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

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.

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.

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.