On October 16, 2008, purchasers of shell eggs brought a class action lawsuit against the leading US producers of processed eggs, including Michaels Foods, Rose Acre Farms, RW Sauder, Ohio Fresh Eggs, Cal-Maine Foods, United Egg Producers and United States Egg Marketers.
Filed in the Eastern District of Pennsylvania, the multidistrict litigation (MDL) alleged that, since 2002, the producers had conspired to inflate the prices of processed eggs.
Processed eggs are removed from their shells and transformed into refrigerated liquid, frozen or dried form, as well as specialty products, such as wet-pack and dry-pack pre-peeled hardboiled eggs, sold whole or sliced, or pickled.
According to a report by MarketsAndMarkets, the egg processing market will be worth $29.2b by 2020, growing at a CAGR of 3.6% from 2015 to 2020.
The sector is expected to witness significant growth due to the demand for bakery, confectionery, convenience and ready-to-eat food products, which are on a constant rise.
Shell eggs are bought or sold in their natural state in the shell.
Coming to a close
The MDL predates Post Holding’s acquisition of Michael Foods, which was completed in June 2014.
However, president and CEO of Post Holdings, Rob Vitale, said the settlement was in the best interest to everyone to finally bring the long and complex litigation to a close.
The terms of the agreement are still to be formally documented and are also subject to approval by the court following notice to all the class members.
However, the consumer packaged goods holding company has reported it does not foresee any complications.
Under current law in the US, the settlement is deductible for federal income tax purposes and Post Holdings stated it expects to record a pre-tax charge in the first quarter of its fiscal year 2017.
The $75m settlement does not affect the action filed on behalf of indirect purchasers of shell eggs (who were unsuccessful in class certification), or dismissed claims by direct purchasers of egg products (which is being appealed).
The case is In re: Processed Egg Products Antitrust Litigation, case number 2:08-md-02002, in the US District Court for the Eastern District of Pennsylvania.
Michael Foods is a food processor and distributor of egg, pasta, refrigerated grocery and potato products, including All Whites and Better ’n Eggs, among others, sold mainly in the US.
The company’s net sales were $2,184.7m for the fiscal year 2016, a decline of 5.2% over the reported prior year.