Papers show killing hens suggested to egg up prices

FRESNO -- A lawsuit alleging the U.S. egg industry conspired to increase consumer prices got a boost recently when a defendant turned over documents and internal memos that show an industry group called for egg producers to slow production.

The lawsuit alleges that as egg prices climbed from 2004 to 2008, industry officials who blamed rising feed costs were covering up an orchestrated killing of hens to reduce supplies.

"If you can get an agreement to manipulate supply, you are changing the economics of the market. Consumers will pay more," said attorney Michael Hausfeld, the lead attorney in the civil antitrust case against at least 13 of the nation's largest producers and trade groups, including industry giant Eggland's Best Inc. of Jeffersonville, Pa.

The plaintiffs' attorneys say the new documents, from Sparboe Farms of Minnesota, the nation's fifth-largest egg producer, bolster the price-fixing allegations uncovered during California's 2008 Proposition 2 referendum that bans caged chickens by 2015.

The United Egg Producers had called the stock reduction an animal welfare effort to give caged chickens more room. The lawsuit maintains it was a ruse to reduce the number of egg-laying hens and increase prices.

An attorney representing the defendants did not return a phone message left with her assistant. Officials of the United Egg Producers referred calls to an attorney, who also did not return telephone messages.

Defendants include NuCal Foods Inc., an egg distribution cooperative based in Ripon. A representative could not be reach for comment late Monday afternoon.

Other defendants are Cal-Maine Foods Inc., Land O'Lakes Inc., Moark LLC, Norco Ranch Inc., Michael Foods Inc. and Rose Acre Farms Inc.

The seven companies account for nearly 42 percent of domestic production.

The documents, and Hausfeld's amended complaint unsealed Thursday, are part of a civil lawsuit filed in U.S. District Court in Philadelphia in 2008 on behalf of restaurants and food processors nationwide.

Sparboe agreed to turn over documents and communications with the United Egg Producers in exchange for being dropped from the lawsuit. Sparboe owner Beth Schnell was traveling in Europe and could not be reached for comment, but a letter the company wrote to the trade group in 2003 expressed concern that the order for stock reductions "strikes of price fixing to us."

Sparboe's documents include one from the United Egg Producers' research economist that says the egg industry could earn more money by reducing the supply of eggs.

As a result of the new documents, the Humane Society of the United States sent a letter Monday to U.S. Attorney General Eric Holder asking that the Justice Department initiate a criminal investigation.

"The industry insists they can't afford a penny per egg to (switch to cage-free systems) and yet that penny pales in comparison to the profits they've been reaping from this alleged scheme. It proves the egg industry doesn't care about consumers or animals," said Jennifer Fearing, chief economist for the animal welfare group.