In the early days of the pandemic, COVID-19 was synonymous with a mad dash for anti-virus home items like hand sanitizer, toilet paper, and anti-bacterial wipes. Amazon emerged from the shopping frenzy as key source of these products and hosts of others. Even as many states are lifting states of emergency, businesses active during the pandemic, such as Amazon, are facing suits for conduct during the pandemic. 

On July 2, 2021, a group of consumers filed a proposed class action complaint in Washington federal court against Amazon alleging “unlawful price gouging during the COVID-19 pandemic.” The plaintiffs bring three counts against the e-commerce giant: (1) violation of the Washington Consumer Protection Act (“WCPA”); (2) negligence; and (3) unjust enrichment.

Plaintiffs highlight that Amazon’s sales have increased more than 1,000 percent since the beginning of the pandemic and describe price increases on a range of products. Specifically, plaintiffs allege that Amazon unlawfully raised prices on face masks, cold remedies, toilet paper, pain reliever, black beans, baking soda, flour, yeast, and disinfectant wipes.

The plaintiffs paint a picture of prices increasing by between 233% and 1,800% since the U.S. Department of Health and human Services declared a public health emergency related to COVID-19. Plaintiffs allege that Amazon is responsible not only for increased prices on Amazon branded or owned produces, but also for products sold by third-parties on its platform. Plaintiffs cite several instances where Amazon branded products were sold well above the pre-pandemic price.

Additionally, early in the pandemic Amazon acknowledge that price increases were occurring on its platform and committed to removing third-party sellers who engaged in price gouging. Plaintiffs have alleged that such independent, third-party activity can be imputed to Amazon, and rest their case on Amazon’s policies—including “Sold by Amazon,” the “Minimum Gross Proceeds” price, and “Automated Pricing” services—for third-party sellers.  With these policies, the Plaintiffs allege, Amazon is “[f]ar from serving as a passive intermediary,” but instead the company “controls the sale and marketing of all third-party products on its platform.” Plaintiffs also point to Amazon’s ability to set prices, set price ceilings, and “retains the ultimate right to reject a price.”

Unlike many U.S. states, Washington does not have an explicit price gouging statute. Plaintiffs, therefore argue that the WCPA, which prohibits “unfair or deceptive acts or [trade] practices,” effectively includes a price gouging prohibition. Plaintiffs acknowledge that there is no explicit percentage cap on price increases.  Instead Plaintiffs ask the court to adopt a rule which establishes that 15% price increase during an emergency constitutes an unfair trade practice in violation of the WCPA. Plaintiffs also point to the fact that Washington Attorney General Bob Ferguson throughout the pandemic has invoked the WCPA to issue numerous cease-and-desist letters barring price gouging.

Amazon is continuing its investigation into the allegations in the complaint and the parties recently agreed to extend the deadlines to respond to the complaint.  As Amazon litigates this case in Washington, related business should prepare for possible claims from consumers.

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Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

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Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels…

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels on antitrust compliance. Chris is also the founder and leader of the firm’s Price Gouging Practice, and is one of the key thought leaders in this space.

Chris handles antitrust matters for clients in a number of industries, including food and agriculture, financial services, media, telecom, technology, e-commerce, consumer products, natural resources, oil and gas, chemicals, and pharmaceuticals.  He also serves as outside counsel to a large number of industry groups, including trade associations and cooperatives.

Chris has been recognized as a leading antitrust practitioner by Chambers, noting that clients describe him as “our primary thought partner – he’s very good at explaining the complex issues and making them easy to understand” and praising “his strong advocacy skills”; by The National Law Review as a “Go To Thought Leader 2020”; by Acritas as a “Star” in multiple years; by Benchmark Litigation as a National Litigation Star 2021; and by The Legal 500 United States for Antitrust: Civil Litigation/Class Actions.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.

Photo of Shannon D. McGowan Shannon D. McGowan

Shannon McGowan is an associate in the Litigation department.  Shannon’s practice focuses on assisting clients navigate a range of antitrust issues.  In addition to her experience on wide-ranging antitrust litigations, Shannon works with clients on general antitrust compliance and litigation issues.  In connection…

Shannon McGowan is an associate in the Litigation department.  Shannon’s practice focuses on assisting clients navigate a range of antitrust issues.  In addition to her experience on wide-ranging antitrust litigations, Shannon works with clients on general antitrust compliance and litigation issues.  In connection with historic restructuring of Puerto Rico’s debts, Shannon advises the Financial Oversight and Management Board for Puerto Rico on a variety of issues related to Puerto Rico Oversight, Management, and Economic Stability Act.

Shannon maintains an active pro bono practice, including assisting non-profit organizations with research into immigration and refugee law and representing individual clients in litigation to improve housing conditions in the Washington D.C. area.

Shannon earned her J.D. from the University of Virginia School of Law, where she captained the school’s Philip C. Jessup International Law Moot Court team.  As an alumnae, she is active in advising the current UVA Jessup Team throughout the year-long competition.

Prior to law school, Shannon served as a legislative assistant to state representatives at the Oklahoma State House of Representatives, where she researched and advised on legislation and policy issues, including government transparency, education, and financial accountability.