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Editor’s note: This story was updated at 4:25 p.m. Monday with comments from Attorney General TJ Donovan.
A Vermont man accused of buying face masks from China and reselling them to Vermont hospitals at a 2400% markup has been ordered by a judge to halt his sales.
The case was brought by the Attorney General’s Office against Shelley Palmer, of Williston, and his company, Big Brother Security Programs Inc., after it was discovered that Palmer had sold thousands of masks to Central Vermont Medical Center in Berlin at a price of $2.50 per mask, despite having acquired the masks for just a few cents each.
Judge Helen Toor granted the state’s preliminary injunction against Palmer Monday after hearing arguments from both sides last week.
In her decision, Toor noted that the state was “likely to succeed at trial” on the merits of its claim that Palmer violated the Vermont Consumer Protection Act.
“Selling crucial” personal protective equipment desperately needed to save lives during a health emergency at a 2400% markup is an unconscionable act in violation of public policy,” Toor wrote.
“I am very pleased with the Court’s decision,” said Attorney General TJ Donovan in a statement. “These are extraordinary times during which Vermonters must continue to work together to stop the spread of COVID-19. It has been heartening to see so many Vermont businesses rise to the occasion during this time of crisis. Price gouging has no place in Vermont, especially during a public health crisis.”
In court Wednesday, Palmer’s lawyer, Bud Allen, argued that the Vermont Consumer Protection Act barred only “unfair conduct” — which he said clearly did not occur in this case.
What did happen, Allen said, was that Palmer provided Central Vermont Medical Center with a sample of the product he could provide, and the price at which he could provide it, and CVMC opted to buy the masks — in fact, tens of thousands of them.
“They can always say no,” Allen said.
Toor asked Allen if it would have been “unfair” if Palmer had been selling the masks for $25 or even $1,000.
Allen responded that to him, “unfair” means a seller offered one thing, and delivered another. In this case, he argued, it’s clear that did not happen.
The state’s lawyer, Justin Kolber, rebutted that idea, saying Allen’s argument seemed to ignore the fact that Vermont is in a state of emergency. Kolber said in times of crisis, the idea of a free market becomes compromised, i.e. that CVMC didn’t really have a choice in whether or not to buy the masks at a gouged rate, because they were desperate, and the masks were necessary to keep their staff safe.
“If these masks were being sold in January 2020, we may not be here before the court,” Kolber said.
Kolber argued this was a clear case of the “unfair conduct,” barred by the Consumer Protection Act. He also noted that some of the legal precedent for his argument actually stemmed from a Vermont Supreme Court case from a number of years ago involving another case against Palmer.
Kolber said even if the masks truly did cost Palmer nearly $1 to produce, as Palmer insisted they did, he should be selling them for $1.10 or $1.15, not $2.50. Anything more than that, he said, would be price-gouging, and as such, illegal.
Toor said there was “no evidence” of significant harm to others if the injunction were issued, and noted that the public interest supports enforcement of consumer protection laws.
Palmer has until Thursday to object to specific language in the injunction.
