Canada’s first COVID-19 price gouging lawsuit filed
For the lawyer who filed Canada’s first COVID-19 “price gouging” lawsuit in a Windsor court on Tuesday, it’s personal.
“I know how important this PPE (personal protective equipment) is, and seeing people take advantage, it hits my heart,” said David
Campbell, a partner in Michigan law firm Bowman & Brooke LLP, which specializes in product liability and commercial litigation.
Campbell filed a lawsuit in Ontario Superior Court of Justice in Windsor on April 21 on behalf of multinational conglomerate 3M against the directors of Caonic Systems Inc., a Waterloo-based
firm that 3M alleges was reselling its N95 face masks at more than five times the regular listed price.
The N95 respirators are a vital piece of protective equipment for front-line workers in the COVID-19 pandemic battle, and they’re a much-needed and still relatively scarce commodity.
In addition to the allegation of profiteering, 3M also accuses Caonic and its two company directors, Zhiyu Pu and Harem Mander, of “falsely affiliating” themselves with 3M. The allegations have not been proven in court.
According to 3M, a Fortune 100 company with 2018 revenues of US$33 billion, Pu ordered thousands of respirators from a Lagos, Nigeria, supplier in December and then began operating an online Shopify account — www.3m-health.com — on Feb. 26, with shipments throughout Canada from Brampton.
Advertising 3M respirators with an estimated list price of US$3 for US$17 each, 3M accuses the resellers of engaging in “profiteering ” and “price gouging ” with their 466-per-cent markups.
In an affidavit filed with the court, a senior counsel for 3M said the corporation “is committed to helping combat the fraudulent, price gouging, and counterfeit activity that is unfortunately occurring in connection with COVID-19.” William Childs, of Austin, Texas, stated further that “3M will be aggressively pursuing third parties seeking to take advantage of this crisis,” and that it was “working with law enforcement to eliminate price gouging.”
Campbell, a lawyer based in Harrow, said an initial court application had to be filed against Shopify because “we didn’t know who these folks were.” The Ottawa-based online e-commerce firm co-operated with 3M and shuttered the site “for fraud” on March 31, but, according to 3M’s lawsuit, it “immediately reopened” as www.tormenhealth. com and continued to associate itself with 3M’s trademarks via social media.
Attempts by the Star on Wednesday to contact Pu, who shares the same Waterloo address as Caonic Systems Inc., Mander, listed as being from Brampton, and their Toronto lawyer, were unsuccessful.
On March 28, Premier Doug Ford lashed out at those seeking to profit from Ontario’s state of emergency, particularly when it comes to critical equipment for front-line workers. He vowed the province would be “coming down hard on price gougers.”
Company officers or co-directors, if convicted, can face a fine of up to $500,000 and a year in jail. Corporations, upon conviction, can face a fine of up to $10 million.
“We’re coming after you,” Ford said at Queen’s Park. “The Ontario government has made it very clear this is illegal,” said Campbell. He said his law firm based in Bloomfield Hills has received assurances from the defendant’s counsel that the masks in dispute are no longer being sold online.
A spokeswoman said 3M, which has its Canadian headquarters and manufacturing facilities in London, Ont., is co-operating with authorities in Ontario over its allegations against Caonic, a company registered last year.
What makes the case personal for Campbell, who practises law on both sides of the border, is the fact the COVID-19 fight hits very close to home. His sister-in-law is a Windsor nurse at Hotel-dieu Grace Healthcare, and his wife is a Forest Glade veterinarian whose workplace donated its much-needed face masks to local hospital workers.
Given the urgency of the current coronavirus crisis, 3M is seeking to have its Windsor-filed lawsuit expedited.
The Minnesota-based technology giant, with close to 90,000 employees globally and more than 50,000 products in the marketplace, is seeking a quick resolution in Ontario on the issue of where the masks are being stored and whether they are counterfeits or authentic 3M products.
“We are dedicated to putting a stop to those who are trying to cash in on this crisis and have taken legal action when we’ve identified illegal behaviour in New York, California, Florida, Texas and now Canada,” Denise Rutherford, 3M’s senior vice-president of corporate affairs, said in a statement on Tuesday.
The company, which became briefly embroiled in a political spat between Ford and the White House over Canadian access to its N95 masks, said 3M has not changed the prices it charges for respirators as a result of the COVID-19 outbreak.
Any damages awarded by the courts will go “to Covid-19-related non-profit organizations,” the company said, adding that, with any seized authentic respirators, “3M will support returning them for use in efforts to fight COVID-19.”