Egg Price-Fixing Class Action Lawsuit Moves Forward

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A federal judge has ruled that Plaintiffs in an egg price-fixing class action lawsuit have offered sufficient evidence to suggest that four of the nation’s largest egg producers joined in a conspiracy to reduce the supply of eggs available on store shelves in order to jack up prices.

U.S. District Judge Gene Pratter refused to dismiss an antitrust class action lawsuit filed against Michael Foods, Daybreak Foods, Rose Acre Farms and Ohio Fresh Eggs that accuses them of engaging in a conspiracy to raise the prices of eggs between 2003 and 2009. Judge Pratter also ruled, however, that the Plaintiffs failed to prove that two other egg producers originally named in the price-fixing class action lawsuit – United Egg Association and entities associated with Hillandale Farms — participated in the conspiracy and granted their motions to dismiss.

According to the egg price-fixing class action lawsuit, the Defendants engaged in eight distinct coordinated actions over the course of a decade that are hallmarks of an anticompetitive conspiracy. The most prominent of these actions was an initiative known as the United Egg Producers (UEP) Certification Program.

The UEP Program imposed blanket guidelines on participating egg producers, setting limits on cage sizes and the number of egg-laying hens a company could maintain. If a producer complied, it could use the UEP’s official stamp on its products.

According to the egg antitrust class action lawsuit, that stamp of approval became critically important to egg producers when major retailers like Wal-Mart and Kroger indicated they’d only purchase UEP-certified eggs.

The egg producers argued that the UEP program was a response to consumer demand for eggs produced from chickens raised in better living conditions, therefore making the program inherently competitive. The Plaintiffs, however, contend there was only one reason why producers would participate in the program: to collectively suppress the supply of eggs and raise their prices.

Judge Pratter agreed with the Plaintiffs, ruling that if their allegations are true, the UEP Certification Program offered no “legitimate business rationale” for an egg producer to join.

“The allegations as to the program raise enough of a plausible inference that certification in the program was inconsistent with independent self-interest, at least because no non-conspiring, self-interested company would have followed the program guidelines,” Pratter wrote.

Pratter gave preliminary approval in October 2009 to a non-monetary class action settlement with Sparboe Farms, Inc., which agreed to aid the Plaintiffs’ case against the remaining defendants by producing witnesses and handing over documents. The Sparboe settlement led to class action settlements with Moark and Land O’Lakes last year.

The case is In Re: Processed Egg Products Antitrust Litigation, Case No. 08-md-02002, U.S. District Court, Eastern District of Pennsylvania.

UPDATE: On Dec. 8, 2016, Post Holdings Inc., the parent company of defendant Michael Foods, agreed to pay $75 million to partially resolve allegations that Michael Foods participated in a conspiracy to artificially inflate the price of shell eggs.

UPDATE 2: The Michael Foods egg price-fixing direct purchaser class action settlement is now open. Click here to file a claim.