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Law360 (July 12, 2021, 4:16 PM EDT) -- Walmart on Friday agreed to pay $9,000 to resolve claims that it sold disinfecting wipes to customers in San Luis Obispo County at an exorbitant price during the coronavirus pandemic, in violation of California law.
Between May and June 2020, Walmart sold disinfecting wipes for $18.99 to $19.99, which exceeded the 50% markup limit under a state executive order barring price-gouging on certain medical and emergency supplies, according to the San Luis Obispo County district attorney's office.
Under the executive order signed by Gov. Gavin Newsom on April 3, 2020, retailers could not sell medical or emergency supplies — such as face masks, gloves or disinfectants — that they had not previously sold before Feb. 4, 2020, for "an unconscionably excessive price," which was defined as more than 50% greater than the amount the business paid for the item. Each instance of a sale or offer to sell would constitute a separate violation of the order, according to the district attorney's office.
After customers complained, and it was contacted by the district attorney's office, Walmart removed the wipes from its online platform and provided a 100% refund to customers in San Luis Obispo County and across the state of California, the office said.
On Friday, San Luis Obispo County Superior Court Judge Ginger E. Garrett approved the parties' settlement and ordered Walmart to pay a civil penalty of $1,500 and $7,500 for the investigation and litigation costs for a total of $9,000, according to the office.
"Protecting consumers in San Luis Obispo County increases the public's trust in local business and fosters a level playing field for businesses in our community and beyond," District Attorney Dan Dow said in a statement Friday. "This important settlement sends a strong message that we are looking out for everyone who lives in our community."
In a statement to Law360 on Monday, a spokesperson for Walmart said it took action as soon as the pricing matter came to the company's attention and that the company is pleased it could resolve the case with the district attorney's office.
Walmart isn't the only company to face litigation over price-gouging claims.
Last June, Albertsons Cos. was accused of exploiting consumers amid the pandemic by drastically increasing prices for high-demand items such as toilet paper and medical supplies, in violation of Golden State law. The grocery giant asked to trim the claims in August, saying the negligence claim 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.
The plaintiffs eventually dropped the suit in September, according to court records.
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, a New York federal judge granted a preliminary injunction against Performance Supply LLC, one of the first targets in a series of suits 3M filed in an attempt to head off price-gouging. Mayer Brown LLP is helping 3M go after such companies for violating 3M's trademarks.
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.
Both the egg price suit and the case against eBay have since been dropped, according to court records.
California is represented in the instant case by Dan Dow and Kenneth Jorgensen of the Office of the District Attorney, County of San Luis Obispo.
Walmart is represented by Peter I. Altman of Akin Gump Strauss Hauer & Feld LLP.
The case is The People of the State of California v. Walmart Stores Inc., case number 21CV-0390, in the Superior Court of California, County of San Luis Obispo.
--Additional reporting by Dani Kass, Bill Donahue, Frank G. Runyeon, Jack Karp and Dave Simpson. Editing by Stephen Berg.
For a reprint of this article, please contact reprints@law360.com.
