THE nation's largest producer and distributor of fresh shell eggs will pay $28 million to settle antitrust claims.
Cal-Maine Foods announced July 23 that it had reached an agreement that would settle all direct purchaser class claims in the long-running suit.
Class action claims against the nation's largest egg producers alleged that the industry conspired to inflate prices by limiting domestic egg production. Several defendants have settled already, including Sparboe Farms and Land O'Lakes suppliers Moark and Norco Ranch.
"We remain confident that our conduct has, at all times, been lawful, appropriate and fair to our customers," Cal-Maine president and chief executive officer Dolph Baker said. "We were able to negotiate a settlement that would eliminate most of our exposure in the antitrust litigation against the company for an amount that we believe is in the best interest of the shareholders, employees, customers and consumers."
Baker said the settlement will allow Cal-Maine to rid itself of a distracting lawsuit and focus on executing the firm's long-term business strategy.
Subject to approval in the U.S. District Court for the Eastern District of Pennsylvania, the settlement will lead to a pretax charge of $28 million in the company's fiscal 2013 fourth quarter.
Cal-Maine said the settlement dealt with the class action direct purchaser claims in the suit, but the company will "continue to vigorously defend" the remaining class action indirect purchaser claims. Also, non-class direct purchasers may opt to participate in the settlement or continue pursuing individual claims.
Plaintiffs in the class claimed that, in 2008, the largest U.S. egg firms purposefully limited the supply by killing a large number of hens under the guise of providing hens with more cage space.
Baker noted that the animal welfare guidelines challenged by the litigation were supported by the industry and its customers.
"The largest retailers and egg buyers in the country, including many of our customers, in fact, were fully aware of, and explicitly supported, the industry-wide animal welfare guidelines challenged in this litigation, and the U.S. Department of Agriculture was fully aware of, and explicitly supported, these animal welfare guidelines as well as all the other conduct the plaintiffs challenged," Baker said in a statement.
The first major settlement, in 2009, resulted in a non-monetary settlement with Sparboe that provided documents and testimony the plaintiffs used in amending their claims against the remaining defendants in the suit.
A year later, the Moark settlement provided $25 million to plaintiffs; the court approved the Moark settlement on July 16, 2012, and checks were mailed to eligible class members on July 3, 2013.