In a decision that extends the reach of what constitutes an “unfair practice” under Washington’s Consumer Protection Act (CPA), the Washington Supreme Court recently confirmed that claims of “price gouging” may be actionable under the CPA. Washington does not have a standalone price-gouging statute.
On August 8, 2024, the Washington Supreme Court issued its opinion in Greenberg v. Amazon.com, Inc., answering two certified questions from the Federal Court in the Western District of Washington. The plaintiffs accused Amazon of charging excessively inflated prices on essential goods during the declared state of emergency arising from the COVID-19 pandemic.
Price Gouging as Unfair Practice: The Court ruled that price gouging, characterized by unreasonably inflating prices during an emergency, may be an “unfair” practice under the CPA. In reaching this decision, the Court ruled that the plaintiffs’ allegations, taken as true, satisfied the “substantial injury test” under 15 U.S.C. § 45(n). Importantly, the Court noted that a plaintiff attempting to establish that an act or practice is “unfair” is not limited to the “substantial injury test” or any of the elements of the FTC’s S&H criteria, explaining that “there may even be additional ways that a plaintiff can show that act or practice that is unregulated by statute is unfair.”
No Explicit Price Increase Threshold: The Court declined the plaintiffs’ invitation to declare that a price increase of 15% or more during a declared emergency is “unfair” as a matter of law. The Court reasoned that setting a certain percentage price increase is unlawful and would intrude on the prerogatives of the legislature. Thus, a price increase during a declared emergency is not necessarily prohibited under the CPA; rather, the context, magnitude, and impact of such increases may all be relevant to assessing their fairness and, ultimately, lawfulness.
A Mixed Question of Law and Fact: The Court clarified that whether an act is unfair or deceptive is a mixed question of law and fact. In the context of case-specific claims of unfairness (i.e. not a claim based on another statute or well-established public policy), the Court decides whether an act or practice is unfair if the underlying facts are not in dispute, and where the underlying facts are disputed, a jury decides the matter.
Businesses operating in Washington must keep in mind the broad interpretations of the CPA endorsed by the Supreme Court. Going forward, price increases during times of a declared emergency may form the basis of a claim as an unfair practice under the CPA. In the absence of clear guidance articulating a standard for price gouging, it is more crucial than ever to maintain detailed records justifying any significant price increases for necessities and consumer goods or services, especially during a declared emergency.
