On April 23, Texas Attorney General Ken Paxton accused the country’s largest egg producer, which sells brands like Egg-Land’s Best and Land O’ Lakes, of raising the price of a dozen eggs by 300%. See Texas v. Cal-Maine Foods Inc., No. 20205427 (215th Dist. Ct. Harris Cty. Tex. Apr. 23, 2020). In California, in an apparently related consumer class action, Whole Foods, Walmart, Trader Joe’s, Costco, and a host of other grocery businesses are alleged to be illegally marking up the price of eggs in violation of California’s consumer protection laws in the midst of the pandemic. See Frazer v. Cal-Maine Foods, Inc., No. 3:20-cv-2733 (N.D. Cal. Apr. 20, 2020). It is alleged in the California case that more than two dozen grocery stores, wholesalers, and producers have been nearly tripling the price of eggs over the past month following Gov. Gavin Newsom’s emergency declaration that ordered all nonessential workers to stay home as the virus swept around the world.
Eggs are not the only focus of consumer class actions stemming from alleged pricing violations that are causing consumers harm, Amazon was also hit with a price-gouging lawsuit on April 21 in California. See McQueen v. Amazon, No. 4:20-cv-02782 (N.D. Cal. Apr. 21, 2020). In that lawsuit, consumers accuse the online retail giant of exploiting them amid the pandemic by drastically increasing prices for high-demand items, like face masks, pain relievers, and disinfectants, in violation of the state’s consumer protection laws. According to the complaint, as many consumers avoid brick-and-mortar stores, Amazon.com Inc. is illegally reaping the benefits by increasing the prices of items by nearly 700% in some cases, which is "flagrantly unlawful" under a California law that prohibits increases of more than 10%, according to the lawsuit.
These actions are cautionary tales for other consumer retailers and financial services companies. Governmental consumer protection agencies and plaintiff class action attorneys are not sitting back but are leaning into the effects of the virus and related regulations and relief programs. Lawyers for these consumer-related companies must stay vigilant and provide strong counsel to their business constituents.
