California AG accuses Dakota Layers of price gouging

Dakota Layers and its subsidiary California Farms LLC have been accused by California Attorney General Xavier Becerra of gouging the price of eggs.

Roy Graber Headshot
(Andrea Gantz)
(Andrea Gantz)

Dakota Layers and its subsidiary California Farms LLC have been accused by California Attorney General Xavier Becerra of gouging the price of eggs.

Becearra on August 20 filed a petition in the San Francisco Superior Court, requesting that the court order the two companies to comply with a set of outstanding investigative subpoenas and interrogatories. Becarra, in a press release, said Dakota Layers and California Farms, an egg distributor, are suspected of charging excessive prices during a state of emergency and violating California’s price gouging laws.

“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 Becerra. â€śEggs 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, California Gov. 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 22, 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 Urner Barry, which appears to have spiked based on consumer demand.

But Becerra asserts that 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.

As of August 20, California Farms and Dakota Layers had not responded to the subpoenas, Becerra said. 

Dakota Layers, according to the Egg Industry Top Companies rankings, is the 51st largest egg producer in the United States. At the conclusion of 2019, the company had a flock of 1.3 million hens.

Other allegations of price gouging

Becerra’s allegations against Dakota Layers and California Farms follow lawsuits filed by other state attorneys general who allege other egg companies are price gouging.

In April, Texas Attorney General Ken Paxton filed a lawsuit such a lawsuit against Cal-Maine Foods. However, in August, the District Court of Harris County, Texas, granted a motion to dismiss that case without prejudice.

In early August, New York Attorney General Letitia James filed a suit alleging Hillandale Farms was price gouging. The company denies the allegations and said it was prepared to defend itself in court, if necessary.

In July, West Virginia Attorney General Patrick Morrisey filed a lawsuit against Dutt & Wagner, accusing the Virginia egg producer of price gouging. Morrisey went on to file another lawsuit against North Carolina egg supplier Merchants Distributors LLC, with that suit, filed on August 11, including similar allegations.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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