OLYMPIA, Wash. (Legal Newsline) - The Washington Supreme Court has given a boost to price-gouging claims against Amazon, opening the retail giant to new claims over increased costs during the COVID pandemic.
Answering a certified question from Seattle federal court, a 5-2 majority found price-gouging is an unfair trade practice under the state's Consumer Protection Act. The ruling gives a boost to a class action lawsuit filed in 2021 by Hagens Berman, a law firm that often takes on Amazon in court, and caused a dissenting justice to lament being the first state supreme court to recognize such a claim for damages.
Amazon's motion to dismiss that case argued the state Consumer Protection Act does not provide a claim for price-gouging as an unfair trade practice. The presiding judge certified the issue to the Washington Supreme Court in two questions, which the Supreme Court reformulated into three.
The CPA doesn't define the term "unfair," but the court has already found that by using a broad term like that, the state Legislature intended to provide flexibility on its meaning. Key in determining "unfair" is whether the plaintiff suffered a substantial injury as a result of alleged conduct.
"Here, the plaintiffs adequately allege a substantial injury," Justice Helen Whitener wrote. "They each suffered monetary harm as a result of Amazon's alleged acts.
"They each paid higher prices on consumer goods and food items than they otherwise would have prior to the HHS's emergency declaration. Also, they have shown that Amazon's actions had widespread impacts and that Amazon is responsible for the price increases on its own products as well as products supplied by third parties."
And that injury was not reasonably avoidable, the court found, considering restrictions on shopping and bare shelves at physical stores during the early months of the pandemic.
"(E)ach plaintiff alleged that given product scarcity and their respective local government's directives to shelter in place during the pandemic, they had no meaningful choice but to purchase their products from Amazon and that they have not been reimbursed," the ruling says.
Plaintiffs include Alvin Greenberg, a 74-year-old man who bought three bottles of Clorox bleach for $58.19 during a shelter-in-place order. That price represented a 168% increase since January 2020.
Another plaintiff is Michael Steinberg, who paid nearly $40 for a two-pound pouch of yeast - a 469% increase.
So, they can pursue claims under the CPA but it will be up to the presiding judge or a jury to determine if these costs constituted price-gouging. The ruling drew a long dissenting opinion from Justice Sheryl Gordon McCloud, joined by Charles Johnson.
"I do not think that we should be the first court in the nation to create a price-gouging claim based on general statutory language prohibiting 'unfair... acts' in trade or commerce," she wrote.
"The decision about whether to create such a claim and whether to include other market-based elements or defenses should be based on economic policy considerations; weighing those numerous, difficult, competing considerations is the job of the legislature, not the courts."
Though the majority felt the Legislature, when it created the CPA, used broad language to help it evolve, McCloud feels lawmakers directed courts construing its language to be guided by final decisions of federal courts and the Federal Trade Commission.
"No FTC guidance or federal precedent has ever interpreted the prohibition of 'unfair' practices in the FTC Act to categorically bar a post-emergency price increase of 15% or of any other percentage," she wrote.
"And the states that do impose percentage-based limits on post-emergency price increases do so through specific legislation directed at price-gouging or through agency regulation - not through the generally worded ban on unfair business practices found in state consumer protection laws."