We are two-thirds of the way through Hawaii’s hurricane season, which spans from the beginning of June through the end of November. Hawaii residents know too well that natural disasters can strike at any moment.
So far this year, they have suffered a number of them. In April, Kauai experienced the worst natural disaster to hit the island since Hurricane Iniki as historic levels of rain caused massive landslides and flooding.
The very next month, Kilauea dramatically roared to life, devastating entire subdivisions and changing permanently the landscape and coastline of Hawaii island. More recently, Hurricanes Lane and Olivia had the entire state on edge, as the massive storms threatened widespread destruction.
Fortunately, advances in science and technology allow warnings of many natural disasters much earlier than in the past, providing residents more time to prepare. While this can help alleviate the last-minute scramble for supplies, it also can give opportunists the chance to take advantage by price gouging.
In 2014, the Legislature addressed these concerns, enacting Chapter 127A of the Hawaii Revised Statutes, titled “Emergency Management.” Included in this wholesale update of Hawaii’s emergency management laws was a prohibition on price increases of specific items during certain emergency conditions.
The prohibitions only go into effect once a state of emergency or a severe weather warning has been declared for the state, a county, or any portion thereof. If that occurs, which was the case in the examples noted above, the statute (1) prohibits any increase in the selling price of any commodity, at both the retail and wholesale levels, in the affected area; and (2) prohibits landlords from terminating rentals for a residential dwelling unit in the affected area. “Commodity” is defined broadly to include “any good or service necessary for the health, safety, and welfare of the people of Hawaii.”
The statute includes a number of caveats, particularly concerning the termination of residential leases. For example, if there is a material breach of the rental agreement — such as the failure to pay rent — then the prohibition does not apply. Also, it will not be deemed a violation if the defendant can prove: the violation of the price limitation was unintentional; prices were voluntarily rolled back upon discovering the potential violation; and a restitution program was instituted for all consumers that may have paid excessive prices. Moreover, despite the prohibitions, a seller or landlord can pass on documentable additional operating expenses they incur due to the emergency, disaster or severe weather to their buyers and tenants.
The prohibited acts remain in effect until 24 hours after the severe weather warning is canceled, or, in the event of a declaration, the later of a date specified by the governor or mayor or 96 hours after the effective date and time of the declaration.
Any violation of the price prohibitions constitutes unfair methods of competition, and unfair and deceptive acts or practices under Hawaii’s consumer protection statute, Chapter 480. That statute imposes civil penalties and also provides an independent cause of action for damages, including the potential for an award of treble, or threefold, damages.
While by and large the response to Hurricanes Lane and Olivia was positive, there were scattered reports of price gouging as the slow-moving storms approached the state. With the current statute in place, it is clear that opportunistic attempts to goose profits during times of need will not be tolerated, and violators can be subjected to hefty penalties and damages awards.
William Harstad is a partner in the litigation and alternative dispute resolution practice group at Carlsmith Ball LLP. He can be reached at wharstad@carlsmith.com.
