| Commitments and Contingencies |
Note 10 - Commitments and Contingencies In re Shell Eggs Litigation Since November 2025, the Company has been named as a defendant in several lawsuits filed in federal courts alleging substantially identical claims, including: (1) the following lawsuits in the Southern District of Indiana: (a) King Kullen Grocery Co., Inc. v. Cal -Maine Foods, Inc., et al., Case No. 1:25 -cv-2274, (b) Nineteenseventynine LLC d/b/a The Breakfast Joynt v. Cal -Maine Foods, Inc., et al., Case No. 1:25 -cv-2301, (c) Taylor Egg Products, Inc. v. Cal -Maine Foods, Inc., et al., Case No. 1:25-cv-2554, (d) Hudson v. Cal -Maine Foods, Inc. et al., Case No. 1:25 -cv-02573, (e) Brandon Huyler v. Cal -Maine Foods, Inc., et al., Case No. 1:26 -cv-00135, and (f) Gloria Emery, Carol Goldberg, and Casey Whalen v. Cal -Maine Foods, Inc., et al., Case No. 1:26 -cv-00193; (2) the following lawsuits in the Northern District of Illinois: (a) Birchmans Parisian, LLC (d/b/a Lisciandro's Restaurant) v. Cal -Maine Foods, Inc., et al., Case No. 1:25-cv-14030, (b) Phil-N-Cindy's Lunch, Inc. v. Cal -Maine Foods, Inc., et al., Case No. 1:25 -cv-14082, (c) Yell-O-Glow Corporation v. Cal -Maine Foods, Inc., et al., Case No. 1:25 -cv- 15084, and (d) Tariq Habash, Delia Govea, Andrew Phillips, and Catalina Torres v. Urner Barry Publications, Inc., Cal -Maine Foods, Inc., et al., Case No. 1:25 -cv-14112; (3) the following lawsuits in the Western District of Wisconsin: (a) Matthew Edlin v. Cal -Maine Foods, Inc., et al., Case No. 3:25-cv-946, (b) India Price, Lakia Session, and Karen Solomon v. Cal -Maine Foods, Inc., et al., Case No. 3:25 -cv-1016; (c) Cheesecake Funk LLC d/b/a Cheesecake Funk v. Cal -Maine Foods, Inc., et al., Case No. 3:26-cv-00400, (d) Philly Phlava Original Steaks and Hoagies, Inc. v. Cal -Maine Foods, Inc., et al., Case No. 3:26-cv-00417; (e) LPJJ LLC v. Cal -Maine Foods, Inc. et al., Case No. 3:26 -cv-00425; (f) C&L, LLC, et al. v. Cal -Maine Foods, Inc. et al., Case No. 3:26 -cv-00454; (g) Angelica Allison, et al. v. Cal -Maine Foods, Inc., et al., Case No. 3:26 -cv-00702; and (h) Gutierrez Family LLC, et al. v. Cal -Maine Foods, Inc. , et al., Case No. 3:26-md-03175; (4) a lawsuit in the Western District of Missouri: Ryan v. Cal -Maine Foods, Inc., et al., Case No. 4:25 -cv-00999; and (5) the following lawsuits in the Central District of California: (a) DenWest Restaurants, Inc., et al. v. Cal -Maine Foods, Inc., et al., Case No. 8:26 -cv-00949, and (b) DMSD Restaurants, Inc., et al. v. Cal -Maine Foods, Inc., et al., Case No. 2:26 -cv-04204. The lawsuits generally allege that the Company, along with other egg producers and industry associations, conspired to artificially inflate the prices of conventional shell eggs nationwide, primarily through manipulation of industry price benchmarks (such as the Urner Barry Egg Index and Eggs Clearinghouse, Inc. spot market), coordinated reporting and supply restrictions, particularly during the calendar year 2022 highly pathogenic avian influenza (“HPAI”) outbreak. In each case, the plaintiff seeks certification of a putative class of either direct or indirect purchasers, monetary damages, injunctive relief, attorneys’ fees, and, in some cases, restitution under Section 1 of the Sherman Act, 15 U.S.C. § 1 (the “Sherman Act”) and various state antitrust and consumer protection statutes. The above actions have been transferred to the Western District of Wisconsin for multidistrict proceedings. An initial judicial management conference took place on May 8, 2026, where the court entered an initial case management order, setting forth deadlines for the consolidated complaints and initial briefing to be filed. No discovery has taken place in any of the actions. The Company disputes plaintiffs’ allegations in each of these actions and intends to vigorously defend itself in these action s. Civil Investigative Demand In March 2025, the Company received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”) in connection with an antitrust investigation to determine whether there was a violation of the antitrust laws through alleged anticompetitive conduct by and among egg producers. In August 2025, the Company received a subpoena from the State of New York requesting information and documents related to its investigation of anticompetitive conduct and high egg prices in the egg industry, and in March 2026, the Company received a similar subpoena from the State of Washington related to its investigation of anticompetitive conduct and high egg prices in the egg industry. Additionally, various states’ attorneys general sought to join the DOJ’s investigation or requested access to the confidential disclosures by the Company to the DOJ. On or about June 25, 2026, the Company entered into an agreement with the DOJ and 17 states’ attorneys general to resolve the investigation, subject to applicable court approvals and procedures. On June 29, 2026, the United States and certain states filed a civil antitrust complaint against the Company alleging that the Company and certain other defendants coordinated bidding to manipulate whole benchmark prices and simultaneously filed the proposed settlement and proposed final judgments. The settlement with the United States is proceeding through the Antitrust Procedures and Penalties Act, commonly known as the Tunney Act, process that includes publication of the proposed judgment, competitive impact statement, public comment period, and eventual court review before entry of the final judgment. The Company denied all wrongdoing or violations of law and no fines or penalties were assessed against the Company. In connection with the agreement, the Company agreed to implement certain antitrust compliance and reporting measures, to donate 30 million eggs to food banks and non-profits, and paid $ 1.5 million to the settling states to resolve the matter.
The State of Washington did not join in this settlement and the Company continues to comply with the State of Washington’s subpoena and cooperate with its investigations. Management cannot predict the eventual scope, duration or outcome of the State of Washington’s investigation and is unable to estimate the amount or range of potential losses, if any, at this time. Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al. On September 25, 2008, the Company was named as one of several defendants in numerous antitrust cases involving the U.S. shell egg industry. The Company settled all of these cases, except for the claims of certain plaintiffs who sought substantial damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These remaining plaintiffs are Kraft Food Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and, until a subsequent settlement was reached as described below, The Kellogg Company. On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in the United States District Court for the Eastern District of Pennsylvania, In re Processed Egg Products Antitrust Litigation, MDL No. 2002, to the United States District Court for the Northern District of Illinois, Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al., Case No. 1:11 -cv-8808, for trial. The Egg Products Plaintiffs alleged that the Company and other defendants violated Section 1 of the Sherman Act, by agreeing to limit the production of eggs and thereby illegally raise the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs attacked certain features of the United Egg Producers animal -welfare guidelines and program used by the Company and many other egg producers. On October 24, 2019, the Company entered into a confidential settlement agreement with The Kellogg Company dismissing all claims against the Company for an amount that did not have a material impact on the Company’s financial condition or results of operations. On November 11, 2019, a stipulation for dismissal was filed with the court, and on March 28, 2022, the court dismissed the Company with prejudice. The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the Egg Products 17.8 million in damages. On November 6, 2024, the court entered a final judgment against the Company and other defendants, jointly and severally, totaling $ 43.6 million after trebling. On December 4, 2024, the Company filed a renewed motion for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment. On December 13, 2024, the court granted defendants’ November 20, 2024 motion to stay enforcement of the judgment and entered an agreed order requiring the defendants to post security during post -judgment proceedings and appeal, and stayed proceedings to enforce the judgment until the disposition of the post -judgment motions and ultimate appeals. On December 17, 2024, the Company posted a bond in the approximate amount of $ 23.9 million, representing a portion of the total bond required to preserve the right to appeal the trial court’s decision. Another defendant posted a bond for the remaining amount. On November 19, 2025, the plaintiffs filed a motion to lift stay of proceedings on attorney’s fees and costs, and on December 5, 2025, the defendants filed their response in opposition to such motion. The court has not ruled on this motion. The Company intends to continue to vigorously defend the claims asserted by the Egg Products Plaintiffs. If the jury’s decision is ultimately upheld, the Company would be jointly and severally liable with other defendants for treble 43.6 million, subject to credit for certain settlements with previous settling defendants, plus the Egg Product Plaintiffs’ reasonable attorneys’ fees. During our second quarter of fiscal 2024, we recorded an accrued expense of $ 19.6 million in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and classified as other noncurrent liabilities in the Company’s Condensed Consolidated Balance Sheets. Although less than the bond posted by the Company, the accrual represents our estimate of the Company’s proportional share of the reasonably possible ultimate damages award, excluding the Egg Product Plaintiffs’ attorneys’ fees that we believe would be approximately offset by the credits noted above. We have entered into a judgment allocation and joint defense agreement with the other defendants remaining in the case. Our accrual may change in the future to the extent we are successful in further proceedings in State of Oklahoma Watershed Pollution Litigation On June 18, 2005, the State of Oklahoma filed suit, in the United States District Court for the Northern District of Oklahoma, against Cal -Maine Foods, Inc. and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc., Peterson Farms, Inc. and Simmons Foods, Inc., and certain of their affiliates. The State of Oklahoma claims that through the disposal of chicken litter the defendants polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint sought injunctive relief and monetary damages, but the claim for monetary damages was dismissed by the court. Cal -Maine Foods, Inc. discontinued operations in the watershed in or around 2005. Since the litigation began, Cal -Maine Foods, Inc. purchased 100 % of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg operation within the Illinois River Watershed. Benton County Foods, LLC is not a defendant in the litigation. We also have a number of small contract producers that operate in the area.
The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered findings of fact and conclusions of law in favor of the State of Oklahoma. The court found the defendants jointly and severally liable for state law nuisance, federal common law nuisance, and state law trespass. The court also found the producers vicariously liable for the actions of their contract producers. On June 12, 2023, the court ordered the parties to mediate, but the mediation was unsuccessful. On June 26, 2024, the district court denied defendants’ motion to dismiss the case. On September 13, 2024, a status hearing was held and the court scheduled an evidentiary hearing for December 3, 2024, to determine whether any legal remedy is available based on the now 15-year -old record and changed circumstances of the Illinois River Watershed (the “IRW”). On December 9, 2025, the court entered a final judgment imposing approximately $ 420,000 all defendants and awarding certain non-monetary remedies, including injunctive relief. Pursuant to the final judgment, the Company is to pay approximately $ 70,000 in penalties. The judgment also entitles the State of Oklahoma to an award of attorneys’ fees and costs in an amount to be determined at a later date. The injunctive relief provides for, among other things, a special master to oversee an investigation, develop a remediation plan subject to court approval, and provide ongoing monitoring of remediation projects, the costs of which will be paid jointly and severally by the defendants. The defendants are required to fund $ 10 5 days of appointment of the special master, and ongoing funding requirements of $ 5 million any time the fund is below $ 5 million. This funding obligation is expected to continue for the 30 years term. The defendants are in discussions of a potential expense sharing agreement; however, the Company does not currently expect to have a material share of the funding. The injunctive relief also includes certain annual reporting requirements and certain requirements on future operations within the IRW removal of litter, storage, transportation, disposal and future land applications. On January 2, 2026, the Company filed its notice of appeal to the United States Court of Appeals for the Tenth Circuit. On January 16, 2026, the district court stayed the monetary portions of the judgment but declined to stay the injunctive portions. Effective July 10, 2026, the Company and all other defendants entered into a settlement agreement with the State of Oklahoma that provides for the payment of funds by the defendants into an environmental relief fund, certain restrictions on the application of chicken litter in the IRW and certain reporting and reporting measures. On July 15, 2026 , the State of Oklahoma and all defendants filed an unopposed joint motion for a stay in light of the settlement and an unopposed joint motion to vacate judgment. On August 17, 2026, the appeals court denied the parties’ motion to vacate the trial court’s judgment and remanded the matter back to the trial court without prejudice , and granted the motion to stay pending further order of the court. The settlement remains subject to applicable court approvals and procedures and is not expected to have a material impact on the Company’s financial condition or results of operations. Other Matters In addition to the above, the Company is involved in various other claims and litigation incidental to its business. Although the outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that the final outcome should not have a material effect on the Company’s consolidated results of operations or financial position. |