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Jeffrey S. Chiesa,
Attorney General

Division of Consumer Affairs
Eric T. Kanefsky, Acting Director

 

 

For Immediate Release:
November 28, 2012
For Further Information Contact:
Jeff Lamm
Neal Buccino
973-504-6327

 

Christie Administration Files New Price Gouging Lawsuits Against Ten More New Jersey Businesses, Including Seven Hotels, Collectively Accused of More Than 1,000 Instances of Price Gouging, Following Hurricane Sandy

NEWARK - Governor Chris Christie, Attorney General Jeffrey S. Chiesa, and the New Jersey Division of Consumer Affairs today announced New Jersey’s second round of price gouging lawsuits, against 10 businesses accused of illegally overcharging consumers during the Hurricane Sandy state of emergency.

The Attorney General’s newest lawsuits include seven hotels, collectively accused of committing more than 1,000 instances of price gouging.  The hotels allegedly charged more than $400 per night in some instances, and excessively increased the rates for rooms by varying amounts, up to more than 200 percent.

Three of the hotels are owned by an affiliated group of companies, Ratan Hospitality Group, based in North Bergen.  The Ratan Hospitality hotels include a Ramada Inn in East Orange, a Holiday Inn Express in North Bergen, and a Howard Johnson Express hotel in Clifton.  Additionally, earlier this month, in its first round of price gouging lawsuits, the State sued a fourth Ratan Hospitality hotel, a Howard Johnson Express in Parsippany.  The four Ratan Hospitality hotels allegedly engaged in a total of more than 500 separate incidents of price gouging during the state of emergency.

Violations of New Jersey’s price gouging statute are subject to civil penalties of up to $10,000 for a first offense and up to $20,000 for each subsequent offense.  Under the law, each individual sale of merchandise is considered a separate and distinct event.  Thus, all of the businesses charged in this latest round face substantial penalties for their alleged actions.

“The last thing people put out of their homes in a natural disaster should have to confront is price gouging from unscrupulous profiteers,” said Governor Christie. “It’s illegal, offensive and completely opposite the spirit of cooperation we saw just about everywhere else in our state in the aftermath of Hurricane Sandy. I encourage more of the same treatment from the Attorney General for any other instances of price gouging he discovers.”

The newest lawsuits also name three more gas stations, including one that allegedly raised the price of regular gasoline by 80 cents to $4.50 per gallon – a 22 percent increase above pre-storm rates. Each of the civil lawsuits was filed by the Division of Law on behalf of the Division of Consumer Affairs.

The four Ratan Hospitality-owned hotels named as defendants in the Attorney General’s lawsuits to date are:

  • Howard Johnson Express-Clifton, at 680 Route 3 West, Clifton.  This hotel allegedly charged as much as $449.99 per room night during the state of emergency.  That represents an increase of or 151 percent above the highest rate charged prior to the state of emergency, which was $179 per room night. This hotel allegedly engaged in 177 instances of price gouging during the state of emergency.
  • Holiday Inn Express, 2600 Tonnelle Avenue, North Bergen.  This hotel is accused of charging as much as $399.99 per room night during the state of emergency.  That represents an increase of 92 percent above the highest rate charged immediately prior to the state of emergency, which was $208 per room night.  This hotel allegedly engaged in 109 instances of price gouging during the state of emergency.
  • Ramada Inn, 120 Evergreen Place, East Orange. This hotel allegedly engaged in 208 instances of price gouging.  In more than 90 of those instances, the hotel raised its rates by more than 30 percent above the highest rate charged prior to the state of emergency, which was $130 per room night. 
  • Howard Johnson Express-Parsippany, at 625 Route 46 East, Parsippany. This hotel was named in New Jersey’s first round of price gouging lawsuits, announced November 9, 2012 (view release). The hotel allegedly charged as much as 32 percent above the highest rate it charged for certain rooms prior to the state of emergency.  This hotel allegedly engaged in 15 instances of price gouging during the state of emergency.

“This one company and its four hotels allegedly committed a staggering number of violations of the price gouging law, and each separate violation merits a penalty of up to five figures,” Attorney General Chiesa said.  “Safe, comfortable lodging is not a luxury when people have been displaced from their homes during a state of emergency.  It is a basic necessity.  We have no tolerance for businesses seeking to unlawfully profit from the desperation of others during this unprecedented storm.”

The lawsuits announced today also include four hotels under separate ownership:

  • Comfort Suites, at 220 Route 17 Mahwah, owned by Tapah, LLC. This hotel allegedly raised its room rates by varying excessive amounts, up to 208 percent.  The hotel allegedly charged $219 after the storm, for a room that was rented at $71.20 prior to the state of emergency. The hotel allegedly engaged in price gouging on 473 instances during the state of emergency.
  • America’s Best Value Inn, at 1311 Route 22 West, Phillipsburg, owned by Om Dutt, LLC.  This hotel allegedly raised its room rates by varying excessive amounts, up to 191.6 percent.  The hotel allegedly charged $350 after the storm, for a room that was rented at $120 prior to the state of emergency. The hotel allegedly engaged in price gouging on 30 instances during the state of emergency.
  • A-1 Motel, at 616 West White Horse Pike, Cologne, owned by A. Classic Corporation. This hotel allegedly raised its room rates by varying excessive amounts, up to 117 percent.  The hotel allegedly charged as much as $108.70 during the state of emergency, compared with its highest pre-storm rate of $50 per room night.
  • Extended Stay America, at 3450 Brunswick Pike, Princeton, owned by ESA P Portfolio LLC.  This hotel allegedly raised its room rates by varying excessive amounts, up to 59.8 percent.  The hotel allegedly charged as much as $154.99 for double rooms during the state of emergency, compared with its highest pre-storm rate for double rooms of $96.99.  The hotel allegedly engaged in price gouging on 107 instances during the state of emergency.

The lawsuits also include three gas stations:

  • Jenny’s Shell Station, LLC, at 461 Bloomfield Avenue, Bloomfield.  This gas station allegedly raised the price for cash sales of regular gas from $3.70 per gallon to $4.50 per gallon, an increase of 22 percent, during the state of emergency.  The company also allegedly raised the price for cash sales of plus-grade gasoline and “V-Power” gasoline by 18 and 17 percent, respectively.  It also allegedly violated the price gouging law by increasing its markup from cost for regular gasoline by 23 percent.  The Division of Consumer Affairs received complaints from approximately 12 consumers about this company.
  • Empire Oil, LLC, d/b/a Delta at 7319 Bergenline Avenue, North Bergen. This gas station allegedly raised the price for cash sales of regular gas from $3.40 per gallon to $4.10 per gallon, an increase of 21 percent, during the state of emergency. The company also allegedly raised the price for cash sales of supreme-grade gasoline by 22 percent. It also allegedly violated the price gouging law by increasing its markup from cost by as much as 14 percent, after receiving shipments of fuel on November 2 and 3. The Division of Consumer Affairs received complaints from approximately 10 consumers about this company.
  • Shiv Shivam Inc., d/b/a Lukoil at 152 Old New Brunswick Road, Piscataway.  This gas station allegedly raised the price for cash sales of regular gas from $3.49 to $4.50 per gallon during the state of emergency – while the cost to the station for regular gasoline increased by only 7 cents per gallon.  The business allegedly violated the price gouging law by raising its markup from cost for regular gasoline by 17.5 percent.  The Division of Consumer Affairs received complaints from approximately 16 consumers about this company. 

Eric T. Kanefsky, Acting Director of the New Jersey Division of Consumer Affairs, said, “Hurricane Sandy brought out the best in most New Jerseyans.  There were, however, certain retailers in the state who allegedly attempted to capitalize on the misfortune of our residents by unlawfully increasing the price of essential items such as shelter and fuel.  Since the storm, the Division of Consumer Affairs has been vigilant about taking these few retailers to task.  The Division will continue these efforts until all allegations of price gouging have been investigated and, the businesses who violated New Jersey’s consumer protection laws have been held accountable.”

New Jersey’s price gouging statute, N.J.S.A. 56:8-107, et. seq., prohibits excessive price increases during a declared state of emergency or for 30 days after the termination of the state of emergency. Excessive price increases are defined as more than 10 percent higher than the price at which merchandise was sold during the normal course of business prior to the state of emergency. If a merchant faces additional costs during the emergency, prices may not exceed 10 percent above the normal markup from cost.

Acting Director Kanefsky noted that the Division of Consumer Affairs has received more than 2,000 consumer complaints since Governor Christie declared a state of emergency on October 27 – an unprecedented number in such a short period of time.  With the lawsuits announced today, the Division of Consumer Affairs has filed suit against a total of 18 New Jersey businesses accused of price gouging (view press release). 

Investigators Michael Costello, Michelle Davis, Roger Hines, John Kulina, Patrick Mullan, Jared O’Cone, and Joseph Rothstein, of the Division of Consumer Affairs’ Office of Consumer Protection, conducted the investigations.  Deputy Attorney General Lorraine Rak, Chief of the Consumer Fraud Prosecution Section, as well as Deputy Attorneys General Glenn Graham, Jah-Juin Ho, Nicholas Kant, Lindsay Smith Puteska, Lorena Salzmann, Patricia Schiripo, Alina Wells, and Special Deputy Attorneys General Labinot A. Berlajolli and Krima Shah represented the state in these actions.

Consumers who suspect price gouging or any other violation of consumer protection laws, particularly as a result of Hurricane Sandy, are urged to call the Division of Consumer Affairs at 800-242-5846.

Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file a complaint with the New Jersey Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.

Follow the Division of Consumer Affairs on Facebook, and check our online calendar of upcoming Consumer Outreach events.

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