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Coronavirus Emergency Declarations Trigger Anti-Pricing Gouging Laws

At the time of publication, at least twenty four states, plus Washington D.C. have declared states of emergency related to the novel coronavirus (“COVID-19”), with that number growing by the hour.  In addition to making more resources available to residents, in many cases, the declarations also trigger additional protections to consumers in the form of anti-price gouging laws.  These laws, which automatically go into effect, are intended to prevent merchants from significantly increasing the cost of consumer goods and services during a crisis.

For instance, in New Jersey a ten percent (10%) price increase during an emergency would be unlawful under most circumstances.  In Pennsylvania, there is an assumption that a twenty percent (20%) increase is unlawful, but lower price increases could be deemed unlawful depending on the circumstances.

Even in states without anti-price gouging laws, the declaration of a state of emergency can result in emergency legislation.  For example, Maryland does not currently have an anti-price gouging law in effect, but shortly after the Governor declared a state of emergency, both houses of the General Assembly introduced legislation aimed at limiting increases in consumer goods and services during the emergency to no more than ten percent (10%).

The particulars of the laws vary with each state.  Some states set a percentage above which the merchant cannot increase the price.  Others simply state the price increase cannot be “unconscionable.”  Some laws apply to any party in the distribution chain, whereas others make allowances for increases if the party is simply passing along its own increased cost.  As a result of the differences, ensuring compliance with these laws can be challenging for businesses that provide consumer goods and services in different states, as a one-size-fits all approach will likely not work.  Violations can range from hundreds to tens of thousands of dollars in penalties, injunctions, lawsuits, criminal penalties and/or other measures.

Thus, in addition to balancing all of the other concerns created by the current crisis, employers will also have to be diligent about managing prices for products and services to ensure that they do not run afoul of the emergency anti-price gouging laws that are being triggered by the emergency declarations prompted by the threat of the coronavirus.  This can be challenging where employers sell goods or services in multiple states.

©2020 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume X, Number 73

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About this Author

Anthony Argiropoulos, antitrust attorney, Epstein Becker
Member of the Firm

ANTHONY ARGIROPOULOS is a Member of the Firm in the Litigation and Health Care and Life Sciences practices and Co-Chair of the firm's National Litigation Steering Committee. He represents health care clients, publicly held companies, and other large businesses in high-stakes litigation and dispute avoidance and resolution. He has represented clients in federal and state court matters throughout the United States and his deep experience includes numerous jury trials, bench trials, injunction proceedings, arbitrations, and mediations.

609-455-1541
Sheila Woolson, Epstein Becker Law Firm, Labor and Employment Litigation Attorney
Member

Sheila Woolson is a Member of the Firm in the Employment, Labor & Workforce Management and Litigation practices, in the firm's Newark office. She focuses her practice on complex litigation matters across a wide array of commercial and employment disputes.

Ms. Woolson draws on her training as a chemist and her experience in the pharmaceutical industry as she represents clients in matters involving state and federal environmental disputes, products liability claims, and toxic torts—matters in which her scientific background is a significant asset. In addition, Ms. Woolson uses her experience to assist clients conducting environmental due diligence and remediation in connection with transactions and regulatory obligations.

973-639-8268