State Consumer
Protection Commissioner
Jerry Farrell
Photo Source: Dept. of Consumer Protection
Posted 4/13/09
Two state officials, one elected, one appointed, often are characterized as “consumer crusaders", trying to help average citizens get a fair shake. The duo is made up of Democratic Attorney General Richard Blumenthal and Gov. Rell’s Commissioner of the Department of Consumer Protection Jerry Farrell. The two men were involved in odd cases last week.
A few weeks ago, when the AIG bonus controversy was red hot in the headlines, Republican Gov. Jodi Rell asked Farrell to investigate whether AIG had violated the Connecticut Unfair Trade Practices Act (CUTPA) by doling out bonuses to execs “against public policy”. AIG, based in Wilton, cited a Connecticut labor law protecting employees salaries as the reason it awarded the bonuses, even though the financial services firm was surviving only because of a major federal government bailout.
Farrell, who usually spends his time issuing consumer product warnings, regulating the liquor trade in Connecticut, or running “stings” against unscrupulous home improvement contractors, plunged into the law books to follow up on Rell’s request.
Try as he might, Farrell concluded CUTPA just cannot be stretched far enough to apply to the AIG mess. “We conducted an exhaustive investigation and careful scrutiny of (AIG’S) documents to determine if Connecticut had any legal authority in this matter as an unfair trade practice, and we found that we do not have subject matter jurisdiction over the issue,” he said.
The legislature designed CUTPA primarily to protect consumers from being “taken”, for example, being cheated out of products or services paid for but never delivered. Farrell said in the AIG case, he could not find a true consumer-company relationship. The AIG bonuses involve the company, the federal government, and indirectly, the taxpayers.
“I could not find anything in the CUTPA statute that would have allowed me to say that ‘taxpayer’ is the same as ‘consumer’,” Farrell explained. He said forcing the issue with legal action against AIG could have raised constitutional issues, in Farrell’s view. His remedy? “The solution lies with the United States Congress to fix what has occurred by amending federal law,” said Farrell.
Meanwhile, Blumenthal (who has his own ongoing investigation of the AIG bonuses) added his two cents to a different controversy: media mergers. The Attorney General is notorious as a media magnet. A longtime joke at the State Capitol is that the most dangerous place to be is anywhere between Blumenthal and any available TV camera. That makes Blumenthal’s latest venture all the more unusual.
He sent off a missive to Sam Zell, head of the financially-challenged Tribune Company which owns, among other media properties, the Hartford Courant newspaper and two Hartford area television stations, WTIC-TV and WTXX-TV. Recently Tribune announced it was combining the newsgathering resources of the newspaper and TV operations, moving the TV studios into the Courant’s Hartford building.
Blumenthal views that combo as troubling, in his words, “raising concerns about public access to diverse and competing sources of information.” Joint newspaper-TV ownership is not unusual in the current regulatory environment, and Blumenthal noted that Tribune is operating under a two-year waiver from the Federal Communications Commission (FCC) allowing it to have the paper and the TV stations. He claims, however, that the melding of all the entities into one “goes well beyond what the FCC intended.”
Tribune replied that all mainstream media are fighting to stay intact in the recession, and are under pressure from online and other newer media forms. “In an economic environment where newspapers and television must innovate and become more efficient to survive, measures such as this are essential,” the company said. Tribune also emphasized that its bringing together of the newspaper and TV stations “is in full compliance with the law.”
Blumenthal asked Zell to inform him on how the merging of Tribune’s newspaper and TV entities would affect employment at all outlets, if it might eventually cause the Courant to disappear in favor of TV, and if it would still be possible for one news organization “to scoop the other."
The AG also said that Tribune’s “survival” argument is “insufficient reason to ignore the law.” Blumenthal stated: “Our region has seen significant shrinkage in its news industry, compounding economic difficulties and diminishing diversity.” He then warned Tribune that if his investigation into the consolidation action proves his point, then there “may be reason to change the law, by statute or regulatory action.”