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AG, campaign donor's law firm sue Dollar General

Discount retailer accused of false advertising, sales practices over store-brand motor oil

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 State Attorney General Hector Balderas has teamed with a New Orleans law firm in a lawsuit against Dollar General stores, alleging the discount chain stocked a store brand of motor oil that was obsolete and not suitable for modern engines.

With the lawsuit, New Mexico joins in a flood of litigation nationwide against Dollar General over the oil. Balderas' office is being assisted by the firm of Kanner & Whiteley, which is representing others in similar lawsuits and whose principal Allan Kanner has been a campaign donor to Balderas.

The firm will be able to petition a judge for legal fees if the New Mexico case is successful. Any monetary judgment will go to the state, Balderas' office said.

The partnership between Balderas' office and Kanner & Whiteley is an example of how state attorneys general have increasingly teamed with supportive plaintiffs lawyers to bring consumer litigation. The relationships are often mutually beneficial, producing political capital for elected officials and dollars for trial attorneys.

In the lawsuit filed in state District Court in Santa Fe this week, Balderas accuses Dollar General of using false advertising and misleading marketing and sales practices to sell the motor oil in its 87 New Mexico stores between 2010 and February.

Some cases of the oil were allegedly labeled as not for use in engines made after 1988, while other cases were reportedly labeled as not for use in engines made after 1930.

According to the New Mexico complaint, Dollar General misled consumers by positioning the store brand motor oil adjacent to more expensive brand-name oil, "wrongfully representing" that the store brand was lower in price but comparable to the brand-name products. Dollar General also is accused of publishing ads that contained misleading statements about the oil.

"Dollar General has also done significant harm to New Mexico's pristine air quality by selling obsolete motor oil that was unknowingly used by its customers in modern vehicles, damaging engines and deactivating emission controls equipment that is required to reduce and control the emission of harmful pollutants," Balderas' office said in statement.

In addition to asking the court to impose financial penalties on Dollar General, the Balderas complaint asks the court to order the chain to develop a system for notifying New Mexico customers of damages caused by the use of the obsolete motor oil, to inspect the engines of customers who used the oil and to repair or replace parts or vehicles damaged by the product.

"Putting New Mexicans' valuable property and safety at risk is unacceptable," Balderas said, "and companies that harm our communities and profit by taking money out of the pockets of our families will face consequences for their bad acts."

Dollar General spokeswoman Crystal Ghassemi said in an email that the chain had not yet seen the lawsuit and could not comment on the allegations.

But, she said, "We are confident that our DG-branded motor oil products meet not only our standards for quality and value, but also all applicable federal and state labeling requirements where they are sold."

Ghassemi said the products contain "obvious and unambiguous language regarding the products' intended and appropriate use."

Dollar General first began facing lawsuits over the product in 2015 and is defending itself against a number of legal actions, including a class-action lawsuit pending in U.S. District Court in Missouri. A federal judge has appointed Kanner as the lead attorney in the class-action lawsuit.

Kanner donated $1,000 to Balderas' election campaign in 2014 and another $1,250 in 2017, online state records show. The Kanner & Whiteley firm, according to OpenSecrets.org, donated a total of $20,000 in 2015 and 2016 to the Democratic Attorneys General Association, which works to get Democrats like Balderas elected and re-elected as state attorneys general.

Balderas spokesman James Hallinan said the Attorney General's Office retains decision-making authority over the case against Dollar General and that Kanner & Whiteley is providing "expertise and resource support."

"The firm will have to apply for fees and costs from the court at the conclusion of the litigation, assuming we are successful," Hallinan said. "They are not getting contingency fees. The state of New Mexico is not paying anything. No taxpayer dollars are being or will be expended for their assistance with the case."

Balderas' predecessor, Gary King, was featured prominently in a 2014 New York Times story about "a flourishing industry that pairs plaintiffs' lawyers with state attorneys general to sue companies, a collaboration that has set off a furious competition between trial lawyer and corporate lobbyists to influence these officials."

According to the Times, the arrangements typically begin with private lawyers scouring news accounts and public records for potential cases where a state's consumers have been harmed, then offering to do the work on the cases in exchange for a fee or a percentage of money won in the case.

While prospecting for clients, private lawyers often donate tens of thousands of dollars to the campaigns of attorneys general and affiliated party-backed organizations.

Kanner declined to comment on his arrangement with Balderas' office, saying protocol required the Attorney General's Office be the one to make any comments on the case.

Asked if he thought his contributions to Balderas' campaign had anything to do with the Attorney General's Office deciding to partner with his firm, Kanner answered, "I doubt that highly. I'm sure it has nothing to do with that."

Hallinan said Kanner & Whiteley was one of 16 firms that responded to a request for proposals from the Attorney General's Office in 2015 "for litigation services, not specific cases."

The contract between the state agency and the law firm was signed in early February. Later that month, Kanner donated $1,250 to Balderas' campaign.

Deputy Attorney General Tania Maestas said she could not speculate on why Kanner would donate to Balderas' campaign.

Contact Phaedra Haywood at 505-986-3068 or phaywood@sfnewmexica­n.com. Follow her on Twitter @phaedraann.

The Santa Fe New Mexican is the sister paper of The Taos News.

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