N.Y. General Business Law § 396-r: Price gouging

§ 396-r. Price gouging. 1. Legislative findings and declaration. The

legislature hereby finds that during periods of abnormal disruption of

the market caused by strikes, power failures, severe shortages or other

extraordinary adverse circumstances, some parties within the chain of

distribution of goods have taken unfair advantage of the public by

charging grossly excessive prices for essential goods and services.

In order to prevent any party within the chain of distribution of any

goods from taking unfair advantage of the public during abnormal

disruptions of the market, the legislature declares that the public

interest requires that such conduct be prohibited and made subject to

civil penalties.

2. (a) During any abnormal disruption of the market for goods and

services vital and necessary for the health, safety and welfare of

consumers or the general public, no party within the chain of

distribution of such goods or services or both shall sell or offer to

sell any such goods or services or both for an amount which represents

an unconscionably excessive price.

(b) For purposes of this section, the phrase "abnormal disruption of

the market" shall mean any change in the market, whether actual or

imminently threatened, resulting from stress of weather, convulsion of

nature, failure or shortage of electric power or other source of energy,

strike, civil disorder, war, military action, national or local

emergency, drug shortage, or other cause of an abnormal disruption of

the market which results in the declaration of a state of emergency by

the governor.

(c) For purposes of this section, the term "drug shortage" shall mean,

with respect to any drug or medical product intended for human use, that

such drug or medical product is publicly reported as being subject to a

shortage by the U.S. Food and Drug Administration.

(d) For the purposes of this section, the term "goods and services"

shall include (i) consumer goods and services used, bought or rendered

primarily for personal, family or household purposes, (ii) essential

medical supplies and services used for the care, cure, mitigation,

treatment or prevention of any illness or disease, and (iii) any other

essential goods and services used to promote the health or welfare of

the public.

(e) This prohibition shall apply to all parties within the chain of

distribution, including any manufacturer, supplier, wholesaler,

distributor or retail seller of goods or services or both sold by one

party to another when the product sold was located in the state prior to

the sale. For the purposes of this subdivision, the term "goods and

services" shall also include any repairs made by any party within the

chain of distribution of goods on an emergency basis as a result of such

abnormal disruption of the market.

3. Whether a price is unconscionably excessive is a question of law

for the court.

(a) The court's determination that a violation of this section has

occurred shall be based on any of the following factors: (i) that the

amount of the excess in price is unconscionably extreme; or (ii) that

there was an exercise of unfair leverage or unconscionable means; or

(iii) a combination of both factors in subparagraphs (i) and (ii) of

this paragraph.

(b) In any proceeding commenced pursuant to subdivision four of this

section, prima facie proof that a violation of this section has occurred

shall include evidence that:

(i) the amount charged represents a gross disparity between the price

of the goods or services which were the subject of the transaction and

their value measured by the price at which such goods or services were

sold or offered for sale by the defendant in the usual course of

business immediately prior to the onset of the abnormal disruption of

the market; or

(ii) the amount charged grossly exceeded the price at which the same

or similar goods or services were readily obtainable in the trade area.

(c) A defendant may rebut a prima facie case with evidence that (1)

the increase in the amount charged preserves the margin of profit that

the defendant received for the same goods or services prior to the

abnormal disruption of the market or (2) additional costs not within the

control of the defendant were imposed on the defendant for the goods or

services.

4. Where a violation of this section is alleged to have occurred, the

attorney general may apply in the name of the People of the State of New

York to the supreme court of the State of New York within the judicial

district in which such violations are alleged to have occurred, on

notice of five days, for an order enjoining or restraining commission or

continuance of the alleged unlawful acts. In any such proceeding, the

court shall impose a civil penalty in an amount not to exceed

twenty-five thousand dollars per violation or three times the gross

receipts for the relevant goods or services, whichever is greater and,

where appropriate, order restitution to aggrieved parties.

5. The attorney general may promulgate such rules and regulations as

are necessary to effectuate and enforce the provisions of this section.