Egg Companies Price-Gouging During Pandemic Texas Class Action

Food prices have soared during the term of Covid-19. The complaint, filed in Texas, opens its allegations by saying, “This statewide class action concerns the despicable and illegal practice of price-gouging of essential groceries, specifically eggs, during the calamitous and unprecedented Covid-19 pandemic.” It brings suit against Cal-Maine Foods, Inc. and other egg companies for “grossly marked-up eggs[.]”

The class for this action is all consumers who bought eggs in Texas that were sold, distributed, produced, or handled by any of the defendants in this case during the state of emergency declared by Governor Abbott on March 13, 2020.

This case brings suit under the Texas Deceptive Trade Practices Act, which addresses the raising of prices for necessities like food in emergencies. The complaint quotes as forbidding “selling or leasing fuel, food, medicine, lodging, building materials, construction tools, or another necessity at an exorbitant or excessive price.”

A further section of the code states that the above section is triggered when a “designated disaster period” begins, for example, when a Texas governor issues an order declaring a disaster, and it ends thirty days after the declaration expires. According to the complaint, Texas Governor Abbott issued an order declaring a disaster on March 13, 2020, and extended it repeatedly, with the last extension being on July 10, 2020.

The complaint traces the progress of the spread of the pandemic in the US, noting closed businesses, job losses, the cancellations of events, the closing of colleges and universities, and a very volatile stock market. It concludes, “The second quarter of 2020 was the worst on record in the history of the United States, as the GDP collapsed by an annualized rate of 32.9%, plunging the country into a recession for the first time in eleven years.”

The complaint alleges that the defendants are some of the largest producers of eggs in Texas and across the country.

Before the pandemic began, the complaint claims, the price of regular eggs was around $1 per dozen. In March, it almost tripled, to nearly $3 per dozen. The complaint asserts, “This increase has not been caused by an increase in the cost or difficult in producing eggs. Rather, it has been driven by increased demand, caused by the emergency situation.”

The complaint alleges that the egg producers “claim that they are simply following contracts that are tied to something called the Urner-Barry index. However, this index is not an independent market that sets the price. Rather it is simply a reflection of how much the producers choose to charge for eggs.” For that reason, the complaint claims, pushing the index price up amounts to price gouging.

Article Type: Lawsuit
Topic: Consumer
Tags: Covid-19 Related, Improper Procedures During National Emergency, Price Gouging