Antitrust

Although many states of emergency have expired, new lawsuits that allege price gouging continue to be filed.  On September 3, 2021, Minnesota Attorney General Keith Ellison filed a complaint in Minnesota state court against Sparboe Farms, Inc. alleging the company engaged in price gouging for the sale of eggs in violation of the Minnesota Governor’s executive order.

In the early days of the pandemic, COVID-19 was synonymous with a mad dash for anti-virus home items like hand sanitizer, toilet paper, and anti-bacterial wipes. Amazon emerged from the shopping frenzy as key source of these products and hosts of others. Even as many states are lifting states of emergency, businesses active during the pandemic, such as Amazon, are facing suits for conduct during the pandemic. 

On June 24, 2021, New York celebrated the lifting on most COVID-19 restrictions. Governor Andrew Cuomo announced the COVID-19 state of emergency would officially expire. With the expiration of the emergency declaration, the state of New York’s price gouging restrictions were also lifted. The New York price gouging statute provides for certain pricing restrictions “during any abnormal disruption of the market”, and that an abnormal disruption of the market is triggered by a declaration of a state of emergency by the Governor. After over a year of COVID-19 related pricing restrictions, the Governor’s announcement marked the end of those restrictions.

In recent weeks many states have either started lifting pricing restrictions put in place during the COVID-19 pandemic or announced their plans to do so. Still, some state governments have indicated that they will continue to hold pricing restrictions in place as a means of protecting consumer welfare as people return to normal spending habits and economies recover from the toll of the pandemic. As the country begins turning the corner toward the end of the pandemic, the landscape of state price gouging restrictions remains muddy as governors take individualized approaches to states of emergency.

Many companies have increased prices in recent months.  Reportedly, across the economy, prices “rose by 5 percent in May compared with a year ago.”  Restaurants are raising prices to cover the cost of increases in wages in a tight labor market.  The prices of used and rental cars are quickly rising, due to low inventory and higher demand.  Gasoline prices have risen, and not just as a result of the recent cyberattack.

Even as Governors lift mask mandates and sporting events welcome fans to stadiums, some states are revisiting their price gouging laws.  Recently, several states have advanced legislation to amend or create price gouging statutes.  State governments are learning from experiences during COVID-19 emergencies and some are proposing legislation to adjust the scope, definitions, and penalties for price gouging.

The Sixth Circuit issued its opinion in the Online Merchants Guild v. Cameron case on April 29, 2021, dissolving a preliminary injunction that had prevented the Kentucky Attorney General from investigating alleged violations of Kentucky’s price gouging laws, and remanding to the district court for further proceedings.

Over a year ago, states of emergency were declared across the country. Such emergency declarations are often the trigger for state pricing restrictions.  Tracking the start and end of the emergency declarations is essential for interpreting the pricing restrictions they impose. For instance, in Oklahoma, the pricing restrictions remain in place throughout the duration of the emergency, and extend for 30 days after the state of emergency has terminated. Proskauer’s Price Gouging Coast to Coast Reference Guide has been updated to reflect new states of emergency dates and legislative changes.

In a case of mistaken identity and a web of conflicting testimony, a Fresno local business successfully appealed a price gouging fine.  The saga between the store and the City of Fresno offers insights in the importance of maintaining proper business records to defend potential price gouging allegations.

On April 8, 2021, an Administrative Hearing Officer for the City of Fresno, California dismissed an Administrative Citation issued by the City Attorney’s Office against a local business for allegedly price gouging.  City Inspectors issued the $10,000 citation in March 2020 while Fresno was under a State of Emergency.  The store owner appealed the fine, and after a virtual hearing, the Hearing Officer determined that the City had not met its burden of proving each element of the case against the business.