Ohio Bill Would Give the State Authority to Limit Customer Purchases and Control Prices of High-Demand Products During the COVID-19 Pandemic and Other Emergencies

A finished roll of toilet paperA bill introduced in the Ohio Senate, and written with the contributions of Ohio Attorney General Dave Yost, would give the attorney general the power to limit customer purchases of key items and to go after alleged "price gouging" by retailers during the ongoing global COVID-19 pandemic and other emergencies declared by the governor.

There is a familiar image during the current pandemic; customers are visiting their local grocery store or retail store only to find empty shelves that once contained toilet paper, paper towels, and other items currently in high demand, like medications.  Some stores have started to limit customer purchases of these items, including hand sanitizers, disinfectant wipes, and other household cleaning products.

Meanwhile, recent news reports have identified some individuals and businesses that have hoarded these high-demand products to re-sell them at higher prices.  Some states have gone so far as to seize stockpiles from alleged "price gougers."  According to the Cleveland Plain-Dealer, the Attorney General's office has received more than 400 complaints of price inflation since the beginning of March.

Now, Ohio is considering targeting both of these issues with legislation.

With regard to limiting purchases, the law would allow the attorney general to establish "per-consumer, per-transaction quantity limitations" on certain goods.  To be limited, those goods must be "specified," and they must be "directly or indirectly related to the state of emergency or necessary to preserve, protect, or sustain the life, health, or safety of persons or their property during the time of the emergency."  The directive limiting quantities must state "with specificity" the date and time it begins, and it shall last for 90 days unless otherwise specified, or unless renewed or revoked by the attorney general.  If the declaration of emergency ends, then the limitation will also expire.

A violation by a supplier of the limitation will be considered an unfair or deceptive act or practice in violation of R.C. 1345.02.  There would be no private right of action for enforcement, as all enforcement must come from the attorney general's office.

With regard to pricing, under the proposed law, goods "that are directly or indirectly related to the state of emergency or necessary to preserve, protect, or sustain the life, health, or safety of persons or their property" must not be sold at a price "grossly in excess of the price at which such goods were sold or offered for sale immediately prior to the state of emergency."  This restriction applies during the entire time of the emergency.

Violators accused of this price inflation could be subject to penalties for an unconscionable act or practice in violation of R.C. 1345.03.  Violations would be subject to a fine up to $25,000, reimbursement to the consumer, and injunctive relief.  Three-quarters of civil fines would go to the state consumer protection enforcement fund, and the remaining funds would go to the treasurer of the county where the violation took place.

The proposed law would apply only if the governor declared a state of emergency (which Governor Mike DeWine has already done in the case of COVID-19) and it would be enforceable only by the attorney general's office.

Suppliers may, however, justify a price increase by showing "with reasonable certainty that their price increase is related to any reasonable but unforeseen circumstances" that include (but are not limited to) the following:  (1) an increase in supply chain costs; (2) an increase in costs due to an action by local, state, or federal government; and (3) effort by a supplier "that has added objective value to the good."

The bill was introduced on April 8, 2020, and it must be approved by both chambers of the Ohio legislature and signed by the governor to become law.  Nevertheless, this bill and other developments in the law demonstrate that businesses and consumers alike need to be vigilant -- monitoring changes in consumer, employment, tenant, and other areas of the law as local, state, and federal governments work to respond to the pandemic.  Any businesses considering certain actions should contact counsel to determine applicable risks, especially as rules and regulations continue to evolve daily.

About The Author

Jason Palmer | Faruki Attorney