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Tuesday, July 23, 2024

Walmart egg price-gouging case settled in Yolo County

Walmart will pay $10,200 to the Yolo County Food Bank and $70,798 for the investigation cost and penalties 

By RACHEL SHEY city@theaggie.org

On Jan. 5, the Yolo County District Attorney posted a press release describing the settlement of a Walmart price gouging case. 

“As part of the settlement, Walmart agreed to pay a partial reimbursement for investigation costs and civil penalties totaling $70,798.00,” the press release read. “Walmart also agreed to pay $10,200.00 to the Yolo County Food Bank to support its mission to advance the quality of life of vulnerable county residents by elevating food security.”

The story of this case begins with Governor Gavin Newsom’s Executive Order N-44-20. The executive order prohibited the sale of food and other items “for a price that is more than 10 percent greater than the highest price charged by that person or entity for that item on February 4, 2020.” 

The complaint in the Walmart case stated that Walmart had increased the egg price by over 10% in Yolo County. This was not just a complaint about Yolo County, nor was it just a complaint about Walmart. In a separate case, filed with the US District Court of the Northern District of California, the plaintiffs found that eggs were “grossly marked-up” at nearly every major grocery outlet in the US, among which were Walmart, Trader Joe’s, Costco, Amazon and Albertsons. 

Not only does this violate the executive order, it also violates Penal Code Section 396, which states that during a state of emergency, it is “unlawful for a person, contractor, business, or other entity to sell… any consumer food items or goods… for a price of more than 10 percent greater than the price charged by that person… immediately prior to the proclamation or declaration of emergency.” 

What was the actual egg price increase? According to Urner Barry, a dozen eggs cost $1.55 in California on March 2, 2020. On March 27, 2020, that price increased to $3.66. This doubling in price looks like price gouging. Urner Barry director Brian Mosoguiri told Reuters that this is just a normal function of the economy. Most likely, people were worried about the COVID-19 pandemic and decided to shop ahead, buying more eggs than usual. 

“People see a sharp increase in prices and assume they’re being gouged, but it’s just a function of the market,” Mosoguiri said in the article. “Egg prices are up because demand is up sharply. Suppliers are seeing four, five, six times the level of demand as before, and there’s essentially a fixed supply.”

According to the executive order, the increase in price is not considered unlawful if the seller can show that the cost of making the goods has increased or if the item was on sale on Feb. 4, 2020. 

Wholesale prices of eggs did increase to $3.09 in March 2020, and the rise in prices among grocery stores, including Walmart, was likely due to this wholesale price increase being passed along to consumers, according to Reuters. Had grocery stores kept the same prices as before, they would have lost money on the eggs. A spokesperson for Trader Joe’s told TODAY that the grocery store did indeed lose money on eggs in March. 

“Even while our costs were rising, we chose not to raise our prices on eggs during the time referenced,” the spokesperson told TODAY. “In fact, for a period of time, we lost money on eggs because of this.”

Walmart did not admit any wrongdoing, according to the press release, but agreed to pay reimbursement and give money to the food bank, in lieu of reimbursing the actual consumers. The stipulation states that it would be unfeasible to contact and reimburse every single consumer individually, and the overall cost would “far exceed the benefit consumers would gain.” 

Yolo County District Attorney Jeff Reisig was pleased with the open communication with Walmart’s team. 

“Our office is proud that communications with Walmart remained professional and constructive, that price discrepancies were corrected, and the Yolo Food Bank will have additional funds to support its mission,” Reisig said in the press release.

Written by: Rachel Shey — city@theaggie.org

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