Retailer Class Action Targets de Blasio for COVID-19 Price Gouging Fines

New York retailers have lodged a $150 million class action lawsuit against NYC Mayor Bill de Blasio and other officials over “outrageous, illegal, excessive and unconstitutional” COVID-19 price gouging fines.

Lead plaintiff Union Square Supply Inc. and other retailers say in the lawsuit filed in New York federal court this week that fines on price gouging during New York’s state of emergency for the coronavirus pandemic have been assessed unfairly. The plaintiffs claim that retailers hit with the fines face a moving target when it comes to defending themselves.  

New York’s COVID-19 price gouging statute allows the city to assess a fine on retailers who took advantage of consumers by charging excessive prices on products made scarce by supply chain disruptions during the pandemic. Initially, the rule was temporary, but it became permanent in June, notes the lawsuit.  

The plaintiffs say that COVID-19 price gouging fines have devolved. They say they have no idea what the parameters of a price may be or what constitutes as “price gouging.” They also say that the fines have become excessive and that it is impossible for them to defend themselves.  

“The price gouging statute is being applied in an arbitrary manner,” says the lawsuit. “It is constantly evolving by decisions in cases which change the determination of price gouging and defenses.” 

The lawsuit contends that the hearings process purportedly in place for a business to defend itself from COVID-19 price gouging fines is “bogus.” Retailers must first navigate an “outrageously difficult” online process to request a hearing on the fine, according to the class action lawsuit.  

The plaintiff says that then, decisions at these hearings are based on computer printouts from online retailers, such as Amazon, where the products listed are often marked “out of stock.”  

The plaintiff contends that it is unfair for prices offered from out-of-state or national retailers to be compared with those charged by NYC retailers with physical shops who are subject to the city’s taxes and laws.  

Further, contesting or appealing the decisions made at these hearings is “nearly impossible,” says the lawsuit, and appeals result in “outrageous decisions.” 

The class action lawsuit alleges that the COVID-19 price gouging fines have become excessive.  

“For a period of time Defendants had a policy to limit fines to a maximum of $3,000,” notes the complaint. “More recently, the $3,000 maximum fine limit is no longer being honored. Fines for violations in excess of $15,000.00 or more frequently occur.” 

The plaintiff points to a box of personal protective equipment as an example of the excessive fine a retailer may face if they are determined to be price gouging.  

“The Defendants now consider each item in a box of personal protection equipment covered by the price gouging statute to be eligible for a separate violation, (i.e., a box of twenty masks is counted as twenty violations) and charge $350 per violation, violations can be outrageously high compared to the alleged ‘price gouging,’” contends the lawsuit.  

The class action lawsuit is seeking more than $150 million in damages on behalf of other New York retailers along with a court order stopping the assessment of COVID-19 price gouging fines.

Have you been hit with a COVID-19 price gouging fine? We want to hear from you! Tell us about your experience in the comment section below.  

The lead plaintiffs are represented by Robert J. La Reddola of La Reddola, Lester & Associates, LLP.  

The New York COVID-19 Price Gouging Class Action Lawsuit is Union Square Supply Inc v. Mayor Bill De Blasio, et al., Case No. 1:21-cv-02390 in the U.S. District Court for the Southern District of New York.  

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