The Volokh Conspiracy

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Defense Production Act Ban on Accumulating "Scarce Materials" to Resell for More Than "Prevailing Market Prices" Not Unconstitutionally Vague

So holds a federal court.


From yesterday's decision in U.S. v. Topouzian (N.D. Ill.); seems correct to me, whatever one might think of the wisdom or propriety of such laws.

The Information in this case charges the defendant with having willfully violated the Defense Production Act of 1950, based on his allegedly intentional accumulation of approximately 79,160 N-95 respirator masks, with the intent to resell the masks at prices in "excess of prevailing market prices" {despite having received warnings from law enforcement}. These types of masks were designated by the President under the Act as "scarce materials" due to the ongoing pandemic….

The Information charges that between March 6 and April 7, 2020, including the period after they were designated as "scarce materials," the defendant accumulated approximately 79,160 N-95 masks at prices ranging from approximately $4.27 to $7 per mask, with a mean price of approximately $5.08. However, prior to the pandemic, defendant's company did not sell N-95 or similar types of masks. Between March 29 and April 22, 2020, the defendant is charged with having sold approximately 11,492 of the masks to customers at a markup of approximately 185% to 367% per mask—in some cases the masks were sold for $19.95 for a single mask….

The defendant's insistence that the lack of a specific or numerical specification of what exactly constitutes "prices in excess of prevailing market prices" requires a finding [that the law is unconstitutionally vague] is mistaken. Indeed, the argument ignores more than a century of unbroken usage of that phrase in every imaginable legal context. As noted earlier, while the phrase "prevailing market price" appeared 70 years ago in the Defense Production Act of 1950, that was by no means its debut. Quite the contrary. The phrase had been used repeatedly for more than a century by both courts and scholars, and both before and after the Act. It must not be forgotten that "[t]he requirement of reasonable certainty does not preclude the use or ordinary terms to express ideas which find adequate interpretation in common usage." …

In crafting the Defense Production Act, Congress intended the term "prevailing market prices" to mean exactly what the term stated and what it had meant throughout its long and continuous usage in this Country: i.e. those prices charged by established vendors in the relevant market, not new market entrants seeking to inflate prices above those routinely charged in the relevant market. Courts and individuals, alike, have routinely determined whether a purchase or sale was "at the prevailing market price."

The Defense Production Act's requirement that a defendant cannot accumulate for sale or sell an item specified as scarce by the President at a price exceeding "prevailing market prices" is not "void-for-vagueness." Adherence to the requirements of the Defense Production Act requires neither an exercise of prophesy nor an "exact[ion of] gifts that mankind does not possess." Unlike statutes which have been condemned under the vagueness doctrine, the DPA does not leave open "the widest conceivable inquiry, the scope of which no one can foresee and the result of which no one can foreshadow or adequately guard against."