George Jepsen ()
Thank you to the Connecticut Law Tribune for the opportunity to talk about our work. Before looking ahead, I would like to acknowledge the impressive accomplishments of my dedicated and talented staff in the year just ended, under the guidance of Perry Zinn Rowthorn as deputy attorney general and my team of senior associates.
It was a productive year, both in the volume of cases and revenue generated for the state and its citizens. Through the hard work and legal skill of our 309 full-time attorneys and support staff, the office was able to generate more than $16 for every dollar expended from our operating budget of $31.7 million, including $200 million in direct benefits to consumers and businesses.
My staff completed nearly 15,000 trial court cases, 169 appeals and 698 administrative proceedings, as well as more than 400 privacy, antitrust and consumer protection investigations. These numbers do not reflect new and pending cases and investigations.
The volume of data breach reports continued to grow. During the last fiscal year alone, 515 data breach notifications, affecting 2.5 million Connecticut residents, were made to my office. A variety of personal information was lost, but in nearly half the reported cases, credit and debit card information was compromised.
I responded to this growing problem by elevating a multidisciplinary task force to department status. The Privacy and Data Security Department is the first of its kind among state attorneys general and is headed by Assistant Attorney General Matthew Fitzsimmons, who is nationally recognized in the field.
My staff was successful in protecting the public interest in a number of high-profile and legally significant matters. While all cases involving the state are important, some presented very challenging legal issues. Among the notable results:
In February, we joined with the U.S. Department of Justice, 18 other states and the District of Columbia in a $1.38 billion settlement with Standard & Poor’s Financial Services and its parent The McGraw-Hill Companies. Connecticut’s share was $36 million.
The settlement capped a five-year legal effort by my office to hold S&P responsible for its role in the 2008 financial crisis. A litigation team headed by Assistant Attorneys General Matthew Budzik and George O’Connell led the complex investigation, developed the legal theory that served as the foundation for other states that filed suit, and led the state coalition in the final negotiations.
My office sued S&P under the Connecticut Unfair Trade Practices Act, alleging that S&P misled investors with repeated statements emphasizing its independence and objectivity, while allowing its analysis to be influenced by its financial interests and knowingly assigning inflated credit ratings to toxic assets packaged and sold by the Wall Street investment banks. A similar case brought by my office against the rating agency Moody’s Investor Services Inc. is moving forward.
In April, a negotiated settlement was reached in State Employees Bargaining Agent Coalition v. Rowland, a case that had been in litigation for nearly 12 years. Good-faith negotiations began after my office withdrew its petition to the U.S. Supreme Court to review the adverse ruling by the U.S. Court of Appeals for the Second Circuit. It took more than a year of work to reach a settlement resolving all claims for economic, compensatory and punitive damages, as well as attorney fees and costs related to the case.
While our petition had legal merit, we understood there was no guarantee the Supreme Court would agree to hear our case, and therefore concluded that the possibility of reaching an equitable resolution through negotiation had to be explored. The financial risks to the state—potential damages of $300 million or more—were too significant.
With hard work and compromise on both sides, we were able to reach that equitable solution. It brings tangible benefits and closure to the settlement class, which consists of more than 49,000 state employees who were union members in November 2002. It also substantially reduces the impact on the state budget by reducing the state’s overall financial exposure and also by spreading the financial liabilities over a number of years. In addition, the settlement further limits the immediate financial impacts to the state budget by adopting the creative approach of paying much of the damages in awards of vacation time. U.S. District Judge Alfred Covello gave final approval to the settlement agreement on Oct. 1.
The SEBAC settlement is an example of a win-win situation that I look for as the state’s chief legal officer for civil matters. Since taking office in 2011, I have made it a priority of my administration to allow all parties—regardless of the circumstances—an opportunity to solve problems through frank and fair discussions. It would be irresponsible not to do so.
This approach—and countless hours of negotiation—also led to an agreement in September to remediate the site of English Station, a former United Illuminating Co. utility power plant in New Haven contaminated with PCBs, asbestos and other toxic chemicals. Iberdrola S.A. of Spain has made a commitment to complete the cleanup within three years of its acquisition of UIL Holdings, UI’s parent company, and gaining access to the property. Iberdrola is committed to spend the entire amount necessary to remediate the property, even if the cost exceeds the $30 million estimate by the state.
Where necessary, my office has not hesitated to protect the state’s interests in court. Led by Assistant Attorney General Maura Murphy Osborne, we successfully defended from constitutional challenge the gun control legislation passed in response to the tragedy at Sandy Hook. The most recent decision by the Second Circuit in October demonstrates that willing states can enact meaningful reform to improve public safety without violating the Second Amendment.
We also protected Connecticut’s financial and symbolic interest in the reproduction Freedom Schooner Amistad by seeking a receivership for the assets of Amistad America Inc., the ship’s former owner. Critically, through negotiations led by Assistant Attorney General Karen Gano, the board of the private, not-for-profit organization agreed not to contest the receivership, avoiding a potentially costly court battle. As a result of the receivership, the charitable organization was dissolved and the Amistad was preserved for its intended charitable purpose: as an educational tool for informing the public about the important human rights story in the early history of our state and country that the Amistad represents. Discovering Amistad Inc., a new charitable organization, now owns and operates the Freedom Schooner, keeping alive Connecticut’s link to an important part of its history.
My office continues to work closely with other state attorneys general on multistate investigations of issues that affect our citizens. One important result announced in November was the national settlement with Education Management Corp., an operator of for-profit, postsecondary educational institutions. The settlement, which Assistant Attorney General Joseph Chambers and Special Counsel Robert Clark were instrumental in negotiating, significantly reforms recruiting and enrollment practices and forgives more than $102.8 million in outstanding load debt held by more than 80,000 former students.
The bipartisan National Association of Attorneys General provides critical support for those multistate efforts. Its purpose is to foster interstate cooperation on legal and law enforcement issues, to conduct nonpartisan policy research, analysis of issues and training, and to facilitate communication between the states’ chief legal officers and all levels of government. I am honored to have been selected to serve as president of NAAG for a one-year term beginning in the summer.
As 2016 begins, health care remains a dominant issue. My office continues to monitor hospital and health insurance mergers and the rapidly changing provision of health care in Connecticut. Along with the state Department of Consumer Protection, we will continue to investigate the concrete foundation failures that have affected so many homeowners and pursue possible legal remedies.
In closing, I thank the people of Connecticut for the opportunity to serve as attorney general. Each day holds new challenges and I am committed to the important work of protecting the public interest of Connecticut and its citizens. •