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Multistate Case Hypothetical - HLS - '11
Potential Multistate Case Hypothetical
Sam Levenson, a prominent class action plaintiff’s lawyer (and former Assistant Attorney General) located in the State of Auburn, is poised to bring a lawsuit against Cote’s Electronics, a prominent bricks and mortar retailer located in the State of Webster that has recently expanded to become one of the nation’s largest Internet retailers. Although Cote’s claims in the terms and conditions on its web page to respect its customers’ privacy, it actually has been selling customers’ personal information to third party marketers. Several Internet blogs had speculated that Cote’s was selling consumer information.
The Chief of the Consumer Division of the State of Minot, Bill McFadden, knows that the speculation was well founded. His two–person consumer division had served a confidential “civil investigative demand” seeking documents from Cote’s, and in response had not only received documents suggesting that it had sold information concerning its customers across the country, but one internal memorandum that stated that a company marketing executive hoped “to turn bytes into billions.”
Unfortunately, due to budget cutbacks, McFadden doesn’t have anyone who has the technical expertise to review Cote’s documents, and can’t afford to hire anyone to do so. Also, his two–person consumer division hasn’t tried a case in years, and Cote’s lawyer responding to the civil investigative demand, John Kendall, is an aggressive defense lawyer from the largest law firm in Minot.
• Is this a good case for Minot?
• Should the case be left to the private law firm?
• Should Minot consider working with the private law firm to bring this case?
• Is this a good potential multistate case?
• If so, when should other States be contacted?
• Before contacting other States, should approval from the “front office” be obtained?
• If other States are contacted, should all States be contacted, and if not, how should the decision be made which States to contact?
Assume that someone made the decision to turn this into a multistate investigation. One of the States contacted that agreed to participate in the multistate investigation was the State of Auburn, which wasn’t that surprising since the Chief of the Consumer Division, Jack Glenn, frequently worked on multistate consumer cases and often served on the informal “Executive Committees” running such cases. His former colleague, Sam Levenson, knew that Glenn was likely to be in the thick of things if there was a multistate investigation.
• When Levenson calls Glenn, and asks if there is a multistate investigation, what does Glenn say?
• When Levenson tells Glenn that he knows the States lack the resources to pursue this case against a multibillion dollar retailer like Cote’s, and he would like to work with the States “collaboratively,” what does Glenn say?
• Does Glenn attempt to get any information from his former colleague about his possible class action lawsuit?
• Does Glenn attempt to try to get Levenson to file his lawsuit sooner—or later—to facilitate the States’ efforts?
• Does Glenn tell the other States about the call from Levenson?
In addition to the State of Auburn, the State of Webster volunteered to be on the Executive Committee. On the most recent conference call, in addition to Mary Baird, Webster’s longtime Assistant Attorney General handling consumer issues (who the other States’ lawyers know and trust from years of working together), Webster’s new Chief Deputy Attorney General, Joyce Grover, announced that she was joining the call, expressing concern that “this investigation not turn into a witch–hunt against one of Webster’s most prominent companies.”
• Do any of the other States have a problem with Grover participating in the strategy call?
• If so, should steps be taken to exclude Grover, or even Webster, from participating in the multistate investigation?
The State of Lewiston also volunteered to be on the Executive Committee. This was interesting since the Attorney General of Lewiston, Bob Bone, was pretty conservative and was considered “pro–business.” But, perhaps it wasn’t that surprising since the office had had massive cutbacks, and was looking for additional “investigative costs” and attorneys’ fees that it would receive as a member of the Executive Committee. For whatever reason, his consumer protection chief, Les Emerson, was on the Executive Committee.
Emerson receives a call from Terry Hannigan, the now former Attorney General of Lewiston. Hannigan says that he is representing Cote’s, and that the word on the street is that Lewiston is part of the “cabal” investigating Cote’s. He wants to know if it is true Lewiston and others are “persecuting” his client, and, if so, he asks for a meeting with Emerson and Bone.
• Does Emerson acknowledge the investigation?
• Does Emerson tell Bone that he received the call from Hannigan?
• Does Emerson agree to the meeting?
• Does Emerson tell the other States he received this call?
For whatever reason, the meeting is held (and Bone attends as well, even though he privately told Emerson that he thought Hannigan was a “buffoon”). Confirming Bone’s assessment, Hannigan has little to say that made little sense. He obviously wasn’t a total fool since he brought John Kendall to the meeting. After spending some time on small talk trying to trade on his status as a former Attorney General, Hannigan turns the meeting over to Kendall.
Kendall explains that the multistate approach is seriously misguided because most States don’t have statutes that apply to privacy issues, including Minot, and that the lead lawyer for Minot, Bill McFadden, had a personal issue with Cote’s since he had bought a bad blue–ray player and complained when Cote’s hadn’t taken it back. At this point, Hannigan spoke up, and mentioned that if the States cracked down on Cote’s, they might just move their operation off–shore to avoid “intrusive regulation” and then Cote’s might contribute to opponents of the various “activist” Attorneys General for ads that said they drove businesses “to China.” Kendall asks for guidance on a “safe harbor” approach to these tricky privacy issues.
• Does the argument that the States lack similar statutes resonate with Emerson?
• Does Emerson have any concerns that McFadden may have a personal issue with Cote’s?
• Does the argument that Cote’s may send its business overseas resonate with Emerson?
• Does the argument that Cote’s may fund attack ads resonate with Bone?
• If the argument that this will cost American jobs is amplified by a letter from the AFL–CIO to every Attorney General, would that make a difference?
• Does Emerson provide the “safe harbor” guidance requested by Kendall?
• If Emerson offers anything on the “safe harbor” guidance, is he speaking for Lewiston, or for all the States?
• Does Emerson tell the other States about these conversations, or seek their input responding to these nettlesome questions?
Following all the various conversations, and conference calls, an article appears about the latest strategy conference call among the States.
• Does it matter if the article appears in a blog read only by handful of people, in the Lewiston Journal, or in the New York Times?
• Does the Executive Committee investigate the leak?
• If the Executive Committee finds out the leak is from the lawyers in Lewiston, or Webster, or Auburn, or Minot, what, if anything, does it do?