Lawsuits & Settlements

SAN FRANCISCO – California Attorney General Kamala D. Harris today announced a settlement with Arbitron Inc., the nation’s dominant provider of radio audience ratings, over allegations that the method it used to collect ratings information discriminated against radio stations with predominantly African-American and Latino audiences. The settlement is the result of a consumer protection lawsuit filed jointly by the State of California and the cities of Los Angeles and San Francisco.

Attorney General Harris, Los Angeles City Attorney Carmen A. Trutanich and San Francisco City Attorney Dennis Herrera alleged that Arbitron Inc.’s implementation of “Portable People Meters” (PPM) to measure radio station listenership in California beginning in 2008 violated the state’s Unfair Competition Law, False Advertising Law and Unruh Civil Rights Act by dramatically undercounting minority audiences, causing sharp declines in advertising rates and revenue for many broadcasters.

“This settlement ensures that California’s diverse audiences will be fully counted by Arbitron’s ratings systems and that broadcasters serving these communities will have the opportunity to compete fairly in the marketplace,” said Attorney General Harris. “I am pleased that Arbitron will be revising its practices in the state and thank my partners in this effort, City Attorneys Carmen Trutanich and Dennis Herrera.”

Arbitron’s ratings are based on information provided by sample groups of listeners. In deploying a new system that relied on electronic metering devices in place of personal listenership diaries, Arbitron’s listener recruitment methodology failed to reflect the diversity of broadcast audiences in California markets, according to the complaint filed in San Francisco Superior Court.

The settlement mandates that Arbitron meet concrete metrics in its efforts to ensure that its audience sampling methods are fair and representative of California’s diverse media markets. Specifically, Arbitron will improve its sample-audience recruitment by increasing address-based outreach to 65 percent of its total recruitment activity by December 31, 2012. Previously, recruitment was conducted primarily via land-line telephone, a survey method that failed to adequately include minority households. Arbitron will also take all reasonable steps to increase minority participation in their sample audience panels in five California major media markets. Additionally, Arbitron will begin incorporating country of origin as a standard demographic characteristic collected from participating Hispanic households—an additional benefit to Spanish-language media outlets. The Columbia, Md.-based media research firm also has agreed to pay a total of $400,000 to the plaintiffs: $150,000 each to the State of California and City of Los Angeles and $100,000 to the City and County of San Francisco.

Radio stations serving primarily African American and Latino audiences were disproportionately affected by the sample audience recruitment methods Arbitron began using with its switch to the PPM ratings scheme in 2008. Of the 18 stations serving minority audiences in Los Angeles, 16 experienced ratings decreases in excess of 30 percent under the initial PPM system. Three of these fell by over 70 percent. One Los Angeles radio station whose audience is mostly African-American, was rated 0.0 for a significant portion of the day immediately after implementation of the new PPM ratings. One Spanish- language radio station that had previously enjoyed a number one ranking in the Los Angeles market saw its ratings plummet by more than 50 percent under Arbitron’s PPM ratings for September 2008.

Arbitron’s PPM methodology was criticized by minority broadcasters and the Media Ratings Council, the independent industry body that accredits media ratings systems, which has found problems with minority representation in Arbitron’s sample audiences in the past.

“Through this settlement, Arbitron has agreed to take important steps to ensure that minority radio stations are reasonably treated in order that they may fairly compete in the California marketplace,” said Los Angeles City Attorney Carmen A. Trutanich. “In a city as diverse as Los Angeles, it is important that all of our residents and our businesses be equally represented and able to compete in our field of commerce. Only then will all Californians have a voice.”

“Assuring the integrity of broadcast rating methodologies is essential to protect media outlets that serve California’s diverse communities,” said San Francisco City Attorney Dennis Herrera. “These measures set all-important ad rates and revenue, and largely determine the success or failure of media outlets in a competitive industry. I’m grateful for the hard work and expertise of my co-counsel in this case, Attorney General Kamala D. Harris and L.A. City Attorney Carmen Trutanich. I am also appreciative to Arbitron and its legal team for their cooperative approach and willingness to negotiate with us in good faith.”

The case is the People of the State of California v. Arbitron, Inc., San Francisco Superior Court.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced that Medco has agreed to pay $2.75 million and change internal procedures to settle claims regarding Medco Health Solution’s engagement of Alfred Villalobos to assist it in securing a CalPERS contract in 2005.

Medco paid Villalobos $4 million for what it claimed was “consulting-as-needed” on an audit of the company, but which may have been intended to influence the awarding of a pharmaceutical benefits contract from the pension fund.

According to the complaint filed with the settlement, Medco failed to exercise sufficient controls to ensure that Mr. Villalobos’ compensation for expenses was not used to fund improper gifts, payments or campaign contributions to CalPERS Board members or staff, and failed to ensure that Mr. Villalobos, as its agent, refrained from meeting with CalPERS Board members and officials during the period of restricted communications during the competitive bid process.

Medco agrees, under the settlement, to a court order requiring the company to not unlawfully interfere or tamper with the competitive bidding process of any California governmental or quasi-governmental agency, and agrees to a requirement that Medco’s independent directors comprehensively review the investigative materials in order to take internal measures to ensure that problems do not occur again.

The $2.75 million dollars secured by the Attorney General’s Office will reimburse the state for attorney fees and investigative costs, some of which the Attorney General is authorized to share with cooperating state agencies such as CalPERS itself.

The CalPERS Board voted not to renew Medco’s contract based in part upon a review of some of the Attorney General’s findings. CalPERS also conducted an investigation of Villalobos’ use by other companies and its full report is available here: http://www.calpers.ca.gov/eip-docs/about/board-cal-agenda/agendas/full/2....

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced that Wal-Mart has agreed to pay $2.1 million for overcharging consumers in violation of a 2008 judgment against the retail chain.

Today’s modified judgment is the result of Wal-Mart’s failure to comply with a 2008 judgment that required the retail chain to resolve errors in pricing at checkout stands.

“Consumers should feel confident that the price on the shelf will be the same price they are charged at the cash register,” said Attorney General Harris. “Californians who shop at Wal-Mart should know that they have the right to ask for the appropriate discount.”

In December 2005, the Attorney General’s office and the San Diego District Attorney’s office investigated allegations that Wal-Mart stores in California were scanning items at a higher price than the prices advertised on store shelves and signs. Through random price-checking, county Departments of Weights and Measures across the state found that 164 Wal-Mart stores in 30 counties had made scanning errors.

According to the terms of the 2008 judgment, consumers who were overcharged at the cash register should have immediately received $3 off the lowest advertised price of the item. If the price was less than $3, the item was to be given to the consumer for free.

Starting in November 2010, Departments of Weights and Measures in 11 counties conducted investigations to monitor Wal-Mart’s compliance and found continued errors in pricing at Wal-Mart checkout stands.

Today, Attorney General Kamala D. Harris, San Diego District Attorney Bonnie M. Dumanis and San Diego City Attorney Jan I. Goldsmith filed a Stipulated Modified Judgment with the San Diego Superior Court resolving Wal-Mart’s failure to comply with the requirements of the 2008 judgment.

The $3 off program was originally scheduled to end in November 2012, but with today’s action has been extended to November 2013. Wal-Mart will also be required to put new, large signs describing the policy, in both English and Spanish, at each of the approximately 3,000 checkout stands at its 180 stores and super centers in California.

Wal-Mart has also agreed to designate a person at every Wal-Mart store in California to ensure pricing accuracy. Any price discrepancy must be reported within three hours to Wal-Mart’s corporate headquarters, which receives and maintains price audit information, consumer complaints and inspection reports for all California Wal-Mart stores.

Wal-Mart has agreed to pay new penalties and costs totaling $2.1 million. These funds will be divided between County Weights and Measures officials, the California Department of Measurement Standards, the Attorney General’s office, the San Diego District Attorney’s office and the San Diego City Attorney’s office.

A copy of the judgment and the sign that will be posted at all Wal-Mart checkout stands is attached to the online version of this release at www.oag.ca.gov.

SACRAMENTO --- Attorney General Kamala D. Harris today announced the appointment of Professor Katherine Porter of the University of California, Irvine School of Law as the California monitor of the commitment by the nation’s five largest banks to perform as much as $18 billion worth of homeowner and borrower benefits in the state. Attorney General Harris’ decision to appoint a California monitor was made independent of the national settlement, and Professor Porter’s role is focused exclusively on ensuring compliance in California.

This California commitment is part of a national federal-state mortgage settlement penalizing robo-signing and other servicing and foreclosure misconduct that is currently pending approval in a federal court in Washington, D.C. Upon approval of the settlement, California’s monitor will assist the Attorney General’s office in holding the banks accountable for their commitments to the state and ensuring that the promised benefits are delivered to homeowners in full and on time.

“Hundreds of thousands of California homeowners will benefit from the commitments of up to $18 billion extracted from mortgage lenders. We must enforce full and timely compliance with these commitments, and the appointment of Professor Porter as our California monitor is central to that enforcement,” said Attorney General Harris. “Professor Porter’s wealth of experience and knowledge will protect the interests of homeowners and ensure the settling banks deliver on their promises,” Attorney General Harris continued.

“I will work hard to make sure banks hold up their promises to change troubling practices so that families and communities across California see the benefits of the settlement,” said Professor Porter. “Part of repairing the damage of the mortgage crisis is restoring public confidence that our largest financial institutions will treat consumers fairly and follow the law.”

Katherine Porter is a Professor at University of California, Irvine School of Law. She specializes in commercial and consumer law, including mortgage foreclosures and bankruptcy, and just released a book, Broke: How Debt Bankrupts the Middle Class. In 2007, Porter authored an empirical study that offered some of the first systemic evidence of the problems in mortgage servicing that harmed homeowners. She has worked with other government entities, including the Federal Trade Commission and the Consumer Financial Protection Bureau, on issues relating to mortgage servicing.

Upon approval of the settlement, Professor Porter will verify the extent and timeliness of lenders meeting their obligations to California homeowners. Using information obtained by the national monitor of the mortgage settlement, former North Carolina Commissioner of Banks Joseph Smith, Professor Porter will review lender filings, homeowner reports and complaints, and other compliance documents to ensure that benefits committed by the banks are performed and result in meaningful relief to California borrowers. She will regularly report the results of her findings to the Attorney General’s Office.

The appointment of Professor Porter as the state’s monitor is one of a series of enforcement mechanisms to ensure transparent compliance with the national settlement and the separate California agreement. Bank of America, Wells Fargo, and JP Morgan Chase will face significant financial penalties if they do not meet their guarantee of a minimum of $12 billion in principal reductions and short sales for homeowners within the state. Unlike the larger national agreement, which is only enforceable in a federal court in Washington, D.C., the agreement reached with California empowers Attorney General Harris to enforce the penalty provisions in California state court.

California secured the estimated $18 billion in borrower benefits and relief as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the relief to California was estimated at $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, on stronger enforcement provisions, and that California and other states preserve key investigations into mortgage misconduct.

California’s separate commitment also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California’s hardest-hit counties and that the principal reductions in these and other California communities will occur within the first year of the settlement. Professor Porter will ensure that both the California-specific and national settlements are properly implemented in the state.

“The California commitment provides a path for thousands of struggling homeowners in California to retain their homes, while preserving our ability to investigate banker crime and predatory lending,” added Attorney General Harris. “This is one important stride in our ongoing efforts to address the mortgage and foreclosure crisis that has devastated too many California communities.”

Attorney General Harris earlier this month joined Assembly Speaker John A. Pérez, Senate President pro Tem Darrell Steinberg and other state legislators to unveil the California Homeowner Bill of Rights, designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state’s urgent mortgage and foreclosure crisis. The legislation would make permanent and available to everyone the interim reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and restrict the unfair and inherently deceptive system of dual-track foreclosures. State legislators authoring key components of the Homeowner Bill of Rights include Assemblymembers Wilmer Carter, Mike Davis, Mike Eng, Mike Feuer, Holly Mitchell, Nancy Skinner, Senate President pro Tem Darrell Steinberg, and Senators Mark DeSaulnier, Loni Hancock, Mark Leno, and Fran Pavley.

Attorney General Harris also continues her work to have the Federal Housing Finance Agency authorize Fannie Mae and Freddie Mac – holders or guarantors of over 60 per cent of California mortgages – to participate in targeted programs of principal reduction that will benefit struggling homeowners, stabilize the country’s housing market, and benefit taxpayers.

The state’s Mortgage Fraud Strike Force continues its work to crack down on all forms of mortgage misconduct. Earlier this month, three prominent attorneys were arrested and are accused of running a loan modification scam.

A photo of Professor Porter is attached to the electronic version of this release at http://oag.ca.gov/

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a $1.2 million settlement with TravelCenters, a leading truck stop operator, over environmental violations at a truck stop and fuel tank system in Riverside County.

“Environmental regulations safeguard the public health,” Attorney General Harris said. “As Attorney General, I will defend those regulations and crack down on those who violate them.”

In March 2009, the Attorney General’s office joined a lawsuit filed by the Riverside District Attorney regarding serious and numerous violations at a truck stop in Coachella. TravelCenters operates 10 service area truck stops in California.

The Riverside County Department of Environmental Health, Hazardous Materials Division discovered numerous violations at a truck stop in Coachella – the most significant of which involved the tampering or disabling of sensors on the fuel tank monitoring system. These sensors are designed to detect the release of hazardous material at the earliest possible opportunity and activate warning alarms.

Other violations at the facility included failure to test and certify the underground storage tanks, failure to properly label and cover hazardous wastes and failure to train employees in a timely manner on safety procedures.

The $1.2 million settlement requires TravelCenters to pay $950,000 in cash for penalties, costs and expenses. TravelCenters receives a $250,000 credit for environmentally protective equipment installed at the Coachella facility that is more than currently required by state law.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO --- California residents who purchased products with LCD panels (computer monitors, laptops, and PCs) from 1999 to 2006 are encouraged to visit a new class action website for information on how to file a claim related to a half billion dollar settlement with manufacturers that engaged in price-fixing.

Consumers are encouraged to visit www.lcdclass.com for more information, and to obtain copies of the settlement agreements and register to receive a claim form. Consumers can also call 855.225.1886 or write: LCD Class, P.O. Box 8025, Faribault, MN, 55021-9425.

In October 2010, Attorney General Kamala D. Harris filed a lawsuit against ten companies for engaging in price fixing of LCD panels from 1999 to 2006 that resulted in higher prices for California residents and businesses, as well as government agencies.

The settlements announced in December 2011 resolve Attorney General Harris’ claims against seven companies, along with those of seven other attorneys general and a national class action. As part of the settlements, the companies that engaged in price fixing will provide a fund for consumers and businesses in 25 states, including California. The settling companies have also resolved claims brought by Attorney General Harris for civil penalties under California’s Unfair Competition Law, as well as restitution for government agencies that purchased the flat screen LCD panels.

Attorney General Harris is joined in these settlements by the attorneys general of Arkansas, Florida, Michigan, Missouri, New York, West Virginia and Wisconsin, as well as a class action brought on behalf of private claimants in the United States District Court for the Northern District of California.

Settling defendants include: Chimei Innolux Corp., Chi Mei Optoelectronics USA, Inc., Chi Mei Optoelectronics Japan Co., Ltd, HannStar Display Corporation, Hitachi, Ltd., Hitachi Displays, Ltd., Hitachi Electronic Devices, USA, Inc., Samsung Electronics, Co., Ltd., Samsung Electronics America, Inc., Samsung Semiconductor, Inc., Sharp Corporation, and Sharp Electronics Corporation.

SAN FRANCISCO – Attorney General Kamala D. Harris today announced an agreement committing the leading operators of mobile application platforms to improve privacy protections for millions of consumers around the globe who access the Internet through applications (“apps”) on their smartphones, tablets and other mobile devices.

Attorney General Harris forged the agreement with six companies whose platforms comprise the majority of the mobile apps market: Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion. These platforms have agreed to privacy principles designed to bring the industry in line with a California law requiring mobile apps that collect personal information to have a privacy policy. The majority of mobile apps sold today do not contain a privacy policy.

“Your personal privacy should not be the cost of using mobile apps, but all too often it is,” said Attorney General Harris.

“This agreement strengthens the privacy protections of California consumers and of millions of people around the globe who use mobile apps,” Attorney General Harris continued. “By ensuring that mobile apps have privacy policies, we create more transparency and give mobile users more informed control over who accesses their personal information and how it is used.”

Privacy policies are an important safeguard for consumers. Privacy policies promote transparency in how companies collect, use and share personal information. The agreement with the platforms is designed to ensure that mobile apps comply with the California Online Privacy Protection Act. The Act requires operators of commercial web sites and online services, including mobile apps, who collect personally identifiable information about Californians to conspicuously post a privacy policy.

This agreement will allow consumers the opportunity to review an app’s privacy policy before they download the app rather than after, and will offer consumers a consistent location for an app’s privacy policy on the application-download screen. If developers do not comply with their stated privacy policies, they can be prosecuted under California’s Unfair Competition Law and/or False Advertising Law.

The agreement further commits the platforms to educate developers about their obligations to respect consumer privacy and to disclose to consumers what private information they collect, how they use the information, and with whom they share it. The platforms will also work to improve compliance with privacy laws by giving users tools to report non-compliant apps and committing companies to implement processes to respond to these reports.

In six months, Attorney General Harris will convene the mobile application platforms to assess privacy in the mobile space.

There are more than 50,000 individual developers who have created the mobile apps currently available for download on the leading platforms. There are nearly 600,000 applications for sale in the Apple App Store alone, and another 400,000 for sale in Google’s Android Market. These apps have been downloaded more than 35 billion times.

These figures are expected to grow. An estimated 98 billion mobile applications will be downloaded by 2015, and the $6.8 billion market for mobile applications is expected to grow to $25 billion within four years.

The rapid growth and expansion in the mobile market exposes consumers to a wide variety of privacy invasions. Smartphones are often on and tethered to their user, transmitting rich data to the app developers. Users of mobile devices are vulnerable to privacy intrusion and abuse by numerous entities, app developers, analytic services and advertising networks. These entities could have access to sensitive information, including a user’s location, contacts, identity, messages and photos. Without a privacy policy, what companies do with the personal data they collect is largely invisible to consumers.

It is estimated that a majority of the mobile apps currently available for download through the platforms do not include even the most basic privacy protection: a privacy policy setting forth how personal data is collected, used and shared. One recent study found that only 5 percent of all mobile apps have a privacy policy.

A recent report by the Federal Trade Commission (FTC), Mobile Apps are Disappointing, evaluated the lack of privacy information available to parents before downloading mobile apps for their children. The FTC report recommended that mobile apps platforms do more to help parents and kids by providing a consistent means for app developers to display information about their privacy practices. The FTC specifically recommended that the platforms provide a designated space for developers to disclose their information in the app stores and markets and that the platforms improve enforcement of requirements for app developers to disclose the private data they collect.

Attorney General Harris, in August, 2011, convened Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion as the most direct way to improve compliance with California law requiring that mobile apps have privacy policies. The platforms have committed to these principles today and are now working to implement them.

“California has a unique commitment to protecting the privacy of our residents. Our constitution directly guarantees a right to privacy, and we will defend it,” added Attorney General Harris. “Forging this common statement of mobile privacy principles shows the power of collaboration -- among government, industry and consumers -- to create solutions to problems no one group can tackle alone.”

Last year, Attorney General Harris also established an eCrime Unit to prosecute identity theft, data intrusions, and crimes involving the use of technology.

LOS ANGELES – Attorney General Kamala D. Harris today announced an historic commitment to California of up to $18 billion that will benefit hundreds of thousands of homeowners in the state hardest hit by the mortgage crisis.

“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis,” said Attorney General Harris. “Hundreds of thousands of homeowners will directly benefit from this California commitment.”

“This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here. We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending,” continued Harris.

California secured the $18 billion agreement as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the estimated relief to California was $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into misconduct.

California’s participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.

Attorney General Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners. Failure to achieve this minimum level of reductions will result in substantial cash payments of up to $800 million that the banks will have to pay to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers the Attorney General to summon the banks to California state court.

California’s separate guarantee also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California’s hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.

To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team. The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.

The national multistate agreement and California commitment will provide substantial relief for thousands of Californians whose mortgages are owned by the five banks in the settlement, but thousands more will still need help as they struggle to stay in their homes.

“I will continue to fight for principal reductions for the approximately 60 percent of California homeowners whose loans are owned by Fannie Mae and Freddie Mac,” Attorney General Harris added.

Attorney General Harris will propose a comprehensive legislative agenda to protect homeowners in the mortgage market. This legislation will build on the three-year reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and an end to the unfair and confusing system of dual-track foreclosures.

“This is an historic amount of relief for California homeowners, but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify, reform and upgrade our broken mortgage system,” Harris added.

The financial benefits of this historic agreement extend to homeowners whose loans are owned or serviced by one of the five largest mortgage lenders. Benefits include:
- More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.
- $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.
- $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011.
- $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures.
- $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed.
- $430 million in costs, fees and penalty payments.

County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. It is estimated that homeowners in the following counties will accrue the following level of benefits over the three-year life of the commitment.
- Los Angeles: $3.92 billion
- Riverside: $1.59 billion
- San Bernardino: $1.13 billion
- Sacramento: $820 million
- Stanislaus County: $368 million

Additional details on the settlement, including how homeowners can apply for relief, can be found at www.oag.ca.gov.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a settlement with the manufacturer of Brazilian Blowout products that will require the company to warn consumers and hair stylists that two of its most popular hair smoothing products emit formaldehyde gas.

The settlement requires GIB, LLC, which does business under the name Brazilian Blowout, to cease deceptive advertising that describes two of its popular products as formaldehyde-free and safe. The company must also make significant changes to its website and pay $600,000 in fees, penalties and costs.

“California laws protect consumers and workers and give them fair notice about the health risks associated with the products they use,” said Attorney General Harris. “This settlement requires the company to disclose any hazard so that Californians can make more informed decisions.”

Today’s settlement is the first government enforceable action in the United States to address the exposures to formaldehyde gas associated with Brazilian Blowout products. It is also the first law enforcement action under California’s Safe Cosmetics Act, a right-to-know law enacted in 2005.

In November 2010, the Attorney General’s office filed suit against GIB, LLC for violating five state laws, including deceptive advertising and failure to provide consumers with warnings about the presence of a carcinogen in its products.

The settlement covers two products used in a popular salon hair straightening process, the “Brazilian Blowout Acai Smoothing Solution” and the “Brazilian Blowout Professional Smoothing Solution”.

The complaint alleged the two products contained formaldehyde but were labeled “formaldehyde free.”
Proposition 65 requires businesses to notify Californians about certain exposures to chemicals in the products they purchase. Formaldehyde is on the Proposition 65 list of chemicals known to cause cancer.

The complaint alleged that that GIB – the manufacturer of the Brazilian Blowout products – did not inform customers or workers that formaldehyde gas was being released during a Brazilian Blowout treatment, and therefore product users did not take steps to reduce their exposure, such as increasing ventilation. Under the terms of the settlement, GIB is required to:

- Produce a complete and accurate safety information sheet on the two products that includes a Proposition 65 cancer warning; distribute this information to recent product purchasers who may still have product on hand; and distribute it with all future product shipments. The revised safety information sheet -- known as a “Material Safety Data Sheet,” or MSDS -- will be posted on the company’s web site.

- Affix “CAUTION” stickers to the bottles of the two products to inform stylists of the emission of formaldehyde gas and the need for precautionary measures, including adequate ventilation.

- Cease deceptive advertising of the products as formaldehyde-free and safe; engage in substantial corrective advertising, including honest communications to sales staff regarding product risks; and change numerous aspects of Brazilian Blowout’s web site content.

- Retest the two products for total smog-forming chemicals (volatile organic compounds) at two Department of Justice-approved laboratories, and work with DOJ and the Air Resources Board to ensure that those products comply with state air quality regulations.

- Report the presence of formaldehyde in its products to the Safe Cosmetics Program at the Department of Public Health.

- Disclose refund policies to consumers before the products are purchased.

- Require proof of professional licensing before selling “salon use only” products to stylists.

GIB will also pay $300,000 in Proposition 65 civil penalties, and $300,000 to reimburse the Attorney General’s office fees and costs.

A copy of the settlement is attached to the online version of this release at www.oag.ca.gov.

SAN FRANCISCO --- Attorney General Kamala D. Harris today announced that she filed a motion to intervene in a lawsuit seeking to require the San Diego Association of Governments (SANDAG) Regional Transportation Plan to take a harder look at the region’s long-term transportation development options.

The lawsuit contends that the Environmental Impact Report (EIR) prepared for the plan does not adequately address air pollution and climate concerns and prioritizes expanding freeways while delaying public transit projects.

“The 3.2 million residents of the San Diego region already suffer from the seventh worst ozone pollution in the country,” said Attorney General Harris. “Spending our transit dollars in the right way today will improve the economy, create sustainable jobs and ensure that future generations do not continue to suffer from heavily polluted air.”

Attorney General Harris will file in San Diego Superior Court papers seeking to intervene in the California Environmental Quality Act (CEQA) action filed by the Cleveland National Forest Foundation and the Center for Biological Diversity. In September 2011, she sent a letter to SANDAG stating that the draft EIR on the Regional Transit Plan was inadequate under CEQA. The final EIR was not substantially different.

The AG’s motion contends that the EIR on the transit plan did not adequately analyze the public health impacts of the increased air pollution. The San Diego region already has a very high cancer risk from particulate matter emitted by diesel engines and vehicles and there is no analysis as to whether this risk will increase.

In addition, the EIR did not analyze the impact of air pollution on communities in San Diego that are already burdened by significant air pollution.

While greenhouse gases initially decrease in the plan, the EIR shows that after 2020, driving miles will increase and overall greenhouse gas emissions from driving will continue to increase at least until 2050.

The transit plan also prioritizes expanding or extending freeways and highways in its early years, largely deferring investment in public transit projects, such as transit, bicycle and foot paths, when funds may not be available.

Related documents are attached to the online version of this press release at http://oag.ca.gov/.

Additional information about the California Environmental Quality Act can be found at http://ag.ca.gov/globalwarming/ceqa.php