Egg producer Hillandale Farms Corp. increased the rates it charged supermarkets by as much as fourfold and collected at least $4 million in profit from gouging prices passed on to New York consumers, a lawsuit alleged.
In a suit filed Tuesday, Attorney General Letitia James accused the Ohio-based egg distributor of increasing prices for wholesalers, grocers and military facilities as a way to take advantage of increased demand brought on by COVID-19. The court filing estimates the additional costs were passed on to hundreds of thousands, if not millions, of consumers who bought 4 million cartons of eggs since mid-March.
“As this pandemic ravaged our country, Hillandale exploited hardworking New Yorkers to line its own pockets,” James said in a statement. “In less than two months, Hillandale made millions by cheating our most vulnerable communities and our servicemembers, actions that are both unlawful and truly rotten."
Hillandale issued a statement saying it "unequivocally denies the allegations that it gouged the prices charged for eggs during the COVID-19 pandemic. Our approach to pricing has been consistent for decades, and without complaint, whether that has led to profits or losses, and the last several months have been no exception," it said.
Hillandale, which was recently ranked the fourth-largest egg producer in the U.S., supplies several grocery chains, including Stop & Shop, Western Beef, BJ's Wholesale Club and Associated Supermarkets, the court filing said.
Shortly after the U.S. and New York State declared emergencies, residents began spending more time at home and stocking up on supplies. Egg sales increased 86% the week of March 16, as compared to that period in 2019, the court filing said.
Hillandale and five companies believed to be affiliated with it soon began hiking prices, the suit said. A dozen large white eggs cost Western Beef as little as 59 cents from January to March 12, but then shot up by nearly five times to $2.93 on March 29, the court filing said.
The attorney general's office said its team fielded hundreds of complaints about the cost of Hillandale-supplied eggs, including from Long Island consumers. A shopper at Dairy Barn in Babylon said extra large eggs cost $6 in April; a Western Beef customer in Roosevelt mentioned eggs while complaining about pricing "taking advantage of people's needs," according to legal paperwork James' team filed to support its case.
Hillandale informed the attorney general that its customers agreed to its pricing practices, which it described as "solely Market based," the suit said.
The company uses an egg price index compiled by the market research firm Urner Barry as a benchmark, the suit said. But the index functions as a feedback loop, since Urner Barry compiles the data by talking to egg producers, which then consult the tool to set rates, the court filing said.
Regardless of what clients agree to, Hillandale cannot charge "unconscionably excessive prices" during market disruptions, such as those caused by the pandemic, the suit said.
The case requests an accounting of Hillandale's New York egg sales from November 2019 on, restitution and damages equal to the value of improper profit — estimated to be at least $4 million — and a civil penalty of $25,000.