Associated Press | April 12, 2010
By Tracie Cone

FRESNO, Calif. (AP) -- 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 between 2004 and 2008, industry officials who blamed rising feed costs were covering up an orchestrated hen kill-off 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 suit 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 immediately return telephone messages.

The documents, and Hausfeld's amended complaint unsealed Thursday, are part of a civil suit filed U.S. District Court in Philadelphia in 2008 on the 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 immediately 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.

Defendants in the civil case include several of the biggest producers in the egg industry: Cal-Maine Foods Inc., Land O'Lakes Inc., Moark LLC, Norco Ranch Inc., Michael Foods Inc., Rose Acre Farms Inc. and NuCal Foods Inc. The companies account for nearly 42 percent of domestic production.