Examining Price-Gouging Allegations During COVID-19 Pandemic
Shook Partner Katie Gates Calderon and Associate Elizabeth Fessler have authored “Best Practices for Food and Beverage Pricing Right Now” for Law360, which discusses how food and beverage companies may face regulatory actions and reputational damage if they are perceived to have raised their prices too much during the COVID-19 pandemic. “With increased demand and potentially increasing production costs due to supply chain disruptions, many in the food and beverage industry may be wondering how to deal with the economic pressures without running afoul of price-gouging statutes,” Fessler and Gates Calderon write.
Many states have different laws governing price-gouging, and those laws often differ on what an acceptable price differential may be. Understanding which state laws apply and documenting all aspects of the reasoning for any price increase are key, they explain, concluding, “If you are contacted about pricing issues, it may be best to contact outside counsel before providing any records or documents to government agents because the laws, and potential defenses, vary by state.”
Price-gouging allegations have already begun to be filed, including a lawsuit brought by the Texas attorney general arguing that Cal-Maine Foods Inc. raised prices for its eggs by 300% and a consumer putative class action seeking “to hold Amazon accountable for its unlawful price increases during the COVID-19 pandemic.” Texas v. Cal-Maine Foods Inc., No. 20205427 (Tex. Dist. Ct., filed April 23, 2020); McQueen v. Amazon.com Inc., No. 20-2782 (N.D. Cal., filed April 21, 2020).