`
`Case No. 1:20-cv-00461
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`)
`KENNETH BELL, SHERRY DABBS-
`)
`LAURY, CHARLENE DIRKS,
`
`)
`WENDY BROWN, and TONNIE
`
`)
`WALKER-BECK, on behalf of
`
`)
`themselves and all others similarly
`)
`situated,
`
`
`
`
`
`)
`
`
`
`
`
`
`
`)
`
`Plaintiffs,
`
`
`
`
`)
`
`
`
`
`
`
`
`)
`v.
`
`
`
`
`
`
`)
`
`
`
`
`
`
`
`)
`CAL-MAINE FOODS, ROSE
`
`)
`ACRE FARMS, INC., HILLANDALE
`)
`FARMS, TRILLIUM FARM
`
`)
`HOLDINGS, LLC, REMBRANDT
`)
`ENTERPRISES, INC., HICKMAN
`)
`EGG RANCH, INC., DAYBREAK
`FOODS, INC., WEAVER BROS., INC., )
`SPARBOE FOODS CORP.,
`
`)
`HERBRUCK’S POULTY RANCH,
`)
`INC., CENTRUM VALLEY FARMS,
`)
`L.P., OPAL FOODS, LLC, MIDWEST
`)
`POULTRY SERVICES, L.P.,
`
`)
`COSTCO WHOLESARE CORP.,
`
`)
`ALBERTSON’S COMPANIES, INC.,
`)
`WAL-MART STORES, INC.,
`
`)
`THE KROGER CO.,
`
`
`
`)
`HEB GROCERY CO., L.P.,
`
`)
`BROOKSHIRE’S GROCERY CO.,
`)
`LOWE’S MARKETS, INC.
`
`
`)
`
`Defendants.
`
`
`
`)
`
`
`CLASS ACTION COMPLAINT
`
`
`
`1
`
`
`
`
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 2 of 17
`
`
`
`
`1.
`
`This statewide class action concerns the despicable and illegal practice
`
`INTRODUCTION
`
`of price-gouging of essential groceries, specifically eggs, in the midst of the ongoing
`
`and unprecedented pandemic. Plaintiffs and the class they seek to represent bought
`
`grossly marked-up eggs through the supply chain created by the defendants, which
`
`includes producers, wholesalers, and retailers. Because consumers such as plaintiffs
`
`lack access to information about which of the defendants, or all of them, participated
`
`in the price-gouging resulting in a near-tripling of egg prices in the past 30 days,
`
`plaintiffs have sued all the defendants in the alternative. Plaintiffs cannot assert that
`
`every defendant engaged in price-gouging, but plaintiffs can and do assert that some
`
`or all of these defendants illegally marked up egg prices following Governor
`
`Abbott’s declaration of an emergency in violation of Texas law.
`
`
`
`2.
`
`The world is in the midst of a global pandemic involving a novel
`
`coronavirus called COVID-19 that causes an often severe and sometimes fatal
`
`respiratory infection. The outbreak originated in December, 2019, in Wuhan, Hubei
`
`Province, China, and in short order the local epidemic spread globally and was
`
`deemed a pandemic by the World Health Organization in March, 2020.
`
`
`
`3.
`
`The first reported case of COVID-19 in the United States was
`
`diagnosed in Washington state in late January, 2020. The case involved a man who
`
`had recently travelled to the epicenter of the outbreak in Wuhan. Although this was
`
`
`
`2
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 3 of 17
`
`the first case confirmed by the Centers for Disease Control, scientists and public
`
`health officials now believe that there may have been other cases of COVID-19 in
`
`the United States prior to that date.
`
`
`
`4.
`
`By mid-March 2020, there were reported cases in all 50 American
`
`states. The federal government, most states, and many local governments called for
`
`stay-at-home and social distancing measures designed to slow the spread of the
`
`disease. Texas Governor Greg Abbott declared a state of emergency in this state on
`
`March 13, 2020 and extended it on April 12, 2020. As of the writing of this
`
`complaint, the vast majority of Americans are subject to similar measures. Even in
`
`areas not subject to government-mandated stay-at-home orders, most people are
`
`voluntarily staying at home except to shop for necessities and to go to work in
`
`“essential” occupations such as healthcare and food sales and delivery services. The
`
`undersigned counsel writing this complaint is doing so from his home office.
`
`
`
`5.
`
`The economic effect of the government-mandated and voluntary
`
`measures to combat the pandemic has been extreme. Many are out of work. Many
`
`have had their wages and salaries reduced. Bars and restaurants have been mostly
`
`closed for weeks, some remaining open but limiting themselves to curbside delivery
`
`and home delivery, and it is predicted many will never re-open. Professional and
`
`college sports seasons have been canceled altogether, throwing many out of work.
`
`Schools, colleges, and universities are now limited to online classes. Those in the
`
`
`
`3
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 4 of 17
`
`business of putting on concerts, plays, and other forms of entertainment are idle as
`
`public gatherings have been banned. All casinos are closed, throwing many more
`
`out of work. The Riverwalk in San Antonio, Sixth Street in Austin, and other famous
`
`Texas attractions are all deserted. Oil prices are at their lowest point in decades. The
`
`stock market is in freefall.
`
`
`
`6.
`
`As in any time of economic turmoil, there are those who seek to profit
`
`from the misery of millions. Defendants, who are producers, wholesalers, and
`
`retailers of eggs, comprise one such set of actors seeking to unfairly profit from the
`
`increased consumer demand for eggs in the midst of the ongoing crisis. Again,
`
`because it is impossible for consumers such as plaintiffs to obtain information
`
`concerning the secretive process of price-setting, this lawsuit does not assert that
`
`each and every defendant engaged in price-gouging. Rather, plaintiffs assert that, at
`
`a minimum, some of these defendants did so. This pleading in the alternative is
`
`specifically authorized by Rule 20(2)(A) of the Federal Rules of Civil Procedure.
`
`
`
`7.
`
`Between the onset of the COVID-19 pandemic and March 30, 2020, the
`
`price of eggs nearly tripled in Texas. In the weeks since, they have remained much
`
`higher than their pre-emergency prices. Some or all of the defendants are engaging
`
`in price-gouging prohibited by Texas law. Plaintiffs allege this because of the
`
`undeniable fact that egg prices nearly tripled after the emergency declaration.
`
`
`
`
`
`4
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 5 of 17
`
`PARTIES
`
`8.
`
`Plaintiff Kenneth Bell purchased eggs at a store owned or operated by
`
`defendant HEB Grocery Co., LP, at a grossly inflated price after the declaration of
`
`emergency by Governor Abbott.
`
`9.
`
`Plaintiff Sherry Dabbs-Laury purchased eggs at stores owned or
`
`operated by defendants Lowe’s Markets Inc., Costco Wholesale Corp., Walmart
`
`Stores, Inc., and The Kroger Company at grossly inflated prices after the declaration
`
`of emergency by Governor Abbott.
`
`10. Plaintiff Charlene Dirks purchased eggs at stores owned or operated by
`
`defendants Brookshire’s Grocery Co., Walmart Stores, Inc., and The Kroger
`
`Company at grossly inflated prices after the declaration of emergency by Governor
`
`Abbott.
`
`11. Plaintiff Wendy Brown purchased eggs at a store owned by defendant
`
`Walmart Stores, Inc. at a grossly inflated price after the declaration of emergency by
`
`Governor Abbott.
`
`12. Plaintiff Tonnie Walker-Beck purchased eggs at a store owned by
`
`defendant Albertson’s Companies, Inc. at a grossly inflated price after the
`
`declaration of emergency by Governor Abbott
`
`
`
`5
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 6 of 17
`
`13. Defendant Cal-Maine Foods, Inc. is a corporation organized under the
`
`laws of Delaware with its principal place of business in Jackson, Mississippi. It is a
`
`corporate citizen of Delaware and Mississippi.
`
`14. Defendant Rose Acre Farms, Inc. is a corporation organized under the
`
`laws of Indiana with its principal place of business in Seymour, Indiana. It is a
`
`corporate citizen of Indiana.
`
`15. Defendant Hillandale Farms is a corporation organized under the laws
`
`of Ohio, with its principal place of business in Newark, Ohio. It is a corporate citizen
`
`of Ohio.
`
`16. Defendant Trillium Farm Holdings, LLC is an entity organized under
`
`the laws of Ohio, with its principal place of business in Johnstown, Ohio. It is a
`
`corporate citizen of Ohio.
`
`17. Defendant Rembrandt Enterprises, Inc. is a corporation organized
`
`under the laws of Iowa, with its principal place of business in Spirit Lake, Iowa. It
`
`is a corporate citizen of Iowa.
`
`18. Defendant Hickman’s Egg Ranch, Inc. is a corporation organized under
`
`the laws of Arizona, with its principal place of business in Buckeye, Arizona. It is a
`
`corporate citizen of Arizona.
`
`
`
`6
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 7 of 17
`
`19. Defendant Daybreak Foods, Inc. is a corporation organized under the
`
`laws of Wisconsin, with its principal place of business in Lake Mills, Wisconsin. It
`
`is a corporate citizen of Wisconsin.
`
`20. Defendant Weaver Bros., Inc. is a corporation organized under the laws
`
`of Ohio, with its principal place of business in Versailles, Ohio. It is a corporate
`
`citizen of Ohio.
`
`21. Defendant Sparboe Foods Corp. is a corporation organized under the
`
`laws of Iowa, with its principal place of business in Litchfield, Minnesota. It is a
`
`corporate citizen of Iowa and Minnesota.
`
`22. Defendant Herbruck’s Poultry Ranch, Inc. is a corporation organized
`
`under the laws of Michigan, with its principal place of business in Saranac,
`
`Michigan. It is a corporate citizen of Michigan.
`
`23. Defendant Centrum Valley Farms, L.P., is an entity organized under
`
`the laws of Indiana, with its principal place of business in Clarion, Iowa. It is a
`
`corporate citizen of Iowa and Indiana.
`
`24. Defendant Opal Foods, LLC is an entity organized under the laws of
`
`Delaware, with its principal place of business in Neosho, MO. It is a corporate citizen
`
`of Delaware and Missouri.
`
`
`
`7
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 8 of 17
`
`25. Defendant Midwest Poultry Services, L.P., is an entity organized under
`
`the laws of Indiana, with its principal place of business in Mentone, Indiana. It is a
`
`corporate citizen of Indiana.
`
`26. The defendants described in Paragraphs 15-27 are involved in egg
`
`production, distribution, and wholesale delivery, and are in the supply chain bringing
`
`eggs to market in the Western District of Texas.
`
`27. Defendant Costco Wholesale Corp. is a corporation organized under
`
`the laws of Washington with its principal place of business in Issaquah, Washington.
`
`It is a corporate citizen of Washington.
`
`28. Defendant Albertson’s Companies, Inc. is a corporation organized
`
`under the laws of Delaware, with its principal place of business in Boise, Idaho. It is
`
`a corporate citizen of Delaware and Idaho.
`
`29. Defendant Wal-Mart Stores, Inc. is a corporation organized under the
`
`laws of Delaware, with its principal place of business in Bentonville, Arkansas. It is
`
`a corporate citizen of Delaware and Arkansas.
`
`30. Defendant The Kroger Co. is a corporation organized under the laws of
`
`Ohio, with its principal place of business in Cincinnati, Ohio. It is a corporate citizen
`
`of Ohio.
`
`
`
`8
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 9 of 17
`
`31. Defendant HEB Grocery Co., L.P. is an entity organized under the laws
`
`of Texas, with its principal place of business in San Antonio, Texas. It is a corporate
`
`citizen of Texas.
`
`32. Defendant Brookshire’s Grocery Co. is a corporation organized under
`
`the laws of Texas, with its principal place of business in Tyler, Texas. It is a
`
`corporate citizen of Texas.
`
`33. Defendant Lowe’s Markets, Inc. is a corporation organized under the
`
`laws of Texas, with its principal place of business in Littlefield, Texas.
`
`34. The defendants described in paragraphs 29-34 are owners or operators
`
`of retail stores or online retailers doing business in this district.
`
` JURISDICTION AND VENUE
`
`
`
`35.
`
`Jurisdiction is proper in this Court under 28 U.S.C. § 1332 because the
`
`claims in this case form part of a class action in which the amount in controversy
`
`exceeds the sum of $5,000,000.00 and the members of the class include citizens of
`
`different states than some or all of the defendants.
`
`
`
`36. Venue is proper in this Court under 28 U.S.C. § 1391(b)(2) because a
`
`substantial portion of the events giving rise to plaintiffs’ complaint occurred in this
`
`district.
`
`
`
`9
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 10 of 17
`
`
`
`37. Each defendant, whether a retailer, wholesaler, or producer of eggs, is
`
`in the business of supplying eggs to customers in this federal district. Each defendant
`
`is part of the supply chain for eggs in Texas.
`
`LEGAL FRAMEWORK AND BACKGROUND
`
`
`
`38. The Texas Deceptive Trade Practices Act contains a section that
`
`specifically addresses the pricing of necessities like food in an emergency situations.
`
`Section 17.46(b)(27) of the Texas Business and Commerce Code prohibits “selling
`
`or leasing fuel, food, medicine, lodging, building materials, construction tools, or
`
`another necessity at an exorbitant or excessive price.”
`
`
`
`39. This section applies when Section 17.4625 of the same code is
`
`triggered. Section 17.4625 states that the “designated disaster period” begins, inter
`
`alia, when the Governor issues a proclamation or executive order declaring the
`
`disaster. This period ends thirty days after the disaster declaration expires.
`
`
`
`40. Governor Greg Abbott issued a disaster declaration on March 13th, and
`
`extended it for an additional 30 days on April 12th. See “Texas Gov. Greg Abbott
`
`extends
`
`disaster
`
`declaration
`
`for
`
`30
`
`days,”
`
`available
`
`at
`
`https://abc13.com/coronavirus-covid-19-pandemic-texas-governor-abbott/6097736
`
`
`
`41. Because a declared disaster has existed in this state since March 13th,
`
`the provisions of Section 17.46(b)(27) have been in effect, making it unlawful for
`
`anyone in the state to sell food at an exorbitant or excessive price.
`
`
`
`10
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 11 of 17
`
`
`
`42. Nothing in the Texas Code limits this provision to food or other
`
`necessities being sold at retail, rather than by producers, distributors, or wholesalers.
`
`On the contrary, the natural implication of the provision is that all sales at an
`
`exorbitant or excessive price, at any level of the supply chain, are prohibited during
`
`a declared disaster.
`
`
`
`43. Before the pandemic, the price for generic eggs in Texas hovered near
`
`$1.00 per dozen. During the month of March, that price nearly tripled to almost $3.00
`
`per dozen. This increase has not been caused by an increase in the cost or difficulty
`
`in producing eggs. Rather, it has been driven by increased demand, caused by the
`
`emergency situation. The price-gouging statute exists to prevent unscrupulous
`
`companies from taking advantage of such demand in emergencies. Yet many egg
`
`producers, wholesalers, and retailers have done precisely that. Because the price
`
`of eggs nearly tripled during the month of March, and have remained at excessive or
`
`exorbitant prices to this day, it is clear that some defendant, or all of them, has
`
`disregarded Texas law and taken outrageous advantage of the emergency situation
`
`to profit from the misery of Texas residents.
`
`44. Pursuant to Rule 20 of the Federal Rules of Civil Procedure, plaintiffs
`
`may join all defendants against whom they seek relief jointly, severally, or in the
`
`alternative, arising out of the same transaction or series of transactions. Plaintiffs’
`
`purchases of eggs from retailers was part of a series of transactions that also included
`
`
`
`11
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 12 of 17
`
`any other sale of the eggs that occurred between their being laid and their arrival at
`
`the point of retail sale. Plaintiffs seek relief in the alternative from any and all entities
`
`that marked up the eggs more than ten percent during the COVID-19 emergency.
`
`CLASS ALLEGATIONS
`
`45. This statewide class action is maintainable against the defendants
`
`pursuant to Rule 23 of the Federal Rules of Civil Procedure. Plaintiffs seek to
`
`represent the following class against each defendant:
`
`All consumers who purchased eggs in the state of Texas that were sold,
`distributed, produced, or handled by any of the defendants during the
`state of emergency declared by Governor Greg Abbott on March 13,
`2020. All employees of the Court and plaintiffs’ counsel are excluded.
`
`46. Because plaintiffs bring this case in the alternative against numerous
`
`
`
`individual entities involved in selling eggs in Texas, plaintiffs anticipate that they
`
`will seek to certify a number of subclasses against particular defendants.
`
` 47. Pursuant to Rule 23(a)(1), the class is so numerous that joinder of all
`
`class members is impracticable. Texas is the nation’s second most populous state,
`
`with more than 28 million residents. Since the average per capita egg consumption
`
`in the United States is more than 285 per year, this means that Texans purchase
`
`almost
`
`eight
`
`billion
`
`eggs
`
`per
`
`year.
`
`See
`
`https://www.statista.com/statistics/183678/per-capita-consumption-of-eggs-in-the-
`
`us-since-2000/. The vast majority of these eggs are sold by the defendants named in
`
`this lawsuit, who represent a large percentage of the Texas grocery market, as well
`
`
`
`12
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 13 of 17
`
`as the thirteen largest wholesalers of eggs in Texas. The number of people who
`
`purchased eggs during the state of emergency is far too large for practicable joinder
`
`in a single suit.
`
`48.
`
`Pursuant to Rule 23(a)(2), this case is predominated by questions of law
`
`and fact common to all class members, including whether the defendants charged an
`
`excessive or exorbitant price for eggs during the COVID-19 emergency.
`
`49.
`
`Pursuant to Rule 23(a)(3), the claims of the named plaintiffs are typical
`
`of those of the class. Every member of the class is a consumer who purchased eggs
`
`during the emergency.
`
`50.
`
`Pursuant to Rule 23(a)(4), the named plaintiffs will fairly and
`
`adequately represent the interests of the class. The named plaintiffs have no interest
`
`adverse to the interests of absent class members. The named plaintiffs have hired
`
`experienced class action plaintiff lawyers as class counsel, who will diligently and
`
`competently represent the interests of the class.
`
`51.
`
`Pursuant to Rule 23(b), questions of law and fact common to all class
`
`members predominate over any questions affecting only individual class members.
`
`The claims of the named plaintiff, like those of all class members, arise out of
`
`conduct by one or more of the defendants to raise the price of eggs in Texas, affecting
`
`all Texas consumers, and thus all class members, in the same fashion. For these
`
`
`
`13
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 14 of 17
`
`reasons, a class action is far superior to other available methods of adjudicating this
`
`controversy. Individual lawsuits would be inefficient and duplicative by comparison.
`
`COUNT ONE: VIOLATION OF THE TEXAS DECEPTIVE TRADE
`
`PRACTICES ACT
`
`CLAIM FOR INJUNCTIVE RELIEF
`
`52.
`
`Plaintiffs incorporate by reference the factual averments of the
`
`preceding paragraphs as if fully set forth herein.
`
`53. The Texas Deceptive Trade Practices Act (DTPA, Tex. Bus. &
`
`Comm.Ed Code Chapter 17) prohibits businesses from engaging “false, misleading,
`
`or deceptive practices,” and contains an illustrative list of such practices.
`
`54.
`
`One of the practices explicitly banned in the DTPA’s list is “selling or
`
`leasing fuel, food, medicine, lodging, building materials, construction tools, or
`
`another necessity at an exorbitant or excessive price.” Tex. Bus. & Comm. Code §
`
`17.46(b)(27). Subsection 27 also bans “demanding an exorbitant or excessive price”
`
`for such items. Id.
`
`55.
`
`One or more defendants violated § 17.46(b)(27) by unjustifiably raising
`
`the price of eggs to an exorbitant or excessive price during the declared state of
`
`emergency.
`
`56.
`
`Plaintiffs sent the notice required by Section 17.505 of the Business and
`
`Professions Code prior to filing this action, and intend to proceed with the case sixty
`
`
`
`14
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 15 of 17
`
`days after the date of the notice. In addition, plaintiffs sent a copy of these notices to
`
`the Consumer Protection Division of the Texas Attorney General’s office.
`
`57.
`
`The Texas Deceptive Trade Practices Act Authorizes injunctive relief
`
`for violation of any of the enumerated categories in Section 17.46 of the Business
`
`and Professions Code. Tex. Bus. & Prof. Code 17.50(b)(2).
`
`58.
`
`Plaintiffs seek to enjoin all defendants from selling (at any level in the
`
`supply chain) eggs at a price more than ten percent greater than the price of eggs
`
`prior to the declaration of emergency on March 13, 2020.
`
`COUNT TWO: VIOLATION OF THE TEXAS DECEPTIVE TRADE
`
`PRACTICES ACT
`
`CLAIM FOR DAMAGES, INCLUDING TREBLE DAMAGES
`
`59.
`
`Plaintiffs incorporate by reference and reallege all factual averments of
`
`the preceding paragraphs as if fully set forth herein.
`
`60. As explained in Count One, the defendants violated the Texas
`
`Deceptive Trade Practices Act, specifically subsection 27 of Section 17.46(b) of the
`
`Texas Business and Professions Code, by selling eggs at an exorbitant or excessive
`
`price.
`
`61. Defendants, or some of them, set the exorbitant or excessive price of
`
`eggs intentionally.
`
`
`
`15
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 16 of 17
`
`62.
`
`This intentional violation entitles plaintiffs and the class to damages,
`
`including up to three times the excess amount paid for eggs during the emergency.
`
`PRAYER FOR RELIEF
`
`Plaintiff respectfully prays for the following relief,
`
`(A) An order certifying the above-described class pursuant to Federal
`
`Rule of Civil Procedure 23, with appropriate notice to absent class
`
`members;
`
`(B) An order appointing plaintiffs’ counsel as class counsel for the
`
`statewide class;
`
`(C) A declaratory ruling that the defendants have engaged in the
`
`practices alleged herein in violation of Texas law;
`
`(D) A permanent injunction enjoining defendants from selling eggs at
`
`prices prohibited by Section 17.46(b)(27) of the Texas Business &
`
`Professions Code for the remainder of the COVID-19 emergency;
`
`(E) After a jury trial, and award of damages, including treble damages, to
`
`plaintiffs and absent class members in an amount determined by the court
`
`pursuant to Texas law;
`
`(F) Attorneys’ fees as authorized by Section 17.50(d) of the Texas
`
`Business & Professions Code;
`
`(G) Any further or different relief the Court may find appropriate.
`
`
`
`16
`
`
`
`Case 1:20-cv-00461-RP Document 1 Filed 04/30/20 Page 17 of 17
`
`Respectfully submitted,
`
`
`
`/s/ Alexander McSwain
`ATTORNEY
`THE CARLSON LAW FIRM
`Texas State Bar No: 24106292
`100 E. Central Texas Expy
`Killeen, TX 76541
`Telephone: (800) 359-5690
`Facsimile: (254) 526-8204
`E-Mail:
`amcswain@carlsonattorneys.com
`
`John E. Norris
`(pro hac vice anticipated)
`DAVIS & NORRIS, LLP
`2154 Highland Avenue South
`Birmingham, AL 35205
`Telephone: 205.930.9900
`Facsimile: 205.930.9989
`jnorris@davisnorris.com
`
`ATTORNEYS FOR PLAINTIFFS
`
`
`
`
`
`
`
`
`17
`
`