Is Walmart defrauding customers into spending more for “organic” eggs?

While USDA wavers on organic egg laws, consumers are taking matters into their own hands with a new lawsuit against the retail giant.

For a year, Pittsburg, California resident Donnie Lee Gibson regularly bought organic eggs at his East Bay Walmart store. At $3.97 a dozen, the Organic Marketside brand cost him about a dollar more than cage-free Marketside. The difference was that the organic label stated that the laying hens were raised “with outdoor access.” Like the growing number of eaters concerned about farm animal welfare, Gibson paid attention to the labels and chose to pay a premium for the organic eggs.

Only it wasn’t true, at least not in the way most of us would understand outdoor access. Produced for Walmart’s private label by Cal-Maine Foods in Chase, Kansas, the hens lived in industrial, multi-story barns with tiny portholes and long ramps to access enclosed porches. No soil or vegetation. No fresh air or sunshine.

On January 8, Gibson became the lead plaintiff in a class-action lawsuit filed in U.S. District Court in Northern California, accusing Walmart and Cal-Maine Foods of fraud. “Consumers are being tricked into paying more based on the ‘outdoor access’ claim on the egg carton,” Gibson said through his attorney, Elaine Byszewski of the law firm Hagens Berman. She added, “The motivation of the lawsuit is to return to consumers the higher amount that they paid for the eggs and get defendants to stop their false advertising.”

When it comes to outdoor access, there’s a misunderstanding frequently exploited on labels featuring sunny pastures and rolling hills, when the reality is often anything but.
As the world’s largest retailer, Walmart is a giant force in the organic foods boom, which is increasing by double digits annually, according to the Organic Trade Association (OTA). But a rash of fake organic food scandals has cast suspicion on the government’s organic seal. It has left eaters wondering exactly why they’re paying more for organic eggs that are essentially the same as cage-free.

Donnie Lee Gibson v. Walmart Stores signals a rebellion aimed at retailers and their suppliers for transparency. “When these food companies fail to uphold their responsibility ensuring truthful advertising to consumers,” the lawsuit states, “such consumers are deceived into paying more for products or buying products that they otherwise would not have.”

It comes at a precarious moment for the $43 billion-dollar organic food industry. Last month, the United States Department of Agriculture (USDA) withdrew a groundbreaking animal welfare rule under pressure from large-scale agricultural groups, including egg producers like Cal-Maine. Finalized in January 2017 to become the first set of farm animal welfare standards under law, the new rule clarified the meaning of outdoor access for poultry as ample access to areas with vegetation and soil. It also pointedly disqualified enclosed porches for organic certification.

Then, last September, OTA sued USDA for obstructing due process, and on January 12, 2018 The Humane Society of the United States filed its own suit, charging the agency with “brazen” political maneuvering. As reported on Tuesday, organic industry members took this fight to the court of public opinion with a full-page ad in the Washington Post and the headline, “If you eat food, you should read this.”

As the law stands now during this impasse, Cal-Maine is technically in compliance with the national organic standards. But Donnie Lee Gibson v. Walmart has nothing to do with the National Organic Program or the USDA organic seal.

The issue of this case is consumer rights. And it narrows the organic egg fracas to one essential question: Did Walmart and Cal-Maine use false advertising to defraud its customers?

“We take this matter seriously,” a Walmart spokesperson told Law360 (paywall). “Once we have been served with the complaint and have reviewed the allegations, we will respond with the court.” Cal-Maine did not respond to repeated requests for comment.

Aerial photograph of an egg farmCourtesy of the Cornucopia Institute

Organic egg production at Cal-Maine’s Kansas facility

The complaint centers on consumer expectations and leans on a 2016 consumer survey from the American Society for the Prevention of Cruelty to Animals (ASPCA). It found that 77 percent of consumers are concerned about the welfare of farm animals and 69 percent of consumers pay “some or a lot of attention to food labels regarding how the animal was raised.” By and large, shoppers are confused by label claims. Many believe that organic means that animals spend most of their time outdoors in open pastures.

“Consumers expect much more from the label than the current [organic] standards ensure,” says Suzanne McMillan, content director of the ASPCA Farm Animal Welfare Campaign. “That’s particularly true when it comes to outdoor access, a misunderstanding frequently exploited on labels featuring sunny pastures and rolling hills when the reality is often anything but.”

At Walmart, the Organic Marketside egg carton reads, “Free to roam, nest and perch in a protected barn with outdoor access” on a green background. An investigation by the plaintiff’s attorneys conducted in the fall photographed eight hen houses at Cal-Maine’s Kansas facility. Built in 2014, it consists of windowless structures the company claims have sufficient interior space for dust bathing, perching and other natural behaviors. The “outdoors” consists of attached concrete porches enclosed with screens and bars that resemble a small state penitentiary. “This is not outdoor access for the hens, as promised by defendants to the consumers paying a premium for it,” the complaint states.

This suit could blow up to include potentially hundreds of thousands of class members.
In 2014, the Cornucopia Institute, a farm justice advocacy organization, filed a formal complaint with USDA against this same facility over outdoor access violations. “Even if a tiny porch with a concrete floor, metal ceiling, and a screened wall could be considered the ‘outdoors,’ if only 1 to 3 percent of the chickens can access their, so-called, outdoor space, that means 97 percent or more of the birds are being illegally confined,” says Mark Kastel, Cornucopia’s founder.

After refiling the complaint to no avail, Kastel considers consumer action a necessary step. “Since the USDA has, almost universally, refused to vigorously enforce the federal organic standards, a responsibility assigned to them by Congress,” he says, “civil litigation by consumers is one of the few avenues to ‘take the law into our own hands.’”

The public interest in farm animal welfare encompasses the living conditions and the treatment of the hens who lay our eggs. This upswell has already caused 200 major corporations to respond to consumer expectations with a commitment to cage-free eggs by 2025. This lawsuit continues a shift of responsibility for enforcing animal welfare onto retailers and their suppliers.

With USDA mired in politics and outdoor access for organics loosely defined, eaters will remain guessing whether the organic eggs we buy are from producers who provide meaningful outdoor access for hens—even if the quality, space, and time on pasture varies—or from those who live by the loophole in the current organic standards for porches. Some egg producers like Austin, Texas-based Vital Farms, have launched campaigns to educate eaters about the differences of genuine pasture-raised eggs. Still, most shoppers looking for better eggs remain at the mercy of unsupported and possibly misleading label claims.

The real opportunity to effect change in the organic market may not be fighting President Trump’s deregulatory USDA but raining down public outrage upon companies that enrich themselves by using labels that deceive eaters into spending money they would not have spent if they had known the truth. “Defendants’ deceptive use of the ‘with outdoor access’ packaging is unethical, oppressive, unscrupulous and injurious to consumers,” the complaint states.

With an open call to other Walmart shoppers who purchased organic eggs in California within the past four years, this suit could blow up to include potentially hundreds of thousands of class members, according to Byszewski.

The case is slated for a jury trial.

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Lynne Curry is an independent journalist based in rural Oregon and a contributing writer for The Counter. A former farm-to-table restaurant owner, she writes frequently about small-scale agriculture, animal welfare, and environmental sustainability issues.