The COVID-19 pandemic has led to sharp spikes in demand for basic necessities, alcohol-based disinfecting products, and essential food staples. Consumers have been willing to pay a premium to stock up on these items from both brick-and-mortar and online marketplaces.  While there is no federal law establishing clear guidelines regarding price gouging, many states have laws that limit or prohibit sellers from charging excessive prices for certain consumer products, which are triggered by the declaration of an emergency by federal, state, and/or local officials. Plaintiffs’ lawyers and states’ attorneys general have begun bringing state and nationwide class actions for price gouging against suppliers, distributors, and retailers of essential products, and we expect this litigation to increase in coming months.

In this three part series, we provide the statutory landscape and analyze the newly filed litigation, outline some key litigation strategies, and advise on best practices for manufacturers and retailers to minimize risk of litigation or investigation for pricing practices.

PART ONE:  Landscape of COVID-19 Price Gouging Regulation

Part One of this report provides an overview of the statutory landscape governing price gouging and summarizes some of the newly filed cases.

Statutory Landscape

Most of the 50 states have enacted specific laws prohibiting price gouging; in other states, actions are brought under general consumer protection statutes.  Many states’ price-gouging statutes do not provide a private right of action, instead vesting prosecutorial authority in the state attorney general’s office.

While most states prohibit price gouging, the laws vary greatly.  Many states, such as Florida and Massachusetts, prohibit unconscionable price increases.  Pennsylvania’s Price Gouging Act, in contrast, makes it unlawful to charge an “unconscionably excessive” price for goods or services during a declared state of emergency and provides that it is prima facie evidence of an “unconscionably excessive” price when the price of a good/service is 20% higher than the average price of the same good/service in the seven days prior to the declared state of emergency. Other states, such as California and Oklahoma, define price gouging as a price increase of more than 10%.

Most of the states’ statutes automatically go into effect upon the declaration of an emergency and apply to all goods and services.  However, some states limit the application to specific products.  For example, Indiana and Illinois’ price gouging laws apply only to fuel and petroleum, respectively.  Georgia requires the governor to identify which items are protected from price gouging. Others, like California, only prohibit price gouging in connection with as-defined “essential” goods and services.

Several state price gouging statutes provide a complete defense where the seller can prove the price increase was directly attributable to its own rising costs of supply, labor, or materials.

Remedies for price gouging typically include injunctive relief, restitution orders, and civil penalties calculated per violation.  Some statutes also permit disgorgement of profits earned and recovery of costs of litigation.  Other states provide criminal penalties for willful acts of price gouging.  For example, price gougers in Mississippi may be charged with a felony and imprisoned up to 5 years.

As of this publication, there is no federal legislation specifically prohibiting price gouging practices.  On May 15, 2020, the House of Representatives passed the HEROES Act, a $3 trillion stimulus bill designed to provide broad financial relief to individuals, businesses, nonprofit organizations, and state and local governments that have been affected by the COVID-19 pandemic.  The proposed text includes the “COVID–19 Price Gouging Prevention Act,” which would prohibit price gouging and vest enforcement authority in the Federal Trade Commission and states’ attorneys general.  The legislation provides that, during the public health emergency declared as a result of COVID-19, “it shall be unlawful for any person to sell or offer for sale a good or service at a price that—(1) is unconscionably excessive; and (2) indicates the seller is using the circumstances related to such public health emergency to increase prices unreasonably.” Consistent with many state price gouging laws, the proposed legislation includes a number of factors to be considered in determining whether a price is excessive, including whether the price increase is attributable to increased costs.  The Senate has not yet voted on the Act.

We expect plaintiffs to raise the following legal theories underlying their consumer price-gouging claims:

  • Unfair competition laws, such as California’s Unfair Competition Law (California Business & Professions Code 17200). Plaintiffs may allege price gouging is unlawful under California’s Unfair Competition Law, which finds business practices unlawful where prohibited by a specific law.  CA Penal Code section 396 expressly provides a violation can serve as a predicate unlawful act under § 17200.
  • Consumer protection laws, such as New York’s Consumer Protection From Deceptive Acts And Practices, Missouri’s Merchandising Practices Act, or California’s Consumer Legal Remedies Act. Several states’ attorneys general have expressed their intent to bring causes of action under general consumer protection laws.  They will likely allege that intentionally increasing prices on essential goods during a state of emergency is unfair or unconscionable under the consumer protection laws.
  • Quasi-contract/ unjust enrichment. Plaintiffs will likely claim that selling products at higher prices exploits of consumers with weaker bargaining power, and any profits derived constitutes an unjust enrichment.
  • Plaintiffs may allege that suppliers and retailers breached a duty to ensure consumer goods are not sold at excessive prices during a declared emergency.  They will likely cite to prior incidences of price gouging during other emergencies to support the contention that the harm was foreseeable and avoidable.
  • State Antitrust Statutes/Sherman Act. Consumers may allege that online marketplaces have anti-competitive policies that operate to fix prices, thereby violating state and federal regulations.

Litigation Summary

To date, putative state and nationwide class actions related to price gouging have been filed in California, Florida, Texas, and Washington.

In one recent complaint filed suit in federal court in the Northern District of California, the putative class action alleges that one online marketplace, despite indicating an intent to curtail price gouging on its site, continues to encourage the practice by charging a “final value fee” based on the price of the product sold. The lead plaintiff alleges she bought a two-pack of N95 masks on the defendant’s site for $23.98, with the same product selling at other national retailers for no more than $8.99.  The complaint asserts claims for violations of California’s Consumer Legal Remedies Act and Unfair Competition Law.

Another California lawsuit alleges that several companies, including farms and suppliers, have engaged in “the despicable and illegal practice of price-gouging of essential groceries, specifically eggs, in the midst of the ongoing and unprecedented pandemic.” According to the complaint, the price of eggs nearly tripled – to $3 per dozen – at certain retailers between the onset of the coronavirus pandemic and the end of March. A similar class action was filed in federal court in Texas after the Texas Attorney General brought suit accusing Cal-Maine Foods Inc., the nation’s largest egg producer, of price-gouging and profiting illegally off the coronavirus pandemic by selling eggs at more than 300% of their normal cost.

No court has yet considered a dispositive motion or class certification issues in any of these COVID-19 price gouging cases.

PART TWO: Litigation Strategies

As we recently reported, many states have laws prohibiting price gouging that have been triggered by the coronavirus pandemic.  Individual plaintiffs and state attorneys general have begun filing suit to enforce these provisions and discourage price gouging.

In Part Two of this report, we discuss some of the strategies available to defend against price gouging allegations in the class action context.

Dismissal Strategies

Achieving dismissal at the pleading stage in this context may be challenging if courts require nothing more than an allegation regarding the price a consumer paid for a given commodity compared to the pre-COVID price. Possible arguments and theories to develop on a pleadings challenge or summary judgment motion include:

  • Article III Standing.
    • Under some state statutes, consumers do not have a private right of action
    • Some state statutes expressly provide that actual sales at the increased price are not required to prove a violation, while federal practice and some states – like California – require a plaintiff to prove actual injury
  • Some state statutes only apply to certain goods or services.
  • Negligence theories are unlikely to succeed absent a duty of care.
  • Pass-through pricing based on upstream cost increases; many states’ price-gouging laws provide a complete defense where a seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service. Assuming the evidence supports it, this is likely the best defense.
  • Prospective injunctive relief is likely moot because by the time court hears the case, the emergency will have passed.

Class Action Strategy

If a class action survives pleading challenges, defeating class certification or minimizing the size of any class that is certified becomes the main priority.  The initial hurdle for the defense is to develop arguments regarding adequacy, typicality, and superiority to demonstrate that class certification is not appropriate. Broad or fail-safe class definitions should also be challenged to narrow the size of the class.  Arguments regarding potential intra-class conflicts requiring sub-classes, as well as adequate representatives for each sub-class, may also be developed in an effort to narrow class size.

Variations and fluctuations in pricing, and factors influencing pricing decisions, may pose a barrier to class certification by making it more difficult for plaintiffs to establish commonality, typicality, and predominance of common issues over individual questions:

  • If there are localized markets that dictate pricing pre- and post-COVID-19, and that pricing varies by geography and product, class members are not similarly situated.
  • Additional individualized issues may drive pricing and timing of prices, such as store specific supply chain issues, the state and local governments’ responses to COVID-19 and corresponding limitations on permissible retail and consumer activity, and consumer demand.
  • As we discussed in Part One, there are dramatic differences in the laws governing particular jurisdictions, and a pricing practice may be considered “unconscionable” in one local market but not in another.
  • The above variations make it challenging to develop a damages model that applies to all putative class members, as required by controlling law.
  • Class treatment may also be inappropriate because the classes (and sub-classes) are unmanageable due to variations in the above factors.

These individualized legal and factual questions may pose a barrier to class certification.

There are also strategies that may be deployed to limit the scope and size of the class, thereby reducing overall exposure:

  • Many states’ price-gouging laws apply only for a specific, limited time period, often 30 days, following the declaration of an emergency. Consequently, the class should only include individuals who can prove they purchased the product during the relevant time period.
  • State-by-state variations. Nationwide classes regarding price gouging are particularly vulnerable due to significant variations in states’ laws.
    • For example, California’s price-gouging statute prohibits sellers from raising prices above 10% in certain circumstances, whereas New York defines price-gouging more subjective as “unconscionably excessive” of pre-emergency prices.
    • Furthermore, while California affords a consumer a private right of action under the Unfair Competition Law, many other states’ price-gouging laws do not offer a private right of action, or have other requirements, such as actual reliance or deception.
    • Likewise, some price gouging laws are limited to the retailer, while others apply to all parties within the chain of distribution of consumer goods and services. The price gouging laws in New York and Massachusetts, for example, expressly apply to all parties in the supply chain.
    • These variations may render class treatment unmanageable, such that the court may only certify certain classes or sub-classes for specific states and/or specific claims.

Part Three:  Price Gouging Risk Management – Best Practices for Manufacturers and Retailers

In Parts One and Two, we discussed the statutory background and some litigation considerations related to price gouging class actions.  In the final installment of our three part series, we propose best practices for manufacturers and retailers to consider during the national emergency to minimize the risk of a price gouging accusation.

First, it is critical to exercise special care in setting prices during and immediately following the pandemic.  Ideally, prices should be increased only to the extent necessary to offset increased costs of production, labor, supplies, or distribution.  Avoid “opportunistic” price increases that are not driven by costs, and limit the duration of increased prices to an as-needed basis in line with upstream pricing.  Pricing decisions should be reviewed frequently, and companies should consider implementing a process for the staffing, approval, and real-time evaluations of pricing changes during a time of crisis

Second, businesses that involve resellers (such as eBay, Amazon and other similar online marketplaces), should closely monitor prices being charged by resellers to avoid liability for their pricing decisions.  Upstream manufacturers should review operative contracts and consider seeking indemnity from downstream customers in the supply chain.

Third, to avoid antitrust exposure, make independent pricing determinations, and avoid discussing future pricing (maximum or minimum) with competitors.  Companies should ensure that high-risk employees (such as those with pricing or sales responsibilities) are familiar with the antitrust laws, particularly in connection with competitor communications. Manufacturers and retailer should consider circulating a refresher on the key guidelines. If you have not provided antitrust training, consider scheduling a training webinar with antitrust counsel to ensure sales staff is familiar with the antitrust laws and best practices specific to pricing during the pandemic.

Fourth, ensure thorough documentation of all pricing decisions, and establish procedures to maintain all documents reflecting corporate decisions to increase prices based on increased costs due to pandemic, as they may serve as key evidence in the event of a lawsuit or investigation alleging price gouging. Be mindful that documents produced in investigations may be public, and could be used in future litigation.

Finally, if investigated for price gouging, remember to keep in mind the potential of a follow-on class action. Formulating a long-term strategy at the investigative stage will help a manufacturer, retailer or supplier better defend any future litigation.

BCLP has assembled a COVID-19 Class Actions taskforce to assist clients with class action litigation issues across various jurisdictions. You can contact the taskforce at:   You can also view other thought leadership, guidance, and helpful information on our dedicated COVID-19 / Coronavirus resources page at