Minding Your Business

Proskauer’s perspective on developments and trends in commercial litigation.

The roll-out of vaccine approvals has led to some confusion over what charges consumers might be asked to cover. This echoes the confusion previously discussed with respect to COVID-19 diagnostic and antibody test pricing. But consumers, providers, and others that will have any involvement with vaccine production, distribution, or administration should be aware that the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides different rules for treatment (including testing) than it does for preventative care, like the recently approved vaccines.   …
Reports of restaurants adding a “COVID surcharge” have become widespread during the pandemic. In recent months, cities and states across the nation have implemented a number of measures designed to help struggling restaurants adapt to the new normal. These include allowing restaurants to implement a “surcharge,” as well as capping fees that third-party delivery services can charge restaurants. However, while “surcharges” may be more benign than direct price increases, a recent California price gouging lawsuit demonstrates that restaurants still need to be vigilant in their compliance with state price gouging laws.…
On November 24, 2020, a class action price gouging claim was filed against a California based operator of casual fine dining restaurants. The class action lawsuit against Hillstone Restaurant Group alleges price gouging in violation of California Penal Code §396. According to the lawsuit, “Hillstone engaged in unfair and unlawful business practices by increasing its price on food items and also unjustifiably charging a 10% or 15% so-called ‘service or packaging fee’ for takeout orders.” The lawsuit further states that “despite increasing the cost of its food items and adding this Fee, there has been no change in the quality…
Companies that sell consumer products worldwide should note the growing convergence between Brazil and the United States for the use of anticompetitive practices laws to prosecute price gouging.  The Brazilian Competition Law (Law No. 12,529/2011) prohibits a non-exhaustive list of anticompetitive practices, including engaging in acts that “arbitrarily increase profits.”  Brazil’s antitrust authority, Conselho Administrativo de Defesa Econômica (“CADE”), however, has not traditionally investigated claims of price gouging as a standalone theory of harm, recognizing the difficulty of demonstrating that a price increase was “arbitrary” as opposed to a legitimate reaction to market developments.  Instead, CADE typically has enforced the…
Many are asking how long states of emergency can continue to be renewed, and whether such extended renewals are permissible or valid. Given the lack of comparable precedent, there is some uncertainty around the issue. Expectations are that while some courts are likely to defer to the use of extraordinary executive power, not all will and there may be strong arguments for a curtailing of things like pricing restrictions.…
On November 12, 2020, D.C. Attorney General Karl Racine filed a lawsuit against Capitol Petroleum Group, LLC (“CPG”), a retailer and distributor of gasoline in the District. According to Attorney General Racine, CPG overcharged its customers for gasoline in violation of the Natural Disaster Consumer Protection Act (“NDCPA”). This is the latest example of aggressive attorneys general investigating price gouging allegations that go well beyond personal protective equipment and other staples.…
Out-of-network providers appear to be inflating the price of COVID-19 diagnostic and antibody tests, according to a recent America’s Health Insurance Plans (AHIP) survey. The October 2020 survey reports that out-of-network providers, as a whole, were charging higher prices for nearly half of the COVID-19 diagnostic tests and a third of antibody and antigen tests—a 10% increase since July. As the AHIP reports, nearly half of all out-of-network diagnostic testing exceeded $185, with between 9% and 16% of out-of-network test claims charging “more than $390 (three times the average cost).”) The amount of COVID-19 tests administered out of network…
China has a very different approach to price gouging restrictions than the state level system in place in the United States. As the Chinese market is of particular importance to our readers and their businesses, operators may benefit from unpacking the anti-price gouging rules contained in national laws and the reinforcing measures against price gouging adopted by Chinese regulators since the outbreak of the COVID-19.…
Although much of the coverage relating to price gouging enforcement has focused on bad actors hoarding pandemic-related goods, businesses that make good faith efforts to comply with the panoply of price gouging restrictions may nevertheless find themselves in the crosshairs. The relevant statutes typically impose a form of strict liability, and do not take motive into account as we have discussed. Even if we assume that states should be able to freeze prices out of their desire to protect their citizens, it is not clear that states should impose strict criminal liability for price gouging violations.…
We continue to cover the patchwork of price gouging laws and enforcement actions brought under them, providing an overview of the current legal landscape. We are also following and will report on the application of price gouging restrictions outside the U.S. In this post, we provide an overview of price gouging restrictions applied by several jurisdictions that may be important to our readers.…
As mentioned in our previous post, the legality of state Governors’ emergency powers have come under scrutiny during the pandemic. Michigan’s Supreme Court, for example, recently struck down Governor Gretchen Whitmer’s emergency powers. The Hawaii Circuit Court, however, recently dismissed a legal challenge to Hawaii Governor David Ige’s emergency powers. In response to the victory, Hawaii Attorney General Clare Connors stated “[t]his decision sends an important message at an important time—the Governor’s emergency proclamations are lawful. By continuing to follow these rules, all residents and visitors protect each other and promote public health during this pandemic crisis.”…
If there is a silver lining to the extended application of most state price gouging laws, it is that we now know more about their ramifications. State attorneys general have launched numerous investigations and brought many lawsuits, and several class actions have been filed by consumers against companies for alleged price gouging up and down the supply chain. Insights can be gleaned from these price gouging-related suits to understand the “anatomy” of these suits, including what they allege, how to avoid them, and, when necessary, how to defend against them.…
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.”…
Since the beginning of the pandemic, many governors have issued executive orders targeted at combating price gouging. However, one California state senator, Senator Thomas Umberg, proposed going a step further. In April 2020, Senator Umberg introduced Senate Bill 1196, which would codify many of the provisions in California Governor Gavin Newsom’s Executive Order N-44-20. On September 30, 2020, Governor Newsom signed the bill into law. In connection with the signing, Senator Umberg stated that “[t]his decisive action ensures that fewer of our neighbors will be victims of price gouging.”…
Florida Governor Ron DeSantis recently made headlines around the country by announcing that he was lifting physical distancing restrictions on restaurants and other businesses in Florida. The Governor’s order allows restaurants to open at full capacity, and prevents cities and counties from ordering them to operate at less than half capacity unless justified by health or economic reasons. Florida cities and counties are also barred from collecting fines for violations of social distancing or mask rules. But, while such actions may seem to indicate an imminent return to something resembling normalcy, or at least the end of widespread social distancing…