Peter Watson, Chair of CSSA Legislative & Legal Committee responded to the CSSA Board with an explanation of SB 1196:
SB 1196 was passed into law by the Gov. Newsom on 9/30/20, and amends certain parts of Cal. Penal Code Section 396 (which is CA’s price gouging law). The rules still prohibits a price increase above 10%, however, the threshold for determining that 10% calculation has potentially changed slightly, to be reviewed on a case-by-case (or unit by unit) basis. The specific revision relevant to our industry relates to the incorporation of the words “or a service,” in subsection (l). Specifically,
“(l) A business offering an item for sale, or a service, at a reduced price immediately prior to the proclamation or declaration of the emergency may use the price it normally charges for the item or service to calculate the price pursuant to subdivision (b) or (c).”
Prior to SB 1196, PC 396 only allowed for “items” (aka goods) to be considered for purposes of utilizing this exception. Now, with the inclusion of services, operators can look at the rental rates being offered immediately prior to the proclamation of emergency, and if such services was being offered for a reduced price, can arguably rely on this provision to increase the threshold to the amount “it normally charges for the … service to calculate the price…”
Hope this helps.
Also, here is a great resource for determining what counties are under a proclamation and when such proclamation will expire (https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging). Remember to always check back – it seems like every time I take a look there is a new row or an extended date. This resource link is on the CSSA website as well.
Finally, a quick CYA - I do legally not represent any of you individually, or the CSSA, so please be sure to make your own determinations on price gouging based on review with your counsel.
As always, feel free to reach out with any other questions on this topic.
Peter Watson | General Counsel
Westport Properties, Inc.