By: Sofia Ellington

On January 18th, 2024, The Washington Supreme Court came to the University of Washington School of Law to hear oral arguments in the case of Greenberg, et al. v. Amazon.com, Inc. The Court seeks to answer a question that will substantially affect consumers: Whether the Washington Consumer Protection Act’s (WCPA) prohibition on “unfair” acts protects against price gouging.

What is the fight about?

Plaintiffs, a class of consumers led by Alvin Greenberg, are suing Amazon in federal district court to hold the company accountable for price gouging during the COVID-19 pandemic. The complaint cites price increases of up to 1000 percent on certain items such as face masks, cold remedies, toilet paper, and baking soda. In Amazon’s reply brief, they argue that price increases are not a per se unfair practice under the Washington Consumer Protection Act (WCPA) or the Federal Trade Commission Act (FTC Act).

Whether the prohibition on unfair and deceptive practices in WCPA protects against price gouging is a question of first impression that originally came before Judge Lasnik in the United States District Court in the Western District of Washington. In certifying the question to the Washington Supreme Court, Judge Lasnik explicitly acknowledged that the complex and competing policy interests at issue influenced his decision to certify instead of making that judgment himself.

What is a Certified Question?

A certified question is a formal request by one court to another for an opinion on a question of law. In this case, it is a federal court asking the Washington Supreme Court to answer a question regarding the interpretation of a state law. While the Supreme Court Justices were visiting classes at UW Law the day before the oral argument, I had the opportunity to ask Chief Justice González how the Washington Supreme Court strategizes about answering certified questions. He told our class that the Court answers certified questions in a way that does not decide the narrow controversy at hand, but instead focuses on interpreting the law for broader applications. The court will thus presumably examine the broader implications of interpreting the WCPA to prohibit price gouging into account when making a decision. That could include policy considerations like how the market will be affected, consumer well-being, and how states across the country interpret their statutes.

Amazon’s shift from forced arbitration to Washington’s choice of law provisions

Most large technology companies, including Amazon, have forced arbitration clauses and class action waivers in their terms of service (TOS). These clauses operate to prevent potential plaintiffs from pursuing their claims in court, forcing them to take disputes to a privatized off-the-record forum where they are less likely to prevail. So how did a class action dispute against Amazon end up before the Washington Supreme Court on a certified question?

Amazon sent a brief email to customers that they were dropping their forced arbitration clause and class action waiver from its TOS after receiving a coordinated 75,000 individual arbitration claims.  A single arbitration takes less time and is more cost-efficient for corporate defendants than litigating a class action—but if thousands of people file individual arbitration demands, dealing with thousands of arbitrations is more costly than defending against a single class action.

In the absence of an arbitration clause, Amazon’s TOS now includes a forum selection clause that mandates that any user consents to litigating in Washington courts, and a choice of law clause, that reads: “By using any Amazon service, you agree that applicable federal law, and the laws of the State of Washington . . . will govern these conditions of use and any dispute of any sort that might arise between you and Amazon.” That means any consumer who wants to sue Amazon must do so under the laws of Washington State, and more importantly in this case, the WCPA.

Oral Arguments 

At oral argument, counsels for both the plaintiffs and Amazon urged the court to think about opposing policy considerations. Plaintiffs emphasized that Amazon did not dispute that they engaged in price gouging after a nationwide public health emergency was declared. Those alleged “unconscionable” price increases caused substantial injury to consumers. Their argument is that price gouging, while not currently regulated under the CPA or FTC Act, is a fundamentally unfair practice that violates the spirit of the CPA. They did not tell the court that there should be a bright line rule—instead arguing cases would proceed like other antitrust claims. This would involve asking the jury to decide on a product-by-product basis what percentage price increase violates the WCPA based on expert testimony and the totality of the circumstances. The plaintiffs concluded by asking the court to find that their facts state a claim under the WCPA.

Amazon argued that in their view, the plaintiffs are asking for something unprecedented. They urged the Court to refrain from making policy decisions that are best left to the legislature to decide. They pointed out that the WCPA is based on the FTC Act, which has been construed to not cover pricing— underscoring that, if the justices rule in favor of the Plaintiffs, they would be the first court in the nation to read such an act to limit pricing. They pointed to other states that regulate pricing through acts of the legislature, not the courts, and only to regulate certain items. Moreover, they advanced an economic argument, warning that supply and demand would be negatively impacted,  throwing off market indicators that are actually helpful to consumers.  

What does this mean for Washington courts and consumers?

In 2021, the Attorney General of Washington, Bob Ferguson, called for a bill that prohibited price gouging during an emergency. Since then, the bill has passed the state Senate but failed in the House of Representatives due to disagreements about the particulars of the act. The outcome of this litigation may push the Washington legislature to act once again on this issue to protect consumers.

At oral argument, both sides had strong policy arguments that the Washington Supreme Court will have to weigh carefully in their decision. Regardless of which way it comes out, consumers around the world will be affected by the Court’s decision. Additionally, Amazon’s choice of law provision in their TOS will undoubtedly have an outsized impact on Washington courts causing a heavier Amazon-related caseload. However, Amazon could change their TOS at any point, so it will be interesting to see how long those provisions last—especially after the outcome of this litigation.