Local Puerto Rican Businesses Say Walmart, Costco, Walgreens, CVS Violated Pandemic Orders by Selling Non-Essential Goods

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The entities that operate Wal-Mart, Costco, Walgreens and CVS Pharmacy locations in Puerto Rico face a proposed class action filed by local retailers who allege the megastores “hijack[ed] the market” and immorally sold non-essential products amid the COVID-19 pandemic in violation of the commonwealth’s State of Emergency. 

According to the 25-page certified translated complaint, defendants Wal-Mart Puerto Rico, Costco Wholesale Corporation, Walgreen of Puerto Rico and Puerto Rico CVS Pharmacy sold while the island was effectively shut down “clothing, shoes, televisions, appliances, and countless other miscellaneous articles” deemed non-essential under executive orders issued by the Honorable Wanda Vázquez Garced, the Governor of Puerto Rico.

“This act had, has, and will have catastrophic effects on Puerto Rican competition and commerce,” the case reads, contending that if “immediate action is not taken,” local merchants will continue to suffer a substantial drop in business volume, causing layoffs and permanent closures.

The plaintiffs allege the defendants “profited illegally” by taking advantage of “the situation caused by the pandemic,” and thus deprived local merchants of the opportunity to compete in a fair and equitable manner. According to the case, the plaintiffs each lost thousands or millions of dollars while closed amid Puerto Rico’s pandemic-related executive orders, whereas the defendants facilitated “thousands of illegal transactions” with the sale of non-essential products. 

“Through their illegal sales, the Defendants created an oligopoly, which, selling articles, that they could not sell under the Executive Orders, they co-monopolized the Puerto Rican trade when 95% of the businesses in Puerto Rico were under compulsory closure under the Executive Orders,” the complaint alleges.

A day after the World Health Organization declared the coronavirus crisis a worldwide pandemic, the Honorable Wanda Vázquez Garced declared on March 12 a state of emergency in an attempt to mitigate the spread of the virus and prevent the collapse of the commonwealth’s health system, the lawsuit says. On March 15, a second executive order imposed a curfew and ordered the total closure of all government activities and private businesses deemed non-essential and not expressly exempt in the order until the end of the month, the complaint relays, noting that the plaintiffs’ businesses were closed to the public as a result of the governor’s action.

The March 15 executive order exempted from closure businesses that were engaged in retail sales through a drive-thru or delivery model, including those offering prepared foods, medicines or medical equipment, and pharmacies, supermarkets, gas stations, financial institutions, elder care centers and other entities related to the distribution of food, medicines, medical articles or fuel, according to the case. 

While Governor Vázquez Garced extended the curfew and store closure orders until April 12, Puerto Rico residents were allowed to engage in permitted activities from 5:00 a.m. until 7:00 p.m., and certain emergency situations, including plumbing, electric, extermination and other services necessary to maintain health and safety, could be addressed on the condition that hygiene be properly maintained and prevention measures implemented, the lawsuit says. The plaintiffs stress in the case that the order extended Puerto Rico’s curfew while allowing a short permitted activities period during the day and maintained that businesses could not sell products considered non-essential.

With a May 1 executive order, Governor Vázquez Garced extended the curfew and business closure mandates until May 25 while authorizing the opening of certain professional services, the case continues. According to the complaint, the order “is clear and consistent in prohibiting the sale of articles that are not, as far as this action is concerned, food, pharmaceutical products, and articles of first necessity.”

“The Executive Order, with its unambiguous language regarding this prohibition, prevented both the Local Merchants and the Defendant megastores and chain pharmacies from selling articles other than those allowed,” the plaintiffs contend. 

Notwithstanding the governor’s orders, however, the defendants “sold all kinds of articles,” including those whose sale was prohibited amid the early COVID-19 restrictions, the lawsuit alleges. The plaintiffs claim the defendants used Puerto Rico’s partial retail authorization “to hijack the market and make sales and retail commercial transactions” to the detriment of local sellers and “without fear of reprisal.” 

Per the complaint, the defendants “acted in tacit collusion” to violate Puerto Rico’s pandemic-induced executive orders while local businesses absorbed expenses, costs and losses. 

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