By Craig Clough

Law360 (August 11, 2020, 5:21 PM EDT) -- Hillandale Farms, one of the largest egg suppliers in the United States, was sued Tuesday by the attorney general of New York for allegedly gouging the price of eggs during the COVID-19 pandemic in an illegal scheme to profit off the deadly virus in the state.

According to New York Attorney General Letitia James, Hillandale jacked up the price of its eggs in March and April as New York became a hotspot of COVID-19 outbreaks, with more than 4 million cartons sold at inflated prices to grocery store chains, U.S. military facilities and wholesale food distributors throughout the state.

The lawsuit alleges violations of New York's General Business Law and Executive Law due to Hillandale's average price for a dozen eggs increasing by around five times from January through April, generating total revenues of about $8 million. 

"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 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 price of a carton of Hillandale large white eggs sold to Western Beef supermarkets in January ranged from $0.59 to $1.10, but by April was as high as $2.93 as the COVID-19 pandemic caused thousands of deaths in New York, according to the lawsuit.

Hillandale also gouged prices on eggs sold to the commissary store at the U.S. Military Academy at West Point in New York state, with prices going from $0.84 per carton in January to $3.15 in April, the attorney general's office alleges. Similar price hikes happened at Stop & Shop, BJ's Wholesale Club, Associated Supermarkets and others in New York, according to the suit.

The lawsuit alleges that Hillandale raised its prices not to cover increased costs, but simply to take advantage of higher consumer demand during the pandemic.

The office also said that Hillandale and other egg producers defended egg price hikes by saying they were following "indexed" prices published by a market research company called Urner Barry. But the indexes work like a "feedback loop," with egg producers telling Urner Barry their "assessments" of prices in the egg in the marketplace, then Urner Barry repeating those prices back to egg producers, according to the suit. 

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 LP.

"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 [raise] prices through illegal price gouging," said Joel Berg, CEO of Hunger Free America, in a statement. "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."

Hillandale did not immediately respond to a request for comment.

The state of New York of represented by John P. Figura of the Office of the Attorney General of the State of New York.

Counsel information for Hillandale was not immediately available.

The case is New York v. Hillandale Farms Corp. et al., case number unavailable, in the Supreme Court of the State of New York, County of New York.

--Editing by Haylee Pearl.

For a reprint of this article, please contact reprints@law360.com.