Major CT manufacturer among companies facing consumer lawsuits over tariff refunds

A wave of lawsuits is testing whether companies that raised prices to offset tariffs can keep the refunds they later received from the federal government. New Britain-based toolmaker Stanley Black & Decker is among the companies accused of unfairly benefiting twice — first through higher prices paid by customers and then through federal tariff refunds. More than 80 consumer lawsuits seeking class-action status have been filed against companies including Amazon, Toyota, Campbell’s and Costco. Other cases have been brought by businesses that paid tariff surcharges to suppliers or commercial partners but have not received reimbursements. Legal experts say the consumer claims face a particularly uncertain future as courts enter largely uncharted legal and logistical territory. In February, the U.S. Supreme Court ruled that the Trump administration lacked authority under the International Emergency Economic Powers Act, or IEEPA, to impose tariffs aimed at addressing persistent U.S. trade deficits and fentanyl trafficking. In the months since, the federal government has established a process to refund companies that paid IEEPA tariffs on imported goods, providing a financial boost to some businesses. Consumers bringing the lawsuits argue that companies would be unfairly enriched if they retained tariff refunds after raising prices to cover the original costs. Companies have begun countering that customers voluntarily paid advertised prices and that businesses are not required to revisit completed transactions when their underlying costs later decline. So far, at least two lawsuits have been filed against Stanley Black & Decker in Connecticut. One was brought by Or Rothschild, a finance and strategy executive from Wisconsin who says he purchased DeWalt-brand power tools. The other was filed by Karlheinz Skelton, a carpentry professional from Maine. Both seek class-action status. The cases are being consolidated as they proceed through U.S. District Court. Litigation wave Rothschild’s lawsuit says Stanley Black & Decker issued a letter in November 2024 notifying consumers that anticipated tariff actions by the incoming Trump administration would require price increases. The company also told investors in a presentation that month that tariffs could create an estimated $200 million in annualized costs and that “pricing actions” would be critical to offsetting the impact. Stanley later confirmed in public investor materials that it had implemented tariff-related price increases, including a “high-single digit U.S. Tools & Outdoor price increase.” Stanley shifted the economic burden of the tariffs to consumers through higher prices on DeWalt products while retaining, or positioning itself to recover, the same tariff payments from the federal government, the lawsuit alleges. Stanley Black & Decker did not respond to a request for comment. Rothschild’s case is being brought in Connecticut by Siri & Glimstad, a national firm best known for class action, data privacy and vaccine-exemption cases. Managing Partner Aaron Siri says the circumstances that brought about this wave of tariff cases may be unique, but he believes the underlying law is clear. “They collected it for a tax, effectively, they didn’t have to pay. You can call that unjust enrichment. It’s not fair to the consumer,” Siri told the Hartford Business Journal. He said consumers have little ability to negotiate with large companies when making retail purchases, which typically do not involve individual contracts. As is often the case with a new area of litigation, Siri said it is difficult to predict how quickly the cases will proceed or how the companies and their attorneys will respond. Hartford attorney Joshua Kons, local counsel in the case involving Skelton, said he expects more tariff-related lawsuits. Although the circumstances are unprecedented, Kons said the underlying legal claims are relatively straightforward. At the heart of the cases is the argument that companies are engaging in an unfair trade practice by retaining refunds after passing the original tariff costs on to customers. “One of our big claims is simple unjust enrichment,” he said. “If Black and Decker and these other companies receive the refund from the government, then naturally they shouldn’t just keep that, because they did raise prices.” Stanley Black & Decker detailed the financial impact of the tariff refunds in its second-quarter earnings report and during a July call with investors. Stanley reported an adjusted gross margin of 33.7%, up 6.2 percentage points from a year earlier. That included a roughly 2.5-percentage-point benefit from net tariff refunds. Adjusted earnings per share were $1.57, including an approximately 17-cent benefit from net tariff refunds, the company reported. “We will use tariff refunds to accelerate growth investments,” CEO Chris Nelson said during the call. Chief Financial Officer Patrick Hallinan said the company doesn’t have immediate plans to lower prices. “We haven’t changed list prices,” Hallinan said during the July investor call. “We don’t have an intention to do that on the downside. All we’ve been doing is dialing in promotional activity as we’ve learned more about elasticity in this post-tariff, high-inflation environment.” Hallinan also warned that inflationary pressures could lead the company to raise prices again by 2027. Pricing freedom At least one company facing such a lawsuit has begun challenging the consumers’ legal theory. Warehouse club retailer Costco asked a federal judge in May to dismiss a proposed class-action lawsuit filed against it in Illinois, according to Reuters. The company argued that the customer voluntarily purchased products at accurately posted prices and received what he paid for. Costco also argued that a retailer is not liable simply because costs that contributed to a price increase later declined. Ross Hofherr, co-leader of the international trade practice at law firm Harris Beach Murtha, said that, in hindsight, companies such as Stanley that tried to be transparent about their pricing decisions may have been better off providing less information. “As soon as you tie a price increase and a specific dollar amount to a specific event, then you have a bunch of consumers who feel as though they were wronged,” he said. Hofherr said he expects companies to argue that incorporating tariffs into product prices is no different from passing along increases in raw-material costs or other expenses. “They don’t have an obligation to be selling to consumers at the lowest possible price. They can set the prices wherever they want,” he said. Companies may also argue that consumers were not obligated to buy products at the higher prices and could have walked away from the purchases. Hofherr said that distinction could put lawsuits involving business-to-business transactions on stronger legal footing, particularly when a tariff surcharge was added to an existing contract. Harris Beach Murtha is advising companies on both sides of those disputes, which Hofherr said require close scrutiny of individual contracts. “It’s created a pretty big mess. There’s going to be a lot of litigation coming from this,” he said. Beyond the legal questions, the consumer cases pose an administrative challenge: determining how to reimburse every customer who bought a product, such as a drill bit, and may have paid only a few cents more because of the tariffs. Attorneys for the plaintiffs said they hope companies will recognize the potential reputational risks and voluntarily establish programs to reimburse customers. Hofherr agreed that companies such as Stanley Black & Decker may want to consider ways to resolve the issue, even if that means offering discounts rather than direct refunds. “There’s definitely a way that they can turn that into a positive and into a promotional campaign,” he said.