One of the nation’s largest egg producers has been accused by New York authorities of embezzling $ 4 million in illegal revenue by grabbing customers with exorbitant prices as the state struggles with emerging cases of coronavirus.
A lawsuit filed Tuesday by Attorney General Letitia James of New York alleges that the producer, Hillandale Farms, sometimes doubled the price of eggs to enter an increase in demand in March and April.
In particular, Hillandale targeted distributors in New York City, such as the military installations at West Point, Fort Hamilton and Fort Drum, according to the lawsuit.
The company did not raise prices to offset increased costs, the package says, but “simply to line up its own pockets and benefit New Yorkers in a time of crisis.”
Officials at Hillandale were not immediately available for comment. They told the lawyer’s office that the firm’s clients, which include supermarkets, had agreed to their pricing practices.
According to the lawsuit, the lawyer’s office received hundreds of complaints from consumers angry over the sudden price increases.
“This location serves low-income families who, due to the current pandemic emergency, are likely to have lost their meager income,” one complainant wrote. “Too bad!”
The lawsuit is one of several accused major egg producers of illegally profiting from higher demand at a time when restaurants were closed and many Americans were forced to rely more heavily on cooking at home.
In April, the Texas Attorney General accused the nation’s largest egg producer, Cal-Maine Foods, of slashing egg prices by 300 percent. Another award-winning lawsuit, in California, cited several major supermarkets, including Whole Foods and Costco.
The New York name is Hillandale Farms Corporation, which is headquartered in Kent, Ohio, as are five other companies that use the Hillandale name.
Hillandale is often ranked among the top five egg producers in the United States. It sells to several supermarkets with stores in New York, including Stop & Shop, Western Beef, BJ’s Wholesale Club and Associated Supermarkets.
Between January and early March, Hillandale sold eggs to Western Beef at prices ranging from 59 cents to $ 1.10 a dozen. Then on March 15, two days after President Trump declared a nationwide emergency in response to the coronavirus, the court said Hillandale increased its price to $ 1.49.
The company continued to increase its prices sharply as the pandemic grew in ferocity, to a peak of $ 2.93 a dozen at the end of March. Prices charged with Western Beef did not return to normal levels until early May, according to the lawsuit.
Other stores saw similar increases. At Stop & Shop, the price Hillandale charged jumped from as low as 85 cents a dozen in January to early April $ 3.15.
The lawsuit alleges that Hillandale increased the prices using a “feedback loop” system in which it coordinated with a market research firm, Urner Barry, to direct the award winning.
Authorities say the feedback loop worked like this: Hillandale and other egg producers told Urner Barry their assessment of egg prices; Urner Barry used these assessments to make “indexed” prices that it sent to producers; Finally, the egg producers sold eggs at the price set by Urner Barry, citing the index as their method of setting a “fair” price.
Urner Barry denied traffic, saying the increase in prices simply reflected the rise in demand.
During the trial, Hillandale raised about $ 8 million in New York revenue, about $ 4 million of it from prize-winning events, according to the lawsuit.
Although the price differences may seem nominal, they could have a significant impact on customers on tight budgets. For a household that uses a dozen eggs a week, the monthly cost to $ 13 could be as high as about $ 5.40.
One plaintiff, who was shopping at a Fine Fare store on the Lower East Side of Manhattan, told the New York attorney general that the prices were “sad and respectful.”
“I have lived in the community for 65 years,” the person wrote. “The prices are ridiculous.”
