3M says it is trying to track down a North Texas fraudster who used its name to try to sell New York City millions of its N95 respirator masks at enormous markups at the height of the city’s coronavirus battle.
The manufacturer says in a lawsuit filed Friday in state district court in Dallas County that an unknown person used a mailbox store in Irving to offer to sell New York City officials the protective respirator masks that are in high demand.
The suit accuses the perpetrator, listed as “John Doe,” of proposing a “grossly inflated” total price of $117 million on March 30. The alleged pandemic profiteer claimed to be a 3M distributor, and the asking price was as much as 600% above what 3M charges for the respirators, the lawsuit says.
“3M does not and will not tolerate individuals or entities deceptively trading off the fame and goodwill of the 3M brand and marks for personal gain,” the lawsuit says.
New York was the nation’s largest hotspot for infection at the time and remains the epicenter of the disease in the U.S., though new statistics indicate the city may be on the downslope of the peak. Shortages of personal protective equipment in New York have led to desperate pleas for help from nurses and other health care workers on the front lines.
North Texas is still awaiting a projected surge in patients, and officials say there are enough beds and medical personnel to handle the crunch. As a result, local hospitals have not been put in the impossible position of having to accept inflated quotes for personal protection.
Pamela Bryant, Parkland Memorial Hospital’s senior vice president of supply chain management, said that market prices for such supplies have risen because of demand but that Parkland has not seen extreme hikes.
“We have been vigilant about knowing where the market is and not paying outside that range,” Bryant said in an email. “If a supplier does not get in that range, we thank them and let them know we will not overpay for their products and move to the next supplier.”
Minnesota-based 3M recently filed similar lawsuits in New York, California and Florida against entities that falsely claimed to be 3M distributors as part of alleged price-gouging schemes.
Erin Nealy Cox, the U.S. attorney in Dallas, has said that battling price-gouging during the pandemic remains a priority for her office. The Irving vendor could face federal charges. A U.S. attorney spokeswoman said she could not comment on whether the person was under criminal investigation.
3M said in its lawsuit that it was working with law enforcement authorities around the world to crack down on fraud. The company created a “3M COVID-19 Fraud hotline” that buyers can call to help spot fraud and cheap knockoffs.
The Irving-based defendant told New York City’s head of procurement in an email that it had 35 million 3M respirators for sale and that 20 million of the masks were in New York City, according to the lawsuit.
3M said in the suit that such “extreme price-gouging” had sullied its reputation. The defendant, it said, is among a cadre of “unsavory characters” who have sought to take advantage of beleaguered health care workers on the front lines of the pandemic.
“The mere association of 3M’s valuable brand with such shameless price-gouging harms the brand, not to mention its more serious threat to public health agencies that are under strain in the midst of worldwide pandemic,” the lawsuit says.
The alleged fraudster used the name “3M Company Trust Account" in emails to New York City officials, according to the lawsuit.
The defendant claimed to have a New York representative who could sell the city two different models of 3M’s N95 respirator masks for $5.75 each. The defendant claimed to have 20 million of one model and 500,000 of the other.
The defendant’s quote of $5.75 for one brand of the respirator was up to 560% higher than what 3M charges for the mask, which is $1.02 to $1.31. The other quote was about 450% higher than the listed price of $1.27. Such price-gouging was an “equally detestable element of Defendant’s unlawful conduct,” the lawsuit says.
New York City officials prepared a “Letter of Intent” in response to the quote, according to the lawsuit.
An email from a city official, included in the lawsuit, illustrates the city’s desperation as dangerous shortages of such equipment continued while hospital ICUs overflowed with COVID-19 patients.
“But we also need to see proof of life. If there’s 20 million masks in NYC, where can see them? I’ll drive there tonight,” Daniel Symon, the city’s chief procurement officer, wrote in an email to the defendant. “What payment terms are being suggested? Can you send quote? What is the name of the company?”
The Dallas lawsuit seeks unspecified damages for alleged trademark infringement, unfair competition, false association, false endorsement, false designation of origin, trademark dilution, false advertising and deceptive acts and business practices.
3M said it would donate any money it recovers through the lawsuit to “charitable COVID-19 relief efforts.”
In addition to its well-known N95 respirators, the company sells stethoscopes, medical tape, surgical gowns, bandages and other wound-care products.
The company has weathered some bad publicity because of the actions of unscrupulous third parties despite the fact that 3M has not raised its prices during the outbreak.
“Such conduct has inspired intense public criticism of the manner in which plaintiff’s respirator masks are being distributed and sold during the COVID-19 pandemic,” the lawsuit says. “Defendant’s conduct imminently and irreparably harms plaintiff’s 3M brand.”
3M says in the lawsuit that it has ramped up production in response to the public health crisis after already supplying health care workers with 10 million of its N95 respirators during the last week of March. The company says it plans double its current annual global production of 1.1 billion respirators.
“In response to the COVID19 outbreak and surge in need for N95 respirators," it says, "3M has doubled its global output rate to nearly 100 million respirators per month, and it expects to produce around 50 million respirators per month in the United States by June 2020.”