3M Fights Phantom-Mask Sales in Multiple Federal Courts: Fractured Marketplace Opens Opportunity for Shady Sellers

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The COVID-19 pandemic, along with the government’s piecemeal response, has triggered a mad scramble for protective masks, leading to a Wild West approach to sales and procurement. But one of the largest mask makers is fighting back against what it sees as unscrupulous sellers.

3M filed three federal lawsuits alleging three companies in California, Florida and New York, were selling fake or even nonexistent 3M-branded medical masks.

“At least one of the lawsuits involved selling or trying to sell property to the federal government as if it were a 3M product,” said Andrew S. Pollis, professor of law at Case Western Reserve University in Cleveland. “In addition to 3M having a clear right to pursue this complaint under the Lanham Act, it’s also criminal, I presume, if the allegations are true.”

The Lanham Act prohibits trademark infringement, trademark dilution and false advertising.

In New York’s Southern District, 3M sued Performance Supply, alleging the company advertised and offered for sale N95 respirators at exorbitantly inflated prices during the coronavirus pandemic.

“Such conduct has inspired intense public criticism of the manner in which 3M’s respirators are being distributed and sold during the COVID-19 pandemic and significant confusion about 3M’s role in the marketplace for respirators that are essential to safeguarding public health,” wrote 3M’s Attorney John P. Mancini. “Defendant’s conduct imminently and irreparably harms Plaintiff’s 3M brand.”

New York Gov. Andrew Cuomo made wearing masks or facial coverings mandatory in public on April 17. Statewide, some 362,764 are coronavirus-positive and 23,488 have died, according to the New York Department of Health.

U.S. District Judge Loretta Preska granted 3M’s request for a preliminary injunction.

“The protection of healthcare professionals who are putting their lives on the line in the fight against COVID-19 is in the public interest,” Judge Preska wrote in her May 4 order. “Those brave and selfless professionals deserve trustworthy supply lines of authentic PPE, including N95 respirators, that are free of misrepresentations, false designations of origin, and unscrupulous profiteering.”

In the Eastern District of California, 3M also sued Utah-based Rx2Live for allegedly deceptively price-gouging Fresno-based healthcare provider Community Medical Centers (CMC).

The complaint alleges RX2Live sold or offered to sell 3M’s branded N95 respirators for prices four to five times those charged by 3M. The defendant answered the lawsuit by denying the allegations and arguing that they acted as a sales agent for a third-party supplier of 3M’s N95 respirators.

“Defendants are not authorized 3M dealers or distributors and further state that they never purported to be same,” wrote Attorney Lloyd M. Eisenberger in his May 15 filing. “Defendant RX2Live provided a purchase order form and price list supplied by the third-party for which it served as a sales agent for four days.”

The lawsuit complains that Rx2Live representative Virginia Cooper contacted CMC by email to advertise PPE products available through Rx2Live, including 3M-brand N95 respirators, and Cooper allegedly perpetrated the fraud over a few days by providing CMC with additional promotional materials, including a price list and a PowerPoint presentation.

“The PowerPoint presentation stated that a minimum order of 10 million masks was required at grossly inflated purchase prices of $52 million for surgical masks and $49.5 million for standard masks compared to 3M’s list prices of $12.7 million and $10.2- $13.1 million, respectively,” wrote 3M’s attorney Mr. Giali. “Virtually all of these statements are false, deceptive, and/or unlawful.”

Federal Magistrate Judge Stanley A. Boone granted 3M’s requested temporary restraining order.

“Somebody was trying to trade off of 3M’s good name and even in normal times that would be unacceptable but particularly in a pandemic where the quality of the product really matters is terrifying,” Mr. Pollis told PacerMonitor News.

As of May 26, the California Department of Health reports 94,558 coronavirus cases statewide and 3,795 fatalities.

In the Middle District of Florida Orlando Division, 3M sued Geftico for allegedly attempting to sell tens of millions of N95 medical masks to the federal government’s Division of Strategic National Stockpile at a higher price. The Centers for Disease Control and Prevention investigated and found the masks didn’t exist.

The Department of Health reports that 50,414 Floridians have coronavirus and 2,252 have died as of May 25.

According to 3M’s attorney Joseph M. Wasserkrug, Geftico blamed elevated prices on 3M, claiming the company had changed prices several times in just a few days when, in actuality, 3M had not changed the prices it charged for respirators.

“Such conduct has inspired intense public criticism of the manner in which 3M’s respirator masks are being distributed and sold during the COVID-19 pandemic and significant confusion about Plaintiff’s role in the marketplace for masks that are essential to safeguarding public health,” stated Mr. Wasserkrug in his April 14 complaint.

The parties reached a settlement to resolve the Florida proceedings on May 14, but 3M’s California and New York cases march on along with the increasing number of positive COVID-19 cases.

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