Walmart, Costco, Trader Joe’s, Kroger and dozens of other food retailers have been accused of illegally inflating the price of eggs sold in California amid skyrocketing demand due to the current global health crisis.
A lawsuit filed Monday in the U.S. District Court for the Northern District of California, alleges several companies, including farms and suppliers, have engaged in “the despicable and illegal practice of price-gouging of essential groceries, specifically eggs, in the midst of the ongoing and unprecedented pandemic.”
According to the suit, which was filed by the law firm Davis & Norris, LLP, the price of eggs nearly tripled at certain retailers between the onset of the coronavirus pandemic and the end of March. Since then, eggs have allegedly remained at a price point that is 10% higher than it was prior to the declaration of emergency. Gov. Gavin Newsom of California declared a state of emergency on March 4.
“As in any time of economic turmoil, there are those who seek to profit from the misery of millions. 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,” the lawsuit reads.
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Price gouging is illegal in the state of California during a state of emergency.
“California’s anti-price gouging statute, Penal Code Section 396, prohibits raising the price of many consumer goods and services by more than 10% after an emergency has been declared,” according to the office of the attorney general.
In early April, the Los Angeles Times reported that the Urner Barry wholesale benchmark for a dozen, conventionally raised California shell eggs was $1.55 on March 2. Yet, by March 27, the benchmark had risen to $3.66. That number has decreased slightly to $3.26 since early April.
Brian Moscoguiri, a director with Urner Barry, told Reuters the current increase in wholesale prices is due to increased demand.
“People see a sharp increase in prices and assume they’re being gouged, but it’s just a function of the market,” he said. “Egg prices are up because demand is up sharply. Suppliers are seeing four, five, six times the level of demand as before, and there’s essentially a fixed supply.”
While numerous stores and farms are named in the suit, it’s possible that not all of them were involved in the alleged illegal activities.
“Plaintiffs cannot assert that every defendant engaged in price-gouging, but plaintiffs can and do assert that some or all of these defendants illegally marked up egg prices following the Governor’s declaration of an emergency in violation of California law,” the lawsuit reads.
Plaintiffs in the case are seeking class-action certification, an injunction issued to those guilty of price-gouging and restitution for the “plaintiffs and absent class members in an amount determined by the court."
Will many of the nation's largest food retailers, like Kroger, Walmart and Costco, are named, several smaller — but popular — chains are also listed as defendants.
When reached via email, a spokesperson for Trader Joe’s, which is named in the suit, told TODAY the case has “no merit.”
“Even while our costs were rising, we chose not to raise our prices on eggs during the time referenced," the spokesperson said. "In fact, for a period of time, we lost money on eggs because of this. Some basic homework by these attorneys would have shown that our egg pricing was another example of how Trader Joe's does everything we can to keep prices down for our customers."
Representatives for Walmart, Costco and Kroger were not immediately available for comment.