On August 16, a coalition of seven state attorneys general (AG) announced a settlement with participants alleged to be involved in a “massive” robocall operation. The stipulated order, which names Scott Shapiro, Michael T. Smith, Jr., and Health Advisors of America (defendants), permanently bans Shapiro and Smith from initiating or facilitating robocalls; working in or with companies that make robocalls; and engaging in telemarketing. The settlement also requires the defendants to make monetary payments to the coalition, which is comprised of AGs from the states of Arkansas, Indiana, Michigan, North Carolina, North Dakota, Ohio, and Texas (the AGs).
The settlement comes after the AGs impleaded the defendants into its larger case against Rising Eagle Capital Group LLC. In the complaint, the AGs alleged the defendants “initiated millions of [r]obocalls advertising various goods and services, including healthcare products” to residential and/or cellular telephone numbers without obtaining consumers’ prior express consent. The complaint further alleges that these actions violated the Telephone Consumer Protection Act and its implementing rules;” the Telemarketing Sales Rule; and state “unfair and deceptive acts and practices” laws.
The stipulated order secures both injunctive and monetary relief against the defendants. Specifically, it permanently bans Shapiro, Smith, and their companies from engaging in robocall-related activities in the plaintiffs’ states. It also bans them from engaging in lead generation or telemarketing for 10 years in the plaintiff states, and from engaging in such activities for two years on a nationwide basis. Finally, the order also includes a monetary judgment in the amount of $73,076,930, but only requires defendant Shapiro to pay $250,000. The remainder of the monetary judgment is suspended due to the defendants’ “financial situation.”
Why It Matters
For several years, regulators at both the state and federal levels have continually focused on eliminating robocalls by bringing coordinated enforcement actions, forming cross-agency working groups, and supporting federal legislation designed to curb robocalling. The defendants’ settlement demonstrates that it is essential to monitor the regulatory environment, and to adjust business practices to minimize risk. The settlement also shows the AGs’ willingness to implead business affiliates who are found to be involved in a larger scheme. As such, businesses of all sizes should conduct due diligence to monitor their affiliates’ business practices.
Troutman Pepper State Attorneys General Team
|Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
|Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
Tim is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, with a primary focus on financial services litigation.
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
John represents clients in a wide variety of general and complex litigation matters, shareholder disputes, products liability, and privacy claims.
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.