This past Thursday, New York Attorney General Letitia James issued a warning to businesses against price gouging for eggs and poultry. The current bird flu outbreak began in March 2024 but has become a topic of increasing concern for consumers and businesses in the new year after more than 13 million hens—necessary to the success of the egg and poultry industry—died or were slaughtered within the last two months.
The result? Mass egg shortages for consumers and soaring cost increases that have jumped more than 50% in the past year, increases that have only accelerated in recent weeks. The problem is that poultry and eggs are essential staples in restaurants and grocery stores that consumers are unable to do without. Increased prices are the necessary result of high demand and dwindling inventory. This problem is only exacerbated by inflation. Egg and poultry producers and processors face higher costs for energy and other goods and services necessary to continue operations.
The blame for egg prices going sky high does not lay at the feet of the agricultural community, but rather speaks directly to mismatched and unavoidable market forces. Despite this, New York Attorney General Letitia James vows to crack down on perceived “price gouging” in the egg and poultry industry. James accuses businesses of using the bird flu as “an excuse . . . to dramatically raise prices” to realize a larger profit margin amid a crisis.
James has historically accused the egg industry of price gouging during the COVID-19 pandemic, accusations that resulted in a settlement that delivered 1.2 million eggs to New Yorkers in 2021. But the situation now presented offers a unique set of challenges unlike those faced during COVID. In the wake of the bird flu, there are simply not enough hens to keep up with the always-high demand for eggs. Businesses are forced to make the difficult choice to either shutter or increase prices amid intense scrutiny from authorities.
Critically, in most states a declared state of emergency is required before price gouging laws may be triggered, and those laws will only be applicable during the duration of the declared emergency. Despite James’s warning, there is no such declared emergency in place in New York state, and therefore, there is no authority for James to act under New York’s price gouging law.
James’s warning does come on the heels of executive orders by California Governor Gavin Newsom to protect California residents against exploitation in connection with the Los Angeles wildfires where an emergency has been declared. The California Department of Justice has already filed two lawsuits against real estate agents for allegedly attempting to price gouge families that evacuated due to the Eaton Fire. California’s anti-price gouging orders are far-reaching and have implications for the egg and poultry industry in California as well, a state that has seen a 70% rise in egg prices between Thanksgiving and the New Year.
McGuireWoods has an experienced team, including former senior officials from key offices of attorneys general across the country that have been counseling clients through price gouging investigations in the agricultural space and other industries over the last several years. The team also helps clients preemptively avoid state regulatory action. Please reach out to Kevin Frankel, Erin Ashwell, or Alex Brackett if you would like to discuss these issues.