AUSTIN, Texas — Update: On Aug. 17, Cal-Maine Foods Inc. issued a statement regarding the dismissal of a State of Texas lawsuit alleging price gouging against the company during the COVID-19 pandemic. The company's motion to dismiss was granted on Aug. 13. The original petition has been dismissed with prejudice.
"We are grateful the Court dismissed with prejudice all claims brought by the State of Texas against Cal-Maine Foods. As we demonstrated to the Court in our court filings and during oral argument, Cal-Maine Foods has never engaged in price gouging. Since 1957, we have strived to operate with honesty and integrity and will continue to do so going forward. We will also continue to do our part to help those affected by COVID-19 by having our employees follow applicable CDC guidelines and supporting the communities we serve through humanitarian efforts, examples of which can be found at: https://www.calmainefoods.com/community-donations."
Original Story: After Texas Attorney General Ken Paxton filed a lawsuit against the state's dominant egg supplier for allegedly taking unfair advantage of the COVID-19 disaster declaration, a class-action suit was filed on April 30.
According to the lawsuits, Cal-Maine Foods Inc. raised the price of eggs by nearly 300% without any supply issues or significant disruptions.
Price gouging laws apply to people or entities selling essential items, such as food, at an excessive price after a disaster declaration has been made by the governor or president. This includes retail suppliers.
“No one is exempt from price gouging laws in Texas, including suppliers of grocery stores and pharmacies,” Paxton said in a statement. “My office will not tolerate any person or business taking advantage of hardworking Texans. Those who violate the Texas Deceptive Trade Practices Act will be met with the full force of the law.”
The Texas Deceptive Trade Practices Act states any price gougers may have to reimburse consumers and may face civil penalties up to $10,000 per violation and an additional penalty of up to $250,000 if it affects elderly consumers.
According to the Attorney General's Office, there have been more than 3,000 complaints of price gouging related to the coronavirus pandemic and an additional 244 complaints about scams, as of March 27.
Those with information on price gouging or disaster scams can call the Office of the Attorney General's toll-free complaint line at 800-621-0508 or file a complaint online.
A spokesperson for Cal-Maine released the following statement on Friday:
“We strongly disagree with the allegations made by Attorney General Paxton. Since 1958, we have operated with honesty and integrity. We are steadfast in our belief these charges are grossly unfair and without merit. The domestic egg market is intensely competitive and highly volatile. For decades, we have priced most of our sales off an independent, third-party market quote published by Urner Barry Publications Inc. We have no control over this market quote and it fluctuates wildly from week to week and sometimes day to day. We have been consistent in our pricing practices whether we sell at a profit or at a loss. We will vigorously defend ourselves from this government overreach into agriculture, and look forward to speaking more in the future.”
After the additional suit was added, Cal-Maine released another statement:
"We strongly deny the allegations made in this litigation. Cal-Maine has not engaged in price gouging and never would.
The domestic egg market is intensely competitive and highly volatile. For decades, we (like other egg producers) have sold most of our eggs pursuant to contracts that are priced off an independent, third-party market quote published by Urner Barry Publications, Inc. We have no control over this market quote and it fluctuates wildly from week to week and sometimes day to day. We have been consistent in our pricing practices whether we sell at a profit or at a loss. And in fact, with consumer demand so high in the early days of the pandemic, we had to purchase eggs on the open market to supplement our productions, which was very expensive, which we then sold at a loss to our customers to meet demand. We do not sell eggs directly to consumers. In recognition of the way in which agricultural commodities are tied to indices, many states expressly exempt agricultural products from price gouging laws.
In fact, the pandemic has adversely affected our business, just like everyone else. We are part of the nation’s critical infrastructure -- we operate under bad conditions, all conditions. These accusations are a slap in the face of the hardworking people in our company, all of whom deserve recognition for their steadfastness during this difficult time. We have invested significant dollars in employee safety, increased employee pay and have added employees to meet demand.
As to demand, eggs have remained at all times one of the cheapest complete proteins available. They are delicious and on a per-egg basis have always been cost-effective and nutritious. More to the point, retail prices for conventional eggs were only briefly elevated and have already come back down.
As for Texas specifically, our company has invested more than $627,000,000 in infrastructure in Texas. We have 1300 employees in Texas. We are creating good jobs in Texas and meaningfully supporting the economy in Texas and elsewhere.
Since 1958, Cal-Maine Foods has operated with honesty and integrity. We are steadfast in our belief these charges are grossly unfair and without merit.
In sum, Cal-Maine Foods has not engaged in price gouging and never would. We will vigorously defend ourselves and look forward to speaking more in the future."
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