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Amazon to Arbitrate Price Gouging Class Action, Leaving Open Questions of Platform Liability

By Christopher E. Ondeck, John R. Ingrassia & Kelly Landers Hawthorne on May 14, 2021
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Class actions plaintiffs and state enforcers have tried to use state price gouging laws to hold online retailers accountable for prices set by third parties.  It remains unclear, however, whether platforms will—or can, under the current legal frameworks—be held liable for price increases made by third party vendors.  One of the key cases that could shed some light on this issue, discussed last summer, has been put on hold, pending the completion of arbitration.

A class action was filed in the Northern District of California against Amazon on April 21, 2020.  Plaintiffs allege that they purchased items on Amazon that month at prices that were higher than before the pandemic.  They claim that the higher prices reflected unlawful price gouging by Amazon, since they exceeded the 10 percent threshold for price increases allowed under the California price gouging law, without justifications for cost increases.  Additionally, the complaint alleges that price increases on the site occurred for both products sold by third parties and products supplied directly by Amazon.

On June 22, 2020, Amazon moved the Court to compel arbitration, arguing, among other things, that plaintiffs agreed to its conditions of use (“COUs”) when they registered their accounts.  The COUs contain an arbitration provision, which includes the requirement that “[a]ny dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com will be resolved by binding arbitration, rather than in court[.]”

On May 7, 2021, the court granted Amazon’s motion to compel arbitration, staying litigation in the meantime. The order notes that, “Courts have repeatedly held that Amazon’s layout of its checkout page provides constructive notice to its users of the COUs,” and, understandably, does not engage with any of plaintiffs’ price gouging arguments.  This live issue remains one to watch, given the lack of clarity for platforms and the possibility that they could be held responsible for third party pricing as well as their own product pricing, regardless of their internal policies or compliance actions.

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Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

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Photo of John R. Ingrassia John R. Ingrassia

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and…

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions or joint ventures.

John is a senior counsel at the Firm, advising on the full range of antitrust matters in diverse industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services and health care, among others.  His practice focuses on the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger notification requirements. John has extensive experience with the legal, practical, and technical requirements of merger clearance and is regularly invited to participate in Federal Trade Commission and bar association meetings regarding Hart-Scott-Rodino practice issues.

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Photo of Kelly Landers Hawthorne Kelly Landers Hawthorne

Kelly Landers Hawthorne is an associate in the Litigation Department.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as…

Kelly Landers Hawthorne is an associate in the Litigation Department.

While at Columbia, she served as an articles editor of the Columbia Journal of Law & the Arts and was involved with the Lawyering in the Digital Age Clinic.  She also worked as a judicial intern for the Honorable Sandra Townes of the United States District Court for the Eastern District of New York.

Kelly is a Teach For America alumnus and taught middle school special education and math in Washington, D.C. prior to law school.

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  • Posted in:
    Corporate & Commercial, Featured Posts
  • Blog:
    Minding Your Business
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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