New York Attorney General Letitia James today filed a lawsuit against Hillandale Farms, one of the country’s largest producers and wholesale distributors of eggs, for illegally gouging the prices of eggs during the coronavirus pandemic. In March and April 2020, Hillandale allegedly gouged the prices of more than four million cartons of eggs sold to major grocery store chains, U.S. military facilities, and wholesale food distributors throughout the state, charging New York customers up to four times the pre-pandemic price for one carton of eggs.

 

During those two months, at the height of the pandemic in New York, Hillandale made an estimated $4 million from unlawfully increasing the price of these eggs, which were often sold in grocery stores located in low-income communities. The lawsuit seeks restitution from Hillandale for those consumers who were forced to pay unlawfully high prices for this essential food item. The Attorney General’s Office learned of Hillandale’s price gouging after receiving complaints from consumers about the high prices of eggs at grocery stores.

 

“As this pandemic ravaged our country, Hillandale exploited hardworking New Yorkers to line its own pockets,” said James. “In less than two months, Hillandale made millions by cheating our most vulnerable communities and our service members, actions that are both unlawful and truly rotten. I will always stand up for working people, especially when they are taken advantage of by corporate greed.”

 

The lawsuit alleges that Hillandale, a company based in Ohio and Pennsylvania, began raising prices during March 2020 as the pandemic grew to emergency levels. In January 2020, Hillandale charged Western Beef supermarkets prices ranging from $0.59 to $1.10 for a dozen large white eggs.

 

On March 15, Hillandale raised that price to $1.49. As the pandemic progressed, Hillandale repeatedly raised the prices it charged Western Beef, eventually reaching $2.93 per dozen — a price almost five times the price Hillandale charged in January. 

 

Similarly, Hillandale allegedly gouged prices on eggs sold to the commissary store at the U.S. Military Academy at West Point. In April 2020, Hillandale charged West Point $3.15 per carton of large eggs, almost quadruple the $0.84 price it charged West Point in January. The suit also alleges that Hillandale raised its prices on eggs sold to Stop & Shop, BJ’s Wholesale Club, Associated Supermarkets, and the commissary stores at the U.S. military bases at Fort Hamilton and Fort Drum. 

 

As Hillandale raised prices on the eggs it sold to grocery stores, consumers complained that the grocery stores raised the prices they charged to consumers. One elderly consumer complained to the Attorney General’s office in April that he attempted to buy Hillandale eggs at a Fine Fare store located on the Lower East Side of Manhattan, only to find that “All prices are $2.30 and double the price.”

 

He said, “I’ve been living in the community for 65 years. The prices are ridiculous – sad and disrespectful to people who are buying from them all our lives.” Another consumer shopping at a Western Beef store complained that the retail price for a dozen Hillandale eggs had increased to $5.49, saying, “This location serves low income families who, due to the current pandemic emergency, have most likely lost what little income they have. Disgraceful!”

 

The lawsuit alleges that Hillandale raised its prices not because of increased costs, but simply to take advantage of higher consumer demand during the pandemic. Hillandale — like numerous egg producers nationwide — did so by following “indexed” prices published by a market research company called Urner Barry.

 

According to the suit, Urner Barry’s “indexed” prices work like a feedback loop. Egg producers such as Hillandale tell Urner Barry their “assessments” of prices in the egg marketplace; Urner Barry then repeats back to egg producers their collective assessments, distilled into “indexed” prices; and egg producers such as Hillandale then use Urner Barry’s indexed prices as justification to set their own prices for the sale of eggs. 

 

The suit alleges that an Urner Barry director defended the price increases, saying, “egg prices are up because demand is up sharply.” The director added, “It’s like ahead of a major snowstorm, when people are not sure if they’ll be able to go out again, other than [sic] this is happening on a national scale.”

 

Yet, as the suit points out, protecting consumers against excessive price increases during such times is the purpose of the State’s price gouging statute. The lawsuit brings claims against six Hillandale Farms companies, including Hillandale Farms Corp., Hillandale Farms East, Inc., Hillandale Farms of PA, Inc., Hillandale Farms Conn, LLC, Hillandale Farms of Delaware, Inc., and Hillandale-Gettysburg, L.P.

 

The lawsuit against Hillandale is the second suit brought by James in the past three months to stop price gouging by wholesale suppliers during the coronavirus pandemic and protect consumers. In May 2020, Attorney General James sued Quality King Distributors, a Long Island-based wholesale company, for illegally raising prices on Lysol disinfectant products it sold to retail stores in New York.  

 

The latest lawsuit was filed in the commercial division of New York State Supreme Court for New York County. The attorney general is suing for a permanent injunction barring Hillandale from continuing its illegal conduct, restitution for injured consumers, damages, civil penalties, and disgorgement of Hillandale’s profits from its illegal practices.

 

“It’s beyond reprehensible that a big company like Hillandale would seek to capitalize on a global health crisis to make a profit,” said David R. Jones, President and CEO of the Community Service Society. “Even more appalling is that countless low-income families in New York, already struggling financially in the wake of the coronavirus, were forced to pay in some cases five times the price for an essential food item — eggs”.

 

Jones added, “We applaud State Attorney General James for seeking injunctive relief barring Hillandale Farms from further price-gouging, civil penalties, disgorgement of its illegal profits, and restitution for consumers who were harmed.” 

 

William Rodriguez and Nelson Eusebio of the National Supermarket Association also weighed in on the announcement of the suit. “We are grateful to Attorney General James and her office for taking a thoughtful and innovative examination of this issue,” they said.

 

“As we have said from the beginning of this pandemic, the reality is that independently-owned supermarkets such as ours, are not in the business of taking advantage of our customers, and while we had no part in increasing the price on eggs, our owners and their employees took the brunt of consumers’ understandable frustration.”

 

They added, “Today, we feel the record was set straight.” “We look forward to continuing to serve the hardworking low-income New Yorkers in our communities that we have been faithfully serving for years”.

 

Nicholas Freudenberg if a professor at the CUNY Graduate School of Public Health & Health Policy. “Since the COVID-19 pandemic hit New York, food insecurity rates have doubled, putting the health and educational progress of children at risk and threatening the well-being of seniors and low-income families,” he said.

 

Meanwhile, Joel Berg, CEO of Hunger Free America also released a statement. “It’s bad enough that hunger is soaring in New York because of the collapse of the economy and the closure of school meals programs, but it is even worse when food companies increase hunger by using a national crisis to astronomically raises prices through illegal price gouging,” he said.

 

“Eggs are a key staple in the diet of most Americans, so it’s particular galling that a company would value improper profits over allowing Americans to eat their product. We thank AG James for standing up for the most vulnerable consumers.”

 

Hillandale Farms released a statement in response to attorney general’s announcement. “Hillandale Farms unequivocally denies the allegations that it gouged the prices charged for eggs during the COVID-19 pandemic,” the statement read. “We are a family-owned and operated business that has been selling eggs since the late 1950s.

 

As one of the larger egg producers in the country, we – including our more than 1,500 employees – take great pride in the quality of our products and the integrity of our operations. We were shocked and dismayed to learn of the New York Attorney General’s lawsuit.”

 

The statement continued, “The COVID-19 pandemic caused a massive disruption in every sector of the economy, including the egg industry. As retail demand for eggs reached historically high levels earlier this year, our dedicated personnel rose to the challenge and worked tirelessly to meet that demand through the most consistent production and delivery measures possible. We wanted to be sure that eggs would remain on store shelves for customers in New York and other markets”.

 

The company said that historically, eggs, like some other commodities, have been subject to volatile pricing, and as an example, said that prices for eggs are now below what they were in August 2019, and well below what they were in January through March 2019.

 

“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,” the statement continued. “We look to a third-party company, Urner Barry, which specializes in the timely, accurate and unbiased reporting of market news and quotations throughout the food industry.”

 

The statement concluded, “We are prepared to defend against these allegations in court, if necessary. Regardless, we will continue to focus on our goals of producing quality eggs at fair prices, humanely caring for our chickens, treating our employees well, and maintaining our more than 60-year reputation of integrity within the food industry”.