Egg Suppliers Dispute Pricing, Bird Flu Allegations
Egg Suppliers Dispute Pricing, Bird Flu Allegations
A group of Midwest egg suppliers are embroiled in a legal battle over pricing, with an Iowa company at the center of the dispute. Grand Prairie Foods is accusing Echo Lake Foods of Wisconsin of breaching a contract and unjust enrichment by doubling the price of egg patties during a bird flu outbreak.
Pricing Escalation After Bird Flu Outbreak
Echo Lake Foods cited an avian influenza outbreak at one of its raw egg suppliers as the reason for the price increase. However, Grand Prairie Foods disputes this claim, alleging that Echo Lake refused to lower its prices despite the market price of eggs decreasing. Emails between Grand Prairie’s president and Echo Lake’s director of sales show that Grand Prairie offered to supply Echo Lake with raw eggs at a lower price, but the offer was declined.
Arrangement and Subsequent Price Increase
Despite the initial disagreement, Grand Prairie and Echo Lake eventually agreed on an arrangement where Grand Prairie would supply Echo Lake with raw eggs at a premium price of $1.70 per pound. In exchange, Echo Lake would sell the finished egg products back to Grand Prairie for $3.60 per pound. However, Grand Prairie later claimed that an avian flu outbreak at its own supplier, Oskaloosa Food Products, forced it to raise its prices and cancel Echo Lake’s orders.
Unpaid Invoices and Lawsuit
Echo Lake, faced with higher costs due to Grand Prairie’s failure to deliver eggs, withheld payments totaling $567,460. This prompted Grand Prairie to sue Echo Lake for breach of contract and unjust enrichment. Echo Lake countersued, alleging that Grand Prairie had breached the contract by failing to fulfill its obligations.
Bird Flu Outbreak Allegation Challenged
Echo Lake attorneys have questioned Grand Prairie’s rationale for the price hike and canceled orders, citing an independent investigation that found no evidence of an avian flu outbreak at Oskaloosa Food Products. Oskaloosa’s chief operating officer confirmed that the plant had not experienced the outbreak described by Grand Prairie.
Subpoena for Pricing Information
Echo Lake subpoenaed Oskaloosa Food Products for access to the contract between Oskaloosa and Grand Prairie. However, Oskaloosa filed a motion to quash the subpoena, arguing that the agreement contained trade secrets. Echo Lake responded by arguing that the price of eggs is not a trade secret. The issue is now before a judge in federal court.
Ongoing Litigation
The legal battle between Grand Prairie and Echo Lake continues in South Dakota federal court. The case raises questions about the pricing practices of egg suppliers, the impact of avian influenza on the egg industry, and the extent to which companies can use trade secrets to justify withholding pricing information.