Albertsons Wants To Trim COVID-19 Price-Gouging Suit

By Lauren Berg
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Law360 (August 11, 2020, 9:59 PM EDT) -- Grocery chain Albertsons urged a California federal judge on Monday to toss a negligence claim in a class action accusing it of exploiting consumers amid the coronavirus pandemic by drastically increasing prices for high-demand items such as toilet paper and medical supplies, saying the claim doesn't allege a statutory violation.

Albertsons argues in its 11-page motion to dismiss that consumer Eleisha Redmond's negligence claim should be nixed because it is "wholly unclear" and doesn't allege that Albertsons actually had a duty to ensure that, during a declared public emergency, it doesn't sell food and other items at excessive prices.

"[Redmond]'s allegation misstates California law, under which there is no general duty of care to avoid causing purely economic losses to third parties," Albertsons said.

Redmond's suit, filed in June, alleges some Albertsons-owned stores have taken advantage of the novel coronavirus pandemic that has killed more than 156,000 Americans by selling essential items far in excess of their pre-COVID-19 prices.

Redmond seeks to certify two classes, one in California and one nationwide, of all people who have bought food, emergency supplies and other essential goods from an Albertsons-owned store at prices that went up by at least 10% after any pandemic-related state of emergency was declared.

On April 3, the suit noted, California Gov. Gavin Newsom issued an executive order targeting price-gouging. The order prohibited price increases of 10% or more since February for items such as food, consumer goods and medical or emergency supplies.

Redmond said she made multiple purchases from an Albertsons-owned Safeway in San Francisco following California's state of emergency declaration. These included items that Albertsons "priced far in excess of 10% above the pre-emergency price for such items," her suit said.

In its motion Monday, Albertsons said it wasn't clear if Redmond is accusing the grocery giant of negligence or negligence per se, whereby an act is considered negligent because it violates a law or regulation. If the claim is negligence per se, then Redmond hasn't alleged a statutory violation, according to the motion.

Albertsons also urged the judge to toss the nationwide class proposed under the negligence claim, arguing that California's anti-price gouging statute can't be applied uniformly across the other 49 states.

"The differences in each state's anti-price-gouging laws — where those laws even exist — are too significant for [Redmond] to overcome," Albertsons said.

Albertsons said the nationwide class fails because price-gouging is not illegal nationwide and there isn't a federal anti-price gouging statute. Even in states where price-gouging is prohibited, the definition of that conduct varies greatly, the grocery company said.

In California, the price increase threshold is 10%, Albertsons said, but in Oregon the threshold is 15%, while the threshold in Pennsylvania is 20%. Alabama and Kansas allow price increases of up to 25%, according to the motion.

"As these states' laws demonstrate, [Redmond]'s claim that a class of consumers nationwide can hold Albertsons liable for a 10% price increase is completely baseless," Albertsons said.

Representatives for the parties did not immediately respond to requests for comment Tuesday.

Albertsons is far from the only company facing a lawsuit over alleged price-gouging during the pandemic.

3M Co. has been on a mission to limit price-gouging in protective gear, launching trademark litigation against New Jersey's Performance Supply LLC and Utah's Rx2Live LLC over accusations the companies are reselling 3M-branded masks at drastically increased prices. In May, 3M won its first injunction in New York.

Meanwhile, Whole Foods, Walmart, Trader Joe's, Costco and a host of other grocery providers were hit with a suit accusing them of illegally marking up the price of eggs, and eBay Inc. was accused of encouraging sellers to jack up the prices of masks, hand sanitizers and other high-demand products.

A number of the grocery stores in the egg lawsuit have since been voluntarily dismissed, according to court records.

Redmond is represented by Tina Wolfson, Theodore Maya and Rachel Johnson of Ahdoot & Wolfson PC.

Albertsons is represented by Kathleen A. Stimeling and Andrew J. Wu of Riley Safer Holmes & Cancila LLP.

The suit is Redmond et al. v. Albertsons Cos. Inc. et al., case number 3:20-cv-03692, in the U.S. District Court for the Northern District of California.

--Additional reporting by Dani Kass, Bill Donahue, Frank G. Runyeon and Dave Simpson. Editing by Jay Jackson Jr.

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