CHICAGO (CN) — The nation's largest egg producers faced the start of a damages trial in the Windy City on Wednesday over their role in artificially inflating the domestic price of eggs for years.
The trial is the latter half of a two-phase federal litigation that began last month. Jurors concluded the first phase two days before Thanksgiving when, after a day of deliberations, they found the egg producers, including Rose Acre Farms, United Egg Producers and Cal-Maine Foods, guilty of participating in a yearslong price-fixing conspiracy.
During the liability phase of the trial, jurors heard how the egg producers utilized numerous strategies to restrict the supply of eggs in the U.S. while also boosting prices. These included killing and molting egg hens early, coordinating egg exports to foreign markets to deflate the availability of eggs in the U.S. — while the eggs sold abroad were cheaper than the then-current domestic price — and enacting ostensible animal welfare reforms known as the UEP Certified Program that increased the size of cages for egg-laying hens. In court, the plaintiffs successfully argued these reforms were not actually meant to improve the lives of hens, but to reduce overall flock numbers and further squeeze supply.
Though the conspiracy began as early as 1998, the jury found the plaintiffs in the case only suffered relevant damages between October 2004 and December 2008. The plaintiffs are large corporations who have bought eggs in bulk from the defendant producers for decades: Kraft Foods Global, The Kellogg Company, General Mills and Nestle USA.
The four corporations first sued the egg producers in December 2011. After more than a decade of legal maneuvering, they now want the jury to award them, collectively, $25.4 million in compensatory damages. They arrived at that figure based on an economic analysis by Indiana University economics professor Michael Baye, who on Wednesday took the stand as an expert witness.
Baye testified each of the four plaintiffs had significantly overpaid for eggs between 2004 and 2008 due to the defendant producers' price-fixing conspiracy. Kraft paid more than $18 million in egg overcharges, Baye said, while Kellogg overpaid by more than $4.6 million, General Mills, over $1.3 million and Nestle, a little over $1.1 million.
These overcharges reflect the total prices the quartet paid for eggs in the same period — Kraft alone spent over $70 million on eggs, with Kellogg paying $15 million, General Mills about $3.9 million and Nestle about $6.5 million.
Before Baye took the stand, attorneys delivered opening arguments to the jury, arguing why they do or don't believe the $25.4 million figure is fair. Attorneys for the egg producers assured jurors they didn't want to "second guess" their Nov. 21 verdict, but asked them to consider the exorbitant wealth of the corporate plaintiffs — the four are worth over $381 billion collectively — compared to the relative modest earnings of the egg producers.
U.S. District Judge Steven Seeger later criticized this argument during a break while the jury was dismissed from the courtroom. He said the U.S. legal system is theoretically indifferent to litigants' wealth and it's "not helpful" to remind jurors of how rich the corporate plaintiffs are or to say that their damages verdict could have wider economic consequences.
"I don't know how much we should hear about that," Seeger said. "I think that's not a helpful theme for the plaintiffs to hear. The reality is we're all equal under the law, rich or poor."
The damages trial will continue through Thursday, after which the jury will once again begin deliberations.
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