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Egg Supplier Scrambling As Pandemic Price-Gouging Enforcement Heats Up

Lori Lustrin, Ilana Drescher & Benjamin Mitchel

Earlier this month, the Attorney General’s Office of the State of New York filed a lawsuit  in New York Supreme Court against Hillandale Farms alleging that the company gouged egg prices during the COVID-19 pandemic.

The State’s Petition, based on alleged violations of New York’s General Business and Executive Laws, contends that Hillandale, one of the nation’s largest producers and wholesale suppliers of eggs, “increased its prices for eggs to levels double, triple, and even quadruple the prices it charged for the same products in January 2020.” [1] For example, according to the Petition, purchaser Western Beef saw Hillandale’s wholesale price for a dozen large eggs jump from $0.59 in January to $2.93 by the end of March.[2]

The Petition further alleges that these rapid, exponential price increases were not caused by supply issues, but rather by Hillandale’s desire to capitalize on consumers’ dire need for, and reliance on, eggs as a source of protein during the COVID-19 pandemic.[3] The State is seeking both a permanent injunction against Hillandale and damages in the form of restitution and profit disgorgement.

This case marks one of the first of what is sure to be a growing trend in state and federal price-gouging enforcement. Price-gouging is all too prevalent following national emergencies and other events that trigger significant changes in supply and demand for basic necessities. The impact of the COVID-19 pandemic on the food industry has been particularly profound. With consumers eating the vast majority of meals at home, grocery demand—and prices—have spiked.

State and federal regulators and civil plaintiffs are therefore making enforcement of pandemic related price-gouging a top priority.[4] The food industry—second only to manufacturers of hotly-demanded essentials like healthcare goods, PPE, and cleaning products—will be a prime target for investigation. Companies in the food distribution chain should review and stay up-to-date on all applicable federal, state, and local anti-gouging laws to ensure their pricing structures comply with often-changing statutory requirements, including pricing caps. The Antitrust Team at Bilzin Sumberg will continue to monitor these cases and provide updates here.

[1] Petition at ¶ 2.
[2] Id. at ¶ 36.
[3] Id. at ¶¶ 5, 45.

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