Bronson, McCollum Announce Groundbreaking Settlement In Morgan Stanley Price Gouging Investigation
For Information, Contact:
Terence McElroy
(850) 488-3022
Sandi Copes
(850) 245-0150
July 13, 2009
TALLAHASSEE - Florida Agriculture and Consumer Services Commissioner Charles H. Bronson and Attorney General Bill McCollum announced today a groundbreaking $2.275 million settlement with Morgan Stanley Capital Group Inc. and a subsidiary, TransMontaigne Product Services Inc. The settlement resolves a price-gouging investigation into price increases for fuel in the aftermath of Hurricane Ike last September. The multimillion dollar settlement is the largest ever paid under the state’s price-gouging law and may be the largest price gouging settlement obtained nationally to date.
“The message here is that we will confront any instances of our citizens being exploited during an emergency,” Commissioner Bronson said. “And if we find that a retailer is simply passing on artificially inflated costs that he or she has had to incur, we will continue digging until we get to the source of it.”
Added Attorney General McCollum:
“Price gouging victimizes people already dealing with a disaster, and big business needs to be held accountable for any involvement in this behavior,” Attorney General McCollum said. “I appreciate Morgan Stanley’s efforts to resolve this matter and set a high standard for the rest of the fuel suppliers in the state.”
Morgan Stanley is a wholesaler of motor fuel in Florida, and TransMontaigne provides marketing, storage and transportation services for Morgan Stanley’s gasoline. Last September, during a declared state of emergency for Hurricane Ike, fuel prices in Florida increased by $1.60 a gallon or more virtually overnight, triggering thousands of complaints to both Commissioner Bronson and Attorney General McCollum’s price-gouging hotlines.
Investigators for the two offices determined that for the most part, retailers were simply passing on price increases that they were forced to pay by their suppliers.
As a result of that finding, Commissioner Bronson subpoenaed records of the 16 largest oil terminal operations in Florida, including TransMontaigne, and Attorney General McCollum jointly subpoenaed TransMontaigne and others seeking gasoline sales information to determine whether the price increases were legally justified.
Today’s settlement is believed to be the first case in the nation in which a fuel supplier – and not a retailer – has agreed to pay unjust enrichment and civil penalties for increasing fuel prices during a declared state of emergency. Because no gasoline retailers were associated with the investigation, consumer restitution from retailers was not possible.
Under terms of the settlement, Morgan Stanley and TransMontaigne will pay the state $650,000 in unjust enrichment, and the maximum $25,000 civil penalty for each of the five days during which price gouging allegedly occurred, for a total of $125,000. In addition, they will pay the state $1.5 million to further future consumer protection activities in Florida and reimburse the state for its fees and costs.
Morgan Stanley and TransMontaigne entered into the agreement without admitting any liability, but the two companies have agreed to abide by Florida’s price-gouging statute in the future.
The Commissioner and Attorney General acknowledged that Morgan Stanley officials were cooperative throughout the investigation.
-30-
