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More price-gouging suits filed in Sandy’s aftermath

By Harvy Lipman, The Record (Hackensack, N.J.) –

HACKENSACK, N.J. — Ten more businesses are being sued by New Jersey for alleged price gouging in the aftermath of Superstorm Sandy.

The complaints filed between Nov. 20 and Monday bring the total number accused by the attorney general of illegally taking advantage of storm victims to 18, all of them hotels or gas stations. The state brought its first round of price-gouging lawsuits against eight businesses on Nov. 8.

The newer claims encompass more than 1,000 allegations against seven hotels, accused of nearly quadrupling their room rates in some instances during the state of emergency declared in response to the storm.

Lawyers for the hotel companies said the state was failing to take into account extenuating circumstances that pushed up the businesses’ operating costs following the storm.

Three gas stations also were sued, with the state citing 38 consumer complaints against them.

Under state consumer-protection laws, any price increase of more than 10 percent during an emergency is considered illegal price-gouging.

“The last thing people put out of their homes in a natural disaster should have to confront is price-gouging from unscrupulous profiteers,” Gov. Chris Christie said in a statement issued Wednesday announcing the lawsuits. “It’s illegal, offensive and completely opposite the spirit of cooperation we saw from just about everywhere else in our state.”

Most of the alleged instances of price-gouging occurred at hotels and motels. The state accused Comfort Suites on Route 17 in Mahwah of violating the law 473 times between Oct. 27 and Nov. 7. The biggest price increase, according to the lawsuit, involved charging $219 after the storm for a room that was rented at $71.20 prior to the state of emergency being declared.

Another North Jersey company, Ratan Hospitality Group in North Bergen, was charged with more than 500 instances of price gouging at its four hotels: the Howard Johnson Express-Clifton, on Route 3 west; the Holiday Inn Express on Tonnelle Avenue in North Bergen; the Ramada Inn in East Orange and the Howard Johnson Express-Parsippany.

“This one company and its four hotels allegedly committed a staggering number of violations,” said Attorney General Jeffrey S. Chiesa, who noted that price gouging carries a potential fine of $10,000 for the first instance and up to $20,000 for each subsequent time someone was overcharged. “Safe, comfortable lodging is not a luxury when people have been displaced from their homes.”

Lawyers for the hotel companies countered that the business faced increased costs that justified the higher prices.

“On average there were between six and 10 people to a room after the storm, and hotels are allowed to charge additional fees for having extra people in a room,” noted James Seplowitz, a Hackensack lawyer representing Comfort Suites. “The hotel incurred a lot of additional costs due to the high occupancy rates. The staff were working around the clock.

“Each room comes with a free breakfast, so there were additional food costs,” Seplowitz said. “The rooms normally come with amenities for two people: soap, shampoo, towels, so all of that had to be provided. I don’t think anyone would suggest that the hotel should eat those extra costs.”

Seplowitz asserted that the pre-storm rates the state is using for comparison are misleading.

“Many of the lower rates before the storm were due to the fact that the rooms were being rented by corporate clients at reduced rates. You could have a room that goes for $199 a night but that was occupied by a corporate client for $120,” he said. “The percentage that the attorney general is claiming the rates were inflated by may be skewed.”

Patrick McGovern, a Newark lawyer representing the Ratan Group, said his client faced similar situations.

“We pointed that out to the Attorney General’s Office,” he said. “You can’t say they should be charging the same rates when the costs were so much greater.”

McGovern added that he is in the process of setting up a meeting with the state’s lawyers.

“We will cooperate fully,” he added. “We’re very much interested in getting these claims resolved.”

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