Major US retailers are sued for egg 'price gouging'
Walmart, Costco and many more are under fire
Legal action is being taken against some of the biggest producers, wholesalers and retailers in the US for allegedly 'price gouging' eggs amid the Covid-19 pandemic. A class action lawsuit is under way in California, and a number of high profile retailers are receiving accusations.
Among them is superstore giant Walmart, which also owns the UK supermarket chain Asda. Amazon, Trader Joe's, Kroger and Costco have been named too.
Cal-Maine Foods is receiving the bulk of the criticism. Cal-Maine Foods is the country's largest egg producer, providing around 19% of the USA's eggs. It has an astonishing 36.2 million laying hens, and last year sold 1,038.9 million dozen eggs.
During the pandemic, the company upped its prices by 300%. At least one lawsuit that alleges the price for a dozen eggs increased from $1 to $3.44 despite no interruption to its supply chain.
It issued a statement saying, "Cal-Maine Foods strongly denies these allegations and will vigorously defend itself against the lawsuit.
"Cal-Maine has not exploited this tragic national pandemic for gain. Cal-Maine Foods is the largest producer and distributor of fresh shell eggs in the US and sells the majority of its shell eggs in states across the southwestern, southeastern, mid-western and mid-Atlantic regions.
"The company’s 3,490+ employees have worked hard during this crisis to meet increased consumer demand. In doing so, Cal-Maine Foods has not changed its longstanding approach to pricing. Any allegation to the contrary is simply not true.
"There has always been great volatility in the egg pricing market. The Covid-19 pandemic caused a massive disruption in every sector of the economy, including the egg industry.
"Retail demand for eggs reached historically high levels and egg prices increased significantly in line with those demand trends. However, egg prices have since declined quickly to pre-Covid-19 levels."
The complaint has been filed by law firm Davis & Norris in the US District Court for the Northern District of California. It claims that the defendants used the coronavirus emergency to up the prices of eggs.
In the complaint, the lawyers state, "This California class action concerns the despicable and illegal practice of price-gouging of essential groceries, specifically eggs, in the midst of the ongoing and unprecedented pandemic.
"Plaintiffs and the class they seek to represent bought grossly marked-up eggs through the supply chain created by the defendants, which includes producers, wholesalers, and retailers.
"Because consumers such as plaintiffs lack access to information about which of the defendants, or all of them, participated in the price-gouging resulting in a near-tripling of egg prices in the past 30 days, plaintiffs have sued all the defendants in the alternative.
"Plaintiffs cannot assert that every defendant engaged in price-gouging, but plaintiffs can and do assert that some or all of these defendants illegally marked up egg prices following the Governor’s declaration of an emergency in violation of California law."
California Governor Gavin Newsom declared a state of emergency of emergency on March 4 as cases of Covid-19 began to grow in the United States.
"As in any time of economic turmoil, there are those who seek to profit from the misery of millions," the lawyers say in their complaint.
"Defendants, who are producers, wholesalers and retailers of eggs, comprise one such set of actors seeking to unfairly profit from the increased consumer demand for eggs in the midst of the ongoing crisis.
"Again, because it is impossible for consumers such as plaintiffs to obtain information concerning the secretive process of price-setting, this lawsuit does not assert that each and every defendant engaged in price-gouging. Rather, plaintiffs assert that, at a minimum, some of these defendants did so."
Price gouging is prohibited in Californian law, and the lawyers argue that egg prices have remained much more than 10% higher than they were before the state of emergency was declared.
Both Costco and Trader Joe’s have publicly denied any wrongdoing.