Amended in Senate August 1, 2016

Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2820

Introduced by Assembly Member Chiu

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(Principal coauthor: Assembly Member Wilk)

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February 19, 2016

An act to amend Section 396 of the Penal Code, relating to crimes.

LEGISLATIVE COUNSEL’S DIGEST

AB 2820, as amended, Chiu. Crimes: price gouging: states of emergency.

Under existing law, upon the proclamation of a state of emergency resulting from an earthquake, flood, fire, riot, storm, or natural or manmade disaster declared by the President of the United States or the Governor, or upon the declaration of a local emergency resulting from an earthquake, flood, fire, riot, storm, or natural or manmade disaster by the executive officer of any county, city, or city and county, and for a period of 30 days following that declaration, it is a misdemeanor with specified penalties for a person, contractor, business, or other entity to sell or offer to sell certain goods and services for a price that exceeds by 10% the price charged by that person immediately prior to the proclamation of emergency, except as specified.

This bill would revise the definitions of a state of emergency and a local emergency to mean a natural or manmade disaster or emergency caused by conditions such as, but not limited to, air pollution, earthquake, fire, flood, storm, epidemic, riot, drought, sudden and severe energy shortage, begin insert or end insert plant or animal infestation or disease, for which a state of emergency has been declared by the President of the United States or the Governor of California or for which a local emergency has been declared by an official, board, or begin insert other end insert governing body vested with authority to make such a declaration in any city, county, or city and county in California, respectively. The bill would include the transportation of persons and towing services in the provisions described above. The bill would also specify that housing means any rental housing with an initial lease term of no longer than one year for purposes of these provisions. The bill would make other clarifying and conforming changes and make certain additional findings by the Legislature. By expanding the scope of an existing crime, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 396 of the Penal Code is amended to
read:

396.  

(a) The Legislature hereby finds that during emergencies
and major disasters, including, but not limited to, air pollution,
earthquakes, fires, floods, civil disturbances, storms, and other
natural and manmade disasters, some merchants have taken unfair
advantage of consumers by greatly increasing prices for essential
consumer goods and services. While the pricing of consumer goods
and services is generally best left to the marketplace under ordinary
conditions, when a declared state of emergency results in abnormal
disruptions of the market, the public interest requires that excessive
and unjustified increases in the prices of essential consumer goods
and services be prohibited. It is the intent of the Legislature in
enacting this act to protect citizens from excessive and unjustified
increases in the prices charged during or shortly after a declared
state of emergency for goods and services that are vital and
necessary for the health, safety, and welfare of consumers. begin delete Further end delete
begin insert Further, end insert it is the intent of the Legislature that this section be
liberally construed so that its beneficial purposes may be served.

(b) Upon the proclamation of a state of emergency declared by
the President of the United States or the Governor, or upon the
declaration of a local emergency by an official, board, or other
governing body vested with authority to make such a declaration
in any county, city, or city and county, and for a period of 30 days
following that declaration, it is unlawful for a person, contractor,
business, or other entity to sell or offer to sell any consumer food
items or goods, goods or services used for emergency cleanup,
emergency supplies, medical supplies, home heating oil, building
materials, housing, transportation, freight, and storage services,
or gasoline or other motor fuels for a price of more than 10 percent
above the price charged by that person for those goods or services
immediately prior to the proclamation of emergency. However, a
greater price increase is not unlawful if that person can prove that
the increase in price was directly attributable to additional costs
imposed on it by the supplier of the goods, or directly attributable
to additional costs for labor or materials used to provide the
services, provided that in those situations where the increase in
price is attributable to additional costs imposed by the seller’s
supplier or additional costs of providing the good or service during
the state of emergency, the price represents no more than 10 percent
above the total of the cost to the seller plus the markup customarily
applied by the seller for that good or service in the usual course
of business immediately prior to the onset of the state of
emergency.

(c) Upon the proclamation of a state of emergency declared by
the President of the United States or the Governor, or upon the
declaration of a local emergency by an official, board, or other
governing body vested with authority to make such a declaration
in any county, city, or city and county, and for a period of 180
days following that declaration, it is unlawful for a contractor to
sell or offer to sell any repair or reconstruction services or any
services used in emergency cleanup for a price of more than 10
percent above the price charged by that person for those services
immediately prior to the proclamation of emergency. However, a
greater price increase is not unlawful if that person can prove that
the increase in price was directly attributable to additional costs
imposed on it by the supplier of the goods, or directly attributable
to additional costs for labor or materials used to provide the
services, provided that in those situations where the increase in
price is attributable to the additional costs imposed by the
contractor’s supplier or additional costs of providing the service
during the state of emergency, the price represents no more than
10 percent above the total of the cost to the contractor plus the
markup customarily applied by the contractor for that good or
service in the usual course of business immediately prior to the
onset of the state of emergency.

(d) Upon the proclamation of a state of emergency declared by
the President of the United States or the Governor, or upon the
declaration of a local emergency by an official, board, or other
governing body vested with authority to make such a declaration
in any county, city, or city and county, and for a period of 30 days
following that proclamation or declaration, it is unlawful for an
owner or operator of a hotel or motel to increase the hotel or
motel’s regular rates, as advertised immediately prior to the
proclamation or declaration of emergency, by more than 10 percent.
However, a greater price increase is not unlawful if the owner or
operator can prove that the increase in price is directly attributable
to additional costs imposed on it for goods or labor used in its
business, to seasonal adjustments in rates that are regularly
scheduled, or to previously contracted rates.

(e) The provisions of this section may be extended for additional
30-day periods, as needed, by a local legislative body, local official,
the Governor, or the California Legislature, if deemed necessary
to protect the lives, property, or welfare of the citizens.

(f) A violation of this section is a misdemeanor punishable by
imprisonment in a county jail for a period not exceeding one year,
or by a fine of not more than ten thousand dollars ($10,000), or
by both that fine and imprisonment.

(g) A violation of this section shall constitute an unlawful
business practice and an act of unfair competition within the
meaning of Section 17200 of the Business and Professions Code.
The remedies and penalties provided by this section are cumulative
to each other, the remedies under Section 17200 of the Business
and Professions Code, and the remedies or penalties available
under all other laws of this state.

(h) For the purposes of this section, the following terms have
the following meanings:

(1) “State of emergency” means a natural or manmade disaster
or emergency caused by conditions such as, but not limited to, air
pollution, earthquake, fire, flood, storm, epidemic, riot, drought,
sudden and severe energy shortage, begin insert or end insert plant or animal infestation
or disease for which a state of emergency has been declared by
the President of the United States or the Governor of California.

(2) “Local emergency” means a natural or manmade disaster
or emergency caused by conditions such as, but not limited to, air
pollution, earthquake, fire, flood, storm, epidemic, riot, drought,
sudden and severe energy shortage, begin insert or end insert plant or animal infestation
or disease for which a local emergency has been declared by an
official, board, or other governing body vested with authority to
make such a declaration in any county, city, or city and county in
California.

(3) “Consumer food item” means any article that is used or
intended for use for food, drink, confection, or condiment by a
person or animal.

(4) “Repair or reconstruction services” means services
performed by any person who is required to be licensed under the
Contractors’ State License Law (Chapter 9 (commencing with
Section 7000) of Division 3 of the Business and Professions Code),
for repairs to residential or commercial property of any type that
is damaged as a result of a disaster.

(5) “Emergency supplies” includes, but is not limited to, water,
flashlights, radios, batteries, candles, blankets, soaps, diapers,
temporary shelters, tape, toiletries, plywood, nails, and hammers.

(6) “Medical supplies” includes, but is not limited to,
prescription and nonprescription medications, bandages, gauze,
isopropyl alcohol, and antibacterial products.

(7) “Building materials” means lumber, construction tools,
windows, and anything else used in the building or rebuilding of
property.

(8) “Gasoline” means any fuel used to power any motor vehicle
or power tool.

(9) “Transportation, freight, and storage services” means any
service that is performed by any company that contracts to move,
store, or transport personal or business property or that rents
equipment for those purposes, including towing services, or any
service that provides transportation to persons.

(10) “Housing” means any rental housing with an initial lease
term of no longer than one year.

(11) “Goods” has the same meaning as defined in subdivision
(c) of Section 1689.5 of the Civil Code.

(i) Nothing in this section shall preempt any local ordinance
prohibiting the same or similar conduct or imposing a more severe
penalty for the same conduct prohibited by this section.

(j) A business offering an item for sale at a reduced price
immediately prior to the proclamation of the emergency may use
the price at which it usually sells the item to calculate the price
pursuant to subdivision (b) or (c).

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.