Antitrust

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.

On April 2, 2021, the acting U.S. Attorney for the District of New Jersey released an update of her office’s efforts to prevent fraud related to the COVID-19 pandemic, noting prosecutions involving the Paycheck Protection Program, the Economic Injury Disaster Loan program, and the Unemployment Insurance programs, as well as prosecutions involving price-gouging and hoarding of critical personal protective equipment. The announcement comes on the heels of a similar one by Attorney General Merrick Garland last month, who marked the one year anniversary of the passage of the CARES Act by announcing that, in the past year, the Department of Justice has charged nearly 500 individuals with COVID-related fraud. These announcements serve as important reminders that, even as the vaccine roll out continues and life regains a sense of normalcy, federal prosecutors continue to actively monitor price gouging compliance.

While the majority of states have had price gouging laws on the books since before the pandemic, widespread pandemic price gouging has led states without laws to reconsider. Some states, like Colorado, passed price gouging legislation mid-pandemic, but other states, including New Hampshire and Washington, are now playing catch up.

On March 18, 2021, retailer Union Square Supply, Inc. filed a civil rights class action lawsuit in the Southern District of New York challenging New York City’s price gouging enforcement practices.  The complaint alleges that defendants are responsible for “the creation and maintenance of an illegal and unconstitutional penalty enforcement scheme, abuse of emergency powers,

State legislatures are still continuing to enact new changes to their states’ price gouging statutes.  Some are expanding the scope of their laws, while others are tailoring the law or emergency orders in response to new issues that have arisen during the course of the COVID-19 pandemic.  Idaho took a third tack and limited limit overbroad enforcement so that its law applied only to price increase, and not to price decreases that are deemed to be insufficient.