supra note 90, at 3–7 (discussing differences in state attorney general consumer protection divisions, with consequences for states’ emphasis on mediation or settlement versus litigation, their pursuit of “impact litigation,” and their preference for seeking damages or injunctive relief).
245 See First, Statement, supra note 114, at 11 (“Comparing how different agencies handle similar problems is a way of overcoming informational asymmetries. [Legislators] can better judge whether agencies are bringing enough of the right kinds of cases or are operating efficiently.”).
246 Metzger, supra note 76, at 2099–2100.
247 See generally Robert D. Cooter & Neil S. Siegel, Collective Action Federalism: A General Theory of Article I, Section 8, _ STAN. L. REV. _ (2010) (offering a functional explanation for the Constitution’s division of power between the federal government and the states).
248 See Hills, supra note 77, at 5 (“Congress frequently regulates activities because state regulation, or lack of regulation, of those activities imposes external costs on neighboring states. The whole point of the federal scheme is to suppress states’ creativity, which might consist only of creatively achieving benefits for their own citizens at the expense of nonresidents.”).
249 S. 1462, The Automated Telephone Consumer Protection Act of 1991; S. 1410, The Telephone Advertising Consumer Protection Act; and S. 857, Equal Billing for Long Distance Charges: Hearing Before the Subcomm. on Communications of the S. Comm. on Commerce, Science, and Transportation, 102nd Cong. 40 (1991) (statement of Direct Marketer’s Association).
250 154 CONG. REC. S7871 (daily ed. July 31, 2008) (statement of Sen. Kyl) (regarding Consumer Products Safety Improvement Act: “Giving 50 attorneys general discretion over consumer product safety laws would lead to 50 different interpretations of the law, and, thus, a confusing patchwork of safety standards that would make it more difficult for the CPSC to enforce uniform, national policies.”).
251 Telemarketing Fraud and Consumer Abuse: Hearing Before the Subcomm. on Transportation and Hazardous Materials of the H. Comm. on Energy and Commerce, 102nd Cong. 80 (1991) (statement of National Retailers’ Association); see also Consumer Product Safety Commission Reauthorization (Part 2): Hearing on H.R. 3343 and H.R. 3443 Before the Subcomm. on Commerce, Consumer Protection, and Competitiveness of the H. Comm. on Energy and Commerce, 100th Cong. 121 (1987) (statement of James Lacy, General Counsel, Consumer Product Safety Commission) (“I think the problem is the fact that it is not quite so simple when you have 50 different attorneys general looking at one law and you have a national Consumer Product Safety Commission which is purportedly setting a uniform consumer product safety environment.”); id. at 340 (statement of National Electrical Manufacturers) (“Manufacturers’ attempts to anticipate and comply with CPSC requirements will be frustrated if the Commission’s decisions about the safety of individual products can be second-guessed by state officials and reexamined and modified by the courts.”); Extend Commodity Exchange Act: Hearing on H.R. 10285 Before the Subcomm. on Conservation and Credit of the H. Comm. on Agriculture, 95th Cong. 287 (statement of Chicago Mercantile Exchange) (arguing that federal agency must have exclusive jurisdiction “so that the industry can be held responsible for one uniform set of requirements. The same reasons which make us unalterably opposed to a division of federal responsibility over futures apply even more strongly to a sharing of authority between federal and state agencies. Such a division of authority would raise the specter of 50 different and possibly conflicting interpretations of the many provision of the CFTC Act”).
252 Landes & Posner, supra note 13, at 38.
254 See Posner, supra note 9, at 257–58 (voicing this concern regarding state antitrust enforcement). But cf. Greve, supra note 9, at 103–04 (showing that state antitrust enforcers frequently pursue in-state defendants); Himes, supra note 193, at 10 (emphasizing former New York Attorney General Eliot Spitzer’s “willingness to take on home-grown business interests”).
255 See supra note 68 and accompanying text; see also, e.g., Widman, supra note 9, at 37 (dismissing concerns about “ad hoc enforcement” of CPSIA on ground that “[i]ndustry is aware of agency regulations and should assume that violations will result in enforcement action. With a statute such as CPSIA, Congress has made clear its decision to sanction violators and increasing the likelihood of such sanctions seems to be a necessary means of communicating to industry that the regulations need to be heeded.”).
256 See, e.g., 15 U.S.C. § 1203 (permitting states to adopt standards governing flammable fabrics that are more stringent than the federal rules); 15 U.S.C. § 6313 (same, for rules governing boxing matches); 15 U.S.C. § 7806 (disclaiming an intent to preempt state law regulating sports agents); 18 U.S.C. § 248(d)(3) (same, for state law regulating access to abortion clinics); 49 U.S.C. § 14711(f) (same, for state criminal law regarding the transportation of household goods); see also California v. ARC America Corp., 490 U.S. 93, 101–02 (1989) (explaining that “the Court has recognized that the federal antitrust laws do not pre-empt state law” and refusing to preempt state laws permitting suit by indirect purchasers, though such actions are foreclosed under federal law).
257 That is not to say that state enforcement of federal law poses no risk to uniformity above and beyond that created by a failure to preempt state law. The Microsoft antitrust litigation, which sparked a wave of commentary critical of state antitrust enforcement, illustrates the potential problem. In 1998, the United States and a group of states filed suit against Microsoft alleging antitrust violations. See http://www.microsoftantitrust.gov/. Efforts to mediate the dispute broke down in the face of disagreements between some of the states and the Department of Justice over the appropriate remedy. First, supra note 9, at 1032–34. It is unclear whether the states should be faulted for the breakdown in Microsoft, or whether the problem (if it is one) has repeated itself elsewhere. Id. Nevertheless, the experience suggests how states’ involvement in litigation can complicate federal enforcement efforts—a risk that does not occur when states can enforce only state law. The important point for present purposes is that federal policymakers have tools to combat such interference while preserving state enforcement. Most federal statutes that authorize enforcement by state attorneys general contain provisions that effectively grant federal officials a right of first refusal on enforcement actions. States must give federal enforcers prior notice of any proposed enforcement action and are precluded from proceeding against a defendant for violations that are the subject of a pending federal action. Those provisions do not appear in the federal antitrust statutes. If indeed state interference with federal antitrust enforcement is a recurring phenomenon, it may be appropriate to cabin state enforcement through equivalent notice and pending-federalaction provisions. Cf. Richard A. Posner, Antitrust in the New Economy, 68 ANTITRUST L.J. 925, 941 (2001) (arguing that Justice Department should have “right of first refusal” to bring antitrust suits, thereby preempting state and private actions).
258 Cf. Richman, supra note 78, at 778–81 (arguing that fragmented prosecutorial authority reduces risk of capture).
259 Cf. Katyal, supra note 79, at 2324–27 (discussing benefits of competition among federal agencies with overlapping jurisdictions).
260 See supra note 72 and accompanying text (listing statutes that authorize state enforcement while preempting state law); see also Widman, supra note 9, at 35 (“Manifestations of state enforcement powers are sometimes seen as concession for absolute preemption of state laws, as in DATA Act of 2009 and FACTA Act of 2003 (citing Data Accountability and Trust Act, H.R. 2221, 111th Cong. (2009), and Fair Credit and Reporting Act, 15 U.S.C. § 1681 et seq., amended by FACTA Act of 2003, Pub. L. 108-159)).
261 Cf. Alan Schwartz, Statutory Interpretation, Capture, and Tort Law: The Regulatory Compliance Defense, 2 AM. L. & ECON. REV. 1, 20–22 (2000) (detailing inefficiencies that can result from preemptable state law).
262 15 U.S.C. § 41 et seq.
263 See Henry N. Butler & Joshua D. Wright, Are State Consumer Protection Acts Really Little-FTC Acts?, at 7–10, available at http://ssrn.com/abstract=1600843.
264 J. Howard Beales, III, The Federal Trade Commission’s Use of Unfairness Authority: Its Rise, Fall, and Resurrection, 22 J. PUB. POL’Y & MARKETING 192, 194 (2003).
265 E.g., Orkin Exterminating Co., Inc. v. FTC, 849 F.2d 1354, 1363–64 (11th Cir. 1988).
266 15 U.S.C. 45(n) (codifying FTC’s policy statement by denying Commission authority to declare act unlawful on unfairness grounds “unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition”).
267 Glenn Kaplan & Chris Barry Smith, Patching the Holes in the Consumer Product Safety Net: Using State Unfair Practices Laws to make Handguns and other Consumer Goods Safer, 17 YALE J. REG. 253, 285 (2000).
268 See Michael M. Greenfield, Unfairness under Section 5 of the FTC Act and its Impact on State Law, 46 WAYNE L. REV. 1869, 1929 (2000) (explaining that although “courts in most states pay lip service to the statutory direction that they be ‘guided by’ interpretations [federal law], . . . in fact they adhere to pre-1980 articulations” of unfairness).
269 See supra note 175 and accompanying text. The phthalates ban preempts state law on the subject. See http://www.cpsc.gov/about/cpsia/faq/231faq.html#q1.
270 See supra note 9.
271 It bears emphasis that antitrust is also an area where state law is not preempted. See supra note 256. Moreover, even if state antitrust law were preempted and states were prohibited from enforcing federal antitrust law, federal law would still permit private antitrust suits and divide federal enforcement authority between the FTC and the antitrust division of DOJ. Thus, while the risk of disuniformity may be particularly stark in the antitrust context, given the breadth of the relevant federal rule, it is far from clear that states’ authority to enforce federal law is the root of the problem. Other contributing factors, including the splintering of federal enforcement authority, the availability of private rights of action, and the continued validity of divergent state laws, are at least as important—and probably more so.
272 See Lemos, supra note 79, at 429–30 & n.122 (discussing statutes that vest primary interpretive authority in federal courts rather than agency).
273 Steven J. Cole, State Enforcement Efforts Directed Against Unfair or Deceptive Practices, 56 ANTITRUST L.J. 125, 135 (1987).
274 This analysis helps make sense of an otherwise puzzling provision of the recent Dodd-Frank financial overhaul bill, which prohibits states from enforcing any “provision of this title” against a national bank or federal savings association but permits states to enforce, against the same institutions, “a regulation prescribed by the [newly created Consumer Financial Protection] Bureau under a provision of this title.” Pub. L. 111-203, § 1042(a)(2).
275 See Shavell, supra note 13, at 586–87 (discussing difficulties in determining optimal level of enforcement); see also Rose, supra note 9, at 2178–92 (analyzing over- and under-deterrence in securities context).
276 Widman, supra note 9, at 16. See also http://www.cpsc.gov/about/faq.html (“We receive about 10,000 reports of product-related injuries and deaths a year from consumers and others. Due to our small staff size, we can investigate only a few of them.”).
277 Altria Group, Inc. v. Good, 129 S. Ct. 538, 544 n.6 (2008).
278 Cf. First, Statement, supra note 114, at 2 (“Although the data themselves cannot show whether there is state under- or over-enforcement [of federal antitrust law], the relatively small number of state cases, coupled with a lack of enforcement resources, leads me to believe that under-enforcement is the more likely conclusion, particularly given the size of the U.S. economy to be policed by antitrust enforcement agencies.”).
279 See supra note 87 and accompanying text.
280 See supra notes 89–90 and accompanying text.
281 See http://www.naag.org/federal_partners.php.
282 Federal policymakers could further reduce the risk of over-enforcement by states by foreclosing multistate actions. See supra note 196.
283 See supra Part II.A.4.
284 Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, Pub L. 108-187, 117 Stat. 2699 (2003) (codified as amended at 15 U.S.C. § 7701 et seq. and 18 U.S.C. § 1037).
285 See Eric Goldman, Where’s the Beef? Dissecting Spam’s Purported Harms, 22 J. MARSHALL J. COMPUTER & INFO L. 13 (2003).
286 15 U.S.C. § 7706(g)(3) (providing for statutory damages of up to $25 or $100 per violation, depending on type of violation, with cap of $1,000,000).
287 See id. § 7706(g)(3)(A) (specifying that “each separately addressed unlawful message that is transmitted or attempted to be transmitted over the facilities of the provider of Internet access service, or that is
transmitted or attempted to be transmitted to an electronic mail address obtained from the provider of Internet access service” is “a separate violation”).
288 See Amy E. Bivens, Spam: Professional CAN-SPAM Plaintiff Again Falls Short of Standing as “Adversely Affected” ISP, E-Commerce Daily (BNA March 12, 2010).
289 See 15 U.S.C. § 7706(f) (authorizing states to sue to recover injunctive relief or actual or statutory damages of up to $250 per violation, with maximum of $2,000,000).
290 Pub. L. 111-203, § 1042(a)(1) (emphasis added).
291 15 U.S.C. § 15g(1).
292 See DeBow, supra note 94, at 281 (arguing that Department of Justice “should clearly be given the authority to move the court to dismiss [state antitrust suits] when the department thinks that the interstate aspects of the litigation outweigh the in-state interests asserted by the plaintiff state”); Rose, supra note 9, at 2222–23 (suggesting that federal securities enforcer should be “given authority to invalidate state orders that it believes conflict with the public interest” (citing John C. Coffee & Hillary A. Sale, Redesigning the SEC: Does the Treasury Have A Better Idea?, 95 VA. L. REV. 707, 779–81 (2009)).
293 See Widman, supra note 9, at 38 (“One need not see state attorneys general as beyond political influence in order to champion concurrent state enforcement, one need only assume that political incentives differ between the federal and state governments and that because of this diversity, concurrent enforcement encourages enforcement even when the regulated industry may strongly lobby against enforcement.”).
294 See Herbert Wechsler, The Political Safeguards of Federalism: The Role of the States in the Composition and Selection of the National Government, 54 COLUM. L. REV. 543 (1954) (arguing that states’ interests are protected in the federal political process); see also Kramer, supra note 209 (updating and revising Wechsler’s thesis).
295 549 U.S. 497, 519 (2007) (“When a State enters the Union, it surrenders certain sovereign prerogatives. Massachusetts cannot invade Rhode Island to force reductions in greenhouse gas emissions, it cannot negotiate an emissions treaty with China or India, and in some circumstances the exercise of its police powers to reduce in-state motor-vehicle emissions might well be pre-empted.”).
296 Stevenson, supra note 90, at 15–16.
297 See Widman, supra note 9, at 32 (“[A] statutory enforcement power [for states] allows for oversight of those areas where an agency chooses not to enforce a violation . . . .”). As Widman explains, state enforcement authority may be significantly more attractive as a “fix” for federal agency inaction than the alternative of expanded judicial review. See id. at 27–29, 32–33.
U.S. Pushes Mortgage Deal
By Nick Timiraos, Dan Fitzpatrick and Ruth Simon
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America’s largest banks to pay for reductions in loan principal worth billions of dollars.
Terms of the administration’s proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won’t be borne by investors who purchased mortgage-backed securities, these people said.
If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said.
But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation’s largest mortgage servicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.
A settlement could help lift a cloud of uncertainty that has stalled the foreclosure process since last fall. Economists have warned that foreclosures need to proceed for the housing market to continue on a path to recovery. It’s unclear how many borrowers would benefit from a deal. Servicers have thus far had difficulty managing the volume of troubled loans.
So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. But some economists warn that rising numbers of underwater borrowers will drag on housing markets and the economy for years unless more is done to help them.
The settlement terms remain fluid, people familiar with the matter cautioned, and haven’t been presented to banks. Exact dollar amounts haven’t been agreed on by U.S. regulators and state attorneys general. Regulators are looking at up to 14 servicers that could be a party to the settlement.
The deal wouldn’t create any new government programs to reduce principal. Instead, it would allow banks to devise their own modifications or use existing government programs, people familiar with the matter said. Banks would also have to reduce second-lien mortgages when first mortgages are modified.
Several federal agencies have been scrutinizing the nation’s largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.
A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff.
“Nothing has been finalized among the states, and it’s our understanding that the federal agencies we are in discussions with have not finalized their positions,” said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.
Last autumn, units of the nation’s largest banks were forced to suspend foreclosures amid allegations that bank employees routinely signed off on foreclosure documents without personally reviewing case details. In subsequent examinations, federal bank regulators said they found deficiencies and shortcomings in document procedures and other violations of state law.
At issue now is a debate over who has been harmed by improper foreclosure practices, and how much. The OCC’s examination concluded only a “small number” of borrowers were improperly foreclosed upon, and banks have argued that any settlement should reflect that fact. Other federal agencies and state officials say banks exacerbated the woes of troubled borrowers by resisting the necessary investments in staff and technology to provide timely, effective help.
Under the administration’s proposed settlement, banks would have to bear the cost of all writedowns rather than passing them on to other investors. The settlement proposal focuses on pushing servicers who mishandled foreclosure procedures to eat losses, by writing down loans that they service on behalf of clients. Those clients include mortgage-finance giants Fannie Mae and Freddie Mac, as well as investors in loans that were securitized by Wall Street firms.
Bank executives say principal cuts don’t necessarily improve payment patterns, and have told other parties involved in the talks that principal reductions could raise new complications. First, it will be difficult to determine who gets reductions and who doesn’t. And even if banks agree to a $20 billion penalty, the number of mortgages that can be cured with that number is limited, one of these people said.
If a single settlement can’t be reached, different federal agencies could seek smaller penalties through regular enforcement channels, and banks could face the prospect of separate civil actions from state attorneys general.
Any settlement could be one of the largest to hit the mortgage industry. In 2008, Bank of America agreed to a settlement valued at more than $8.6 billion related to alleged predatory lending practices by Countrywide Finance Corp., which it acquired that year.
—Robin Sidel contributed to this article.
Banks Bristle at Mortgage-Loan Plan
By Nick Timiraos, Dan Fitzpatrick and Ruth Simon
The banking industry privately knocked the Obama administration’s nascent proposal to force banks to modify mortgage loans, saying the plan won’t help solve problems facing troubled borrowers.
The nation’s largest banks haven’t yet seen a proposal that is designed to help resolve mortgage-servicing errors that affected troubled borrowers. But industry executives are bristling at the administration’s new approach, disagreeing that principal reductions will help borrowers and, in turn, the broader housing market.
Though a unified settlement is uncertain and would have to appease regulators, banks and state attorneys general, some officials are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.
The proposal “would bring with it enormous costs that would far outweigh any potential benefits,” Chris Flanagan, a Bank of America Corp. mortgage strategist, said in a research note Thursday.
Even an amount of $20 billion “would accomplish little” in addressing borrowers who currently owe $744 billion more on their mortgages than their homes are worth, Mr. Flanagan added.
Asking servicers to assume the costs of all write-downs is unfair unless the administration can pinpoint the “source of harm,” said Bob Davis, executive vice president of the American Bankers Association. If the loans are going bad because of economic conditions and job loss, “it’s not clear why servicers would bear the brunt because it’s outside their control.”
The pushback is the latest symptom of the warring interests in the housing market and the difficulty fixing problems that existed long before the foreclosure-paperwork crisis erupted last fall. Economists have said that the U.S. economy’s recovery is threatened the longer the foreclosure process is delayed.
The proposal is the Obama administration’s latest effort to revamp the way mortgage companies help troubled borrowers and address concerns that past initiatives didn’t go far enough to help troubled borrowers.
The administration’s signature Home Affordable Modification Program, or HAMP, helped more than 500,000 borrowers lower their monthly payments through interest-rate reductions. But it has fallen short of ambitious goals to modify millions of loans since its introduction two years ago. Last year, the White House unveiled new measures to encourage banks to write down loan balances, but they haven’t been widely used.
Given the banks’ track record in reworking loans, some attorneys who represent borrowers in foreclosure question whether the administration’s proposal could work. “Requiring banks to eat the loss, and at the same time allowing them to administer the program, is a recipe for a program that will not do anything except raise people’s expectations and frustrate them,” said Gloria Einstein, an attorney at Jacksonville Legal Aid Inc. She said an independent third party should administer the program.Banks have resisted reducing loan balances in part because of concerns that it could encourage more borrowers to stop making payments in order to receive a smaller loan.
The plan also may face some resistance on Capitol Hill. House Republicans on Thursday said they would prepare bills next week to terminate HAMP and similar programs. The administration’s proposal appeared to be a ploy to “revamp” the HAMP program, said U.S. Rep. Patrick McHenry (R., N.C.). “If this is their attempt to create HAMP 2, then I find it deeply troubling.”
The White House declined to comment.
“The administration’s ongoing review is focused on getting to the bottom of the problems in the foreclosure process and holding appropriate parties accountable,” said a spokeswoman for the Department of Housing and Urban Development. “Doing so will help homeowners, the housing market and our economy, and any suggestions to the contrary are simply wrong.”
Any settlement that includes loan write-downs would require banks such as Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. to complete modifications within one year from the settlement’s date, said people familiar with the matter. Banks could face additional fines if they don’t comply with the terms of the settlement, and they would have to hire independent auditors to provide monthly updates on their progress and compliance with the terms.
Penalties could be assessed depending on the volume of loans that are 90 days or more delinquent in each bank’s servicing portfolio, and by the extent of any deficiencies uncovered by bank examiners, these people said.
Any settlement that includes loan write-downs would require banks such as Bank of America, Wells Fargo and J.P. Morgan Chase to complete modifications within one year from the settlement’s date, said people familiar with the matter.
Elizabeth Warren of the Consumer Financial Protection Bureau has floated a figure of about $25 billion for a unified settlement, according to people familiar with the situation.
The push for write-downs likely would focus on loans that banks service on behalf of other parties, and not for loans that they hold on their books. The settlement would require servicers to comply with existing investor contracts, and some of those contracts could complicate efforts because they give investors authority to reject reductions of loan balances.
Banks consider their mortgage-servicing problems as technical matters, such as the filing of foreclosure documents that were never verified by so-called robo-signers, say people familiar with the situation. Bank executives also want any penalties to reflect the fact that few borrowers have been improperly ejected from homes, these people say.
But some state attorneys’ general and federal regulators are pushing for as high a figure as possible, arguing that mortgage servicers have chronically underinvested in their operations, making it difficult for borrowers to get timely, effective help before falling further behind on their mortgages.
Susan Wachter, a real-estate finance professor at the University of Pennsylvania, said the proposed settlement would provide “disincentives for wrongful behavior” by mortgage servicers.
States enforce federal law in a variety of contexts. Each type of dual enforcement raises issues of federalism and jurisdiction. Drawing from recent federalism debates on the role of states in federal civil law enforcement, this paper examines the use by state attorneys general of express authority to enforce federal consumer protection laws. Currently, 22 federal laws explicitly provide for concurrent federal and state public enforcement authority. The project reported here is an empirical analysis of state use of concurrent public enforcement authority in 16 federal consumer protection statutes.9
Concurrent public enforcement of federal law has become increasingly contentious in the U. S. Congress and is the subject of recent scholarly attention. How enforcement is ultimately authorized is both a practical and political issue. Especially in the area of consumer protection, where federal agencies oversee the federal laws and are subject to bureaucratic, budgetary, and ideological constraints, concurrent enforcement offers an expanded arsenal for public enforcement of these laws. Due to the power that inherently comes with enforcement authority, interested parties lobby for or against such legislative grants routinely. Yet legislators and scholars have no formal data or even a clear understanding of how and when such enforcement powers are used by states, either alone or in combination with other states. Nor is there reliable information on cooperation or disagreement between states and federal agencies with the concurrent enforcement power. The data we present are designed to add real world context to a debate that is often couched in rhetoric without grounding in the actual use of this authority.11
Part II examines the 22 federal laws with clear state enforcement provisions. This part first describes the development of these laws, then analyzes relevant legislative histories for patterns, explores common features of these types of grants of enforcement, and reviews the existing scholarship of state enforcement of federal law.13
Part III explains the structure of the empirical study by classifying the laws and the agencies involved in overseeing these laws. This part details our process of compiling data about state actions using concurrent enforcement authority in 16 identified federal consumer protection statutes. This part also has a short discussion of types of cases we encountered but excluded. This paper does not examine implied enforcement power2 or more generally cooperative forms of enforcement power, but focuses on explicit legislative grants of authority to state attorneys general to enforce federal civil law.15
Given this history of the evolution of explicit legislative grants of authority for state enforcement of federal law, our study aims to establish the actual use of these grants of enforcement power. Part IV compiles the data on cases brought by state attorneys general into three categories—by type of statute, by state and by year. We modified results in some circumstances to further break down whether the cases were brought by a single state, a small group of states or a large group of states. Part V presents the collected data on federal agency involvement in states cases using concurrent enforcement authority.17
The study results strongly suggest that fears about over-enforcement or inconsistent enforcement by the states have not been realized in actual practice. Part VI analyzes the data and summarizes the modest use of these statutes by state attorneys general in relation to the criticism of the statutes. This part also explores some of the reasons states have not used this authority more extensively and the ways that states appear to be strategic in their use of the statutes. Part VII then analyzes the data on federal-state interaction when states use concurrent enforcement authority and again concludes that there is no evidence validating the fear that state use of such authority leads to inconsistent application of the statutes.19
Our study is designed to provide the empirical data that will address questions raised by the spike of scholarly interest and the escalated political rhetoric surrounding the particular federal legislative tool of concurrent state enforcement. The study data are meant to illuminate exactly where and how state enforcement of federal law takes place. We intend this information to be a resource for future legislative debates and theoretical work.22
II. Development of Federal Statutes Authorizing Concurrent State Enforcement24
There are currently 22 federal laws that explicitly grant enforcement power to the state, or more specifically, state attorneys general. These laws primarily focus on consumer protection and antitrust areas and the enforcement powers provided are generally quite specific. The antitrust provisions have generated a separate body of scholarly analysis, as have the telecommunications provisions. Recently, scholars have turned toward the consumer protection laws more generally. This Part provides a necessary context to our study by exploring the statutory language, legislative history, and scholarly attention to the concurrent enforcement provisions in these laws.27
A. Enactment of Concurrent State Enforcement of Federal Laws (1976-2010)29
The first statute to provide enforcement authority to state attorneys general was the Clayton Act, as amended by the Hart-Scott-Rodino Act of 1976. The next instance of an explicit grant of authority to the states appears in a 1983 amendment to the Real Estate Settlement Procedures Act (“RESPA”). This grant provides authority to state attorneys general, as well as state insurance commissioners, to enjoin real estate settlement service providers from providing kickbacks as a means of obtaining customers.31
Congress inserted explicit grants of state enforcement authority into a wave of consumer protection laws in the 1990s, as follows: the Nutrition Labeling and Education Act of 1990 (“Nutrition Labeling Act”); the Telephone Consumer Protection Act of 1991 (“TCPA”); the Telephone Disclosure and Dispute Resolution Act of 1992 (“TDDR”); the Home Ownership and Equity Protection Act (1994) (“HOEPA”); the Telemarketing and Consumer Fraud and Abuse Prevention Act (1994) (“TFCAP”), which authorized the promulgation of the Telemarketing Sales Rule (“TSR”); the Freedom of Access to Clinic Entrances Act of 1994 (“FACE”); the Odometer Disclosure Act (1994) (“Odometer Act”); the Credit Repair Organizations Act (1996) (“CROA”); the Professional Boxing Safety Act of 1996 (“Boxing Safety”); and the Children’s Online Privacy Protection Act of 1998 (“COPPA”). After a five year lull, Congress provided express authority for state enforcement of federal law in seven more statutes enacted from 2003-2010, as follows: the Fair and Accurate Credit Transactions Act (2003) (“FACTA”) amending the Fair Credit Reporting Act (“FCRA”); the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”); the Sports Agent Responsibility and Trust Act (2004) (“SPARTA”); the Household Goods Mover Oversight Enforcement and Reform Act of 2005 (part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)); the Consumer Product Safety Improvement Act (2008) (“CPSIA”); the Health Insurance Portability and Accountability Act (as amended in 2009) (“HIPPA”); and the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (“Dodd-Frank”).34
B. Legislative Debate About Concurrent Public Enforcement.36
The legislative history of these statutes shows a marked increase in political rhetoric and dispute around concurrent enforcement provisions in federal law in recent years. Early statutes had little legislative discussion of these provisions. Mostly, the record shows comments merely noting the attorney general authority without discussion or explanation.38
The first House report to specifically address the role of state enforcement of federal law appears in the Nutrition Labeling Act. The Report noted that the state attorneys general had already been playing a role in enforcement and that state involvement can aid the federal government in a time of “dwindling Federal resources.”40
In 1994, the legislative history of the TSR shows a Senate again concerned with efficiency and lack of Federal resources to address the “widespread nationwide consumer problem that requires enhanced enforcement authority at the federal level, and increased enforcement resources beyond those available to Federal authorities.” The Congressional Budget Office positively noted the opportunity these laws create for multi-state cooperation, commenting that “the provision permitting state officials to sue for telemarketing fraud could reduce the aggregate number of such cases nationwide . . . [because] [u]nder current law . . . each affected state must individually bring action against the fraudulent operation.” The debate around the Freedom of Access to Clinic Entrances Act of 1994 introduces the first criticisms of state authority to enforce federal law. In that case, the House and Senate versions of the bill had slightly different language regarding when a state attorney general may bring an enforcement action. The debate itself also contained many mentions of the state attorneys general enforcement powers31 and some of the first criticisms of state enforcement power.42
Debate over granting states concurrent enforcement power over federal law increased sharply in recent years. Two of the most contentious examples are the enactment of amendments to CPSIA in 2008 and the Dodd-Frank Act in 2010. The main focus of the criticisms has been the concern that federal statutes will be enforced too often by eager state attorneys general and that having multiple enforcers will create inconsistencies in the interpretation and application of the laws.44
The CPSIA, known as the Consumer Product Safety Improvement Act of 2008, seemed to be a catalyst for a larger scope of criticisms surrounding concurrent state enforcement. The legislative history for CPSIA shows opponents fearing the power of state attorneys general more generally than the matters covered by the statute’s terms. For example, the history shows a concern with “some State attorneys general . . . us[ing] their positions to garner national attention to advance their careers,” and a concern that such enforcement provisions “would tempt some [AGs] to file frivolous lawsuits that could ultimately undermine the effectiveness of the CPSC.” Senator Coburn echoed these larger criticisms of state attorneys general with his disapproval of the CPSIA:46
Overzealous state attorneys general will now have the authority and discretion to interpret safety regulations and could unilaterally on a whim rule a business is noncompliant and could then hand over expensive lawsuits to their trial lawyer’s cronies who are notoriously close with state law enforcement officials. State attorneys, then, would be hard-pressed to deny politically active state trial lawyers to sue companies when the litigation will not cost the State a dime and could, in many cases, bring the attorney general positive publicity.
This concern in the legislative debate parallels arguments, often fueled by industry groups, against the increasingly active role of state attorneys general in many areas of litigation and policy.50
The controversy over concurrent state enforcement authority continued with the Dodd-Frank Act. The U. S. Senate debated an amendment authored by Senator Corker to eliminate state attorney general enforcement of the statute and of rules to be promulgated by the envisioned Consumer Financial Protection Bureau (“CFPB”). Proponents of the Corker amendment focused on predicted inconsistencies in interpretation of the federal law that they argued would result from concurrent enforcement. During debate on the amendment, Senator Corker described state enforcement powers as “very detrimental” and argued that:52
Now you have state AGs all across the country who have the ability to enforce. I think that is a huge step in the wrong direction.…[W]ithout my amendment passing,…what happens is, state AGs, interpreting these (rules) in different ways all across the country, will now be taking actions against these institutions on vague language such as “abusive.”
As with CPSIA, industry trade groups lobbied against concurrent state enforcement authority in the Dodd-Frank Act. Senator Dodd decried the “false claim” by the U. S. Chamber Commerce that companies would be “lost in the maze of…State attorneys general interpreting and enforcing Federal law at the State level.” An American Bankers Association official described the concurrent enforcement authority in Dodd-Frank as exposing “banks to a multiplicity of state interpretations of the law” and argued that “[w]hen states have an independent hand in enforcement, it will call into question the finality of the supervisory process.”56
Despite the growing criticism of concurrent enforcement authority in federal consumer protection laws, both CPSIA and Dodd-Frank authorize state enforcement of federal law. Critics, however, were successful in restricting the Dodd-Frank authority in a manner that precludes multiple states from joining litigation in a single federal court.59
C. Common Features of Concurrent Enforcement Statutes61
Congress has used certain procedural mechanisms in an attempt to balance federalism concerns with this form of concurrent enforcement. We note some of these procedural mechanisms below.63
A notice requirement is perhaps the most common legislative parameter included in these state enforcement powers. The Clayton Act provides for the federal government to notify the state attorneys general if they are bringing an action under the antitrust laws and have reason to believe a state attorney general would be entitled to bring an action under the Act based on the same alleged violation. Some have argued that this type of notice procedure goes too far toward empowering the states. Subsequent state enforcement provisions contain the now common requirement that a state must give prior or contemporary notice to the federal agency involved in enforcement of the law. The notice requirement is usually followed with a provision that gives authority to the primary federal agency to intervene in a case at its discretion. States often are precluded from bringing a case while a federal action is pending.65
Throughout the 1990s, Congress began to address the role of preemption when drafting these grants of authority. Most of these earlier statutes contain savings clauses to signal that the grant of authority does not preempt states from also bringing suit under their state laws that govern similar violations, so long as the state law remains consistent with the federal law. Some of these statutes clarify that a more stringent state law is not considered inconsistent. More recent legislative history shows a marked increase in debate about a state enforcement provision having a preemptive effect on state laws governing the area more generally, although these proposed restrictions on state authority rarely make it into the law.67
The relief available from the enforcement actions is another area where Congress has chosen different legislative parameters over the years, ranging from limiting the enforcement powers to injunctive relief, to allowing damages within certain legislatively prescribed limits, to allowing uncombined damages. Similarly, some statutes award costs and fees, while others do not.69
The CAN-SPAM legislative history illuminates the strategic decisions underlying both the preemption and fees issues. In that case, there was a Subcommittee compromise “prohibiting class action lawsuits, and instead authoriz[ing] State Attorneys General to enforce the bill’s anti-spam provisions on behalf of aggrieved citizens in their respective States.” After the compromise was reached, however, a later amendment expressly prohibited the states from recovering litigation costs from enforcement actions.71
All of the statutes examined herein provide for the states to bring their claims in federal district court. In a controversial move, the Dodd-Frank Wall Street Reform Act further provided that the state may only bring a claim in the federal district court of that state. This provision likely will prevent groups of states from becoming joint plaintiffs in a single federal court action, as regularly occurs in the antitrust areas and in some cases brought under other consumer protection statutes.73
The Clayton Act antitrust statute contains a unique provision excluding someone receiving a contingency fee from the definition of “state attorney general.” This restriction was not revisited until the recent CPSIA legislation, where Congress provided other limitations on private counsel retained to assist state attorneys general but did not address contingency fees. This provision responds to criticisms of state attorneys general employing outside counsel on contingency fee arrangements.76
D. Scholarly Analysis of Concurrent Enforcement Statutes78
Recent high-profile legislative acts granting states power to enforce federal law have coincided with expanded preemption of state law and renewed interest in creating buffers to agency capture. The use of state enforcement power has become a legislative tool that is increasingly politicized but without much study of its purposes and effects. Scholarly literature has in turn begun to examine state enforcement of federal law as a valuable federalism tool in the administrative arena. In a previous article, one of the co-authors examined the particular accountability-forcing mechanism embedded in legislation delegating enforcement powers to the states alongside the federal government, particularly in the recent CPSIA.80
Gillian Metzger has tracked the rise of federalism in administrative law generally, most recently looking in detail at the states’ role in reforming agency failures. While primarily focused on a judicially-created special state role, Professor Metzger acknowledges the Congressional delegations of state enforcement power and the ability of such enforcement powers to reform certain agency failures. Professor Metzger points to several justifications for a special state role in reforming agency failure, including “the belief that states are likely to be particularly effective monitors of agencies and instigators of administrative change.”82
Echoing similar concerns of agency failure, Rachel Barkow recently examined the history and design of the Consumer Product Safety Commission and the Consumer Financial Protection Bureau to determine new institutional design features that could buffer such independent consumer protection agencies against industry capture. Professor Barkow points to the benefits of state enforcement of federal law especially to address agency under-enforcement, which is a distinct element of industry capture. Catherine Sharkey further acknowledges the unique role of the states in federal agency design, recommending in her recent draft guidance to the Administrative Conference of the United States that states be inserted into agency policy in meaningful ways, such as consultation and notification of both agency policy and enforcement decisions.84
Finally, Margaret Lemos examines state enforcement of federal law as a unique form of state power. Professor Lemos begins to sketch a comprehensive picture of state enforcement of federal law as an understudied break from more typical enforcement patterns (i.e., a sovereign enforcing its own laws) and the more common model of public enforcement. Lemos does not empirically examine the use of these laws.87
III. Identification and Classification of State Enforcement Actions89
This section describes the data our study collected. We focus on sixteen federal consumer protection statutes that contain express state enforcement authority (hereinafter “examined statutes”). For each of the examined statutes, we sought to identify all public enforcement action taken by any state. We obtained information from electronic database searches, from state data practice act requests to all 50 state attorneys general, and from requests to eight federal agencies under the Freedom of Information Act. For each identified case, we collected data about claims under federal law apparent from the face of the initial pleadings.92
A. Federal Consumer Protection Laws Examined94
Of the 22 total statutes incorporating state enforcement provisions, our study focuses on sixteen consumer protection laws. Those statutes are: RESPA, HOEPA, CROA, FCRA, CPSIA, TSR, Boxing Safety, COPA, CAN-SPAM, FACE, Nutrition Labeling, HIPPA, TCPA, SAFETEA-LU, Odometer Act and Dodd-Frank.96
At the outset, we determined that antitrust and environmental law—both areas with long and rich cooperative federalism regimes—would be carved out of any results. The early environmental administrative regimes commonly provided for state enforcement, but states were actively engaged in regulation as well as enforcement. For example, the Clean Air Act allowed the states to regulate under State Implementation Plans (SIPs). Such state plans remained subject to approval by the federal Environmental Protection Agency (EPA). Because of the federal regulatory connection to the state’s enforcement authority78 and the particular legislative history of the environmental system of state and federal cooperation, we omitted all cases arising under the environmental statutes.98
The original concurrent enforcement authority in federal law concerned antitrust enforcement. State attorneys general frequently use this federal enforcement power to bring actions that are filed jointly by numerous states in federal court. These cases are part of a well- organized group of antitrust enforcement officials in state attorneys general offices who have a fairly long history of cooperating to bring such joint actions in federal courts. In fact, state attorney general engagement in antitrust work, like in the environmental area, occurred through a federal initiative to increase state antitrust enforcement of federal law. Some data has been collected about the number and type of these actions and scholars have examined the use of concurrent enforcement authority under the Clayton Act. State attorneys general do not have such a well-developed multistate system for enforcement of the federal consumer protection laws that form the subject of this study.101
B. Identification of Enforcement Actions103
We used three primary methods to identify relevant state enforcement actions. First, we conducted a search of electronic legal databases for cases. Not surprisingly, we found mostly cases that were filed by the states in court and for which there was at least one written opinion
issued by the court in the matter.
Second, we issued requests under the relevant state government data practice laws to each of the fifty state attorneys general. These requests sought “information on past or present cases or public investigations where your office asserted a claim under a federal consumer protection statute (other than antitrust law) that explicitly grants enforcement power to state attorneys general or other state enforcement agencies.” We identified for each state the sixteen federal statutes for which we sought this information. If our search of electronic legal databases revealed that the State receiving the request had been involved in an action under the authority of one of the examined statutes, we asked that State to verify the accuracy of the identified case and provide information on any further cases undertaken by that State.107
We received responses from 33 of the 50 states. Fourteen of the states responding identified additional cases that were brought under the enforcement authority in the examined statutes. Seventeen states did not respond at all.109
Third, we issued requests under the federal Freedom of Information Act (FOIA) to eight federal agencies. Most of the examined statutes require that a state bringing an action under the statute notify a designated federal agency, and thus we reasoned that the agencies would have records of such actions. We sent a FOIA request to seven federal agencies designated to receive such notices under one or more of the examined statutes—the U. S. Federal Trade Commission (FTC), the U. S. Federal Communications Commission (FCC), the U. S. Health and Human Services Administration (HHS), U.S. Department of Transportation (DOT), U.S. Housing and Urban Development (HUD), the U. S. Department of Justice (DOJ) and the U.S. Consumer Product Safety Commission (CPSC). We sent a similar request to the U. S. Food and Drug Administration (FDA). Although the FDA is not required to be notified under any of the examined statutes, it is the primary federal regulator for one of the statutes, the Nutrition Labeling Act.111
Each agency was requested to provide documentation of notice by state attorneys general for any action taken, or intended to be taken, under the federal statute for which the agency was to be notified of the state action. We received timely responses to our FOIA requests from seven of the agencies. After initially refusing to respond to our initial request, the FTC responded in February 2011 with a limited production of nine documents. Because the FTC is the federal agency designated to receive notice for six of the sixteen examined statutes, its limited response may limit the comprehensiveness of the data for these statutes.113
We searched electronic legal databases during July 2010. State data practices requests were sent during August 2010 and responses were received through January 2011. The federal FOIA requests were sent during June 2010 and October 2010 and responses were received from July 2010 through February 2011.116
C. Relevant State Enforcement Cases and Data118
State actions were counted as relevant enforcement cases only if the action included a claimed violation of one of the examined statutes and was brought under the express state enforcement authority in the examined statute. We looked solely to the assertion of the claim as the criterion for a relevant enforcement action and did not consider the disposition of that claim in the lawsuit.120
We included settlements negotiated under state law authority for an attorney general to enter into a pre-complaint settlement with the defendant, which is commonly referred to as an Assurance of Voluntary Compliance (AVC). Pre-complaint settlements were included if the AVC identified an alleged violation of one of the examined statutes as a legal basis for the settlement. We did not include one instance in which the state sent a letter threatening enforcement but did not either file a lawsuit or reach a settlement.122
We excluded several cases in which the state attorneys general brought actions referencing one of the examined statutes but which did not allege that the states were relying on the examined statute to obtain relief. Most commonly, these cases asserted that a violation of the federal law gave rise to per se violation of state unfair and deceptive acts and practices laws. We similarly excluded cases in which assertions of state law violations relied on the standards or definitions in an examined statute, or referenced the federal law only as relevant background. In many of these cases, the defendant removed to federal court and the state sought a remand. In Florida v. CSA Credit Solutions, for example, Florida was one of eight states to bring claims against CSA Credit Solutions of America under state unfair and deceptive acts and practices (“UDAP”) laws. One count of the complaint included references to CROA. As Florida stated in its Response to Defendant’s motion to Remand, “The Attorney General could have instituted an action under CROA, but elected to utilize the state law enforcement tools and remedies provided under FDUTPA (Florida Deceptive and Unfair Trade Practices Act)”.124
We also identified but excluded one case in which a multistate group of state attorneys general brought an action under an examined statute but alleged a violation of a provision of that statute not enforceable by state attorneys general. Finally, we did not include as a relevant enforcement case a joint action between a state attorney general and a federal agency in which the violation of an examined statute was asserted only by the federal agency.127
D. Data Gathered From State Enforcement Actions129
For each relevant case, we gathered the following data: (1) the parties to the lawsuit or settlement; (2) the date the Complaint or AVC was filed with the court; and (3) the examined statute(s) that the state attorney general claimed had been violated. This information was derived from the Complaint or the AVC. We looked beyond the face of the Complaint or AVC only to determine whether a federal agency took any formal action in the case beyond joining the case at the outset as a party, such as intervening in a lawsuit or filing an amicus brief.131
The identity of the public enforcement plaintiffs to the cases bears mention. The most common use pattern for concurrent enforcement authority is where a state notifies the designated federal agency and then files an action in federal court against one defendant claiming a violation of federal law as well as state laws. In other cases, states will join with other states as plaintiffs in a lawsuit or settlement, will file jointly with a federal agency, or both. Cases in which states jointly prosecute a matter are known as “multistate” actions.134
IV. Data on Use of Examined Statutes by State Attorneys General136
We identified 104 cases of state attorney general use of federal law enforcement authority. In this section, we analyze these cases along three dimensions: use by examined statute, use by state attorney general and use over time. In Part V, we look at the relationship between state and federal actors in these enforcement cases.139
A. Use by Examined Statute141
State attorneys general have asserted claims under nine of the sixteen examined statutes. We could not find evidence of any cases brought by state attorneys general under the following seven statutes: CPSIA, Boxing Safety, COPPA, Nutrition Labeling, RESPA, Dodd- Frank, and SAFETEA-LU. Sixteen of the cases involved claims under two of the examined statutes, and thus there are 120 claims under the examined statutes for the 104 cases. Fourteen of the multiple claim cases asserted claims under both TSR and TCPA, while the other two cases involved adding a TSR or TCPA claim to a case alleging a violation of CROA.143
As shown in Figure #1, the nine statutes used by state attorneys general clearly divide among the two telemarketing statutes, TSR and TCPA, and the other seven statutes. The two telemarketing statutes account for 91 of the 120 claimed violations, including 51 TSR claims and 40 TCPA claims. The remaining seven statutes accounted for 29 claims, as follows: CROA (10), FACE (5), HOEPA (5), FCRA (4), CAN-SPAM (2), HIPPA (1) and Odometer (2). Figure 1 shows the distribution of claims by examined statute.145
Figure #1: Claims By Examined Statute147
Some of the examined statutes are extensively used by a few attorneys general. Other statutes were used by a range of different state attorneys general. Comparing FACE and FCRA claims offers a useful contrast as to breadth of use. There were five claims brought under FACE, but FACE was used four times by New York and once by neighboring Connecticut. In contrast, we identified four FCRA claims that were widely dispersed among the state attorneys general—a multistate case brought by 16 attorneys general against TransUnion Corporation in 1992, and another multistate case brought by 29 states against U. S. Bancorp in 1999, one lawsuit by Minnesota in 2004, one lawsuit by Ohio in 2010.150
B. Use by State152
This section analyzes the number of cases brought by each state attorney general and the extent to which each state used the various examined statutes.155
1. Number of Cases by State157
Figure #2: Cases by State (Individual State Cases Only)159
The other 12 cases were multistate actions. Two of the cases were large multistate groups of 29 and 16 states, respectively, that alleged violations of FCRA. One case was a group of 7 states asserting a violation of the TSR. The other nine cases were smaller multistate groups of 2 to 4 states alleging violations of one of the telemarketing statutes. Figure #3 shows the number of cases brought by each state including participation by that state in any of the multistate cases.161
Figure #3: Cases by State (Individual & Multistate Cases)163
As shown above, 41 of the 50 states were a plaintiff in at least one case, either individual or multistate, brought under one of the examined statutes. Participation by state attorneys general in a large multistate action, however, often involves little expertise or effort by most participating states. Multistate cases are investigated and settlements are negotiated by a small group of “lead” states. But a state participating in a very small multistate case of 2 to 4 states presumably must have greater knowledge of the details of the matter and more involvement in the case. Accordingly, including both individual and small multistate cases in measuring the number of cases, as is shown in Figure #4, may provide a more accurate reflection of the active use of the examined statutes by each state.165
Figure #4: Cases by State (Individual & Small Multistate Cases Only)167
This measure shows 26 states using the examined statutes. Only 3 additional states were added to the 23 states that have brought individual cases. Interestingly, some states used the examined statutes primarily through joining in small multistate actions. North Carolina, for example, brought only one individual case, a 2004 action under the TCPA. Yet North Carolina brought 4 cases alleging TSR or TCPA violations as part of a small multistate case. It joined with New York in 1996, with Wisconsin and Virginia in 2001, with California, Illinois and Ohio in 2009, and with Kansas, Illinois and Minnesota also in 2009. Three of these four cases were filed jointly with the FTC.170
2. Use of Examined Statutes by State172
Another useful way to look at the use of the examined statutes by states is to evaluate the extent to which each state brought cases under different statutes. Figure #5 indicates the number of examined statutes used at least once by each state bringing an individual or small multistate case.174
Figure #5: Number of Examined Statutes Used by Each State (Individual & Small Multistate Cases Only)176
No state used more than 4 of the 16 examined statutes. Nor did any state use more than 2 of the non-telemarketing examined statutes. Some states used multiple statutes. Illinois, the dominant user of these statutes, brought claims under CROA, HOEPA, TCPA and TSR in the 41 individual or small multistate cases in which it was a plaintiff. Minnesota also used four of the examined statutes (FCRA, HOEPA, TCPA and TSR) in just 6 individual or small multistate cases. Other states specialized in just one type of statute. Colorado brought 3 individual cases from 2003 through 2010, all of which were CROA claims. Missouri brought 7 individual or small multistate cases from 2000 through 2009, all of which were under the telemarketing statutes.
Figure #6 shows the use of the examined statutes by differentiating the two telemarketing statutes from the other eight examined statutes actually used at least once by a state attorney general.
Figure #6: Cases by State by Telemarketing Statutes versus Other Examined Statutes180
Of the 26 states that have brought an individual or small multistate action, only 8 states—Arkansas, California, Illinois, Minnesota, New Jersey, New York, Ohio and Washington—brought cases under both a telemarketing statute and one of the other seven statutes utilized by the states. Five of the 26 states (Colorado, Connecticut, Delaware, Maryland and Utah) brought only non-telemarketing claims. The remaining half of the 26 states used only the telemarketing statutes.183
C. Use Over Time185
We also analyze the cases based on the filing date of the complaint or the AVC. Although the concurrent enforcement provisions in the examined statutes were enacted between 1988 and 2010, the bulk of the statutes date from the early to mid 1990s. Figure #7 shows the number of claims filed by year.187
Figure #7: Number of Claims by Year (1988-2010)189
Use of the examined statutes rose starting in 1996, soon after passage of the mid-1990s statutes. Since 1996, there have been year to year variations in the number of claims filed, and the number of claims dropped during 2005-2008, but a fairly steady average of about 7-8 claims are filed each year.191
The number of claims show spiked in 1999, 2004 and 2009. This result resulted from one state filing multiple claims under the same statute in the same year. Figure #8 is based on modifying the database to count as one claim situations in which one state brought multiple claims under the same statute in the same year. This method of counting the claims, denoted as “annual counting,” removes fluctuations due to a spike of claims by one state under one statute. It may provide a more accurate depiction of the breadth of use of the examined statutes over time. The trend line in this graph makes clear the relatively constant use of the examined statutes over the last 15 years in terms of states filing non-duplicative claims.193
Figure #8: Number of Claims by Year Using Annual Counting Method
Finally, Figure #9 provides a count of the claims filed asserting violations of each the two telemarketing statutes and of all the non-telemarketing statutes considered as a group.197
Figure #9: Number of Claims by Year Filed by Type of Statute (1996-2010)200
V. Data on Federal Involvement in State Cases202
Federal agencies were actively and cooperatively involved in the cases brought by state attorneys general. Overall, a federal agency participated in 20 of the 104 cases brought by the states under the authority in the examined statutes. The FTC participated in 13 state lawsuits under the examined statutes. The DOJ and FCC participated in 4 and 3 cases, respectively. The type of federal involvement varied by the identity and number of state plaintiffs and the federal agency involved in the matter.204
Federal participation was much higher in multistate suits than in actions by individual states. A federal agency was involved in 7 of the 12 multistate cases, or 58.3%, as compared to 13 of the 92 individual cases, or 14.1%.206
The FTC tends to cooperate prior to filing in TSR cases with multistate groups and with the State of Illinois. It filed jointly with states in 5 of the 8 multistate suits alleging violations of the TSR. Illinois was the sole state plaintiff in each of the other 4 cases in which the FTC filed jointly with a state; three of which were brought under the TSR. The 9 cases in with the FTC filed jointly with the states were brought between 1997 and 2009. In 1996, the FTC intervened in a case brought by Tennessee alleging TSR violations. The FTC also filed an amicus brief in a case brought by Minnesota under the TSR. In two other cases, actions brought separately by the FTC and a state under the same examined statute were consolidated after filing. One such case was brought by New Jersey under CROA and the TSR, and the other case was a HOEPA claim filed by Illinois.208
The FCC was involved in a series of three cases alleging TCPA violations brought by state attorneys general in California, Indiana, Missouri and Texas between 2000 and 2003. In each case, the FCC did not participate as a plaintiff seeking relief in the action, but rather moved to intervene on the question of the constitutionality of the “junk fax” provisions of the TCPA. The DOJ also intervened in two cases raising the same constitutional issues regarding the TCPA—a 2002 case brought by Minnesota and a 2009 and a 2006 case brought by Oklahoma. In each of these cases, the federal agency intervention was in support of the state position.210
The DOJ filed jointly with states in two cases. The DOJ joined a multistate group of 4 states (California, Illinois, North Carolina and Ohio) alleging TCPA and TSR violations against Dish Network. The DOJ also joined with Connecticut in a case under FACE in 1995.212
More rarely, an agency will monitor litigation and sometimes intervene at a later date if the agency feels the litigation addresses issues of federal concern. This was the case in a series of TCPA cases filed by Missouri, which caused the FCC to note the filings in their internal email and to note that “it would be a good idea for the FCC to intervene or at least track closely so that we can file a brief or an amicus brief if legal issues of concern to us arise, which seem very likely.” Ultimately, the FCC did not intervene in those cases. Similarly, In Texas v. American Blast Fax, the FCC moved to intervene once the defendant raised an issue of the constitutionality of the TCPA. The motion to intervene became moot once defendant’s motion to dismiss was denied.215
VI. Actual Use of Concurrent Enforcement Authority Appears Limited217
Our study found that state attorneys general use concurrent enforcement authority with federal consumer protection laws in a sparing manner. The cases brought are overwhelmingly to enforce the telemarketing laws. The state cases appear to have generated almost no conflict with federal agency enforcement. Federal agency involvement in state cases has been cooperative.220
A. The Data Do Not Suggest Excessive Enforcement.222
The criticisms of concurrent enforcement authority do not find support in the data we collected about the actual use of these provisions by state attorneys general. Although our data are limited, neither over-enforcement nor inconsistency with federal regulators is apparent.224
A primary concern raised by critics of state enforcement power is that the state attorneys general would be “overzealous.” The most striking fact about the data is the modest number of cases brought by state attorneys general. Although most of the 16 statutes have been available for use by the states since at least the mid-1990s, we were able to identify only 104 cases asserting 120 claims under the concurrent enforcement authority in the examined statutes. Only the two telemarketing statutes were used in more than 10 cases. In fact, the very small sample size makes it is difficult to make many detailed conclusions from the data.226
Because “over-enforcement” is a vague claim that could refer to the merits of public enforcement actions rather than just the number of cases, it is difficult to refute conclusively the charge of misuse of the authority. Beyond the small raw number of cases and claims, there is no evidence of patterns that suggest the kind of use by states that was of concern to the critics of concurrent enforcement. One concern raised by critics is that state attorneys general will hire outside counsel on a contingency basis to prosecute cases and that this arrangement will result in frivolous suits. While we did not collect data on the use of outside counsel in our study, it appeared to be infrequent or even non-existent on the face of the pleadings in the state enforcement cases. A few states have shown a preference for not asserting claims under their enforcement authority in the examined statutes even when referencing the standards or definitions in these statutes. The number of claims has not varied substantially since the most commonly used statutes were enacted in the 1990s, so there is no evidence that state attorneys general are trending toward over-use of the examined statutes.229
B. Some Observations on Non-use of Examined Statutes231
One of the more striking results from our study was that about half of the statutes were never used by the state attorneys general. Of the 16 examined statutes, we found no cases brought under 7 of the statutes, and 3 of the statutes were used by the states only once or twice. Four of these 10 statutes never or rarely used were passed since 2005, with Dodd-Frank enacted almost contemporaneously with our data collection. But some of the statutes have been in place for years. Enforcement authority has been available for Nutrition Labeling for over 20 years, for instance.233
As we compiled our data, we found ourselves wondering if there was any pattern or common thread amongst the statutes that were used by the states as opposed to the statutes that were not used, since only nine of the sixteen statutes we examined, as far as we could detect, had ever been used by a state attorney general. Put another way, why are some statutes not accessed by the states even when the state has express enforcement power?235
One possible explanation is that certain features of the enforcement power might influence usage. No particular language or structure of the enforcement provisions was readily correlated to use by the states. Although almost all of the statutes that awarded fees and costs were used, five of the statutes that do not mention fees and costs also were used by the states. Almost all of the statutes that were used provided for damage awards, but there were a few statutes providing damage awards that were never used. Use versus non-use was split evenly amongst statutes providing for federal court jurisdiction only and those allowing other courts of competent jurisdiction.237
Nor is there a clear connection between some of the other obvious factors that might influence state attorneys general use of the examined statutes. Availability of alternative state law seems to offer little explanatory value. The examined statutes for which there are widespread state analogs varied from the most used, such as the TCPA and CROA, to the least used, such as the Odometer Act. On the other hand, preemption of state law coupled with concurrent enforcement authority did not seem to have much of an impact on use of the examined statues by the states. Of the five statutes that explicitly preempt some state law, three had been used and two were not used.239
Perhaps the best explanation may lie in a careful examination of the relationship between use and subject matter of the examined statutes. Obviously, the telemarketing statutes are by far the most often employed by the states. Telemarketing has long been an area of great concern to state attorneys general. The next group of examined statutes most frequently used by the states in terms of number of unique claims is CROA, HOEPA and FCRA. These statutes concern consumer credit and finance, another area of traditional focus by state attorneys general. The only other consumer finance statutes were the very recently enacted Dodd-Frank, and RESPA, for which the enforcement authority is limited to injunctive relief for only one provision of the statute. The remaining statutes address a variety of consumer protection concerns either not commonly associated with state attorney general consumer protection efforts (household goods transportation and boxing safety) or consumer protection areas in which state attorneys general actions have been over-shadowed by a comprehensive federal regulatory system (nutrition labeling and consumer product safety). Yet subject matter does not fully explain the difference in use. Auto fraud, such as odometer tampering, is a long-standing area of state attorney general expertise, but almost no cases have been brought by the states under the federal Odometer Act.241
In any case, our collected data clearly are insufficient to explain the differences in use between the examined statutes. Some other possible factors influencing states might be differences among analogous state laws, substantive differences between the state and federal law at issue, and knowledge about the various examined statutes among state attorneys general offices. Identifying the factors influencing state use of concurrent enforcement authority would be useful for drafting and debate concerning future federal statutes incorporating this authority.244
C. States Make Strategic Use of Concurrent Enforcement Authority246
State motivations and litigation strategies obviously cannot be quantified purely through statistical data, but observations from our data suggest that states are clearly weighing the federal and state options and making specific decisions as to how to bring their claims. For instance, we received complaints from both Arkansas and Washington, both filed in 2010, both claiming violations of various telecommunications laws. Arkansas filed in federal court under the TCPA and TSR, whereas Washington chose to file in state court under various Washington state consumer laws. In this particular case, Washington led a multistate investigation against the defendant, U.S. Fidelis, and other states filed similar claims in their state courts as well.248
While the precise factors leading Arkansas to enforce the federal law can not be deduced from the complaint, some reasons might be as simple as attorney forum preference or lack of state law remedies for precise violations. Or, in a state where state consumer laws are not used frequently, a federal law might afford stronger precedent for certain types of claims. On the other hand, states might choose state law when the state law mirrors the federal law due to familiarity with state law, courts and procedure. Cost considerations also may be a factor. For example, in a case where many states are tracking a certain defendant, there is a chance that actions brought under concurrent enforcement authority in federal law would be consolidated in a multidistrict litigation, which could either increase or decrease the litigation costs for the state, depending on the circumstances.250
Another example we encountered illuminating varying state motivations appeared in the parallel state and federal multistate actions against Dish Network. In this case, Illinois, California, North Carolina and Ohio joined with the Federal Trade Commission and the Department of Justice to sue Dish Network under the Telephone Consumer Protection Act as well as various state consumer protection laws. Within a similar time period, the remaining 46 states reached a multistate settlement with Dish Network based on violations of state telecommunications and consumer protection laws. The federal action remains open.252
The data does bear some evidence that states are making clear choices how best to protect their state’s consumers. Giving states a choice, through both retaining state consumer protection laws alongside federal enforcement powers, allows a state attorney general to use the approach best suited to the particular case. It also creates a dynamic where a state attorney general can operate in tension with both the state legislature as well as the federal agency. Such tensions can create opportunities for accountability.255
VII. Actual Use of Concurrent Enforcement Authority Appears Cooperative257
The argument that use of concurrent enforcement authority by states would lead to inconsistent interpretations of the statutes also appears unsupported. Although we did not evaluate the merits of the state claims, information collected on federal agency participation in state cases shows no conflict with federal interpretation of the law. With only one exception among the 20 cases of federal agency participation, the federal agency jointly prosecuted the case with the state or participated in the case to support the position of the state attorney general. Federal-state cooperation in the cases identified in our study provides some indication that the advocates of concurrent enforcement were correct that the states would use their enforcement power to support and supplement federal enforcement of the examined statutes.259
If over-enforcement or inconsistent use of the statutes have occurred, the conduct of Illinois is likely to be the best example. Illinois was the outlying state as a prolific user of the examined states. It accounted for 34 of the cases brought by an individual state, or more than a third of the total number of cases. The data show that federal agencies cooperated more with Illinois than other states, even adjusting for the disproportionate use of the statutes by Illinois. Illinois was the co-plaintiff in five of the six cases in which the FTC or DOJ filed as a joint plaintiff in a case brought by a single state. And even though Illinois brought many more cases than any other state, it only used 4 of the 16 examined statutes—the same number as Minnesota.261
The only exception to federal-state cooperation was one instance when a state suit under concurrent enforcement authority provided a forum for litigation of an inter-agency disagreement. Minnesota brought a TSR claim against Fleet Mortgage Corporation. The FTC, the federal agency responsible for promulgating and enforcing the TSR, participated as an amicus supporting Minnesota’s position while the OCC filed a contrary amicus brief. The issue of concern was the authority of the FTC to bring enforcement actions against a non-bank operating subsidy of a national bank. Fleet Mortgage Corporation (“FMC”) was not a bank, but it was an operating subsidiary of a bank. FMC argued that the FTC had no authority to enforce the TSR against it, and thus Minnesota had no authority to bring a TSR action under its concurrent enforcement power, because FMC was an operating subsidiary of a national bank and the FTC generally has no authority over banks. The OCC filed an amicus in support of FMC’s motion to dismiss. The FTC responded by filing an amicus brief in support of the Minnesota action and urging the court to allow the Minnesota action because FMC was itself not a bank. In a matter of first impression, the court interpreted section 133 of the Gramm Leach Bliley, then recently enacted, as allowing for FTC actions against non-bank operating subsidiaries of banks, and thus permitted the Minnesota suit to proceed.263
While there were no instances of substantial federal-state conflict, in two cases state use of concurrent enforcement authority seems to have spurred agency action. New Jersey gave proper notice to the FTC of its intention to bring a suit under CROA and TSR in In re Credit Management. The agency approved the state complaint and then later the agency filed its own complaint based on the same facts. The court then consolidated the two cases pending approval by the agency. Eventually, the court granted a preliminary injunction against the defendant credit company. In another case, the state action also took place before independent federal agency action. In that case, Arkansas v. Troescher, the state notified the agency of its intent to file a complaint under its enforcement authority in March of 2005. In January of 2006, the FCC issued a citation to the same company for the same violation.265
These two cases may reflect a form of competition between state and federal agencies. If so, such a result suggests a benefit of state concurrent enforcement by introducing competition for the federal agency that will force a form of accountability. This type of “uncooperative federalism” is perhaps more at play with legislative grants of state enforcement authority perceived as a response to lax agency enforcement, for example in areas of product safety or financial regulation.268
This study provides data on actual use of enforcement authority that should help ground the increasingly polarized debate about when and how states are permitted to enforce federal law. The criticism of such provisions as creating a flood of lawsuits appears unfounded based on the past 20 years of use of these statutes by the states. The federal agencies primarily responsible for enforcing the statutes examined cooperatively participate with states in public enforcement of these statutes. This study should assist legislators, other policymakers and scholars in their continuing work to balance enforcement between states and federal agencies to maximize consumer protection.
1 See infra Part II.A.276
2 See, e.g., Employment Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. § 1132 (2009); Fair Housing Act, 42 U.S.C. § 3613 (2006).278
3 See, e.g., Occupational Safety and Health Act of 1970, 29 U.S.C. § 667 (2006) (permitting and encouraging states to adopt their own occupational safety and health plans, so long as the state standards and enforcement “are or will be at least as effective in providing safe and healthful employment” as the federal Act); Federal Water Pollution Control (Clean Water) Act of 1972, 33
U.S.C. § 1342 (2008) (creating the National Pollutant Discharge Elimination System permit program to control water pollution by regulating point sources that discharge pollutants into United States waters. In most cases, the permit program is administered by authorized states); Title XIX of the Social Security Act, 42 U.S.C. § 1396–1396w-5 (2006) (creating grants to states for medical assistance programs created Medicaid framework. Each state administers its own Medicaid program while the Federal government monitors these state-run programs and establishes requirements for service delivery, quality, funding and eligibility standards); Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6941–6949a (2006) (authorizing states to carry out many of the functions of the federal law through their own hazardous waste programs, which are authorized and approved by the federal government); Clean Air Act, 42 U.S.C. § 7410 (2006) (authorizing states to take over compliance with the Act by writing and submitting a state implementation plan (SIP) to the EPA for approval. The SIP then becomes the state’s legal guide for local enforcement of the Clean Air Act).
4 See infra notes 8-25.282
5 See, e.g., Stephen Calkins, Perspectives on State and Federal Antitrust Enforcement, 53 DUKE L.J. 673 (2003); Michael S. Greve, Cartel Federalism? Antitrust Enforcement by State Attorneys General, 72 U. CHI. L. REV. 99 (2005).284
6 Philip J. Weiser, Federal Common Law, Cooperative Federalism, and the Enforcement of the Telecom Act, 76 N.Y.U. L. REV. 1692, 1693 (2001).286
7 Amy Widman, Advancing Federalism Concerns in Administrative Law Through a Revitalization of Enforcement Powers: A Case Study of the Consumer Product Safety Improvement Act of 2008, 29 YALE L. & POL’Y REV. 165 (2010), Margaret H. Lemos, State Enforcement of Federal Law, 86 N.Y.U. L. Rev. (forthcoming 2011), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1685458.288
8 15 U.S.C. § 15© (2006).290
9 Act of Nov. 30, 1983, Pub. L. No. 98-181, § 461©, 97 Stat. 1153, 1231 (codified at 12 U.S.C. § 2607(d)(4) (2010)) (“The Secretary, the Attorney General of any State, or the insurance commissioner of any state may bring an action to enjoin the giving of kickbacks.”). This provision will change slightly on July 1, 2011. Dodd-Frank Wall Street Reform and Consumer Protection (Dodd-Frank) Act, Pub. L. No. 111-203, § 1098(7), 124 Stat. 1376, 2104 (2010) (allowing the Bureau of Consumer Financial Protection to “bring an action to enjoin violations” of RESPA and giving the Bureau “primary authority to enforce or administer” RESPA); Designated Transfer Date, 75 Fed. Reg. 57,252 (Sept. 20, 2010) (deciding that certain authority will transfer to the Bureau of Consumer Financial Protection on July 21, 2011, triggering the effective date of the Dodd-Frank amendment to 12 U.S.C. § 2607).292
10 Nutrition Labeling and Education Act of 1990, 21 U.S.C. § 337(b) (2006).294
11 Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227(f) (2010).296
12 Telephone Disclosure and Dispute Resolution Act, 15 U.S.C. § 5712 (2006).298
13 Home Ownership and Equity Protection Act, 15 U.S.C. § 1640(e) (2009).300
14 Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6103 (2006). This Act authorizes the Federal Trade Commission to promulgate a rule prohibiting certain conduct in telemarketing. The Federal Trade Commission used its authority to promulgate the Telemarketing Sales Rule (“TSR”). 16 C.F.R. § 310 (2010). State enforcement actions are brought to remedy violations of the TSR.302
15 Freedom of Access to Clinic Entrances Act of 1994, 18 U.S.C. § 248©(3) (2006).304
16 Odometer Disclosure Act, 49 U.S.C. § 32709(d) (2006).306
17 Credit Repair Organizations Act, 15 U.S.C. § 1679h© (2006).308
18 Professional Boxing Safety Act of 1996, 15 U.S.C. § 6309© (2006).310
19 Children’s On-Line Privacy Protection Act of 1998, 15 U.S.C. § 6504 (2006).312
20 Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN- SPAM), 15 U.S.C. § 7706(f) (2006).314
21 The Sports Agent Responsibility and Trust Act, 15 U.S.C. § 7804 (2006).316
22 Household Goods Mover Oversight Enforcement and Reform Act of 2005, 49 U.S.C. §§ 14710–14711 (2006).318
23 Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2073(b) (2008) (incorporating 15 U.S.C. §§ 1194(a), 1264(d), 1477).320
24 Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. § 1320d-5(d) (2009).322
25 Dodd-Frank Act, Pub. L. No. 111-203, § 1042, 124 Stat. 1376, 2012-14 (2010) (to be codified at 12 U.S.C. § 5552).324
26 See, e.g., H.R. REP. NO. 97-532, at 56 (1982) (noting that an attorney general of a “state in which a violation is occurring” may bring an action); see also, H.R. REP. NO. 98-123, at 132 (1983) (“[T]he Attorney General of any State . . . may bring an action to enjoin violations of RESPA provisions.”).326
27 H.R. REP. NO. 101-980, at 19 (1990) (“In an era of dwindling Federal resources, the Federal Government should encourage as much participation as possible from State enforcement agencies. State participation is especially important given FDA’s admission that it lacks the resources to adequately enforce Federal food labeling laws. It is essential for Federal and State enforcement agencies to work cooperatively to protect consumers from deceptive health claims.”). Also around this time, the executive branch under George H.W. Bush questioned the constitutionality of state enforcement provisions in the telecommunications statutes. See Lemos, supra note 7, at 11 n. 64 (noting that “subsequent administrations have abandoned the complaint.”).328
28 S. REP. NO. 103-80, at 3 (1993).330
29 S. REP. NO. 101-396, at 5 (1990).332
30 See, e.g., H.R. REP. NO. 103-488, at 11 (1994) (The Senate Bill provided that the AGs may bring an action “if he or she has reasonable cause to believe that ‘any person or group of person is being, has been, or may be injured by conduct constituting a violation of this section, and such conduct raises an issue of general public importance.’” The House had provided that the attorneys general could bring an action “upon reasonable cause to believe that ‘any person, or group of persons, is aggrieved by a violation.’” The Committee proposed that the “reference to ‘an issue of general public importance’” be deleted).334
31 See, e.g., 140 CONG REC. 10,171 (statement of Sen. Chafee) (stating, in support of the bill “[v]ictims of clinic violence will now be able to seek injunctive relief and civil damages against the perpetrators, and the Attorney General and State attorneys general will have new enforcement roles through the courts”); id. at 10,172 (statement of Sen. Moseley-Braun) (“The passage of the Freedom of Access to Clinic Entrances Act will help local and State law enforcement, who, despite their best intentions, have been unable to adequately safeguard medical providers, patients, and clinics against this dangerous activity. Attorneys general throughout the United States are looking forward to this legislation going into effect in order to protect women and medical providers who are currently under assault by violent demonstrators.”); id. at 9400 (statement of Rep. Sensenbrenner) (“It allows the U.S. Attorney General as well as the State attorneys general, another unprecedented provision, to sue pro-lifers in Federal court on behalf of the abortion clinic or personnel and gives the court authority to assess thousands of dollars in civil penalties against each pro-lifer. Moreover, conferees dropped a provision contained in the Senate bill, which is part of traditional civil rights laws, requiring the U.S. Attorney General to find that the conduct raises an issue of general public importance before initiating a lawsuit.”); id. at 5392 (statement of Rep. Morella) (“FACE would permit the Federal Government to take an active role in ending attacks against abortion clinics. Without enactment of FACE, the Attorney General cannot deploy Federal marshals to assist local police to keep clinics open.”).336
32 Id. at 10,173 (statement of Sen. Hatch).338
33 154 CONG. REC. S7871 (daily ed. July 31, 2008) (statement of Sen. Kyl).340
34 Id. at S7872 (statement of Sen. Coburn).342
35 See, e.g., Hans Bader, The Nation’s Worst State Attorneys General, COMPETITIVE ENTER. INST. (July 2010), http://cei.org/sites/default/files/Hans%20Bader%20-20The%20Nation%27s%20Worst%20State%20Attorneys%20General_0.pdf; Victor E. Schwartz x%x Christopher E. Appel, The Plaintiffs’ Bar’s Covert Effort To Expand State Attorney General Federal Enforcement Power, WASH. LEGAL FOUND. (July 10, 2009), http://www.wlf.org/Upload/legalstudies/legalbackgrounder/071009Schwartz_LB.pdf.344
36 156 CONG. REC. S3866-72 (May 18, 2010).346
37 Id. at S3871 (Statement of Senator Corker).348
38 156 CONG. REC. S3003 (April 30, 2010) (Statement of Senator Dodd).350
39 Richard Riese, Senior Vice President, Center for Regulatory Compliance, American Bankers Association, Reforming Consumer Financial Protection, 15 Consumer Protection Update 7, American Bar Association (Spring 2010). The President and CEO of the American Bankers Association, Edward Yingling, stated the following during the early Congressional proceedings on Dodd-Frank: “ [T]he safety and soundness regulator will not be able to do its job if it has no authority over consumer laws, much less if that authority is held by not only the Federal consumer regulator, but every State regulator, legislature and attorney general as well.” Statement of Edward Yingling, Creating A Consumer Financial Protection Agency: A Cornerstone of America’s New Economic Foundation, Hearing Before the S. Committee on Banking, Housing & Urban Affairs, S. Hrg 111-274 (7/14/09).352
40 See infra notes 57-59.354
41 Notably, this is a “reverse notification” procedure, similar to one currently being championed by Catherine Sharkey. See Catherine Sharkey, Federal Agency Preemption of State Law, ADMINISTRATIVE CONFERENCE OF THE UNITED STATES (Nov. 27, 2010) (Third Draft Report), http://www.acus.gov/wp-content/plugins/download-monitor/download.php?id=48. All of the statutes since the Clayton Act have required the state to notify the federal agency if they plan to enforce federal law, rather than the federal agency notifying the states.356
42 See, e.g., Richard A. Posner, Antitrust in the New Economy, 68 ANTITRUST L.J. 925, 941 (2001).358
43 Fourteen statutes require notice. 15 U.S.C. § 15c (2006); 15 U.S.C. § 1640(e) (2009); 15 U.S.C. § 1679h© (2006); 15 U.S.C. § 1681s©(1)(2006); 15 U.S.C. § 2073(b) (2008); 15 U.S.C. § 5712 (2006); 15 U.S.C. § 6103 (2006); 15 U.S.C. § 6504 (2006); 15 U.S.C. § 7706(f) (2006); 15 U.S.C. § 7804 (2006); 21 U.S.C. § 337(b) (2006); 42 U.S.C. § 1320d-5(d) (2009); 47 U.S.C. § 227(f) (2010); 49 U.S.C. § 14710–14711 (2006).360
44 See, e.g., 7 U.S.C. § 13a-2(2); 15 U.S.C. § 1640(e)(1); 15 U.S.C. § 1679h©(2)(B); 15 U.S.C. § 2073(b)(3); 15 U.S.C. § 5712(b); 15 U.S.C. § 6103(b); 15 U.S.C. § 6504(a)(2)(B)(ii); 15 U.S.C. § 7706(f)(5); 15 U.S.C. § 7804(b); 21 U.S.C. § 337(b)(2)(B)-(C); 42 U.S.C. § 1320d-5(d)(4); 47 U.S.C. § 227(g)(3).362
45 The only statutes which clearly preclude States from bringing an action while a Federal action is pending are: CPSIA, 15 U.S.C. § 2073(b)(5); TDDRA, 15 U.S.C. § 5712(g); TCFAP, 15 U.S.C. § 6103(d); CAN-SPAM, 15 U.S.C. § 7706(f)(8); SPARTA, 15 U.S.C. § 7804(d); Nutrition Labeling Act, 21 U.S.C. § 337(b)(2)(C); HIPPA, 42 U.S.C. § 1320d-5(d)(7); and TCPA, 47 U.S.C. § 227(g)(7).364
46 For examples of statutes that explicitly preempt state law, see Lemos, supra note 7, at 13 n.71. See 7 U.S.C. § 16(e) (2008) (commodities); 11 U.S.C. § 526(d) (2010) (debt relief agencies); 15 U.S.C. § 1681t (2006) (credit transactions); 15 U.S.C. § 5722(a) (2006) (pay-per-call services); 15 U.S.C. § 6502(d) (2006) (children’s online privacy protection); 15 U.S.C. § 7707(b) (2006) (spam email); 49 U.S.C. § 32711 (2006) (odometer tampering).366
47 See, e.g., CROA, 15 U.S.C. § 1679j; Fair Credit Reporting Act, 15 U.S.C. § 1681t (savings clause); CPSIA, 15 U.S.C. § 2073(b)(4); TCFAP, 15 U.S.C. § 6103(f); FACE, 18 U.S.C. § 248; TCPA, 47 U.S.C. § 227(e)(1); 49 U.S.C. § 32711.368
48 See, e.g., RESPA, 12 U.S.C. § 2607(d)(6) (2010) (“No provision of State law or regulation that imposes more stringent limitations on affiliated business arrangements shall be construed as being inconsistent with this section.”). CPSIA also allows for a state to petition the agency to be exempt from preemption for more stringent state laws. CPSIA, 15 U.S.C. § 2075©.370
49 See supra notes 33–35 (describing CPSIA and Dodd-Frank legislative histories).372
50 CPSIA, 15 U.S.C. § 2073©; see also CAN-SPAM, 15 U.S.C. § 7706(f)(2)(allowing injunctive relief only for a lesser burden of proof – without showing knowledge).374
51 For example, CAN-SPAM, 15 U.S.C. § 7706(f)(3) provides clear statutory damages.376
52 For more on financial incentives possibly affecting state enforcement, see Lemos, supra note 7, at 23–27.378
53 Statutes expressly providing for fees and costs are 15 U.S.C. § 15©(A)(2); 15 U.S.C. § 1681s© (2006); 15 U.S.C. § 7706(f)(4); 49 U.S.C. § 32709–32710.380
54 H.R. REP. NO. 107-41 (2001) (statement of Rep. John Dingell).382
55 Id. (“In my view, it is simply unfair to require the taxpaying public to foot the legal bill for the damage caused by spammers. Recovery of reasonable legal fees is properly included in damage awards to individuals under this bill, and I believe it should likewise be permitted when the State acts as an agent on their behalf. If we are serious about putting an end to spam, as I hope we are, then we should not be creating a disincentive to enforcing the law against it.”).384
56 Some statutes also provide for “another court of competent jurisdiction.” See, e.g., HOEPA, 15 U.S.C. § 1640(e) (2009); FCRA, 15 U.S.C. § 1681s©(1)(A); Odometer Act, 49 U.S.C. § 32709(2) (2006). In these cases, the federal agency may sometimes intervene and remove to federal district court. See HOEPA, 15 U.S.C. § 1640(e). Keeping all cases where a state enforces federal law in federal court can address the industry lobbies concerns of multiple interpretations of regulations. Further, as Prof. Lemos points out, the fact that these statutes provide for enforcement without regulatory authority goes even further toward addressing concerns that such cases will result in a patchwork of regulations. Lemos, supra note 7, at 40–42.386
57 Dodd-Frank Act, supra note 25 at § 1042(a)(1) (“the attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State.”). This language was contained in an amendment authored by Senator Carper in response to the Corker amendment rejected by the Senate. 156 CONG. REC. S3868-3872 (May 18, 2010). See supra notes 36-39 and accompanying text.388
59 See infra note 76.392
60 15 U.S.C. § 15g (2006).394
fn61 15 U.S.C. § 2073(b)(6) (2008) (“If private counsel is retained to assist in any civil action under paragraph (1), the private counsel retained to assist the State may not—(A) share with participants in other private civil actions that arise out of the same operative facts any information that is—(i) subject to attorney-client or work product privilege; and (ii) was obtained during discovery in the action under paragraph (1); or (B) use any information that is subject to attorney-client or work product privilege that was obtained while assisting the State in the action under paragraph (1) in any other private civil actions that arise out of the same operative facts.”).396
62 Rachel E. Barkow, Insulating Agencies: Avoiding Capture Through Institutional Design, 89 TEX. L. REV. 15 (2010); Sharkey, supra note 37.398
63 See, e.g., Barkow, supra note 58; Gillian E. Metzger, “Federalism and Federal Agency Reform,” 111 COLUM. L. REV. 1 (2011); Widman, supra note 7; Lemos, supra note 7.400
64 Widman, supra note 7. The other co-author similarly has argued that preemption of state enforcement against national banks serves to reduce competition between regulators and thus promote industry capture of federal banking regulators. Prentiss Cox, 30 Pace L. Rev. 279, 306-309 (2009).402
65 Metzger, supra note 59.404
66 Id. at 70.406
67 Barkow, supra note 58.408
68 Id. at 58.410
69 Sharkey, supra note 37.412
70 Lemos, supra note 7; see also Widman, supra note 7, at 176.414
71 See, e.g., Lemos, supra note 7, at 43 (stating that, on the question of whether state enforcement of federal law creates a problem of over-enforcement, “[e]mpirical research is necessary to answer the question conclusively, but the existing record does not suggest an imminent risk of over-enforcement of all or even most federal consumer protection law.”).416
72 RESPA, 12 U.S.C. § 2607(d)(4) (2010); HOEPA, 15 U.S.C. §1640(e) (2009); CROA, 15 U.S.C. § 1679h (2006); FCRA, 15 U.S.C. § 1681s©(1) (2006); CPSIA, 15 U.S.C. § 2073(b) (2008); TSR, 15 U.S.C. § 6103 (2006); Boxing Safety, 15 U.S.C. § 6309 (2006); COPPA, 15 U.S.C. § 6504 (2006); CAN-SPAM, 15 U.S.C. § 7706(f) (2006); FACE, 18 U.S.C. § 248 (2006); Nutrition Labeling Act, 21 U.S.C. § 337(b) (2006); HIPPA, 42 U.S.C. § 1320d-5 (2009); TCPA, 47 U.S.C.A. § 227(f) (2010); Household Goods Mover Oversight Enforcement and Reform Act of 2005, 49 U.S.C. § 14710–14711 (2006); Odometer Act, 49 U.S.C. § 32709(d) (2006); Dodd- Frank, Pub. L. No. 111-203, 124 Stat. 1376 (2010).418
73 See infra Part III.B.420
75 Our study did not include two consumer protection statutes: The Telephone Disclosure and Dispute Resolution Act of 1992, 15 U.S.C. § 5712 (2006) and the Sports Agent Responsibility and Trust Act of 2004, 15 U.S.C. § 7804 (2006). A 2010 Westlaw search reveals that the Telephone Disclosure and Dispute Resolution Act has resulted in one state enforcement action, Massachusetts v. Info Access, filed in federal court on Oct. 21, 1994. No states have enforced the Sports Agent Responsibility and Trust Act of 2004.424
76 See William W. Buzbee, Contextual Environmental Federalism, 14 N.Y.U. ENVTL. L.J. 108, 121–26 (2005) (discussing the “parallel, overlapping, and cooperative” structure of environmental laws and pointing to state attorney general enforcement as a particular benefit, along with a significant citizen role); Alex Klass, Common Law and Federalism in the Age of the Regulatory State, 92 Iowa L. Rev. 545, 580 (2007) (noting that “there has always been a close and complimentary relationship between federal law and state law in the area of environmental protection.”).426
77 Clean Air Act, 42 U.S.C. § 7410(a)(1)(2006) (“Each State shall, after reasonable notice and public hearings, adopt and submit to the Administrator, within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof) under section 7409 of this title for any air pollutant, a plan which provides for implementation, maintenance, and enforcement of such primary standard in each air quality control region (or portion thereof) within such State.”). For more on the environmental laws and their role in creating a model of cooperative federalism, see Widman, supra note 7, at 10–12 (“Other laws, such as the Clean Water Act, gave states the authority to amend or reverse federal permitting decisions. The Superfund law allowed for state enforcement of clean-up standards. This model became known as ‘cooperative federalism.’ The cooperation often consisted of parallel state administrative regimes with local expertise working under the auspices of the Federal agency. The state regimes would issue permits, investigate violations and issue sanctions, however with varying degrees of Federal oversight.” (footnotes omitted)).428
78 Lemos, supra note 7, at 13–14 (“The model employed by the Clean Air Act, in which states regulate at the direction of the federal government, is well known in the literature on cooperative federalism. Students of federalism have emphasized the various ways that states can exercise regulatory authority in areas of concurrent state-federal authority. For these scholars, preserving state regulatory authority is the primary goal of federalism. . . . Accordingly, while states implementing the Clean Air Act and similar statutes certainly engage in enforcement, the rules they are enforcing may vary from state to state.”).430
79 See supra notes 5, 8.432
80 Caulkins, supra note 5, 53 Duke L. J. at 678-679.434
82 Greve, supra note 5, 72 U. Chi. L. Rev. at 103-110.438
83 We also searched state attorney general websites to identify possible actions under the examined statues. No cases were identified through this method that were not found by one of the other three methods.440
84 State data practices act requests from Amy Widman, Legal Dir., Ctr. for Justice & Democracy, to 50 state attorneys general (Dec. 31, 2010) (on file with author).442
87 We received documents from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Washington, West Virginia, Wisconsin, Wyoming. Responses on file with author.448
88 Minnesota, Maryland, Washington, Indiana, Texas, Connecticut, Idaho, Colorado, Delaware, Illinois, California, Ohio, Iowa, Arkansas450
89 Alabama, Kansas, Kentucky, Louisiana, Maine, Michigan, Montana, Nevada, New Jersey, New York, North Carolina, Oklahoma, Oregon, Tennessee, Utah, Vermont, Virginia. Responses on file with author.452
90 See supra notes 38-41.454
91 Federal agency FOIA requests from Amy Widman, Legal Dir., Ctr. for Justice & Democracy, to 50 state attorneys general (June 14, 2010) (on file with author).456
92 12 U.S.C. § 337(b).458
93 The FOIA requests also included a request for “All communication since 1976 from state attorneys general to the Commission, including, but not limited to, the Commission’s rule making, enforcement, investigation, or adjudication, or lack thereof” related to the statutes for which the agency is to receive notice from the states. Freedom of Information Request, supra note 87.460
94 The FTC responded after we sent a second FOIA request in October 2010. FTC amended FOIA request from Amy Widman, Legal Dir., Ctr. for Justice & Democracy (October 12, 2010) (on file with author). The second request sought only information about any state actions under the identified statutes and omitted the request for communications from state attorneys general related to these statutes. Id.462
95 HOEPA, 15 U.S.C. §1640(e) (2009); CROA, 15 U.S.C. § 1679h (2006); FCRA, 15 U.S.C. § 1681s©(1) (2006); TCPA, 47 U.S.C.A. § 227(f) (2010); TSR, 15 U.S.C. § 6103 (2006); COPPA, 15 USC 6504.464
96 Two cases we examined, Attorney General of Maryland v. Dickson. 717 F. Supp. 1090 (D.Md. 1989) and Utah ex rel. Wilkinson v. B & H Auto, 701 F.Supp. 201 (D. Utah 1988), were both brought under the Federal Motor Vehicle Information and Cost Savings Act, 15 U.S.C. § 1981, which was replaced with the Odometer Disclosure Act, 49 U.S.C. § 32709(d) in 1994. For purposes of our study, the language in the two acts was the same regarding state enforcement authority.466
97 State attorneys general have statutory authority to enter into pre-complaint settlements with individuals or companies they investigate for violations. These settlement mechanisms are known as Assurance of Voluntary Compliance, or in some states are called an Assurance of Discontinuance. Luther McKinney and Dewey Caton, What To Do When The Attorney General Calls: State Regulation of National Advertising, 3 DePaul Bus. L.J. 119, 140 (1990-1991). In most cases these settlements are filed with and approved by the court, but some states do not require filing with the court. One AVC not filed with a court is included in the relevant state enforcement cases identified for the study. In the Matter of United Collections Bureau, No. 364940 (Assurance of Voluntary Compliance with Ohio Attorney General’s Office) (August 12, 2010).468
98 Washington Attorney General’s Office letter to Advantage citing violation of TCPA (on file with the authors).470
99 See, e.g., Missouri v. Progressive Business Publications, Inc., 504 F. Supp. 2d 699 (W.D. MO. 2007). For a discussion of state consumer protection actions brought as a violation of state UDAP laws, see Jonathon Sheldon & Carolyn Carter, Unfair and Deceptive Acts and Practices § 4.2.1 (National Consumer Law Center, 7th ed. 2008).472
100 See, e.g., State of Florida v. Credit Solutions of America, Inc. (2009). See also New York ex rel. Cuomo v. Dell, Inc., 514 F. Supp. 2d 309, 401 (N.D.NY. 2007).474
101 See State of Texas v. CSA-Credit Solutions of America, Inc., Cause No. D-1-GV-09-000417, 261 (Travis Cnty. Dist. Ct. 2009); State of Idaho v. Credit Solutions of America, Inc; State of New York v. Credit Solutions of America, Inc. (2009); State of Missouri v. Credit Solutions of America (2009); State of Maine v. Credit Solutions of America, Inc. (2009); State of Florida v. Credit Solutions of America, Inc. (2009); State of Oregon v. Credit Solutions of America (2010); News Release, Idaho Dep’t of Fin., Department Of Finance Settles With A Dallas, Texas Based Debt Settlement Company – $588,000 In Consumer Restitution Ordered (Jan. 15, 2008), available at http://finance.idaho.gov/PR/2008/Credit_Solutions_PressRelease.pdf . In 2010, the FTC changed its Telemarketing Sales Rule to include these types of debt relief practices under the TSR and therefore clarified state authority to enforce the federal law for such instances under the TSR as well. See Final Rule Amendment, 75 Fed. Reg. 48,458 (amending 16 CFR § 310.2 (2010)).476
102 State of Florida v. Credit Solutions of America, Inc. (2009). See also New York ex rel. Cuomo v. Dell, Inc., 514 F. Supp. 2d 309, 401 (N.D.NY. 2007) (granting remand and finding no federal question jurisdiction for claims alleging violations of state law based on violations of federal law, ECOA and FCRA, brought by the New York Attorney General).478
103 State of New York , et. al. v. GMAC Mortgage Corporation, et. al., No. 90-7294 (S.D.N.Y. 1990).480
104 United States and State of Illinois v. Mercantile Mortgage Co., et. al., 2002 WL 32153637 (N.D. Ill 2002).482
105 In the case of Ohio’s AVC not filed with a court, see supra note 93, we used the date the AVC was fully executed by all parties.484
106 Jason Lynch, Note: Federalism, Separation of Powers, and the Role of the State Attorneys General in Multistate Litigation, 101 Colu.. L. Rev. 1992, 2003-2007 (2001).486
107 The Dodd-Frank authority was enacted as the data was being collected, so the lack of cases under that statute was not surprising.488
108 The case against U. S. Bancorp asserting a FCRA claim was originally filed as an individual action by Minnesota. Minnesota v. U.S. Bank N.A., et al., No. 0:99cv872 (D. Minn. 1999) The case was settled and then later joined by 28 other states. Id. (Amended Consent Judgment, 2000).490
109 A federal agency filed jointly with the state, intervened or was otherwise joined to the action in 13 of these cases. See infra section VA.492
110 The case originally filed by Minnesota and later joined by 28 other states is counted here as a multistate case. See supra note 105.494
111 The nine states that have never been a plaintiff in a case using one of the examined statutes are as follows: Alaska, Georgia, Kentucky, Louisiana, Maine, Mississippi, Rhode Island, South Carolina, and West Virginia.496
112 See supra notes 10-18.498
113 See, e.g., FCC email chain July 9, 2003 re: Missouri’s filing of a TCPA case (“It seems at least on first blush that it would be a good idea for the FCC to intervene or at least track closely so that we can file a brief or an amicus brief if legal issues of concern to us arise, which seem very likely.”) On file with authors.500
114 Fed. Communications Comm’n Motion to Intervene, Texas v. American Blast Fax, 121 F. Supp. 2d 1085 (W.D. Tex. ,2000) (No. 1:00CV00085). Both the FTC and the OCC monitored a suit by Minnesota under the TSR and the two agencies filed competing amici briefs in the case. See infra note 115-120.502
115 Texas v. American Blast Fax, 121 F. Supp. 2d 1085 (W.D. Tex. 2000).504
116 See supra notes 8-25.506
117 See supra notes 32-36.508
118 Given the relatively small number of cases and the large number of possible explanatory variables, it is difficult to make many firm conclusions about the causation for the outcomes observed in our study. See generally Gregory Mitchell, Case Studies Counterfactuals and Causal Explanation, 152 U. Pa. L. Rev. 1517 (2004).510
119 See supra note 34.512
120 See supra notes 95-98 (citing cases in which the state attorneys general brought actions referencing the examined statutes but did not use the concurrent enforcement authority in the statute).514
121 See supra notes 20-25.516
122 Nutrition Labeling and Education Act of 1990, 21 USC § 337.518
123 The only exception was RESPA, for which concurrent state authority is limited to its anti- kickback provisions. 12 U.S.C. § 2607(d) (2010).520
124 Boxing Act, 15 U.S.C. § 6309©(3) (2006); COPPA, 15 U.S.C. § 6504(a)(1)(C) (2006); Household Goods Mover Oversight Enforcement and Reform Act of 2005, 49 U.S.C. § 14710(a) (2006).522
125 However, our data revealed that even where those statutes providing for other courts, state attorneys general brought enforcement actions in federal court when claiming under these federal laws.524
126 Only five of the seven statutes with clear preemption were included in our study.526
127 But see TDDRA, 15 U.S.C. § 5712 (2006). Though not included in our data, there was only one case on record of a state using this enforcement power. See supra note 71.528
128 See, e.g., Prentiss Cox, “The Importance of Deceptive Practice Enforcement in Financial Institution Regulation,” 30 Pace L. Rev. 279, 292 (2009) (“Telemarketing, automobile sales, credit repair organizations, and countless other marketplace transactions are regularly subject to UDAP actions by the FTC or the state attorneys general.”).530
129 But see RESPA 12 U.S.C. §§ 2601–2617, CPSIA 15 U.S.C. §§ 2051–2089, COPPA 15 U.S.C. §§ 6501–6506, and Dodd-Frank, Pub. L. No. 111-203, 124 Stat. 1376 (2010). All of these statutes are arguably traditional areas of state attorneys general enforcement, yet not used.532
130 See Complaint, Arkansas v. U.S. Fidelis, Inc., No. 4:10CV00378 (E.D. Ark. May 11, 2010), 2010 WL 3229812; Complaint, Washington v. U.S. Fidelis, No. 10-1-00885-1 (Thurston Cnty. Dist. Court Apr. 29, 2010), available at http://www.atg.wa.gov/uploadedFiles/Home/News/Press_Releases/2010/State%20of%20WA%20v.%20Fidelis.pdf.534
131 Iowa, Idaho, Kansas, North Carolina, Ohio, Wisconsin, and Arizona all filed similar complaints in their state courts on the same day as Washington.536
132 Complaint, United States v. Dish Network L.L.C., No. 3:09-cv-03073-JES-CHE (C.D. Ill. Mar. 25, 2009), available at http://www.ftc.gov/os/caselist/0523167/090325echostarcmpt.pdf.538
133 See, e.g., Idaho AVC re: Dish Network (on file with the authors).540
134 See supra Part VA. Also, in one case the state joined in filing a case with a federal agency but only the federal agency asserted the claim under the examined statute, with the state alleging only a UDAP violation. United States and State of Illinois v. Mercantile Mortgage Co., et. al., 2002 WL 32153637 (N.D. Ill 2002).542
135 State of Minnesota v. Fleet Mortgage Corporation, 181 F. Supp.2d 995 (2001). One of the co-authors was lead counsel for the State of Minnesota in this litigation.544
136 See supra notes 115-120.546
139 Id. at 997552
141 Id. at 1002.556
142 In re Nat’l Credit Mgmt Grp., LLC, 21 F. Supp. 2d 424 (D.N.J. 1998).558
143 In re Troescher Typing Service, 22 FCC Rcd. 19789 (2007), available at http://www.fcc.gov/eb/Orders/2007/DA-07-4590A1.html.560
144 See Jessica Bulman-Pozen & Heather K. Gerken, Uncooperative Federalism, 118 YALE L. J. 1256, 1259 (2009)(explaining uncooperative federalism as taking place when “states use regulatory power conferred by the federal government to tweak, challenge, and even dissent from federal law.”). In this case, states might be using their enforcement power to function as a watchdog of sorts over the federal agency and encourage consistent enforcement.