3M (NYSE:MMM) is suing Performance Supply in federal court, accusing the New Jersey–based company of misrepresenting a business relationship as it sought to price gouge New York City on N95 respirators.
Maplewood, Minn.–based 3M claims that Performance Supply was pricing N95 respirators to New York City officials at prices 500-600% over the 3M listed price in a falsely claimed business affiliation. 3M is seeking injunctive relief for Performance Supply to cease its activities and is requesting damages that will be donated to COVID-19 non-profit organizations if awarded.
“3M does not – and will not – tolerate price gouging, fraud, deception or other activities that unlawfully exploit the demand for critical 3M products during a pandemic,” 3M senior VP of corporate affairs Denise Rutherford said in a news release. “3M will not stop here. We continue to work with federal and state law enforcement authorities, and around the world, to investigate and track down those who are illegally taking advantage of this situation for their own gain.”
3M has supplied healthcare workers and first responders with N95 respirators throughout the COVID-19 pandemic, with more than 10 million distributed in just the last week of March. The company said in the lawsuit that there has been a number of scams ranging from unlawful price-gouging, fake offers, counterfeiting and other unfair and deceptive practices. 3M recently started working with law enforcement around the world to create a COVID-19 Fraud Hotline for users to call in information related to fraud and avoid counterfeit products.
“This lawsuit is only one of the many legal tools 3M is using to protect the public,” Rutherford said. “3M is also making referrals to law enforcement authorities, taking down websites with fraudulent or counterfeit product offerings, removing false or deceptive social media pages and sending cease and desist letters as a first step prior to taking further legal action.”
Despite these efforts, 3M claims that on March 30, Performance Supply sent a formal quote to New York City’s Office of Citywide Procurement with an offer to sell millions of 3M-branded N95 respirators at an inflated price of about $45 million. Performance Supply is not an authorized distributor of 3M products and has “no rights to use [3M’s] famous 3M marks,” 3M’s lawyers said in the lawsuit complaint, filed in federal court in New York City.
3M said that Performance Supply reproduced the 3M marks through the formal quote and attached it to technical specification sheets with the 3M mark to “confuse and deceive New York City officials into believing that [Performance Supply] was an authorized distributor.”
The N95 maker said that the formal quote was also made to confuse its recipients by referring to the St. Paul, Minn.–area headquarters of 3M as opposed to Performance Supply’s New Jersey headquarters, with repeated referring to the offer’s acceptance being at 3M’s discretion. 3M claims that the ruse worked and the Citywide Procurement Office prepared a Bid Evaluation Request where they mistakenly identified Performance Supply as a “vendor” of the 3M-brand N95 respirators on two occasions.
The prices offered to New York City’s Procurement Office were 500-600% above what 3M prices the N95 respirators. The lawsuit alleges that the offer “constituted extreme price-gouging by any measure, including under New York State’s statutory provision.”
3M is bringing the lawsuit against Performance Supply for federal and state trademark infringement, unfair competition, false association, false endorsement, false designation of origin, trademark dilution, false advertising and deceptive acts and practices. 3M is also seeking preliminary and permanent injunctive relief.
N95 respirators have been in short supply since the COVID-19 pandemic started. Some of the earliest reports of shortages in the U.S. occurred in early March. Since then, 3M has ramped up production of its face masks, making 1.1 billion annually with 400 million in the U.S., and has partnered with Ford to make its powered air-purifying respirators.