State v. Big Bro. SEC. Programs

Vermont Superior Court·Decided April 27, 2020·No. 326-4-20 Cncv·Published

Opinion

State v. Big Bro. Sec. Programs, No. 326-4-20 Cncv (Toor, J., Apr. 27, 2020).

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the accompanying data included in the Vermont trial court opinion database is not guaranteed.]

STATE OF VERMONT

SUPERIOR COURT CIVIL DIVISION Chittenden Unit Docket No. 326-4-20 Cncv

State of Vermont vs. Big Brother Security Programs and Palmer

ENTRY REGARDING MOTION

. Title: Motion for Preliminary Injunction (Motion 1) Filer: State of Vermont Attorney: Justin E. Kolber Filed Date: April 13, 2020 Opposition filed April 20, 2020 by Ernest M. Allen, Attorney for Defendants

The State of Vermont brings this case against defendants Big Brother Security Programs Inc. and Shelley Palmer, alleging that they have engaged in unconscionable price-gouging of essential personal protective equipment during the COVID-19 pandemic in violation of the Vermont Consumer Protection Act. The State seeks a preliminary injunction barring defendants from such sales. The court held a preliminary injunction hearing on April 22, a date agreed on by the parties. The parties agreed that the sworn declarations of the State’s witnesses—David Cheney, Michael Schirling, and Shea Bellino—would be treated as their direct testimony, and they were all made available for cross-examination by defense counsel. The parties stipulated to the admission of all the exhibits that had previously been submitted by both sides. Both sides chose to present oral argument on the record rather than filing post-hearing memoranda.

Findings of Fact

The court finds the following facts to be established by a preponderance of the evidence for purposes of this motion. Because this is a preliminary hearing, these facts

are not necessarily binding for future proceedings. The court could reach contrary conclusions with a more through presentation of evidence at trial.

On March 13, Governor Scott declared a state of emergency due to the COVID-19 crisis. Executive Order No. 01-20. That Order noted the March 11 declaration of a COVID- 19 pandemic by the World Health Organization, and among other things placed restrictions on travel, visits to residential care facilities and hospitals, and non-essential gatherings. The Order noted:

it is critical we take steps to control outbreaks of COVID-19, particularly among those who are elderly or already have underlying chronic health conditions, to minimize the risk to the public, maintain the health and safety of Vermonters, and limit the spread of infection in our communities and within our healthcare facilities.

Id. at 1-2.

Defendant Big Brother Security Programs, Inc. is solely owned and managed by Palmer. Its primary business is transporting patients for non-emergency medical treatment. Palmer also has several other businesses, including selling gold bullion, importing renewable energy systems from China, and renting medical equipment such as wheelchairs. Big Brother was not in the business of selling personal protective equipment (PPE) prior to March of this year. Neither Big Brother nor Palmer are certified resellers of PPE.

Palmer has contacts in China and realized that PPE was going to be necessary as the COVID-19 pandemic hit the United States. Through his contacts he obtained thousands of surgical masks. He claims that he paid 55 to 60 cents per mask. He proffered an email that appears to show 60-cent and 65-cent prices (5,000 masks for $3,000 and 5,000 makes for $3,250). Ex. A. However, an invoice in one of the boxes of masks he sold

shows that he paid 10 cents per mask. Ex. 2. Palmer claims that the invoice is a fraudulent document created by someone he does not know for purposes of getting the masks though U.S. customs easily and without a customs duty. The court does not find Palmer’s testimony on that issue to be credible, given the fact that—as discussed below—his testimony on other matters was obviously false. The court finds that he paid ten cents per mask.

Palmer went to Central Vermont Medical Center (CVMC) on March 16 and spoke to David Cheney, the Director of Patient Support Services. They apparently knew each other already, presumably from Palmer’s medical transport business. Palmer told Cheney he had surgical masks available for sale. Cheney asked for samples and pricing. On March 17, Palmer returned with a sample pack of 50 masks and quoted a price of $2.50 per mask. He said they were “considered in China as N95 masks.” Cheney could see they were clearly only surgical masks.

Palmer told Cheney he was “here to help” and was not making a profit on the masks. That was clearly false. Cheney told Palmer the hospital usually paid 6 cents per mask, but that the hospital “had little choice due to the impending PPE shortages and need to keep patients and employees safe.” Cheney Declaration at 9. Cheney had the samples reviewed by the hospital’s quality control department, which found that they met standards for surgical masks. He then received approval to purchase them, and bought 9,500 on March 18, 15,ooo on March 20, and 18,000 on March 24, all for $2.50 per mask. CVMC paid 6 cents per mask prior to the COVID-19 crisis. During the crisis, it has paid other sellers up to 30 or 40 cents per mask. CVMC paid the much higher prices for Palmer’s masks because of concerns about the supply shortage and the need to protect

employees and visitors. CVMC currently has a large shipment of PPE on order that it is having trouble getting into the United States.

The invoices to CVMC from Big Brother falsely described them as N95 masks. The original packaging in which the masks came did not say N95, but only “face masks.” Exs. 4c, 4d. In one of the boxes was an invoice from the manufacturer showing a sale price of 10 cents per mask. Ex. 2.

Mr. Palmer tried to sell the masks to Champlain Medical Urgent Care on March 17.

The conversation was recorded on the office video system. Palmer held two packets of masks wrapped in plastic and offered them to the practice for $2.50 a mask. He said: “these aren’t the fancy ones, these are regular industrial N95s.” The medical assistant, Shea Bellino, looked at the package and said: “these look like surgical masks to me, not the N95s.” A coworker held up an N95 mask and showed Palmer what N95s look like. Palmer responded: “those each have the same rate” and asserted that his were N95s because they had “the aluminum that goes on your nose.”

Bellino’s declaration adds to what can be heard on the video. She explained that aluminum on the mask does not make it an N95 mask. Bellino is familiar with such masks because the clinic specializes in occupational health services and many of the clinic’s patients are sent by their employers to be fitted for respirators. She routinely conducts N95 fit testing and was clear that Palmer’s masks were not N95s. The practice declined to purchase them. Bellino Dec. ¶¶ 9-12.

The same day, Palmer approached the Vermont Department of Public Safety with an offer to sell it masks. He met with Commissioner Michael Schirling, and showed him a box of masks that Palmer stated were N95 masks. Palmer offered to sell 10,000 masks for $2.50 each. Schirling and Deputy Commissioner Christopher Herrick examined the

masks and, being familiar with N95 masks, immediately saw that they were merely surgical masks. They told Palmer the price was too high for surgical masks, which should be under $1.00, and declined to purchase them. Palmer continued to maintain that they were N95 masks. Palmer asserts that Commissioner Schirling is lying both about Palmer claiming they were N95 masks, and about Schirling saying the price was too high for surgical masks. The court disagrees, and finds Commissioner Schirling credible.

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State v. Big Bro. SEC. Programs, (Vt. Ct. App. 2020).

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