Costco, Others Jacked Up Egg Prices Amid COVID-19: Suit

By Lauren Berg
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Law360 (April 21, 2020, 9:29 PM EDT) -- Whole Foods, Walmart, Trader Joe’s, Costco and a host of other grocery providers are illegally marking up the price of eggs in violation of Golden State law in the midst of the deadly coronavirus pandemic, according to a California federal lawsuit filed Monday.

More than two dozen grocery stores, wholesalers and producers have been nearly tripling the price of eggs over the past month following Gov. Gavin Newsom’s emergency declaration that ordered all nonessential workers to stay home as the novel coronavirus, COVID-19, swept around the world, according to the class action complaint. The proposed class includes people who have bought eggs in California that were sold, distributed, produced or handled by the defendants since the state of emergency was declared March 4.

“As in any time of economic turmoil, there are those who seek to profit from the misery of millions,” according to the suit. “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.”

Other big companies named in the suit include Amazon, Albertsons and Kroger Co., along with a slew of smaller stores and farms. The suit was filed by California egg purchasers Adrienne Fraser, Codey DeNoyelles, Chevalia Morgan, Carolyn Flowers, Petrina Fennell, Jill Mayer, Kat Hall, Eugene F. Elander, Iris Delgado and Christa Rodriguez.

In their suit, which alleges violations of California’s Unfair Competition Law, the consumers do not assert that every defendant engaged in price-gouging because they can’t get enough information about the “secretive process of price-setting.” But the consumers said that at a minimum, some of the defendants did engage in price gouging.

The consumers allege that the price of eggs nearly tripled between the onset of the COVID-19 pandemic and the end of March, and have remained more than 10% higher than they were before the declaration of emergency in California.

The named plaintiffs said they bought eggs at grossly inflated prices from individual stores owned by Costco, Whole Foods, Amazon, Walmart, Albertsons and Trader Joe’s, among others.

The suit seeks a declaratory ruling that the grocery defendants violated California law, a permanent injunction barring the defendants from selling eggs at illegal prices and restitution to the plaintiffs and proposed class members in California. 

This is not the only lawsuit targeting alleged price gouging related to the pandemic.

3M Co. has been on a mission this past week to limit price gouging in protective gear.

The company launched trademark litigation against New Jersey’s Performance Supply LLC and Utah’s Rx2Live LLC on April 10, accusing them of reselling its 3M-branded masks at drastically increased prices. 3M claims the companies used confusing tactics to mislead buyers into thinking the companies — and their "unconscionably high prices" — were authorized by 3M.

Whether the country’s largest producer of the masks will succeed in using trademark law to attack price gouging remains to be seen.

Counsel for the plaintiffs and representatives for defendants Opal Foods and Trillium Farm declined to comment. A representative for Trader Joe's also declined to comment, but told Law360 that the grocery chain had not raised the prices of its eggs.

Costco denied to Law360 on Wednesday that it had engaged in price gouging. On the contrary, the company said, it has filed complaints with governmental authorities that egg suppliers have charged Costco increased prices that "did not seem in line with feed and production costs of those suppliers."

Representatives for the other defendants did not immediately respond to requests for comment.

The consumers are represented by Robert Salgado, Dargan Ware, John E. Norris and Andrew Wheeler-Berliner of Davis & Norris LLP.

Counsel information for the defendants was not immediately available.

The case is Adrienne Fraser et al. v. Cal-Maine Foods Inc. et al., case number 3:20-cv-02733, in U.S. District Court for the Northern District of California.

--Additional reporting by Dani Kass and Bill Donahue. Editing by Peter Rozovsky.

Update: This story has been updated with comment from Costco.

For a reprint of this article, please contact reprints@law360.com.

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