Attorney General Becerra Petitions Court to Require California Egg Distributor and its Parent Company to Comply with Investigation into Alleged Price Gouging Violations

SACRAMENTO – California Attorney General Xavier Becerra today filed a petition in the San Francisco Superior Court requesting that the court order two companies in the egg supply chain to comply with a set of outstanding investigative subpoenas and interrogatories. California Farms LLC, an in-state egg distributor, and its parent company and main supplier Dakota Layers LLC, an egg producer located in South Dakota, are suspected of charging excessive prices during a state of emergency and violating California’s price gouging laws. Since the coronavirus pandemic began, prices on consumer grocery staples have prompted numerous consumer complaints about potential price-gouging violations. Today’s petition is part of an ongoing investigation into egg pricing practices.

“Today we are asking the court to order California Farms LLC and Dakota Layers LLC to comply with our investigation into potential violations of California law related to pricing in the egg market during the public health emergency,” said Attorney General Becerra. “Eggs are a food staple in many households throughout the state, and families have been unfairly subjected to price gouging during the coronavirus pandemic. We have reason to suspect that these egg distributing companies have violated California’s laws, contributing to this problem. We need to get to the bottom of this.”

On March 4, 2020, Governor Gavin Newsom declared a statewide emergency due to the coronavirus pandemic. This triggered California’s anti-price-gouging law, Penal Code 396, making it unlawful during the thirty days following a declaration of emergency to sell any consumer food item at a price more than 10 percent higher than the price charged for that same item immediately before the declaration was issued – except where the price increase is the result of increased supply or labor and production costs. On April 3, 2020, Governor Newsom issued Executive Order N-44-20 that extended the effective window of Penal Code 396 from 30 days to six months, effectively prohibiting unlawful price increases through September 4, 2020. The Executive Order also prohibited the sale of any consumer food item at a price more than 10 percent higher than the price charged for that same item on February 4, 2020.

On April 22, 2020, Attorney General Becerra served an investigative subpoena and a set of investigative interrogatories on both California Farms and Dakota Layers. The subpoena and interrogatories sought information about the companies’ business practices, such as the companies’ actions to purchase and sell eggs based on a survey-based variable market index price published by the Delaware-based publisher, Urner Barry, which appears to have spiked based on consumer demand. Reliance on a market index, such as those published by Urner Barry, to price goods is not a defense to liability under California’s price gouging laws.

To date, California Farms and Dakota Layers have failed to respond to the subpoenas. The petition filed today requests that the court require the companies to respond to the subpoenas and interrogatories issued by Attorney General Becerra.

A copy of the petition can be found here.