Are Michigan’s Enhanced Price Gouging Provisions Undone?

As much of the country remains under various and often overlapping states of emergency, one Governor’s powers have been limited by a state supreme court. On October 2, 2020, the Michigan Supreme Court held that Michigan Governor Gretchen Whitmer did not have authority to issue or renew COVID-related executive orders beyond April 30, 2020. The Court stated that “our decision today . . . leaves open many avenues for our Governor and Legislature to work together in a cooperative spirit and constitutional manner to respond to the COVID-19 pandemic.”

Governor Whitmer has faced immense backlash from those questioning her authority to extend Michigan’s coronavirus emergency declaration and issue COVID related executive orders. However the Governor has maintained that the Emergency Management Act of 1976 (EMA) and the Emergency Powers of the Governor Act of 1945 (EPGA) give her the authority to do so. In a sharp rebuke, the Michigan Supreme Court concluded that “the executive orders issued by the Governor in response to the COVID-19 pandemic now lack any basis under Michigan law.” In a written statement, Governor Whitmer stated she “vehemently disagree[s] with the court’s interpretation of the Michigan Constitution. Right now, every state and the federal government have some form of declared emergency. With this decision, Michigan will become the sole outlier . . . .”

Michigan’s Supreme Court ruling, the full effects of which are not yet known, may have an impact on the enhanced price gouging provisions the state had in place until June 12, 2020. On March 10, 2020, the same day that she declared a state of emergency, Governor Whitmer issued Executive Order 2020-08, putting enhanced restrictions on price gouging into effect. The enhanced price gouging provisions were extended by a series of executive orders through June 12, 2020. Under the enhanced provisions, “[a] person must not resell a product in this state at a price that is grossly in excess of the purchase price at which the person acquired the product.” The order further provided that “[a] person must not offer for sale or sell any product in this state at a price that is more than 20% higher than what the person offered or charged for that product as of March 9, 2020, unless the person demonstrates that the price increase is attributable to an increase in the cost of bringing the product to market or to an extraordinary discount in effect as of March 9, 2020.”

Given that the Court found that Governor Whitmer lacked authority to issue COVID related executive orders beyond April 30, 2020, the question arises whether the enhanced price gouging provisions also ceased on April 30, 2020. The Court’s ruling has no effect on the enhanced price gouging provisions that remained in place up until April 30, 2020. Nonetheless, Michigan consumers are not without protection. Under Michigan’s Consumer Protection Act, the state defines an unfair, unconscionable, or deceptive trade practice to include “[c]harging the consumer a price that is grossly in excess of the price at which similar property or services are sold.” Mich. Comp. Laws §445.903(z)

The limits of emergency powers have become a hot topic during the pandemic. As the pandemic continues, businesses need to stay current with respect to changes that may result from orders being challenged and rescinded.

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Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

 

Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.

Photo of Kelly Landers Hawthorne Kelly Landers Hawthorne

Kelly Landers Hawthorne is an associate in the Litigation Department.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as…

Kelly Landers Hawthorne is an associate in the Litigation Department.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as a judicial intern for the Honorable Sandra Townes of the United States District Court for the Eastern District of New York.

Kelly is a Teach For America alumnus and taught middle school special education and math in Washington, D.C. prior to law school.