Attorney says AG grandstanding with price-gouging suit

CHARLESTON — West Virginia Attorney General Patrick Morrisey has filed a lawsuit against a Putnam County business that allegedly was gouging customers in the wake of last month's chemical spill that polluted the water of 300,000 residents.

But the attorney for that convenience store calls Morrisey’s actions nothing more than political grandstanding.

The AG's office said it filed a lawsuit Feb. 14 against Hurricane-based Mid Valley Mart, accusing the business of more than doubling the price of bottled water when Gov. Earl Ray Tomblin declared a state of emergency after the Jan. 9 spill.

The complaint says the business, which operates two convenience stores, kept water at that price for more than a week.

"Defendants engaged in unfair and deceptive practices in charging the inflated rate to consumers at their stores," states the complaint, submitted by Assistant AGs Martin Wright Jr. and Maryclaire Akers.

The complaint says Mid Valley Mart and manager/owner Achraf Assi increased the price of gallon jugs of Tyler Mountain Spring Water to $3.39 on the morning of Jan. 10 at its two stores in Hurricane. Previously, the store sold similar gallons of water for $1.59. The complaint also details one consumer who was charged more than $40 for a dozen gallon jugs of water.

The complaint also tells of an incident on the morning of Jan. 10 when a consumer was charged $1.59 per gallon of water, but returned an hour later and was charged $3.39 per gallon.

"The employee working ... told the consumer that she would sell him six of the 1-gallon jugs of water at a price of $1.59 per gallon jug," the complaint states. "However ... the clerk told this customer that he would have to wait to see how much the other 12 jugs would cost 'depending on whether Tyler Mountain raised its prices.'"

Tom Peyton, a Nitro attorney who is representing Mid Valley Mart, was critical of how Morrisey’s office handled the situation.

“It is political grandstanding, for sure,” Peyton said Wednesday.  Just from the way it was handled. There was no letter sent before they filed the lawsuit to try to settle.

“I’m not sure why we weren’t contacted to explain anything. Instead, the media was contacted so they could make a big deal about filing a consumer protection claim. We provided hundreds of pages of documents.

“I just don’t agree with the way in which it was handled. It’s not the way most lawyers handle claims like that. He did it that way so he could grandstand, to make it look as if he’s now some kind of super lawyer in protecting consumer rights.”

According to MetroNews, Assi told WSAZ the $1.59 price was for a liter of water, not a gallon because the story started selling gallon jugs after the leak to fulfill demand. Assi also told WSAZ he allowed consumers to fill gallon jugs free from taps at his stores because they are served by Putnam Public Service District and had clean water.

Peyton said he provided paperwork to the AG’s office last month after Assi was served a subpoena. Peyton says he should have been given the professional courtesy of being notified of the lawsuit filing.

Instead, Peyton says, Morrisey’s office decided to notify the media instead. He says Assi told him WSAZ was present when he was served with the papers shortly after the case had been filed.

“I wouldn’t run to the press, but Mr. Morrisey apparently decided to,” Peyton said. “Now, my client has these serious allegations made against him, and it’s been all over the news.

“My client was giving water out to consumers. He was giving water and letting people fill containers off his tap. It doesn’t make a lot of sense to me that he would do that if he was trying to price gouge. But, of course, the AG didn’t bother to ask anybody about that.”

The AG's office claims that employee misrepresented and concealed the basis for the mark-up in violation of state code. It says she also made false statements or representations regarding the refusal to sell the other two cases at the same $1.59 price per gallon.

“Our office worked diligently in the hours and days after the chemical spill to educate both citizens and businesses about the state's price gouging laws," Morrisey said in a Feb. 14 press release. "At that time, we pledged to aggressively pursue any entity that artificially inflated prices to take advantage of citizens in a time of need.

“In this case, it doesn't appear that our warnings were heeded.

“I will not tolerate people taking advantage of our citizens during times of emergency. If you think you can get away with breaking the law or price gouging our citizens, think again.”

And the spokesman for a national legal reform group also was critical of Morrisey's handling of the matter.

"I suppose all elected officials have to practice populist politics some of the time, but this lawsuit by AG Morrisey smacks of Darrell McGraw show-boating and flies in the face of basic supply-and-demand economics," said Darren McKinney of the American Tort Reform Association. "How so? Price increases properly temper runaway demand that stems from human nature's proclivity to hoard scarce goods during a crisis. And price increases during crises also stimulate much needed increases in supply as, in a case like this, bottled water suppliers from beyond the region could be incentivized by higher retail prices to absorb the higher transportation costs involved in delivering their products where they're desperately needed more quickly.

"Leaving aside other weaknesses in the state's anti-gouging law, such as its invitation to citizens to condemn to authorities those retailers with whom they may have long-simmering animosities that have nothing to do with actual price gouging, populism will always have its place in American politics -- and especially in West Virginia politics.

"But litigation that may deter product suppliers from going the extra mile during the next crisis will not help West Virginians then or in the long run, and AG Morrisey should know that."

On Jan. 9, Tomblin declared a state of emergency in parts or all of nine counties after a chemical leak resulted in at least 10,000 gallons of crude MCHM being released from a tank at Freedom Industries into the Elk River and contaminating the water supply.

Under West Virginia law, it is illegal for a business to increase the price of an emergency supply or essential consumer item by more than 10 percent during a declared state or emergency and for 30 days after, whichever is longer.

In this state of emergency, bottled water was deemed to be an essential consumer item because West Virginia-American Water issued a do-not-use order restricting consumers from using it for cooking, cleaning, bathing or even laundry.

“During the water crisis, West Virginians showed their true colors and did everything they could to help their neighbors," Morrisey said. "Those with access to potable water opened their homes and hearts to friends, family members and strangers so they could shower and get a warm meal.

"Others volunteered for hours at water distribution centers. West Virginia citizens shined during this crisis, but sadly a few bad apples didn't follow the law.”

Following the state of emergency declaration, Morrisey assembled a price gouging team within the Consumer Protection Division, as well as a team to investigate the causes and truth about the water contamination crisis. The Office also established a 24-hour tip hotline for consumers to call to report price gouging.

“As we all continue to deal with the effects of this leak, I encourage consumers to report any price gouging they may be experiencing," Morrisey said. "To date, our office has issued six investigative subpoenas and served ceased and desist letters to more than 15 entities.

"My office will continue to aggressively pursue and investigate instances of gouging as they arise."

In addition to seeking injunctive relief, the complaint seeks restitution/reimbursement to consumers and fines in excess of $5,000 per violation.

It also seeks to conduct a hearing on this matter as soon as possible.

Putnam Circuit Court case number 14-C-59