On January 15, Texas Attorney General (AG) Ken Paxton announced that the state had settled its long-running lawsuit against Cal-Maine Foods, Inc. over the prices that the company charged for eggs in the first months of the COVID-19 pandemic. Notably, Cal-Maine avoided making any monetary payment as part of the settlement, instead agreeing to donate more than two million eggs to Texas food banks.

The Lawsuit

Texas sued Cal-Maine and its Texas subsidiary in April 2020. The complaint alleged that Cal-Maine — the state’s dominant egg supplier — had been charging around $1 for a dozen generic eggs in the months leading up to the governor’s declaration of a pandemic-related disaster. The company then allegedly increased its price to $3 when the pandemic caused a surge in demand. According to the complaint, Cal-Maine violated the Texas Deceptive Trade Practices — Consumer Protection Act (DTPA) by (1) charging an exorbitant or excessive price during a declared disaster, and (2) misrepresenting that egg prices were outside of its control.

Cal-Maine moved to dismiss the complaint, asserting that the state had not adequately pleaded facts to support either of its theories of liability. The company also argued that the DTPA is unconstitutionally vague and violates the U.S. Constitution’s Commerce and Takings clauses, at least as applied by the AG to Cal-Maine. The Harris County district court granted Cal-Maine’s motion in August 2020, but the Court of Appeals reversed the dismissal two years later. Acknowledging that Cal-Maine had raised colorable arguments, the Court of Appeals nevertheless concluded that further discovery was warranted and that the case could proceed “because it cannot be said that the State’s claims are completely baseless in fact or in law.”

The Settlement

Texas and Cal-Maine ultimately resolved the litigation one month before the scheduled trial. The settlement agreement provides no monetary relief to Texas but includes notable nonmonetary terms.

Most interestingly, Cal-Maine has agreed to donate a total of 180,000 dozen large brown and/or white eggs to Texas food banks within 120 days of the effective date. The agreement identifies 17 food banks across Texas and specifies how many eggs will be donated to each. Cal-Maine is required to coordinate the logistics of the egg donations with each food bank and to finance the shipping, storage, and other tasks and costs associated with the donations. If any food bank wants to redirect all or part of its share to another of the listed food banks or to another local nonprofit entity, Cal-Maine must arrange for delivery to the designated recipient as long as the company receives three weeks’ notice from the originally intended recipient.

Cal-Maine must provide the Texas AG’s office with monthly status updates until the egg donations have been completed. By the 120-day deadline, the company must certify that it has completed the donations, along with the date, recipient, and egg count for each donation. If Cal-Maine determines that it may not be able to meet the deadline, it must provide documentation to the attorney general’s office to substantiate its reasons for failing to complete the donations, and the parties must negotiate in good faith over a potential extension.

The agreement also includes injunctive relief. For a 10-year period, Cal-Maine is enjoined from selling eggs or demanding prices for eggs during a designated disaster period at levels that would violate the DTPA’s prohibition on exorbitant or excessive prices during declared disasters. For the same period, the company must keep exemplar copies of documents reflecting any official internal notice that it provides regarding the injunction as well as records of all notices and written communications with the state of Texas.

Finally, for 10 years, Cal-Maine must (a) respond to any request by the AG’s office within 20 business days of receipt of a written request, and (b) promptly make available copies of records reasonably requested by the AG’s office to demonstrate compliance with the requirements of the settlement agreement.

The settlement agreement includes no finding or admission of wrongdoing by Cal-Maine.

Why It Matters

Paxton’s egg donation agreement serves as a reminder that AGs are sometimes open to creative settlements to enforcement actions. Outside-the-box solutions like this one may be less costly to companies than either continuing to litigate or making a cash payment — particularly when the settlement offers the AG an opportunity to show that they are delivering tangible results for their constituents and/or local nonprofits that serve their communities.

Troutman Pepper Locke State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
	Chris Carlson Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
	Lauren Fincher Lauren has vast experience handling state attorneys general investigations, navigating complex regulatory compliance matters, and providing strategic counsel in enforcement actions across various industries. She helps clients manage high-stakes regulatory matters and guides them through complex legal landscapes.
	Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, representing clients in single and multistate enforcement actions, including inquiries and investigations, as well as litigation involving state attorneys general and other state and federal governmental enforcement bodies. He has significant experience handling actions with federal agencies, including the CFPB and FTC, as well as single plaintiff and class action litigation for clients in highly regulated sectors such as financial services, health care, pharmaceutical, and education.
	Michael Yaghi Mike handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
	Matthew J. Berns Drawing on his experience in senior leadership roles in the New Jersey Attorney General’s and Governor’s Offices and as a trial attorney for the U.S. Department of Justice, Matt provides an insider’s perspective when guiding clients through complex government investigations, litigation, and other actions.
	Samuel E. “Gene” Fishel Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
	Jeff Johnson Jeff helps clients navigate complex regulatory and litigation challenges with local, state, and federal authorities. His clients benefit from his decade of broad litigation experience, understanding of emerging state and federal regulatory issues, and strong relationships with attorneys general across the U.S. In addition to handling cases from trial through state or federal appeals, Jeff serves as amicus counsel in advancing legal rules to support his clients’ vital interests.
	Jay Myers Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
	Zoe Schloss Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Nick Gouverneur Nick is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. He received his J.D. from the University of Illinois College of Law, where he served as a member of the Journal of Law, Technology & Policy.
	Troy Homesley Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	Philip Nickerson Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Dascher Pasco Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
	Kyara Rivera Rivera Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
	Timothy Shyu Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
	Trey Smith Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
	Daniel Waltz Dan helps clients navigate all aspects highly regulated relationships between industry participants and federal, state and local governments. Whether engaging with regulators, negotiating transactions or representing clients in the courtroom, he delivers solutions that help his clients achieve their strategic goals.
	Cole White Cole is a member of the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) group. He has a decade of experience working in the attorney general community, having joined the firm from the Wyoming Office of the Attorney General, where he was assistant attorney general.
	Zoe Schloss Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
	Stephanie Kozol Stephanie is Troutman Pepper Locke’s senior government relations manager in the state attorneys general department.