Greenberg v. Amazon.com, Inc.

3 Wn.3d 434

[No. 101858-4. En Banc.]

Argued January 18, 2024.

Decided August 8, 2024.

Certification From the United States District Court for the Western District of Washington

IN

Alvin Greenberg et al., Plaintiffs, v. Amazon.com, Inc., Defendant.

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Whitener, J., delivered the opinion of the court, in which González, C.J., and Stephens, Yu, and Montoya-Lewis, JJ., concurred. Madsen, J., filed a concurring opinion. Keenan, J. Pro Tem., filed a concurring opinion, in which Yu and Montoya-Lewis, JJ., concurred. Gordon McCloud, J., filed a dissenting opinion, in which Johnson, J., concurred. Owens, J., did not participate in the disposition of this case.

Nature of Action: Consumers filed a class action against an online retailer, alleging that the retailer violated the Consumer Protection Act (CPA) (ch. 19.86 RCW) by charging consumers grossly inflated and, thus, unfair prices during the COVID-19 pandemic and that a price increase of 15 percent on any consumer good or food item after a declared emergency was unfair for purposes of the CPA.

United States District Court: The United States District Court for the Western District of Washington, No. C21-0898RSL, Robert S. Lasnik, J., on April 4, 2023, certified to the Washington Supreme Court questions of (1) whether the CPA comprehends a claim of price gouging, as alleged by the individual plaintiffs in their first amended complaint, as an unfair practice, (2) whether the CPA’s prohibition on unfair acts or practices prohibits price increases of 15 percent or more on any consumer good or food item after a declared emergency, and (3) if yes to either question, whether the court or the jury determines when an alleged claim of "price gouging" constitutes an unfair trade practice under the CPA.

Supreme Court: The court holds that (1) price gouging may be an unfair act or practice under the CPA, (2) the CPA’s prohibition on unfair acts or practices does not prohibit price increases of 15 percent or more on any consumer

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good or food item after a declared emergency, and (3) a jury decides whether a particular act is unfair under the CPA in situations when a plaintiff advances a case-specific unfairness claim that is not regulated by statute or by some other well-established public policy, but where the underlying facts regarding the defendant’s conduct are undisputed, the court decides unfairness as a matter of law.

Steve W. Berman, Ben Harrington, and Benjamin Siegel (of Hagens, Berman, Sobol, Shapiro), for plaintiffs.

John Goldmark, Maryann T Almeida, Stephen M. Rummage, and James E. Howard (of Davis Wright Tremaine LLP) (John D. Freed, Joseph Rose, Kristin Linsley, Rachel S. Brass, Warren Loegering, and Russell B. Balikian, of counsel), for defendants.

Callie A. Castillo on behalf of John B. Kirkwood, amicus curiae.

Robert A. Battles on behalf of Association of Washington Business, amicus curiae.

Robert B. Mitchell Jr., David R. Fine, Tyler S. Badgley, and Maria Monaghan on behalf of Chamber of Commerce of the USA, amicus curiae.

Ziyong Li, Stephanie Sheridan, Meegan Brooks, and Michael Meuti on behalf of National Retail Federation, amicus curiae.

Benjamin Brysacz on behalf of Attorney General of the State of Washington, amicus curiae.

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[As amended by order of the Supreme Court August 16, 2024.]

¶1 Whitener, J. — The United States District Court for the Western District of Washington asks this court to answer two certified questions about our Consumer Protection Act (CPA), chapter 19.86 RCW.

Standard of Review

[1, 2] ¶2 "A federal court may certify a question of local law to the Washington Supreme Court when, in the federal court’s opinion, ‘it is necessary to ascertain the local law of this state in order to dispose of [a] proceeding [pending before the federal court] and the local law has not been clearly determined.’ " Kellogg v. Nat’l R.R. Passenger Corp., 199 Wn.2d 205, 215, 504 P.3d 796 (2022) (alterations in original) (quoting RCW 2.60.020). "Certified questions from federal court are questions of law that we review de novo." Carlsen v. Glob. Client Sols., LLC, 171 Wn.2d 486, 493, 256 P.3d 321 (2011). "We consider the legal issues not in the abstract but based on the certified record provided by the federal court." Id.

Certified Questions Presented

¶3 On October 22, 2021, Alvin Greenberg, Michael Steinberg, Julie Hanson, Christina King, and Ronnell Robertson (the plaintiffs) filed a first amended class action complaint in the United States District Court for the Western District of Washington. Clerk’s Papers (CP) at 1-69. The plaintiffs alleged that Amazon violated the CPA "by charging consumers grossly inflated and thus ‘unfair’ prices during the COVID-19 pandemic." CP at 64. The plaintiffs also alleged that "[f]or purposes of this First Amended Complaint,… a price increase of 15% on any consumer good or food item after a declared emergency is ‘unfair’ for purposes of the [ ]CPA." Id. Additionally, the plaintiffs alleged claims of negligence and unjust enrichment. CP at 66-68.

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¶4 On December 3, Amazon moved to dismiss the first amended complaint under Fed. R. Civ. P. 12(b)(6). CP at 70. As to the CPA claim, Amazon argued that the plaintiffs failed to state a claim for relief because "price gouging" is not an unfair trade practice. CP at 85-95.

¶5 On April 4, 2023, the District Court entered an order certifying two questions to this court:

[1.] Does the Washington Consumer Protect Act’s prohibition on "unfair" acts or practices comprehend a price gouging claim of the type alleged in the First Amended Complaint?

[2.] If yes, does the Court or the jury determine what percentage increase in the price of goods is "unfair" for the purposes of the statute?

Ord. Certifying Questions to the Wash. Sup. Ct. at 9.

¶6 As an initial matter, the parties disagree on the scope of the first certified question. Amazon contends that the question is whether "the CPA makes price increases of 15% or more during emergencies categorically unlawful" because the plaintiffs framed their complaint around that specific percentage threshold. Reply Br. of Appellant (Def.’s Reply Br.) at 4. The plaintiffs, on the other hand, contend that the question is more general—that is, whether price gouging is an unfair trade practice under the CPA—because their individual claims do not rest on a specific percentage threshold. Answering Br. of Appellees (Pls.’ Br.) at 18-22. Instead, the plaintiffs claim that the 15 percent figure is immaterial at this juncture and relevant only for class certification purposes. Id.

¶7 The plaintiffs’ first amended complaint alleges both that "charging consumers grossly inflated … prices during the COVID-19 pandemic" and that "a price increase of 15% on any consumer good or food item after a declared emergency" constitutes an unfair act or trade practice under the CPA. CP at 64. The plaintiffs, it appears, advance both individual claims and class-based claims—the latter depending on whether a price increase crosses a certain per-

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centage threshold as a basis for their claim. In certifying the questions to this court, the District Court did not appear to view the issue as solely hinging on whether a price increase above 15 percent during a state of emergency is categorically unfair; instead, as the plaintiffs contend, it seemed to view the issue more generally. See Ord. Certifying Questions to the Wash. Sup. Ct. at 1, 3-8 (discussing whether price gouging generally is an unfair trade practice under the CPA). The way the District Court framed the second question suggests that the percentage threshold question must also be answered.

¶8 Therefore, because the plaintiffs advanced both individual claims and class action claims in their complaint, we have reformulated the questions¹ as follows:

1. Does the CPA comprehend a claim of price gouging, as alleged by the individual plaintiffs in their first amended complaint, as an unfair practice?

2. Does the CPA’s prohibition on unfair acts or practices prohibit price increases of 15 percent or more on any consumer good or food item after a declared emergency?

3. If yes to either question, then does the court or the jury determine when an alleged claim of "price gouging" constitutes an unfair trade practice under the CPA?

¶9 The first certified question, we answer in the affirmative and hold that price gouging, as alleged in the plaintiffs’ first amended complaint, may be an unfair act or practice within the meaning of RCW 19.86.020. The second certified question, we answer in the negative. Finally, the answer to the third certified question depends on whether the defendant’s conduct is disputed as explained below.

¶10 Context matters in answering these certified questions. This case is before us in the context of a Fed. R. Civ. P. 12(b)(6) motion to dismiss. In such a procedural posture, a plaintiff’s allegations are presumed to be true and a court

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may even consider hypothetical facts. Tenore v. AT&T Wireless Servs., 136 Wn.2d 322, 330, 962 P.2d 104 (1998); Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). To that end, our holdings today are narrow and simply hold the plaintiffs have stated a cognizable claim for relief under our CPA based on the facts alleged in their complaint.

Facts²

I. Background on "Price Gouging"

¶11 The Department of Justice defines "price gouging" as a term that lacks a formal definition; however, it typically refers to a "significant and rapid price increase after a demand." Joseph Nguyen Ho, Price Gouging & Health Justice: Passing Anti-Price Gouging Laws amid a Pandemic, 30 Annals Health L. Advance Directive 213, 214 (2020) [https://perma.cc/CW47-M8NK]. "Often, price gouging is a situation where a retailer or a supplier takes advantage of increases in demand by ‘charging exorbitant prices for necessities after a natural disaster or other state emergency’ " Id. (quoting Heather Morton, Price Gouging State Statutes, Nat’l Conf....