Amended in Senate August 19, 2016

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

(Principal coauthor: Assembly Member Wilk)

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 begin delete disaster or emergency caused by conditions such as, but not limited to, air pollution, end delete begin insert emergency resulting from an end insert earthquake, begin delete fire, end delete flood, begin insert fire, riot, end insert storm, begin delete epidemic, riot, end delete drought, begin delete sudden and severe energy shortage, or end delete plant or animal infestation or disease, begin insert or other natural or manmade disaster end insert 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 other 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 begin delete the transportation of persons and end delete 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 begin delete changes end delete begin insert changes, including, among others, a specification that these provisions apply to both a state of emergency and a local emergency, end insert and begin insert would end insert 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 begin delete emergencies
and major disasters, end delete begin insert a state of emergency or local emergency, end insert
including, but not limited to, begin delete air pollution, earthquakes, fires,
floods, civil disturbances, storms, and other natural and manmade
disasters, end delete begin insert an earthquake, flood, fire, riot, storm, drought, plant or
animal infestation or disease, or other natural or manmade
disaster, end insert 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 begin insert or local emergency end insert 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 begin insert or local emergency end insert for goods
and services that are vital and necessary for the health, safety, and
welfare of consumers. Further, 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 begin insert proclamation or end insert 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
begin insert or declaration end insert 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 begin insert emergency or
local end insert 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 begin insert emergency
or local end insert 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 begin insert proclamation or end insert 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 begin insert or declaration end insert
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 begin insert emergency or local end insert
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 begin insert emergency
or local end insert 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 begin delete disaster
or emergency caused by conditions such as, but not limited to, air
pollution, end delete begin insert emergency resulting from an end insert earthquake, begin delete fire, end delete flood,
begin insert fire, riot, end insert storm, begin delete epidemic, riot, end delete drought, begin delete sudden and severe energy
shortage, or end delete plant or animal infestation or begin delete disease end delete begin insert disease, or other
natural or manmade disaster end insert 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 begin delete disaster
or emergency caused by conditions such as, but not limited to, air
pollution, end delete begin insert emergency resulting from an end insert earthquake, begin delete fire, end delete flood,
begin insert fire, riot, end insert storm, begin delete epidemic, riot, end delete drought, begin delete sudden and severe energy
shortage, or end delete plant or animal infestation or begin delete disease end delete begin insert disease, or other
natural or manmade disaster end insert 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 begin delete services, or any
service that provides transportation to persons. end delete begin insert services. end insert

(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 begin insert or declaration end insert 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.