December 2020 Antitrust Health Care Chronicle Vol. 34, Issue 1
Price-Gouging enforcement during the covid-19 pandemic
Since the beginning of the COVID-19 pandemic, federal and state agencies have emphasized through public statements and enforcement actions that they are on the lookout for unlawful price gouging. With ongoing shortages of personal protective equipment and surging demand for health care products, pricing in the health care industry is likely to be under intense scrutiny as the pandemic continues. This article will summarize recent statements and actions by federal and state antitrust enforcers regarding price gouging, which provide insight into customary practices for enforcement in the health care and pharmaceuticals sector. materials or materials the supply DOJ is Leading Federal of which would be threatened by” accumulation beyond reasonable demands or for the purpose of resale Gouging at excessive prices.4 Any person who willfully accumulates designated The U.S. Department of Justice (“DOJ”) materials for a prohibited purpose has taken the lead on price gouging at the federal level by creating and/or imprisonment for up to one the COVID-19 Price Gouging Task year.5 The DPA does not create any Natalie Hayes1 Force to monitor and investigate related private right of action, so allegations of unlawful price gouging Associate, Weil, Gotshal & enforcement is solely within the and by bringing criminal cases Manges, LLP purview of government enforcers. against alleged price gougers. The Federal Trade Commission (“FTC”), On March 23, 2020, President Trump in contrast, is unlikely to take action issued an executive order delegating regarding price gouging without new his authority under Section 102 to legislation because the FTC’s current the Secretary of Health and Human statutory mandate may not include 2 Services (“HHS”) to “prevent hoarding price gouging. of health and medical resources necessary to respond to the spread Federal Legal Authority of COVID-19 within the United States.”6 Shortly after the President The Defense Production Act of 1950 issued the executive order, HHS (“DPA”) allows the DOJ to bring designated 15 categories of health criminal charges related to price care items as scarce materials subject gouging in certain circumstances. to Section 102 of the DPA, including The DPA does not explicitly prohibit ventilators and related materials, high prices; instead, it provides for hydroxychloroquine, sterilization criminal penalties against anyone services, disinfecting devices, who accumulates certain materials several types of respirators, and “for the purpose of resale at prices in 3 several types of personal protective excess of prevailing market prices”. equipment.7 The initial designation Under Section 102 of the DPA, the President has broad authority to 2020, HHS extended the designation designate materials that are “scarce for another 120 days and designated
1 The author is an associate in the Litigation 3 Defense Production Act of 1950 §§ 102-103, 50 Department at Weil, Gotshal & Manges LLP. Any U.S.C. §§ 4512-3 (2018). views expressed are those of the author alone at the time of publication and do not necessarily 4 Id. at § 4512 5 Id. at § 4513.
2 Letter to The Honorable Joseph Simons, Chairman, 6 Exec. Order No. 13910, 85 Fed. Reg. 17,001 (2020). FDuring a legislative hearing, FTC Chairman Joe Simons was asked whether the FTC currently 7 Notice of Designation of Scarce Materials or has enough authority to address price gouging. Threatened Materials Subject to COVID-19 Hoarding Chairman Simons responded, “no, we don’t really Prevention Measures Under Executive Order 13910 think that we have the authority now to do it. It is and Section 102 of the Defense Production Act of Teleconference 1950, 85 Fed. Reg. 17592 (Mar. 25, 2020), https:// Forum with FTC Chairman Simons Before the Subcomm. on Consumer Prot. and Commerce of the H. Comm. on Energy & Commerce, 116th Cong. (2020), https://www.youtube.com/watch?v=kalFV_ 23 K4G1E&feature=youtu.be. December 2020 Vol. 34, Issue 1
additional scarce materials, the National Center for Disaster HHS designated certain materials as including certain materials used for Fraud. scarce under the DPA. In April 2020, isolation of viral genetic materials the first case was filed against and testing, drug products U.S. Attorney Carpenito recently Amardeep Singh for hoarding recommended by the National spoke about the DOJ’s approach to personal protective equipment in Institutes of Health to treat COVID- investigating allegations of price New York and reselling the 19, and alcohol-based sanitizers.8 gouging and acknowledged that the equipment at a substantial markup task force is focused on in his retail store.14 Singh allegedly DOJ COVID-19 Hoarding and profiteering—not on high prices received at least 40 shipments of Price Gouging Task Force charged by resellers with higher- facemasks and 14 shipments of than-typical costs. Carpenito said: surgical gowns, including some that On March 24, 2020, Attorney had been designated as scarce by General William Barr created the When the task force sees HHS.15 Singh then allegedly sold COVID-19 Hoarding and Price substantially higher prices, it these and other medical, Gouging Task Force within the DOJ inquires whether the disinfecting, and personal protective to investigate and prosecute those legitimate costs of the equipment products at prices in who violate the DPA.9 The task force reseller are high. If, in order excess of prevailing market prices.16 is led by Craig Carpenito, the U.S. to turn any profit or simply These sales allegedly included sales Attorney for the District of New break even, the reseller must of three-ply disposable masks at a Jersey, with assistance from the set a high resale price, even a markup of 1,328%.17 Investigators Antitrust Division’s Criminal Section, price much higher than other found more than 100,000 face and is composed of experienced transactions in the market, the masks, 10,000 surgical gowns, DOJ attorneys from around the fact that the reseller is not nearly 2,500 full-body isolation suits, country.10 The task force’s mission is profiteering is important for and more than 500,000 pairs of 12 to address market manipulation, us to consider. disposable gloves during a search of hoarding, and price gouging related Singh’s warehouse and retail store to COVID-19 and to coordinate the Moreover, according to Carpenito, on April 14, 2020.18 investigation and prosecution of the task force will consider if a these activities across the U.S.11 As reseller is charging a price Shortly after bringing the case part of this mission, the task force substantially higher than the against Singh, the DOJ brought has created a reporting system for traditional price for a product but another case in New York, charging complaints about hoarding or price has costs that are generally in line Kent Bullock and William Young Sr. gouging of medical items through with costs of a traditional with violation of the DPA by 13 distributor. knowingly and intentionally
8 conspiring to accumulate personal Extension of Designation of Scarce Materials Federal Investigations and or Threatened Materials Subject to COVID-19 Hoarding Prevention Measures Under Enforcement Actions Executive Order 13910 and Section 102 of the 14 Press Release, Dep’t of Justice, Long Island Man Charged Under Defense Production Act Defense Production Act of 1950, 85 Fed. Reg. The DOJ has brought at least four 45895, with Hoarding and Price-Gouging of Scarce https://www.govinfo.gov/content/pkg/FR- criminal price gouging cases since Personal Protective Equipment (Apr. 24, 2020-07-30/pdf/2020-16458.pdf. 2020), https://www.justice.gov/usao- edny/pr/long-island-man-charged-under- 9 12 Memorandum from Att’y Gen. William Barr COVID-19 Fraud: Law Enforcement’s Response defense-production-act-hoarding-and-price- for Heads of Dep’t Components and Law to Those Exploiting the Pandemic Before the S. gouging-scarc-0. Enforcement Agencies, All U.S. Attorneys Comm. on the Judiciary, 116th Cong. 1 (2020) 15 (Mar. 24, 2020), (emphasis added) (joint statement of William Id. https://www.justice.gov/file/1262776/downlo Hughes, Assoc. Deputy Att’y Gen., and Craig 16 Id. ad. Carpenito, U.S. Att’y for the District of New Jersey). 17 Id. 10 Id. 13 Id. 18 Id. 11 Id.
24 December 2020 Vol. 34, Issue 1
protective equipment, including different model of N95 mask that The DOJ’s recent activities and KN95 respirators and surgical masks cost him $10 each.24 enforcement actions, including for the purpose of “resale at prices Carpenito’s testimony and in excess of prevailing market Ronald Romano, a used car statements by U.S. Attorneys, prices”.19 Bullock and Young salesman, was also arrested on May suggest that the DOJ will continue to allegedly sought to resell one million 26 and charged with violating the investigate and bring enforcement KN95 respirators in New York at a DPA.25 Romano allegedly attempted actions against price gouging for the substantial markup between March to acquire N95 respirators for resale duration of the pandemic. and April 2020.20 In at least one to the City of New York at a 400% instance, the alleged price markup over the list price and Key State Statutes and three-ply facemasks for resale to the represented a 300% to 400% Recent Enforcement increase compared with pricing State of Florida at a markup of more before the COVID-19 pandemic.21 than 500% over the manufacturer’s Actions price.26 On May 26, 2020, Richard Schirripa The DOJ is not the only enforcement was arrested on charges of price Other DOJ Activity agency investigating price gouging. gouging in the sale of N95 Many states have statutes that respirators.22 Schirripa, a In addition to the activities of the prohibit price gouging in certain pharmacist, allegedly spent task force, many U.S. Attorneys have circumstances, and state attorneys $200,000 to acquire N95 respirators expressed interest in investigating general have indicated they will take for the purpose of reselling them at price gouging, for example by calling action to stop price gouging during a substantial markup.23 According to on hospitals and other health care the pandemic. According to the the DOJ, Schirripa charged $25 per providers to report price gouging.27 National Conference of State mask for N95 masks that cost him Legislatures, at least 30 states have $20 each and $15 per mask for a statutes addressing price gouging 24 Id. that may be relevant during the
25 28 19 Complaint and Affidavit in Support of Press Release, Dep’t of Justice, New Jersey pandemic, and many of these Application for Arrest Warrants at 1, United Man Arrested For $45 Million Scheme To statutes include provisions Defraud And Price Gouge New York City States v. Bulloch, No. 20-MJ-327 (E.D.N.Y. Apr. regarding price gouging of medical 27, 2020), https://www.justice.gov/usao- During COVID-19 Pandemic (May 26, 2020), edny/press-release/file/1271741/download; https://www.justice.gov/usao-sdny/pr/new- products or supplies. Enforcement see also Press Release, Dep’t of Justice, Two jersey-man-arrested-45-million-scheme- by government agencies is often defraud-and-price-gouge-new-york-city- Individuals Arrested for Conspiring to Violate critical because many of the statutes the Defense Production Act (Apr. 28, 2020), during. do not create a private right of https://www.justice.gov/usao-edny/pr/two- 26 Id. individuals-arrested-conspiring-violate- action. This section will highlight defense-production-act [hereinafter DOJ 27 See, e.g., Jay Town, U.S. Attorney for the Press Release on DPA Violation]. Northern District of Alabama, Letter to statutes and recent activities Healthcare Officials (Apr. 15, 2020), relating to price gouging in four 20 DOJ Press Release on DPA Violation, supra https://www.justice.gov/usao-ndal/press- note 19. release/file/1269071/download (stating that 21 Complaint and Affidavit in Support of the HHS designation of scarce items triggered Application for Arrest Warrants, supra note “both criminal and civil enforcement DeVillers, U.S. Attorney for the Southern District of Ohio, Letter to Hospital Executives, 19, at 23. remedies that [his] office will aggressively enforce.” (emphasis in original)); Halsey B. (Apr. 7, 2020), https://www.justice.gov/usao- 22 Press Release, Dep’t of Justice, Licensed Frank, U.S. Attorney for the District of Maine, sdoh/pr/us-attorney-devillers-sends-letter- Pharmacist Charged With Hoarding And Price Letter to Maine Medical Association and hospital-executives-promoting-partnership- Gouging Of N95 Masks In Violation Of Maine Hospital Association (Apr. 14, 2020), thwarting. Defense Production Act (May 26, 2020), https://www.justice.gov/usao-me/press- 28 Heather Morton, Price Gouging State https://www.justice.gov/usao- release/file/1268796/download; Robert M. Statutes, NAT’L CONFERENCE OF STATE LEG., (Mar. sdny/pr/licensed-pharmacist-charged- Duncan Jr., U.S. Attorney for the Eastern 30, 2020), hoarding-and-price-gouging-n95-masks- District of Kentucky, Letter to Hospital violation-defense. https://www.ncsl.org/research/financial- Executives (Apr. 14, 2020), services-and-commerce/price-gouging-state- https://www.justice.gov/usao-edky/press- 23 Id. statutes.aspx. release/file/1268681/download; David M.
25 December 2020 Vol. 34, Issue 1
major states: California, Florida, as a factor in deciding whether price California Attorney General Xavier New York, and Texas.29 gouging is unlawful, which is similar Becerra has indicated that his office to the DOJ task force approach of is on the lookout for price gouging, California considering increased costs when including price gouging of health evaluating alleged price gouging care products, through a series of During declared emergencies, under the DPA. However, the public announcements. The first Section 396 of the California penal California statute goes further than announcement, on March 4, 2020, code prohibits the sale of certain DOJ’s policy by setting out a specific specifically identified medical goods and services (including formula for determining whether a supplies as a category of goods medical supplies) “for a price of price increase is justified by a cost covered by California’s price gouging more than ten percent greater than increase.34 law.38 On March 20, 2020, Becerra the price charged by” the same issued a statement calling for online seller for the same items As drafted, Section 396 may not platforms to take steps to stop price “immediately prior to the apply to a seller that begins offering gouging, including price gouging of proclamation or declaration of a good or service for the first time surgical masks on their platforms.39 emergency.”30 Violations of the after an emergency is declared Just a few days later, Becerra issued statute are punishable by because a new seller will not have a another statement emphasizing that imprisonment for up to one-year comparative pre-emergency price. California’s price gouging law not and/or a fine of up to $10,000.31 To address this issue, California only applies to retailers, but also Although this appears to be a clear- Governor Gavin Newsom issued an applies to manufacturers, cut prohibition on prices above a executive order on April 4, 2020.35 wholesalers, and distributors.40 In certain level, the statute also Executive Order N-44-20 prohibits the same statement, Becerra said provides an exception that permits sellers who did not offer an item for higher prices if the seller can show sale before the emergency from filed-against-los-angeles-county-pharmacist the increase in price was “directly charging a price that is 50% more [hereinafter Charges Filed Against L.A. Pharmacist]. attributable to additional costs.”32 If than either the amount paid for the 38 the seller can show increased costs, item or the cost to produce the Press Release, Cal. Att’y Gen. Xavier Becerra, Attorney General Becerra Issues 36 then the price may be up to ten item. Refusing to follow or willfully Consumer Alert on Price Gouging Following percent greater than (1) the total neglecting to obey the executive Statewide Declaration of Emergency for Novel Coronavirus Cases in California cost to the seller plus (2) the markup order is punishable by Communities (Mar. 4, 2020), customarily applied by the seller for imprisonment for up to six months https://www.oag.ca.gov/news/press- the same goods or services in the and/or a fine of up to $1,000.37 releases/attorney-general-becerra-issues- consumer-alert-price-gouging-following- ordinary course immediately prior statewide. 33 to the onset of the emergency. 39 34 Id. Press Release, Cal. Att’y Gen. Xavier Thus, California law considers costs Becerra, Attorney General Becerra Calls on 35 Cal. Exec. Order N-44-20 (2020), Online Marketplaces to Up Their Game to https://oag.ca.gov/news/press- Combat COVID-19 Price Gouging on Their 29 While the issues that arise in these major releases/attorney-general-becerra-and- Platforms (Mar. 20, 2020), states are illustrative of the types of issues alameda-county-district-attorney- https://oag.ca.gov/news/press- that may arise under state law in other o%E2%80%99malley-announce. The releases/attorney-general-becerra-calls- jurisdictions, this analysis should be executive order also sets February 4, 2020 as online-marketplaces-their-game-combat- considered a starting point for analysis of the date used to determine pre-disaster covid-19. statutes in other jurisdictions and not a prices for purposes of analyzing prices under 40 Section 396 of the California Penal Code. Press Release, Cal. Att’y Gen. Xavier comprehensive summary of issues that may Becerra, Attorney General Becerra Reminds arise at the state level. 36 Id. Wholesalers and Manufacturers They are 30 CAL PENAL CODE § 396 (2019). 37 Subject to California’s Price Gouging Law Press Release, Cal. Att’y Gen. Xavier (Mar. 27, 2020), 31 Becerra, Attorney General Becerra: Charges Id. https://oag.ca.gov/news/press- Filed Against Los Angeles County Pharmacist 32 Id. releases/attorney-general-becerra-reminds- for Price Gouging on Masks (June 18, 2020), wholesalers-and-manufacturers-they-are- https://oag.ca.gov/news/press- 33 Id. subject. releases/attorney-general-becerra-charges-
26 December 2020 Vol. 34, Issue 1
“it’s imperative that we stop price under the statute if it (1) represents 501.160 during the COVID-19 State gouging anywhere in the supply a “gross disparity” from the average of Emergency, including health care chain.”41 price for the same product or products such as protective masks, service in the ordinary course of personal protective equipment, and Becerra has also brought at least business 30 days before the COVID-19 test kits and related one criminal case related to price declaration or (2) grossly exceeds medical supplies.53 Moody also gouging for health care products. the average price of the same made clear that price gouging would On June 18, 2020, Becerra’s office product or service in the trade area be a focus for the Attorney General’s announced criminal charges against 30 days before the declaration.47 office by creating a “rapid response Katrin Golian, an independent However, similar to California’s team ready to immediately respond business owner in Los Angeles, for statute, the Florida statute provides to allegations of price gouging” in selling KN95 respirators at a markup an exception if the price is early March.54 of more than 50%, in violation of “attributable to additional costs Newsom’s April Executive Order.42 incurred in connection with the Between March 10, 2020, when the Becerra’s office began investigating rental or sale” of the product or hotline was activated, and Golian following a consumer service.48 The statute provides for September 1, 2020, Moody’s office complaint and found that Golian civil penalties of up to $1,000 per made more than 9,500 referrals and had purchased respirators for $5 violation and up to $25,000 for contacts to merchants about price each, which she subsequently sold multiple violations in the same 24- gouging, issued 92 subpoenas for $10 each.43 Investigators warned hour period.49 The Florida statute related to price gouging Golian that the prices violated the does not create a private right of investigations, and worked to executive order, but Golian was still action, instead leaving enforcement deactivate 250 online posts offering selling the masks for $10 each when to government agencies.50 items at allegedly high prices.55 agents returned several days later Moody’s office has also recovered and purchased masks while Florida Attorney General Ashley more than $1 million in COVID-19 undercover.44 Following the sales to Moody activated the state’s Price related enforcement actions, at the undercover agents, Golian was Gouging Hotline on March 10, least some of which relate to price arrested.45 2020,51 one day after Florida gouging.56 Governor Ron DeSantis issued an Florida executive order declaring a state of emergency related to COVID-19.52 Florida also has a statute prohibiting Moody published a list of prices above a certain level, but with commodities covered under § civil rather than criminal penalties. 53 Fla. Att’y Gen. Ashley Moody, Commodities Florida Statute § 501.160 prohibits Covered Under the COVID-19 State of 47 the sale of essential commodities Id. Emergency, (last visited June 26, 2020), http://myfloridalegal.com/webfiles.nsf/WF/TD during a declared state of 48 Id. GT- emergency at “unconscionable 49 FLA.STAT. § 501.164 (2019). BN7LNS/$file/Commodities+Covered+Under+ 46 COVID+SOE.pdf. prices.” A price is “unconscionable” 50 § 501.160. 54 Moody Activates Price Gouging Hotline, 51 Press Release, Fla. Att’y Gen. Ashley Moody, 41 supra note 51. Id. Attorney General Moody Activates Price 55 42 Charges Filed Against L.A. Pharmacist, supra Gouging Hotline (Mar. 10, 2020), Press Release, Fla. Att’y Gen. Ashley Moody, note 37. http://www.myfloridalegal.com/newsrel.nsf/n Attorney General Moody Recovers More than ewsreleases/126AC86DF86F94348525852700 $1 Million for Consumers Amid COVID-19 43 Id. 5F9BDE [hereinafter Moody Activates Price Pandemic (Sept. 1, 2020), 44 Id. Gouging Hotline]. http://www.myfloridalegal.com/newsrel.nsf/n 52 ewsreleases/379A2AF75B6C4390852585D600 45 Id. Fla. Exec. Order 20-52 (2020), 53BBD4?Open&. http://myfloridalegal.com/webfiles.nsf/WF/GP 46 FLA.STAT. § 501.160 (2019). EY-BMKH4K/$file/Virus+SOE.pdf. 56 Id.
27 December 2020 Vol. 34, Issue 1
New York emergency related to COVID-19, which passed and was subsequently providing a clear basis for signed by Governor Cuomo on June Before the COVID-19 pandemic, enforcement under the price 6, 2020,68 expanded the goods and New York’s price gouging statute gouging statute.63 In the press services covered by the statute prohibited the sale of “consumer release announcing the declaration, beyond “consumer” goods and goods and services vital and Governor Cuomo’s office rolled out explicitly added coverage for necessary for the health, safety and a hotline and website where “essential medical supplies and welfare of consumers” at “an consumers could report price services”.69 The revised statute: unconscionably excessive price” gouging.64 Just three days later, New during a market disruption.57 The York Attorney General Letitia James Prohibits the sale of “goods and statute’s definition of market announced the first cease-and- services vital and necessary for disruption includes any cause of desist orders related to price the health, safety and welfare of market disruption “which results in gouging during the pandemic, which consumers or the general public” the declaration of a state of related to hand sanitizer and at an unconscionably excessive emergency by the governor.”58 disinfectants being sold in New York price.70 Under the pre-pandemic statute, City.65 In the same announcement, “consumer goods” meant those James made clear that the Attorney Defines “goods and services” to “used, bought or rendered primarily General’s office would “remain include “consumer goods and for personal, family or household vigilant in ensuring [they] find and services” as covered by the purposes.”59 The statute also stop such unlawful activity and previous version of the statute, permitted defendants to rebut “a continue to ask the public to report “essential medical supplies and prima facie case with evidence that suspected fraud, scams, or price services used for the care, cure, additional costs not within the gouging”.66 mitigation, treatment, or control of the defendant were prevention of any illness or imposed on the defendant for the Within days of the COVID-19 disease” and “any other essential goods and services.”60 The penalty emergency declaration, New York goods and services used to for violating the price gouging state legislators announced a new promote the health and welfare of 71 statute was a civil penalty of up to bill to strengthen and expand the the public.” $25,000 and, where appropriate, price gouging statute.67 The bill, restitution.61 Much like Florida’s Allows a defendant to rebut a prima facie case by showing that statute, the pre-COVID New York 63 N.Y. Exec. Order No. 202 (2020), statute did not create a private right https://www.governor.ny.gov/news/no-202- of action. Instead, the statute left declaring-disaster-emergency-state-new- of Emergency” Due To COVID-19 (Mar. 11, york. enforcement to the Attorney 2020) 64 Press Release, N.Y. Gov. Andrew Cuomo, At https://www.nysenate.gov/newsroom/press- General.62 Novel Coronavirus Briefing, Governor Cuomo releases/brad-hoylman/legislators-rally-crack- Declares State of Emergency to Contain down-price-gouging-after-new-york. Spread of Virus (Mar. 7, 2020), On March 7, 2020, Governor Andrew 68 Press Release, N.Y. Att’y Gen. Letitia James, Cuomo declared a state of https://www.governor.ny.gov/news/novel- Attorney General James’ Price Gouging coronavirus-briefing-governor-cuomo- Authority Strengthened After Governor declares-state-emergency-contain-spread- Cuomo Sings New Bill Into Law (June 6, 2020) virus. https://ag.ny.gov/press- 57 N.Y. GEN.BUS.LAW § 396-R (2019) (emphasis 65 Press Release, N.Y. Att’y Gen. Letitia James, release/2020/attorney-general-james-price- added). AG James: Price Gouging Will Not Be gouging-authority-strengthened-after- 58 Id. Tolerated (Mar. 10, 2020), governor-cuomo [hereinafter NY Signs New https://ag.ny.gov/press-release/2020/ag- Price Gouging Bill into Law]. 59 Id. james-price-gouging-will-not-be-tolerated. 69 N.Y. GEN.BUS.LAW § 396-R (2020) (emphasis 60 Id. 66 Id. added to show revisions). 61 70 Id. 67 Press Release, N.Y. State Sen. Brad § 396-R. Hoylman, Legislators Rally To Crack Down On 62 Id. 71 Id. Price Gouging After New York Declares “State
28 December 2020 Vol. 34, Issue 1
“(1) the increase in the amount Texas addresses price gouging prevent disaster scams and stands charged preserves the margin of under its deceptive trade practices ready to prosecute any price-gouger profit that the defendant received statute. For certain goods and who takes advantage of those taking for the same goods or services services, the statute prohibits (1) precautions and looking for safety prior to the abnormal disruption selling or leasing at an “exorbitant and supplies.”80 Since then, Paxton of the market or (2) additional or excessive price” or (2) demanding has filed one enforcement action costs not within the control of an “exorbitant or excessive price” in related to price gouging of health the defendant were imposed on connection with such sales during a care products.81 In that case, the defendant for the goods or designated disaster period.76 The Paxton’s office alleges an online services.”72 term “exorbitant or excessive price” auction site listed face masks and is not defined in the statute and N95 respirators for sale with some Provides for a civil penalty of up there is no explicit provision of the respirator masks being bid up to $25,000 “per violation or three providing for a defense based on to over $10 per mask.82 times the gross receipts for the cost increases. The statute enables relevant goods or services, government enforcers to seek Conclusion whichever is greater” and, where equitable relief and civil penalties of 73 appropriate, restitution. up to $10,000 per violation, plus an The DOJ and state attorneys general additional amount of no more than are likely to continue scrutinizing Upon the enactment of the revised $250,000 if the victim was over 65 prices and investigating price statute, Attorney General James 77 years of age. Unlike Florida and gouging throughout the COVID-19 made clear that her office will New York, the Texas statute also pandemic. Given the nature of the continue to investigate and bring provides for a private right of action emergency and ongoing shortages enforcement actions related to price for those harmed by price of personal protective equipment gouging, stating that “New Yorkers 78 gouging. and other medical supplies, health can rest assured that our office will care pricing in particular is likely to fight every day to ensure they are Texas Governor Greg Abbott remain in the news. When not taken advantage of during the declared a statewide disaster evaluating price increases on health coronavirus pandemic or any other related to COVID-19 on March 13, care products during the pandemic, emergency our state may face in the 79 2020. The same day, Texas one factor to consider is the risk for future.”74 Although James’ office has Attorney General Ken Paxton said, criminal and civil liability at both the not brought any enforcement “[m]y office will work aggressively to federal and state level. Because actions related to health care each state has its own statutes— products under the revised statute, 76 which may or may not permit price the press release regarding the TEX.BUS.&COM.CODE § 17.46 (b)(27) (2019). Note that Texas also prohibits increases that are attributable to revisions noted the office has unconscionable prices for health care cost increases—sellers should received more than 7,000 price treatment at emergency facilities. This provision is not limited to declared consider all relevant statutes and gouging complaints and has issued emergencies and does not create any private executive orders in any state where more than 1,500 cease-and-desist EX US OM ODE rights of action. T .B .&C .C § products will be sold. orders.75 17.464 (2019). 77 The total penalty is not to exceed $50,000. Texas TEX.BUS.&COM.CODE § 17.47 (2019). 80 Id. 78 TEX.BUS.&COM.CODE § 17.50 (2019). 81 Press Release, Att’y Gen. Ken Paxton, AG 72 79 Id. Press Release, Att’y Gen. Ken Paxton, AG Paxton Files Lawsuit to Halt Price Gouging at Paxton Warns of Price Gouging as Texans 73 Auctions Unlimited LLC (Mar. 26, 2020), Id. Prepare to Prevent the Spread of Coronavirus https://www.texasattorneygeneral.gov/news/ 74 NY Signs New Price Gouging Bill into Law, (Mar. 13, 2020), releases/ag-paxton-files-lawsuit-halt-price- supra note 68. https://www.texasattorneygeneral.gov/news/ gouging-auctions-unlimited-llc. releases/ag-paxton-warns-price-gouging- 75 Id. texans-prepare-prevent-spread-coronavirus. 82 Id.
29