IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

KENNETH BELL, et al.,

Plaintiffs

v.

CAL-MAINE FOODS, et al.,

Defendants.

Case No. 1:20-cv-00461-RP

DEFENDANTS’ MOTION TO DISMISS 

PLAINTIFFS’ FIRST AMENDED CLASS ACTION COMPLAINT 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 1 of 132
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TABLE OF CONTENTS

Page

I. INTRODUCTION........................................................................................................................1

II. RELEVANT ALLEGATIONS...................................................................................................5

III. ARGUMENT.............................................................................................................................6

A. Plaintiffs Fail to Establish Subject Matter Jurisdiction Under the Class 

Action Fairness Act..................................................................................................6

B. Plaintiffs Fail to Establish Subject Matter Jurisdiction Under Article III 

and Their Claims Must Be Dismissed for Lack of Standing. ..................................7

1. Plaintiffs lack standing to sue Defendants who did not produce or 

distribute the eggs they purchased. ............................................................10

2. Even as to the three Defendants that Plaintiffs contend 

“participated in the production, packing or distribution” or eggs 

they bought, Plaintiffs still lack Article III standing..................................11

a. The allegations against Centrum and Trillium fail to 

establish Article III standing..........................................................11

b. The allegations against Cal-Maine Foods fail to establish 

Article III standing.........................................................................12

C. The Amended Complaint Fails to Satisfy Both Minimum and Heightened 

Pleading Standards.................................................................................................14

D. The Amended Complaint Fails to State a Claim Under the DTPA. ......................16

E. DTPA § 17.46(b)(27) Is Unconstitutional As It Is Void For Vagueness 

And Violates The Dormant Commerce Clause. ....................................................20

1. DTPA § 17.46(b)(27) is unconstitutionally vague.....................................20

2. DTPA § 17.46(b)(27) violates the dormant Commerce Clause.................22

a. DTPA § 17.46(b)(27) has impermissible extraterritorial 

effects.............................................................................................23

b. As applied here, DTPA § 17.46(b)(27) unconstitutionally 

burdens interstate commerce..........................................................28

IV. CONCLUSION........................................................................................................................30

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ii

TABLE OF AUTHORITIES

Page(s)

CASES

A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc.,

881 F.2d 1396 (7th Cir. 1989) ...................................................................................................1

A.B. Small Co. v. Am. Sugar Ref. Co.,

267 U.S. 233 (1925).................................................................................................................21

ABC Arbitrage v. Tchuruk,

291 F.3d 336 (5th Cir. 2002) ...................................................................................................14

Amstadt v. U.S. Brass Corp.,

919 S.W.2d 644 (Tex. 1996)........................................................................................16, 18, 19

Anderson v. Kutak, Rock & Campbell (In re Taxable Mun. Bond Sec. Litig.),

51 F.3d 518 (5th Cir. 1995) .....................................................................................................12

Ashcroft v. Iqbal,

556 U.S. 662 (2009).................................................................................................................15

Ass’n for Accessible Medicines v. Frosh,

No. CV MJG-17-1860, 2017 WL 4347818 (D. Md. Sept. 29, 2017), rev’d, 887 

F.3d 664 (4th Cir. 2018) ....................................................................................................21, 25

Ass’n for Accessible Meds. v. Frosh,

887 F.3d 664 (4th Cir. 2018), cert. denied, 139 S. Ct. 1168 (2019)............................24, 25, 29

Audler v. CBC Innovis Inc.,

519 F.3d 239 (5th Cir. 2008) .....................................................................................................8

Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007).................................................................................................................15

Bige, Inc. v. Penn-Am. Ins. Co.,

No. 1-15-CV-292RP, 2015 WL 5227726 (W.D. Tex. Sept. 8, 2015) .....................................14

C & A Carbone, Inc. v. Town of Clarkstown,

511 U.S. 383 (1994)...........................................................................................................24, 26

Cameron v. Terrell & Garrett, Inc.,

618 S.W.2d 535 (Tex. 1981)....................................................................................................18

Carrea v. Dreyer’s Grand Ice Cream, Inc.,

No. C 10–01044 JSW, 2011 WL 159380 (N.D.Cal. Jan.10, 2011).........................................12

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 3 of 132
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Chavez v. Ford Motor Co.,

No. EP-18-CV-109-KC, 2018 WL 6190601 (W.D. Tex. Sept. 26, 2018)...................14, 18, 19

Coates v. City of Cincinnati,

402 U.S. 611 (1971).................................................................................................................21

DaimlerChrysler Corp. v. Cuno,

547 U.S. 332 (2006)...................................................................................................................8

Dickerson v. Bailey,

336 F.3d 388 (5th Cir. 2003) ...................................................................................................23

Doe v. Boys Clubs of Greater Dall., Inc.,

907 S.W.2d 472 (Tex. 1995)................................................................................................9, 17

Gartheiser Honea, P.C. v. Moskowitz,

2018 WL 6617780 (E.D. Tx. Dec. 18, 2018) ..........................................................................25

Grand River Enters. Six Nations, Ltd. v. Pryor,

425 F.3d 158 (2d Cir. 2005).....................................................................................................28

Granfield v. NVIDIA Corp.,

No. C 11-05403 JW, 2012 WL 2847575 (N.D. Cal. July 11, 2012) .......................................12

Grayned v. City of Rockford,

408 U.S. 104 (1972)...........................................................................................................20, 21

Healy v. Beer Inst., Inc.,

491 U.S. 324 (1989)......................................................................................................... passim

Hines v. Hash,

843 S.W.2d 464 (Tex. 1992)....................................................................................................16

Holliday v. Weaver,

410 S.W. 439 (Tex. App.—Dallas 2013, pet. denied)...............................................................7

Hollinger v. Home State Cty. Mut. Ins. Co.,

No 5:09-CV-118, 2010 WL 11530632 (E.D. Tex. Aug. 5, 2010).........................................6, 7

Int’l Dairy Foods Ass’n v. Boggs,

622 F.3d 628 (6th Cir. 2010) .............................................................................................23, 28

Jewell v. Grain Dealers Mut. Ins. Co.,

290 F.2d 11 (5th Cir. 1961) .......................................................................................................6

Jim Walter Homes, Inc. v. Valencia,

690 S.W.2d 239 (Tex. 1985)....................................................................................................16

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 4 of 132
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Johnson v. City of Dallas,

61 F.3d 442 (5th Cir. 1995) .......................................................................................................8

Kassel v. Consol. Freightways Corp. of Del.,

450 U.S. 662 (1981).....................................................................................................24, 26, 29

KT & G Corp. v. Att’y Gen. of Okla.,

535 F.3d 1114 (10th Cir. 2008) ...............................................................................................28

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992)...................................................................................................................7

Meadowbriar Home for Children, Inc. v. Gunn,

81 F.3d 521 (5th Cir. 1996) .......................................................................................................8

North Dakota v. Heydinger,

825 F.3d 912 (8th Cir. 2016) .............................................................................................23, 26

O’Shea v. Littleton,

414 U.S. 488 (1974)...................................................................................................................8

Online Merchants Guild v. Cameron,

--- F. Supp. 3d ----, No. 3:20 CV 29 ..................................................................................26, 27

Online Merchants Guild v. Cameron,

--- F. Supp. 3d ----, No. 3:20 CV 29 GVFT, 2020 WL 3440933, at *11 (E.D. 

Ky. June 23, 2020)...................................................................................................................24

Online Merchants Guild v. Cameron,

--- F. Supp. 3d ----, No. 3:20 CV 29 GVFT, 2020 WL 3440933 (E.D. Ky. June 

23, 2020) ..................................................................................................................................22

Paterson v. Weinberger,

644 F.2d 521 (5th Cir. 1981) .....................................................................................................6

Pelican Chapter, Associated Builders & Contractors, Inc. v. Edwards,

128 F.3d 910 (5th Cir. 1997) .............................................................................................23, 28

Perry v. Brassell,

No. 18-cv-00062-ADA, 2018 U.S. Dist. LEXIS 221386 (W.D. Tex. Oct. 18, 

2018) ..........................................................................................................................................8

Pharm. Research & Mfrs. of Am. v. D.C.,

406 F. Supp. 2d 56 (D.D.C. 2005), aff’d sub nom. Biotechnology Indus. Org. 

v. D.C., 496 F.3d 1362 (Fed. Cir. 2007) ..................................................................................24

Pike v. Bruce Church, Inc.,

397 U.S. 137 (1970)...............................................................................................23, 28, 29, 30

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Pilgrim’s Pride Corp. v. Frisco Food Servs., Inc.,

No. CIVA 206-CV-512 TJW, 2007 WL 508365 (E.D. Tex. Feb. 13, 2007) ............................7

In re Plains All Am. Pipeline, L.P. Sec. Litig.,

245 F. Supp. 3d 870 (S.D. Tex. 2017), aff’d on other grounds sub nom. Police 

& Fire Ret. Sys. of City of Detroit v. Plains All Am. Pipeline, L.P., 777 F. 

App’x 726 (5th Cir. 2019) .........................................................................................................9

Ramirez v. GEICO,

548 S.W.3d 761 (Tex. App.—El Paso 2018, pet. denied).......................................................16

Ramming v. United States,

281 F.3d 158 (5th Cir. 2001) .....................................................................................................6

Richardson v. Foster & Sear, L.L.P.,

257 S.W.3d 782 (2008)............................................................................................................16

Rivera v. Wyeth-Averst Labs,

283 F.3d 315 (5th Cir. 2002) .........................................................................................9, 13, 14

Schlesinger v. Reservists Comm. to Stop the War,

418 U.S. 208 (1974).................................................................................................................12

Scottsdale Ins. Co. v. Knox Park Constr., Inc.,

488 F.3d 680 (5th Cir. 2007) .....................................................................................................8

Simon v. E. Ky. Welfare Rights Org.,

426 U.S. 26 (1976).....................................................................................................................8

Smith v. Goguen,

415 U.S. 566 (1974).................................................................................................................21

Spokeo, Inc. v. Robins,

136 S. Ct. 1540 (2016)...........................................................................................................7, 8

Spradling v. Williams,

566 S.W.2d 561 (Tex. 1978)....................................................................................................17

State v. Cal-Maine Foods, Inc.,

215th Dist. Ct. Harris Cty, No. 2020-25427..............................................................................4

Steel Co. v. Citizens for a Better Env’t,

523 U.S. 693 (2013)...................................................................................................................7

Streber v. Hunter,

221 F.3d 701 (5th Cir. 2000) ...................................................................................................17

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Todd v. Perry Homes,

156 S.W.3d 919 (Tex. App.—Dallas 2005, no pet.)................................................................19

U. S. Civil Serv. Comm’n v. Nat’l Ass’n of Letter Carriers, AFL-CIO,

413 U.S. 548 (1973)...........................................................................................................20, 21

United States ex. rel. Campbell v. KIC Dev., LLC,

No. EP-18-CV-193-KC, 2019 WL 6888525 (W.D. Tex. Dec. 10, 2019) .................................6

United States ex rel. Steury v. Cardinal Health, Inc.,

625 F.3d 262 (5th Cir. 2010) ...................................................................................................14

United States ex rel. Thompson v. Columbia/HCA Healthcare Corp.,

125 F.3d 899 (5th Cir. 1997) ...................................................................................................14

United States ex rel. Willard v. Humana Health Plan of Tex. Inc.,

336 F.3d 375 (5th Cir. 2003) ...................................................................................................14

United States v. Flores,

No. 16-40622, 730 F. App’x 216, 2018 WL 1864956 (5th Cir. Apr. 18, 2018)......................25

United States v. Harriss,

347 U.S. 612 (1954).................................................................................................................20

United States v. L. Cohen Grocery Co.,

255 U.S. 81 (1921)...................................................................................................................21

Villarreal v. Wells Fargo Bank, N.A.,

814 F.3d 763 (5th Cir. 2016) .....................................................................................................9

Whitmore v. Arkansas,

495 U.S. 149 (1990).................................................................................................................10

Wyble v. Gulf S. Pipeline Co., L.P.,

308 F. Supp. 2d 733 (E.D. Tex. 2004).....................................................................................10

STATUTES, RULES & REGULATIONS

28 U.S.C. § 1332..........................................................................................................................2, 6

28 U.S.C. § 1332(d)(2) ....................................................................................................................6

Fed. R. Civ. P. 8.........................................................................................................................3, 16

Fed. R. Civ. P. 8(a) ........................................................................................................................15

Fed. R. Civ. P. 9(b) ....................................................................................................................3, 14

Fed. R. Civ. P. 12(b)(1)....................................................................................................................2

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Fed. R. Civ. P. 12(b)(6)..................................................................................................................14

Fed. R. Evid. 201 ...........................................................................................................................25

Fla. Stat. Ann. § 501.160(1)(b), (5) ...............................................................................................28

Ky. Rev. Stat. Ann. § 367.37 4(1)(c).............................................................................................23

S.C. Code Ann. § 39-5-145(I)........................................................................................................28

S.C. Code Ann. § 39-5-145(A)(5)(a)(i) .........................................................................................28

Tenn. Code Ann. § 47-18-5103(b)(1)............................................................................................28

Tex. Bus. & Com. Code Ann. § 17.45...........................................................................................24

Tex. Bus. & Com. Code Ann. § 17.45(11) ......................................................................................7

Tex. Bus. & Com. Code Ann. § 17.46(a) ......................................................................................23

Tex. Bus. & Com. Code Ann. § 17.46(b)(27)........................................................................ passim

Tex. Bus. & Com. Code Ann. § 17.47(c) ......................................................................................20

Tex. Bus. & Com. Code Ann. § 17.49(f)(1) ..................................................................................17

Tex. Bus. & Com. Code Ann. § 17.49(f)(2) ..................................................................................17

Tex. Bus. & Com. Code Ann. § 17.49(g) ......................................................................................17

Tex. Bus. & Com. Code Ann. § 17.50(a)(1)....................................................................................9

Tex. Bus. & Com. Code Ann. § 17.50(b) ........................................................................................7

Tex. Bus. & Com. Code Ann. § 17.505(a) ................................................................................2, 16

Tex. Bus. & Com. Code Ann. § 17.505(d) ................................................................................2, 16

Tex. Bus. & Com. Code Ann. § 17.505(e) ....................................................................................16

U.S. Const., Article I, Section 8, Clause 3 (Commerce Clause)............................................ passim

U.S. Const., Article III........................................................................................................... passim

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I.

INTRODUCTION

Plaintiffs purport to represent a class of consumers who purchased shell eggs at retail from 

various outlets (“Retailers”) at various times following Governor Abbott’s March 13, 2020 

emergency declaration related to COVID-19. Defendants1are producers of shell eggs, none of 

whom are alleged to have sold eggs directly to any Plaintiff or any other consumer, at any price, 

as Plaintiffs admit. Am. Compl. (ECF No. 119) ¶¶ 35-64. Nevertheless, Plaintiffs accuse 

Defendants of raising prices in violation of the Texas Deceptive Trade Practices Act’s (“DTPA”) 

prohibition against price gouging. See Tex. Bus. & Com. Code Ann. § 17.46(b)(27).2

In their Original Complaint, Plaintiffs expressly admitted that they were unable to allege 

that any specific Defendant charged “exorbitant or excessive” prices in violation of Section 

17.46(b)(27). See Orig. Compl. (ECF No. 1) ¶ 1 (“Plaintiffs cannot assert that every defendant 

engaged in price-gouging [sic], but plaintiffs can and do assert that some or all of these defendants 

illegally marked up egg prices . . .”). In response to Defendants’ first motion to dismiss (ECF No. 

110-1), Plaintiffs now proffer an entirely new theory: that Defendants are to blame for an alleged 

brief spike in wholesale egg prices tied to the Urner Barry price index.3 Am. Compl. ¶ 67.

 

1 Cal-Maine Foods, Inc., Rose Acre Farms, Inc., Hillandale Farms, Trillium Farm 

Holdings, LLC, Rembrandt Enterprises, Inc., Hickman’s Egg Ranch, Inc., Daybreak Foods, Inc., 

Weaver Bros., Inc., Sparboe Farms, Inc., Herbruck’s Poultry Ranch, Inc., Centrum Valley Farms, 

LLP, Opal Foods LLC, and Midwest Poultry Services, L.P. (collectively, “Defendants”). 

2 Section 17.46(b)(27) prohibits, in relevant part: “taking advantage of a disaster declared 

by the governor under Chapter 418, ... by: (A) selling or leasing fuel, food, medicine, lodging, 

building materials, construction tools, or another necessity at an exorbitant or excessive price.”

3 The Urner Barry price index is published by Urner Barry Publications, Inc. 

(www.urnerbarry.com), “a business publisher that specializes in market reports on the food 

industry” and “report[s] on what various producers and sellers were charging in order to allow 

those producers to standardize their prices.” Am. Compl. ¶ 65. The Urner Barry price index is the 

most commonly used benchmark for establishing wholesale prices of commodity eggs between 

producers and purchasers in the United States. See A.A. Poultry Farms, Inc. v. Rose Acre Farms, 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 9 of 132
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Specifically, Plaintiffs allege that Defendants “helped create a sharp spike in the price 

index directly following the onset of the pandemic” by “manipulating the Urner-Barry [sic] index.” 

See id. ¶¶ 67, 71. But what any particular Defendant did to “manipulate” the Urner Barry price 

index is left to the reader’s imagination, as is how the Urner Barry price index relates to the retail 

prices Plaintiffs paid. Critically, Plaintiffs do not allege that any Defendants specifically charged 

exorbitant or excessive wholesale prices to anyone, nor do Plaintiffs allege any connection 

between unspecified wholesale price increases and the retail prices of which they complain. 

Plaintiffs’ vague, generalized, conclusory allegations fail to cure the defects in their Original 

Complaint. Indeed, considering the heightened pleading standard that applies to DTPA actions, 

such allegations provide no more support for bringing suit against Defendants than did the selfdefeating allegations in Plaintiffs’ initial pleading.

As detailed below, the Amended Complaint should be dismissed on multiple, independent 

grounds.4 First, dismissal is warranted under Rule 12(b)(1) because Plaintiffs have failed to allege 

facts sufficient to establish subject matter jurisdiction. The Class Action Fairness Act or “CAFA,” 

28 U.S.C. § 1332, limits federal subject matter jurisdiction to class actions in which the amount in 

controversy against each defendant exceeds $5 million. Here, the Amended Complaint fails to 

 

Inc., 881 F.2d 1396, 1398 (7th Cir. 1989) (“Pricing in the egg business is based on the ‘Urner 

Barry index’, a daily compendium of egg prices. Processors bid in relation to that scale—e.g., ‘five 

cents per dozen back of [= under] Urner Barry’—so that they may strike long-term deals in a 

fluctuating market. A buyer who receives a bid well under the Urner Barry scale is assured of a 

relatively good buy even though the delivered price may move up or down with the market.”). See 

also https://www.urnerbarry.com/Methodology (last visited Nov. 19, 2020); disc. infra note 6.

4 Concurrent with this Motion, certain Defendants will file individual verified pleas in 

abatement due to Plaintiffs’ failure to provide the pre-suit notice required by Tex. Bus. & Com. 

Code Ann. § 17.505(a). If the Court finds it has jurisdiction over any of these Defendants, and 

does not entirely dismiss the pleading as to all of them, then for the reasons set forth in each of the 

pleas in abatement, the Court must abate these proceedings pursuant to Tex. Bus. & Com. Code 

Ann. § 17.505(d). Any Defendant not concurrently filing a plea in abatement does not concede 

that Plaintiffs satisfied the pre-suit notice requirement and reserves all rights.

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plead that $5 million in economic damages is recoverable from any single Defendant. Under 

CAFA, therefore, subject matter jurisdiction is absent.

Second, Plaintiffs lack standing under Article III to assert claims against Defendants. As to 

ten Defendants – Rose Acre Farms, Inc., Hillandale Farms, Rembrandt Enterprises, Hickman’s 

Egg Ranch, Inc, Daybreak Foods, Inc., Weaver Bros, Inc., Sparboe Farms, Inc., Herbruck’s 

Poultry Ranch, Inc, Opal Foods, LLC, and Midwest Poultry Services, L.P. – none of the Plaintiffs 

alleges that he or she purchased eggs produced by these Defendants. Whatever injury-in-fact each 

Plaintiff claims to have suffered as a result of his or her egg purchases, therefore, that injury could 

not possibly be attributed to Defendants who did not even supply the eggs in question. As to all 

thirteen Defendants, Plaintiffs fail to allege how any Defendant’s conduct resulted in their alleged 

injury or how the injunctive relief and damages they seek against Defendants would redress the 

harm caused by paying prices independently determined by retailers. 

Third, the Amended Complaint should be dismissed because Plaintiffs’ DTPA claims fail 

to meet the requisite heightened pleading standards of Rule 9(b). Indeed, Plaintiffs’ allegations are 

so vague that they fall below even the more lenient notice pleading standard of Rule 8. Despite 

amending their complaint, Plaintiffs still fail to allege what Defendants did to any individual 

Plaintiff that was unlawful beyond broad, conclusory allegations that do not put Defendants on 

reasonable notice of the specific facts supporting any DTPA claims against them.

Fourth, Plaintiffs fail to state a claim under the DTPA, which requires Plaintiffs to allege 

that Defendants’ purported conduct occurred “in connection with a consumer transaction.” The 

Amended Complaint does not allege that Defendants sold eggs directly to Plaintiffs (it admits the 

opposite). Indeed, nothing in the Amended Complaint establishes that any Defendant actually sold 

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eggs at unlawful prices to anyone in or outside the State of Texas. Based on such fundamental 

defects, the Amended Complaint should be dismissed with prejudice.

Fifth, dismissal with prejudice is required because Section 17.46(b)(27) is 

unconstitutionally vague and violates the dormant Commerce Clause. One Texas state court 

recently dismissed a similar case filed by the Texas Attorney General when presented with similar 

arguments. On August 13, 2020, the 215th District Court in Harris County dismissed, with 

prejudice, an initial petition filed by the Texas Attorney General (“State”) against Defendant CalMaine Foods, Inc. (“Cal-Maine Foods”), alleging violations of the DTPA, just as do Plaintiffs 

here. State v. Cal-Maine Foods, Inc., 215th Dist. Ct. Harris Cty, No. 2020-25427 (Petition attached 

hereto as Exhibit A). The State’s petition accused Cal-Maine Foods of price gouging based on 

allegations that in March 2020, Cal-Maine Foods’ generic shell egg prices in Texas rose in the 

same manner as did national and regional market prices. See Ex. A ¶¶ 4-5, 21, 34.

Cal-Maine Foods moved to dismiss the petition. See State v. Cal-Maine Foods, Rule 91a 

Motion to Dismiss (filed June 26, 2020) (attached hereto as Exhibit B). Among other arguments, 

Cal-Maine Foods asserted that Section 17.46(b)(27) was void for vagueness, violated the dormant 

Commerce Clause by having extraterritorial effect and impeding interstate commerce, and 

constituted an unconstitutional taking without just compensation as applied by the State. After 

extensive oral argument, the District Court dismissed the State’s initial petition with prejudice. 

State v. Cal-Maine Foods, Order on Defendants’ Rule 91a Motion to Dismiss (Aug. 13, 2020) 

(attached hereto as Exhibit C). Although the District Court did not specify the grounds for its 

ruling, the dismissal with prejudice reflects a judicial determination that the State could not remedy 

the initial petition’s infirmities through re-pleading their initial petition. Considering the dearth of 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 12 of 132
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Texas state court interpretation of Section 17.46(b)(27), the result is noteworthy and merits 

consideration.5

II.

RELEVANT ALLEGATIONS

In response to the COVID-19 pandemic, Texas Governor Greg Abbott declared a state of 

emergency on March 13, 2020. Am. Compl. ¶ 4. Plaintiffs allege that “[b]etween the onset of the 

COVID-19 pandemic and March 30, 2020, the price of eggs nearly tripled in Texas,” and that “the 

spike in egg prices came almost entirely from the producers and distributors[.]” Id. ¶ 7.

Plaintiffs allege that they purchased eggs from various Retailers, each of whom was named 

as a defendant in the Original Complaint but was subsequently dropped from the Amended 

Complaint. See Am. Compl. ¶¶ 35-64. Certain individual Plaintiffs allege that they purchased eggs 

allegedly produced, packaged or distributed by three named Defendants, but there are no 

allegations (nor could there be) that any Plaintiff purchased eggs directly from any Defendant. See 

id. ¶¶ 38, 43, 48, 53, 58, 63.

Plaintiffs do not allege what specific action any particular Defendant took, if any, to raise 

the price of eggs sold at wholesale or retail. Instead, Plaintiffs allege that Defendants are “part of 

the supply chain for eggs in Texas” and “simply following contracts that are tied to something 

called the Urner-Barry [sic] Index.” Am. Compl. ¶¶ 28, 34. The Amended Complaint alleges that 

“[a]ll of the egg producers named in this lawsuit participated in the feedback loop that creates the 

Urner-Barry [sic] Index” during the pandemic, which “helped create a sharp spike in the price 

index directly following the onset of the pandemic.” Id. ¶ 67. That is the complete universe of facts 

alleged against Defendants. The allegations do not specify how any Defendants participated in the 

 

5 The State of Texas has appealed the ruling to the Texas Court of Appeals, First District. 

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so-called (undefined) “feedback loop”; what Defendants communicated to Urner Barry, if 

anything; who communicated with whom; how such alleged communications could possibly have 

“manipulated” the Urner Barry price index; or how the Urner Barry price index impacted Plaintiffs.

III.

ARGUMENT

A. Plaintiffs Fail to Establish Subject Matter Jurisdiction Under the Class Action 

Fairness Act.

Plaintiffs assert subject matter jurisdiction under the Class Action Fairness Act (“CAFA”), 

28 U.S.C. § 1332. Am. Compl. ¶ 26. Under CAFA, federal district courts possess diversity 

jurisdiction over “any civil action in which the matter in controversy exceeds the sum or value of 

$5,000,000, exclusive of interest and costs, and is a class action[.]” 28 U.S.C. § 1332(d)(2).

The Fifth Circuit recognizes a distinction between a “facial attack” and “factual attack” to 

subject matter jurisdiction. Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). Defendants 

are lodging a “facial attack,” for which “the trial court is required merely to look to the sufficiency 

of the allegations in the complaint because they are presumed to be true.” Id. In such a case, 

Plaintiffs bear the burden of establishing that jurisdiction does in fact exist. See United States ex. 

rel. Campbell v. KIC Dev., LLC, No. EP-18-CV-193-KC, 2019 WL 6888525, at *1 (W.D. Tex. 

Dec. 10, 2019) (citing Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)).

“[W]here a suit is brought against several defendants asserting claims against each of them 

which are separate and distinct, the test of jurisdiction is the amount of each claim, and not their 

aggregate.” Hollinger v. Home State Cty. Mut. Ins. Co., No 5:09-CV-118, 2010 WL 11530632, at 

*8 (E.D. Tex. Aug. 5, 2010) (quoting Jewell v. Grain Dealers Mut. Ins. Co., 290 F.2d 11, 13 (5th 

Cir. 1961)). In this case, jurisdiction is absent because Plaintiffs allege no facts suggesting that 

damages against any single Defendant will exceed $5 million. The Amended Complaint alleges 

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“separate and distinct” claims against each Defendant, arising out of separate alleged violations of 

DTPA § 17.46(b)(27), for which Plaintiffs seek unspecified economic damages. See Am. Compl. 

¶¶ 85-88. See Tex. Bus. & Com. Code Ann. § 17.50(b) (authorizing recovery of “economic 

damages”). “Economic damages” are defined as “compensatory damages for pecuniary loss, 

including costs of repair and replacement.” Tex. Bus. & Com. Code Ann. § 17.45(11); see also 

Holliday v. Weaver, 410 S.W. 439, 443 (Tex. App.—Dallas 2013, pet. denied) (noting that courts 

construe “economic damages” synonymously with “actual damages” under the common law). 

Nor may Plaintiffs argue that their claims against Defendants should be aggregated to reach 

the required $5 million amount in controversy. Aggregation is proper only “if the defendants are 

jointly liable to the plaintiff.” Hollinger, 2010 WL 11530632, at *9 (quoting Pilgrim’s Pride Corp. 

v. Frisco Food Servs., Inc., No. CIVA 206-CV-512 TJW, 2007 WL 508365, at *2 (E.D. Tex. Feb. 

13, 2007)). The DTPA claims against Defendants in this case do not, nor could they, rest on a 

theory of joint liability in connection with Plaintiffs’ individual consumer transactions (again, 

transactions to which no Defendant was party). The Amended Complaint must be dismissed, 

therefore, based on the failure to satisfy CAFA’s minimum amount in controversy.

B. Plaintiffs Fail to Establish Subject Matter Jurisdiction Under Article III and Their 

Claims Must Be Dismissed for Lack of Standing.

Plaintiffs lack standing under Article III of the Constitution, which allows the federal courts 

to decide only “Cases” and “Controversies.” See U.S. Const., Art. III § 2. To establish a case or 

controversy, a “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the 

challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial 

decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v. Defenders of 

Wildlife, 504 U.S. 555, 560-56 (1992)). This test is “inflexible and without exception.” Steel Co. 

v. Citizens for a Better Env’t, 523 U.S. 693, 705 (2013). Plaintiffs bear the burden of showing that 

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8

they have standing for each claim alleged. See, e.g., DaimlerChrysler Corp. v. Cuno, 547 U.S. 

332, 352 (2006). When a plaintiff lacks standing, the case must be dismissed for lack of subject 

matter jurisdiction. See, e.g., Perry v. Brassell, No. 18-cv-00062-ADA, 2018 U.S. Dist. LEXIS 

221386, *5 (W.D. Tex. Oct. 18, 2018) (“[s]tanding is a jurisdictional issue; therefore, a plaintiff 

who lacks standing cannot litigate his claims in federal court”) (citing Meadowbriar Home for 

Children, Inc. v. Gunn, 81 F.3d 521, 529 (5th Cir. 1996)).

The fact that this action is brought as a proposed class action “adds nothing to the question 

of standing.” Spokeo, 136 S. Ct. at 1547 n.6 (quoting Simon v. E. Ky. Welfare Rights Org., 426 

U.S. 26, 40 n.20 (1976)). “[I]f none of the named plaintiffs purporting to represent a class 

establishes the requisite of a case or controversy with the defendants, none may seek relief on 

behalf of himself or any other member of the class.” Johnson v. City of Dallas, 61 F.3d 442, 445 

(5th Cir. 1995) (quoting O'Shea v. Littleton, 414 U.S. 488, 494 (1974)). Therefore, “under the 

general principles of standing, ‘a litigant may not merely champion the rights of another.’” Audler 

v. CBC Innovis Inc., 519 F.3d 239, 248 (5th Cir. 2008) (quoting Scottsdale Ins. Co. v. Knox Park 

Constr., Inc., 488 F.3d 680, 684 (5th Cir. 2007)) (citation and quotation marks omitted).

None of the named Plaintiffs alleges that he or she purchased eggs directly from any of the 

Defendants (in fact, they concede they did not); nor do Plaintiffs contend that any of the 

Defendants set the (allegedly excessive) retail prices Plaintiffs paid for the eggs they purchased 

(because, in fact, Defendants did not). Therefore, Plaintiffs cannot amend their pleading to state a 

claim. None of the Plaintiffs alleges any conduct by Defendants that resulted in their paying an 

“excessive price” for eggs. Plaintiffs’ alleged “injury” boils down to their claim that Defendants 

allegedly charged wholesale prices to Retailers pursuant to contracts that somehow violate the 

DTPA (never mind that the DTPA does not even apply to large commercial transactions between 

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9

sophisticated commercial parties – disc. infra Section III.D.). Plaintiffs’ convoluted claim relating 

to wholesale prices, however, is not theirs to make. Plaintiffs’ only proffered “harm” derives from 

the prices they paid when they bought eggs from Retailers who decided (and continue to decide) 

how much to charge for eggs. Retailers are sophisticated entities who price their products for their 

own reasons. Indeed, oftentimes they sell eggs at a loss as “loss leaders.”6 A consumer DTPA 

plaintiff must show, among other things, that the defendant’s false, misleading, or deceptive acts 

constituted “a producing cause” of the consumer’s damages. Tex. Bus. & Com. Code § 

17.50(a)(1); Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 768 (5th Cir. 2016) (citing Doe 

v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 478 (Tex. 1995)).

Moreover, because Plaintiffs admit they did not purchase eggs at prices set by Defendants, 

whatever “injury” they purport to have suffered is not traceable to Defendants. To the contrary, 

Defendants could not possibly be the “producing cause” of Plaintiffs’ alleged “damages.” The

Retailers’ intervening pricing decisions preclude finding any causal link between Plaintiffs’ 

alleged injury and the Defendants, depriving Plaintiffs of Article III standing. See, e.g., Rivera v. 

Wyeth-Averst Labs, 283 F.3d 315, 320-321 (5th Cir. 2002) (“Where an element of standing 

depends on the unfettered choices made by independent actors not before the courts and whose 

exercise of broad and legitimate discretion the courts cannot presume either to control or to 

predict” a plaintiff must “adduce facts showing that these choices have been or will be made in 

such a manner as to produce causation.”). Defendants having not caused the injury or harm 

Plaintiffs contend to have suffered, Plaintiffs lack standing to sue them. See, e.g., In re Plains All 

 

6

See, e.g., Eric Troy, What Are Loss Leaders in Grocery Stores? CulinaryLore Blog (Aug. 

9, 2016), at https://culinarylore.com/food-culture:what-are-loss-leaders-in-grocery-stores/#:~:

text=Two%20typically%20identified%20loss%20leaders,plenty%20of%20regular%20priced%2

0items (last visited Nov. 16, 2020). 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 17 of 132
10

Am. Pipeline, L.P. Sec. Litig., 245 F. Supp. 3d 870, 932 (S.D. Tex. 2017), aff'd on other grounds 

sub nom. Police & Fire Ret. Sys. of City of Detroit v. Plains All Am. Pipeline, L.P., 777 F. App’x

726 (5th Cir. 2019).

1. Plaintiffs lack standing to sue Defendants who did not produce or distribute 

the eggs they purchased.

None of the individual Plaintiffs alleges that he or she actually purchased any eggs 

produced or distributed by Defendants Rose Acre Farms, Inc., Hillandale Farms, Rembrandt 

Enterprises, Hickman Egg Ranch, Inc, Daybreak Foods, Inc., Weaver Bros, Inc., Sparboe Farms, 

Inc., Herbruck’s Poultry Ranch, Inc, Opal Foods, LLC, and Midwest Poultry Services, L.P. See 

Am. Compl. ¶¶ 35-64. As against these ten Defendants, Plaintiffs have not pleaded any element 

necessary to establish Article III standing.

For example, Plaintiffs do not plead injury-in-fact from conduct traceable to these 

Defendants because their alleged purchases admittedly do not involve these Defendants or eggs 

they produced, packaged, or distributed. Id. Indeed, none of Plaintiffs’ purchase allegations even 

mentions these Defendants. Id. Similarly, Plaintiffs fail to plead the third standing element of 

redressability, because the Amended Complaint is bereft of any allegation as to eggs produced or 

distributed by these Defendants, and thus it is insufficient as a matter of law to establish that 

Plaintiffs’ alleged injury could be redressed by the claims against these Defendants. See Wyble v. 

Gulf S. Pipeline Co., L.P., 308 F. Supp. 2d 733, 742 (E.D. Tex. 2004) (“if a Plaintiff cannot 

establish that he has been injured . . . he cannot seek redress for that violation”). The claims against 

these Defendants must therefore be dismissed. See Whitmore v. Arkansas, 495 U.S. 149, 155-56 

(1990) (“[a] federal court is powerless to create its own jurisdiction by embellishing otherwise 

deficient allegations of standing”).

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2. Even as to the three Defendants that Plaintiffs contend “participated in the 

production, packing or distribution” or eggs they bought, Plaintiffs still lack 

Article III standing. 

Plaintiffs also lack standing to pursue claims against Centrum, Trillium and Cal-Maine 

Foods, regardless of the Amended Complaint’s threadbare and insufficient allegations that certain 

Plaintiffs purchased eggs purportedly produced, packed, or distributed by those Defendants.

a. The allegations against Centrum and Trillium fail to establish Article 

III standing.

Ms. Brown is the one Plaintiff who alleges that she bought eggs produced by Centrum or 

Trillium.7Id. ¶ 58. She maintains that she “purchased 18-Count Great Value eggs at a retail grocery 

store in Tom Green County, Texas”; that those eggs cost between $1.00 and $1.50 before the 

pandemic and $3.00 after the pandemic; and that “[b]ased on information on the packaging, 

including the plant codes, Plaintiff Brown believes that Defendants Trillium [and] Centrum . . . 

participated in the production, packing, or distribution of these eggs.” Id. ¶¶ 56-58.8

Regardless of her belief that Centrum or Trillium produced eggs that she ultimately 

purchased at retail at an alleged excessive price, Ms. Brown does not allege any unlawful conduct 

by either Trillium or Centrum that resulted in her alleged injury. Whether viewed as a failure to 

plead injury caused by conduct traceable to Trillium and Centrum, or as a failure to plead injury 

redressable by her putative claim against Centrum and Trillium, Ms. Brown fails to establish 

Article III standing.9

Further, even if Ms. Brown’s limited purchase allegations were sufficient to satisfy Article 

 

7 No other named Plaintiff attempts to allege a personal injury fairly traceable to Trillium 

or Centrum’s conduct that could be redressed by this lawsuit. See Am. Compl. ¶¶ 35-54, 60-64. 

8 The Complaint has two paragraphs numbered 56. 

9 The absence of any such pleading also dooms Plaintiffs’ claims for failure to state a proper 

DTPA claim. See infra Section III.D.

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III (they are not), she would have standing only to pursue claims based solely on the purchase of 

the single product she allegedly purchased—18-Count Great Value eggs—and on her purchases 

of that product from the (unnamed) Retailer where she purchased it. See Anderson v. Kutak, Rock 

& Campbell (In re Taxable Mun. Bond Sec. Litig.), 51 F.3d 518, 522 (5th Cir. 1995) (“[I]t is wellestablished that to have standing to sue as a class representative it is essential that a plaintiff . . . 

must possess the same interest and suffer the same injury shared by all members of the class he 

represents.”) (quoting Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208 (1974)); see 

also Granfield v. NVIDIA Corp., No. C 11-05403 JW, 2012 WL 2847575, at *6 (N.D. Cal. July 

11, 2012) (finding “claims relating to products not purchased must be dismissed for lack of 

standing”); Carrea v. Dreyer’s Grand Ice Cream, Inc., No. C 10–01044 JSW, 2011 WL 159380, 

at *3 (N.D.Cal. Jan.10, 2011) (dismissing claims on same ground). As a matter of law, Ms. Brown 

cannot pursue any broader of a claim against Centrum and Trillium. Moreover, no other named 

Plaintiff has standing to seek relief against them in any capacity whatsoever. 

b. The allegations against Cal-Maine Foods fail to establish Article III 

standing.

The foregoing principles apply equally to the claims asserted against Cal-Maine Foods. See

Am. Compl. ¶¶ 38, 43, 48, 53, 58, 63. Although several Plaintiffs (including Ms. Brown) claim to 

have purchased eggs for which they believe Cal-Maine Foods supposedly “participated in the 

production, packing or distribution” of (e.g., id. ¶ 63), they fail to plead any nexus between CalMaine Foods and their alleged “injuries.” Plaintiff Bell alleges only that he bought “18-Count large 

Hill Country Fare eggs from an H-E-B store in Hays County, Texas” (id. ¶ 35); Plaintiff DabbsLaury alleges only that she bought “18-Count large Kroger eggs from a Kroger store in Dallas 

County, Texas” (id., ¶ 40); Plaintiff Dirks alleges only that he bought “one dozen large Brookshire 

brand eggs at a Brookshire’s store in Lamar County, Texas” (id., ¶ 50); as noted above, Plaintiff 

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Brown alleges she purchase “18-Count Great Value eggs” at an unnamed retail store in Tom Green 

County, Texas (id. ¶¶ 55, 58); and Plaintiff Walker-Beck asserts only that she bought “one dozen 

large Lucerne brand eggs at a Randall’s store in Harris County, Texas” (id. ¶ 60). 

None of the Plaintiffs alleges any conduct by Cal-Maine Foods that resulted in their paying 

an “excessive price” for eggs. No Plaintiff alleges Cal-Maine Foods set the retail prices Plaintiffs 

paid for the eggs they bought. As with Trillium and Centrum, whether viewed as a failure to plead 

injury caused by conduct traceable to Cal-Maine Foods, or as a failure to plead a redressable injury, 

Plaintiffs fail to plead facts requisite to establish standing to sue Cal-Maine Foods.

In all events, none of the named Plaintiffs has standing to represent a proposed class of 

“[a]ll consumers who purchased eggs in the state of Texas that were sold, distributed, produced, 

or handled” by Cal-Maine during the state of emergency declared in Texas. Id. ¶ 72; disc. supra

Section III.B.ii. First, it is evident from the face of the Amended Complaint that Plaintiffs 

themselves paid wildly different prices for the eggs they purchased, underscoring the huge 

variation between and among retail prices for eggs (which as Plaintiffs tacitly concede, Defendants 

do not set). Compare, e.g., Am. Compl. ¶ 51 (claiming that Ms. Dirks paid as much as “$3.96” for 

one dozen eggs); with id. ¶ 56 (claiming that Ms. Brown paid “approximately $3.00” for 18 eggs). 

Second, because egg producers like Cal-Maine Foods neither set retail prices for eggs nor 

sell eggs to consumers, these Plaintiffs do not (and cannot) assert claims based solely on who may 

have produced, packaged, and/or distributed the eggs. See, e.g., Rivera v. Wyeth-Averst Labs, 283 

F.3d 315, 320 (5th Cir. 2002). 

Third, Plaintiffs do not complain about the quality of the eggs allegedly purchased, only 

the money they alleged they paid to the Retailers from which they purchased eggs – not to CalMaine Foods or any other Defendant. Id. at 321 (“Where an element of standing depends on the 

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unfettered choices made by independent actors not before the courts and whose exercise of broad 

and legitimate discretion the courts cannot presume either to control or to predict” a plaintiff must 

“adduce facts showing that these choices have been or will be made in such a manner as to produce 

causation.”). If Plaintiffs have any complaint, it is against the Retailers who set the prices for the 

eggs Plaintiffs claim to have purchased, not Cal-Maine Foods or any other egg producer. Plaintiffs’ 

claims must be dismissed for lack of standing. Id.

C. The Amended Complaint Fails to Satisfy Both Minimum and Heightened Pleading 

Standards. 

“Federal courts in Texas consistently apply Rule 9(b)’s heightened pleading requirements 

to claims brought under the DTPA.” Chavez v. Ford Motor Co., No. EP-18-CV-109-KC, 2018 

WL 6190601, at *2 (W.D. Tex. Sept. 26, 2018) (slip op.); see also Bige, Inc. v. Penn-Am. Ins. Co., 

No. 1-15-CV-292RP, 2015 WL 5227726, at *4 (W.D. Tex. Sept. 8, 2015) (listing cases). Under 

Federal Rule of Civil Procedure 9(b), a party alleging fraud “must state with particularity the 

circumstances constituting fraud.” Fed. R. Civ. P. 9(b). “Rule 9(b) requires, at a minimum, ‘that 

the plaintiff set forth the who, what, when, where, and how of the alleged fraud.’” United States 

ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 265 (5th Cir. 2010). “A dismissal for failure 

to plead fraud with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim 

under Rule 12(b)(6).” Chavez, 2018 WL 6190601, at *2 (quoting United States ex rel. Thompson 

v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 900 (5th Cir. 1997)).

A plaintiff who sues under the DTPA may not “base claims of fraud on speculation and 

conclusory allegations.” United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 

F.3d 375, 385 (5th Cir. 2003) (quoting ABC Arbitrage v. Tchuruk, 291 F.3d 336, 350 n.67 (5th 

Cir. 2002)). In this case, the Amended Complaint alleges little more than that each Defendant “is 

a distributor or producer of eggs, in the business of supplying eggs to customers in this federal 

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district” and that “each defendant is part of the supply chain for eggs in Texas.” Am. Compl. ¶ 28. 

Plaintiffs do not plead the “who, what, when, where, and how” of Defendants’ alleged DTPA 

violations.

The allegations that the Defendants violated the DTPA by “unjustifiably raising the price 

of eggs to an exorbitant or excessive price” (Am. Compl. ¶ 81), “participat[ing] in the feedback 

loop that creates the Urner-Barry [sic] Price Index” and “help[ing] create a sharp spike in the price 

index” (Am. Compl. ¶ 67),” are conclusory and lacking in particularity with respect to the nature 

(i.e., the who, what, where, and how), of each Defendant’s actual pricing or participation in the 

alleged “feedback loop” (whatever that means). 

So deficient are these allegations that they fail to meet even basic notice pleading standards. 

Federal Rule of Civil Procedure 8(a) “demands more than an unadorned, the-defendantunlawfully-harmed-me accusation” and “more than a sheer possibility that a defendant has acted 

unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 

U.S. 544, 555 (2007)). To survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to “state a claim that is plausible on its face.” Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S. at 570). “A pleading that offers ‘labels and conclusions’ or ‘a 

formulaic recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ 

devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 

557). 

In their Original Complaint, Plaintiffs effectively admitted that they guessed about which 

egg producers to name in this lawsuit, and “sued all the defendants in the alternative” because they 

could not “assert that every defendant engaged in price-gouging [sic].” Orig. Compl. ¶ 1; see also 

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id. ¶¶ 6-7, 55. Despite amending their complaint, Plaintiffs still fail to allege what Defendants did 

to any individual Plaintiff that was unlawful beyond broad, conclusory allegations that do not put

Defendants on reasonable notice.10 Filling these gaping factual holes in the Amended Complaint 

is a matter of sheer guesswork. Indeed, there is no factual basis on which to conclude that any 

Defendants took any action, lawful or unlawful, that affected any Plaintiff in the slightest.

D. The Amended Complaint Fails to State a Claim Under the DTPA.

To recover under the DTPA, a plaintiff must show that: “(1) he is a consumer; (2) the 

defendant engaged in a false, misleading, or deceptive act; and (3) the act constituted a producing 

cause of the plaintiff’s damages.” Ramirez v. GEICO, 548 S.W.3d 761, 770 (Tex. App.—El Paso 

2018, pet. denied). Moreover, for liability to be imposed, “the defendant’s deceptive conduct must 

occur in connection with a consumer transaction.” Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 

649 (Tex. 1996) (emphasis added). In addition to the reasons set forth above, dismissal is warranted 

because of the failure to state a claim under the DTPA in at least three important respects.

First, nowhere in the Amended Complaint do Plaintiffs allege that any Defendant sold eggs 

to anyone at unlawful prices in violation of Section 17.46(b)(27). The Amended Complaint offers 

no basis for concluding that any prices charged by any Defendant—or indeed, any retail prices 

 

10 More than compliance with Rule 8 is at stake here. The importance of fair notice to 

DTPA defendants is reflected by Section 17.505(a), which requires a consumer to send written 

notice to a defendant at least 60 days before filing suit. See Tex. Bus. & Com. Code § 17.505(a). 

As set forth in certain Defendants’ respective verified pleas in abatement, the notice must disclose, 

“in reasonable detail,” the plaintiff’s “specific complaint,” “the amount of economic damages” 

attributable to the defendant’s alleged violation of the DTPA, and any attorneys’ fees reasonably 

incurred as of the date of the notice. Id. The remedy for lack of proper notice is abatement of any 

pending DTPA lawsuit until the sixtieth day after the date on which proper written notice is served 

on the defendant. Tex. Bus. & Com. Code § 17.505(d), (e). “If a plaintiff fails to give notice while 

the action is abated for that purpose, it should be dismissed.” Richardson v. Foster & Sear, L.L.P., 

257 S.W.3d 782, 785 (2008), quoting Hines v. Hash, 843 S.W.2d 464, 469 (Tex. 1992) 

(quoting Jim Walter Homes, Inc. v. Valencia, 690 S.W.2d 239, 242 (Tex. 1985)).

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paid by Plaintiffs—were “exorbitant” or “excessive” and therefore proscribed by Section 

17.46(b)(27). Plaintiffs attempt to obfuscate this omission by “seek[ing] to enjoin all defendants 

from selling (at any level in the supply chain) eggs at a price more than ten percent greater than 

the price of eggs prior to the declaration of emergency on March 13, 2020.” Am. Compl. ¶ 84. 

Notably, this arbitrary “ten percent” standard is made up, not based on Texas law or precedent. 

Furthermore, not every allegedly “excessive or exorbitant” price increase is actionable 

under the DTPA. The statute excludes claims arising out of a written contract involving total 

consideration of more than $100,000 where counsel has represented the purchaser in connection 

with a transaction (Section 17.49(f)(1), (f)(2)); as well as any transaction or set of transactions 

involving “more than $500,000” (Section 17.49(g)). Here, Plaintiffs’ allegations on their face 

pertain to wholesale transactions between large commercial enterprises—i.e., large Retailers and 

wholesale egg producers—under negotiated market price-indexed contracts for the purchase and 

supply of significant quantities of shell eggs. Am. Compl. ¶¶ 28, 34. As described by the Amended 

Complaint, it is more plausible than not that these transactions would not be actionable under the 

DTPA.

Second, the Amended Complaint fails to allege that any Defendants engaged in any other 

“false, misleading, or deceptive act.” “An act is false, misleading, or deceptive if it has the capacity 

to deceive an ‘ignorant, unthinking, or credulous person.’” Spradling v. Williams, 566 S.W.2d 561, 

562 (Tex. 1978); Doe v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 479 (Tex. 1995); see 

also Streber v. Hunter, 221 F.3d 701, 728 (5th Cir. 2000) (finding that an act is “false, misleading, 

or deceptive” within the meaning of the Texas DTPA if it has the capacity to deceive an ignorant, 

unthinking, or credulous person). Plaintiffs do not allege, on any level, that the Defendants 

engaged in any activity that has the capacity to deceive a person under the standards set forth by 

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law. Nor could they, given Defendants do not advertise or have any consumer-facing disclosures 

concerning the store brands Plaintiffs allege to have purchased.

Third, Plaintiffs cannot sue Defendants under the DTPA for wholesale egg sales and 

transactions. Plaintiffs allege (Am, Compl. ¶ 73) that Defendants’ sales all occurred on the 

wholesale market to Retailers, like supermarkets, not to consumers like Plaintiffs. But for liability 

to be imposed under the Texas DTPA, “the defendant’s deceptive conduct must occur in 

connection with a consumer transaction.” Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 

1996). The DTPA does not impose liability on upstream manufacturers and suppliers that never 

directly transacted with the consumer. Amstadt, 919 S.W.2d at 650; Chavez, 2018 WL 6190601, 

at *3 (Cardone, J.) (“The Texas Supreme Court has made clear that DTPA claims based on 

allegedly false, misleading, deceptive, or unconscionable acts cannot be brought against remote, 

or ‘upstream,’ manufacturers and suppliers that never directly transacted with the plaintiffconsumer.”).11

This Court’s decision in Chavez is illustrative. There, the plaintiff asserted DTPA 

violations against Ford Motor Company, alleging that she purchased a Ford vehicle from an 

authorized dealer and that “an unidentified salesperson at the dealership claimed the vehicle was 

100% perfect and the airbags were also 100% perfect and all airbags should deploy properly in 

case of an accident.” Chavez, 2018 WL 6190601, at *1 (citations and quotation marks omitted). 

 

11 “The [DTPA] Act is designed to protect consumers from any deceptive trade practices 

made in connection with the purchase or lease of any goods or services.” Cameron v. Terrell & 

Garrett, Inc., 618 S.W.2d 535, 541 (Tex. 1981). “The in-connection-with requirement imposes a 

limitation on liability that is consistent with the underlying purposes of the DTPA. Without this 

limitation, we would merely substitute the defendant’s introduction of a particular product into the 

stream of commerce for the conduct that was found to have violated the DTPA. There is no 

authority for shifting the focus of a DTPA claim from whether the defendant committed a 

deceptive act to whether a product that was sold caused an injury.” Amstadt, 919 S.W.2d at 649-

650.

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The Plaintiff claimed that the airbags did not deploy as represented. Id. The court concluded that 

the plaintiff failed to state a DTPA claim against Ford, in part, because plaintiff did not “plead any 

facts indicating that [Ford] ‘committed a deceptive act . . . in connection with’ her purchase of the 

Ford Focus.” Id. at 4 (quoting Amstadt, 919 S.W.3d at 649-50). In other words, “Plaintiff does not 

claim that Defendant was involved in the sale of the Ford Focus or that Defendant took any action 

in relation to the sale. And Plaintiff does not indicate how Defendant, an automobile manufacturer, 

can be held liable for the salesperson’s statements at an independent dealership.” Id. Because the 

plaintiff did not allege that Ford “committed any deceptive act ‘in connection with’ her purchase,” 

the court held that “[Ford] cannot be held liable under the DTPA as an ‘upstream’ manufacturer.” 

Id. at 4 (citations omitted).

The same is true here. Plaintiffs do not allege that Defendants’ alleged conduct occurred 

“in connection with a consumer transaction.” Nor do Plaintiffs specifically allege that any 

Defendants charged exorbitant or excessive wholesale prices to anyone, what those prices were, 

or any connection between unspecified wholesale price increases and the retail prices of which 

Plaintiffs complain. Plaintiffs allege in conclusory fashion that they were “directly harmed” by 

Defendants Cal-Maine Foods, Trillium, and Centrum by virtue of those Defendants’ alleged 

involvement in the supply chain for the specific eggs purchased by Plaintiffs. See Am. Compl. 

¶¶ 38, 43, 48, 53, 58, 63. But as explained above with regard to Article III standing, Plaintiffs fail 

to allege any facts connecting the prices they allegedly paid to the Retailers from whom they 

allegedly purchased eggs and any unlawful conduct by these Defendants. See Todd v. Perry 

Homes, 156 S.W.3d 919, 922 (Tex. App.—Dallas 2005, no pet.) (defendant homebuilder had no 

connection with plaintiffs’ purchase of home because plaintiffs did not contract with, receive 

representations from, or confer benefits on defendant). As to the remaining Defendants, the 

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Amended Complaint pleads no nexus to the eggs that any Plaintiff purchased at retail, nor does it 

otherwise identify any actions those Defendants took “in connection with” those purchases.

E. DTPA § 17.46(b)(27) Is Unconstitutional As It Is Void For Vagueness And Violates 

The Dormant Commerce Clause.

As shown, Plaintiffs’ Amended Complaint should be dismissed because it fails to establish 

subject matter jurisdiction and standing, fails to satisfy the most elementary pleading requirements, 

and fails to state a cognizable claim under the DTPA. But Plaintiffs’ claims independently fail 

because the statute under which they have brought suit, Section 17.46(b)(27) of the DTPA, is 

fundamentally unconstitutional. 

1. DTPA § 17.46(b)(27) is unconstitutionally vague.

The Constitution’s due process clause guarantees that a statute “is void for vagueness if its 

prohibitions are not clearly defined.” Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). In 

relevant part, Section 17.46(b)(27) prohibits: “taking advantage of a disaster declared by the 

governor” by either selling food at “an exorbitant or excessive price” or demanding such a price 

in connection with its sale. Tex. Bus. & Com. Code Ann. § 17.46(b)(27). Section 17.46(b)(27) 

does not define what constitutes “an exorbitant or excessive price.”

The language of Section 17.46(b)(27) is so imprecise as to leave the reasonable person to 

guess at its meaning and whether any given price is permissible or will subject that person to up 

to $250,000 in penalties per violation. It therefore fails to provide the constitutionally required 

notice of the scope of behavior that it prohibits. See U. S. Civil Serv. Comm’n v. Nat’l Ass’n of 

Letter Carriers, AFL-CIO, 413 U.S. 548, 579 (1973) (statutes must be “set out in terms that the 

ordinary person exercising ordinary common sense can sufficiently understand and comply with”

(citing United States v. Harriss, 347 U.S. 612, 618 (1954)); see also Tex. Bus. & Com. Code Ann. 

§ 17.47(c) (setting forth penalty ranges). 

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Vague statutes violate due process in two ways. First, a vague statute fails to give “the 

person of ordinary intelligence a reasonable opportunity to know what is prohibited,” and threatens 

to “trap the innocent by not providing fair warning.” Grayned, 408 U.S. at 108; see also Coates v. 

City of Cincinnati, 402 U.S. 611, 614 (1971); United States v. L. Cohen Grocery Co., 255 U.S. 81, 

89 (1921) (a statute that “forbids no specific or definite act . . . leaves open . . . the widest 

conceivable inquiry, the scope of which no one can foresee and the result of which no one can 

foreshadow or adequately guard against”). Second, a vague statute invites discriminatory 

enforcement, as “language of . . . a standardless sweep allows policemen, prosecutors, and juries 

to pursue their personal predilections.” Smith v. Goguen, 415 U.S. 566, 575 (1974). 

Section 17.46(b)(27) does both and is thus void for vagueness.

Absent any standard by which to gauge unlawful prices, Section 17.46(b)(27) does not 

identify the prohibited conduct “in terms that the ordinary person exercising ordinary common 

sense can sufficiently understand and comply with.” U.S. Civil Serv. Comm’n, 413 U.S. at 579; 

see also Grayned, 408 U.S. at 112. Without any guidance or clarity in the DTPA about what prices 

are “exorbitant or excessive,” no person can know what prices are prohibited. Plaintiffs underscore 

this truth by literally fabricating a standard (“ten percent”) in their pleading. Am. Compl. ¶ 84.

The United States Supreme Court has long held that similar price control statutes are 

unconstitutionally vague because the “terms ‘unjust,’ ‘unreasonable,’ and ‘excessive’ as applied 

to prices . . . had no commonly recognized or accepted meaning” absent a standard or baseline 

against which to measure the terms. A.B. Small Co. v. Am. Sugar Ref. Co., 267 U.S. 233, 239 

(1925); see also L. Cohen Grocery Co., 255 U.S. at 89 (statute prohibiting “any unjust or 

unreasonable rate or charge in handling or dealing in or with any necessaries” was 

unconstitutionally vague); Ass’n for Accessible Medicines v. Frosh, No. CV MJG-17-1860, 2017 

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WL 4347818, at *10-11 (D. Md. Sept. 29, 2017), rev’d, 887 F.3d 664 (4th Cir. 2018). Section 

17.46(b)(27) contains no standard or baseline against which to determine whether prices are 

“exorbitant or excessive.” And absent such a standard, Section 17.46(b)(27)’s prohibition of an 

“exorbitant or excessive price” likewise lacks a commonly recognized or accepted meaning and is 

thus similarly unconstitutionally vague.

Plaintiffs’ only allegations about pricing are that shell egg prices were excessive or 

exorbitant because they were higher after the declared disaster than before the declared disaster. 

Am. Compl. ¶ 34. But Plaintiffs point to nothing in the statute on which they base this view because 

Section 17.46(b)(27) does not tie the terms “exorbitant or excessive price” to some change from 

the price before the declared disaster. Instead, Section 17.46(b)(27) provides for absolutely no 

framework at all to determine when prices violate the statute.

Accordingly, Section 17.46(b)(27) is void for vagueness, requiring the dismissal of 

Plaintiffs’ claims with prejudice.

2. DTPA § 17.46(b)(27) violates the dormant Commerce Clause. 

Plaintiffs’ claims also must be dismissed because Section 17.46(b)(27) violates the 

dormant Commerce Clause by regulating transactions wholly outside of Texas and unduly 

interfering with the interstate market for shell eggs. Even a price gouging statute that provides a 

benchmarking standard (unlike the vague provisions of Section 17.46(b)(27)), may nonetheless be 

unconstitutional as a dormant Commerce Clause violation. See Online Merchants Guild v. 

Cameron, --- F. Supp. 3d ----, No. 3:20 CV 29 GVFT, 2020 WL 3440933 (E.D. Ky. June 23, 2020) 

(slip op.) (enjoining application of Kentucky price gouging statute to online marketplace sales 

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because of the unconstitutional impact that Kentucky prices would have on creating a national 

price ceiling).12

Because Congress has full power to regulate interstate commerce under the Commerce 

Clause, Article I, Section 8, Clause 3 of the Constitution, the corollary doctrine—the dormant 

Commerce Clause—holds that “states lack the power to impede this interstate commerce with their 

own regulations.” Dickerson v. Bailey, 336 F.3d 388, 395 (5th Cir. 2003).

State statutes that are protectionist or that practically control commerce outside the state’s 

borders are facially or per se invalid. Healy v. Beer Inst., Inc., 491 U.S. 324, 336 (1989); North 

Dakota v. Heydinger, 825 F.3d 912, 919 (8th Cir. 2016); Int’l Dairy Foods Ass’n v. Boggs, 622 

F.3d 628, 646 (6th Cir. 2010). A state law also can violate the dormant Commerce Clause if, as 

applied, it places burdens on interstate commerce that are “clearly excessive in relation to the 

putative local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); see also Pelican 

Chapter, Associated Builders & Contractors, Inc. v. Edwards, 128 F.3d 910, 918 (5th Cir. 1997). 

Section 17.46(b)(27) violates the dormant Commerce Clause in both ways.

a. DTPA § 17.46(b)(27) has impermissible extraterritorial effects.

Section 17.46(b)(27) unlawfully impacts sales outside the state of Texas in “practical 

effect” and is thus per se invalid. The purpose of the DTPA is to prevent “[f]alse, misleading, or 

deceptive acts or practices in the conduct of any trade or commerce.” Tex. Bus. & Com. Code 

Ann. § 17.46(a). 

 

12 Specifically, Ky. Rev. Stat. Ann. § 367.37 4(1)(c) provides that prices are not unlawful 

if they are “consistent with fluctuations in applicable commodity, regional, national, or 

international markets, or seasonal fluctuations,” or follow the “contract price, or the result of a 

price formula, established” before the emergency).

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Section 17.45 defines “trade” and “commerce” to include the “advertising, offering for 

sale, sale, lease, or distribution of any good or service, of any property, tangible or intangible, real, 

personal, or mixed, and any other article, commodity, or thing of value, wherever situated, and 

shall include any trade or commerce directly or indirectly affecting the people of this state.” DTPA 

§ 17.45 (emphasis added.) Section 17.46(b)(27), on which plaintiffs sue, makes price gouging a 

“false, misleading, or deceptive act[] or practice[].” Thus, when read as a whole, the statute applies 

to activity occurring wholly outside of Texas if the indirect result affects Texans. That is facially 

an unconstitutional overreach. Healy, 491 U.S. at 336 (a statute that “controls commerce occurring 

wholly outside the boundaries of a State . . . exceeds the inherent limits of the enacting state’s 

authority”).

For this reason, price gouging statutes must not have the practical effect of regulating 

“upstream pricing” for transactions that occur wholly outside the state. Ass’n for Accessible Meds. 

v. Frosh, 887 F.3d 664, 666 (4th Cir. 2018), cert. denied, 139 S. Ct. 1168 (2019); see also Pharm. 

Research & Mfrs. of Am. v. D.C., 406 F. Supp. 2d 56, 67-71 (D.D.C. 2005), aff’d sub nom. 

Biotechnology Indus. Org. v. D.C., 496 F.3d 1362 (Fed. Cir. 2007) (price gouging statute had a 

per se invalid extraterritorial reach as it applied to transactions between manufacturers and 

wholesalers that occur wholly outside the District of Columbia). The same is true of the DTPA.

Moreover, the Texas statute must be considered in light of actual or potential other state 

laws of a similar nature. Healy, 491 U.S. at 337. If it would be virtually impossible for a company 

to conduct interstate business while complying with a patchwork of kindred statutes in different 

states, this weighs in favor of finding a statute to have unconstitutional extraterritorial impact. See 

C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 406 (1994) (O’Connor, J., concurring); 

Kassel v. Consol. Freightways Corp. of Del., 450 U.S. 662, 671-75 (1981); Online Merchants 

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Guild v. Cameron, --- F. Supp. 3d ----, No. 3:20 CV 29 GVFT, 2020 WL 3440933, at *11 (E.D. 

Ky. June 23, 2020) (slip op.).

Like the unconstitutional price control statute in Frosh that did “not limit the Act’s 

application to sales that actually occurred within Maryland,” nothing in Section 17.46(b)(27) limits 

its application to transactions in Texas. 887 F.3d at 671. The practical effect of Section 

17.46(b)(27) is to set prices at which companies can sell their goods, including to national 

Retailers. Section 17.46(b)(27) impacts out-of-state sales by mandating some unknown maximum 

price that would impact pricing through the distribution chain for companies with operations both 

in and outside of Texas. Therefore, if Plaintiffs are successful, companies based in other states, 

with no operations in Texas, could be required to set prices in their national contracts to comply 

with Section 17.46(b)(27) in the event that any of the shell eggs sold under the contract could 

impact shell egg prices in Texas. This problem is compounded by the vagueness of Section 

17.46(b)(27), which provides no indication of what prices those companies would need to charge 

to comply with Section 17.46(b)(27). 

A review of the allegations and Defendants in this suit make that point clear. As noted 

previously, many of the Defendants are not based in Texas and have no operations in Texas. For 

example, Trillium Farm Holdings, LLC, is an Ohio company headquartered in Croton, Ohio with 

operations only in Ohio. Am. Compl. ¶ 16; Trillium Farms Ohio, Trillium Farms, 

trilliumfarmsohio.com/index.cfm (last visited August 19, 2020).13 The following Defendants 

 

13 The Court may take judicial notice of party websites. See Gartheiser Honea, P.C. v. 

Moskowitz, 2018 WL 6617780 *2 & n.1 (E.D. Tx. Dec. 18, 2018) (citing, Fed. R. Evid. 201 and 

noting that “[t]he Fifth Circuit has found that ‘publicly available [information] on [a company’s] 

official website’ may be considered ‘an authoritative source’ in certain contexts where the facts a 

court is taking notice of may be ‘accurately and readily determined from sources whose accuracy 

cannot reasonably be questioned.’”), citing United States v. Flores, No. 16-40622, 730 F. App’x 

216, 2018 WL 1864956 (5th Cir. Apr. 18, 2018) (internal citation omitted).

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similarly do not have operations in Texas: Centrum Valley Farms, 

http://www.centrumvalleyfarms.com (last visited September 3, 2020), Opal Foods, LLC, 

http://www.opal-foods.com (last visited September 3, 2020), Daybreak Foods, Inc., 

http://www.daybreakfoods.com (last visited September 3, 2002), and Weaver Bros., Inc., 

https://www.weavereggs.com (last visited September 3, 2020). Some of those with operations in 

Texas also operate outside the State and do business with national Retailers operating both in and 

out of Texas. Yet, Plaintiffs in this suit seek to punish conduct that occurred wholly outside of 

Texas, including by entities that played any part “at any level in the supply chain.” Am. Compl. ¶ 

33. “A state statute has undue extraterritorial reach and is per se invalid when it requires people or 

businesses to conduct their out-of-state commerce in a certain way.” Heydinger, 825 F.3d at 919. 

Section 17.46(b)(27)’s extraterritorial impact is even more evident when considering the 

effect of every state adopting similar legislation, a key test the United States Supreme Court 

outlined in Healy: “[T]he practical effect of the statute must be evaluated . . . by considering how 

the challenged statute may interact with the legitimate regulatory regimes of other States and what 

effect would arise if not one, but many or every, State adopted similar legislation.” 491 U.S. at 337. 

If every state had a different price gouging statute in effect during emergencies, with different 

definitions of unlawful prices, it would be virtually impossible for a company to conduct interstate 

business while complying with this patchwork of differing statutes. See C & A Carbone, Inc. v. 

Town of Clarkstown, 511 U.S. 383, 406 (1994) (O’Connor, J., concurring); Kassel, 450 U.S. at 

671-75; Online Merchants Guild, 2020 WL 3440933, at *11 (“Consideration of the potential for 

conflicting state requirements cuts in favor of finding that [a state]’s price gouging statutes violate 

the extraterritoriality doctrine.”). And as noted below, this web of conflicting state price gouging 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 34 of 132
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laws unfortunately is a reality here as one federal court and arguably one Texas state court have 

determined already.14

In Online Merchants Guild, the Eastern District of Kentucky recently enjoined the 

Kentucky Attorney General from enforcing Kentucky’s price gouging statute because of its 

extraterritorial effects.15 The Court explained that because Amazon sellers post one price for their 

goods across the country on the “nationwide” online marketplace, “to avoid potential liability 

Merchants Guild members must either treat Kentucky prices as a national ceiling, or exit the 

national marketplace.” Online Merchants Guild, 2020 WL 3440933, at *10 (internal citation and 

quotation omitted). In effect, enforcement of the statute “ha[s] the practical effect of controlling 

the price of transactions that occur wholly outside the state.” Id. The court ruled that this “type of 

extraterritorial impact appears violative of the principles expressed in Healy.” Id. (citing Healy, 

491 U.S. at 336 (“A State may not adopt legislation that has the practical effect of establishing a 

scale of prices for use in other states[.]”) (internal citation and quotation marks omitted)). The 

reasoning in Online Merchants Guild applies with equal force in this case. Similar to the plaintiffs 

there, Defendants sell shell eggs in a national market – i.e., throughout the United States. The 

“practical effect” of the DTPA is to control the price of transactions occurring wholly outside of 

Texas by requiring Defendants to either treat Texas prices as a national ceiling or exit the national 

marketplace.

 

14 Although the 215th District Court in Harris County did not issue a written order of 

specific findings, it dismissed with prejudice the State of Texas’ price gouging suit, in which these 

same arguments, among others, were raised. 

15 In its complaint and motion for a preliminary injunction, the Guild also challenged 

Kentucky’s price gouging statutes as void for vagueness. In its order, the court declined to consider 

this argument, finding the analysis “unnecessary” at the “preliminary stage” of the case. Online 

Merchants Guild, 2020 WL 3440933, at *11 n.11.

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In sum, because Section 17.46(b)(27) is not limited to transactions in Texas and includes 

upstream transactions in other states, it has the practical effect of impermissibly regulating 

extraterritorial transactions and is thus per se unconstitutional under the dormant Commerce 

Clause. See KT & G Corp. v. Att’y Gen. of Okla., 535 F.3d 1114, 1143 (10th Cir. 2008) (“[A] 

statute will be invalid per se if it has the practical effect of extraterritorial control of commerce 

occurring entirely outside the boundaries of the state in question.”) (citing Grand River Enters. Six 

Nations, Ltd. v. Pryor, 425 F.3d 158, 168 (2d Cir. 2005)); see also Int’l Dairy Foods Ass’n, 622 

F.3d at 645.

b. As applied here, DTPA § 17.46(b)(27) unconstitutionally burdens 

interstate commerce.

Not only is Section 17.46(b)(27) per se unconstitutional by virtue of its impermissible 

extraterritorial effects as described above, the statute as applied in this case also violates the 

dormant Commerce Clause, because the “burden imposed on such commerce is clearly excessive 

in relation to the putative local benefits.” Pike, 397 U.S. at 142; Pelican Chapter, 128 F.3d at 918.

As noted previously, Defendants sell their eggs at wholesale to Retailers operating in many 

states in addition to Texas. Several states, recognizing the volatility of food commodity pricing, 

exempt such commodities from their price gouging statutes (if they have price gouging statutes at 

all). See, e.g., Fla. Stat. Ann. § 501.160(1)(b), (5) (excluding from the price gouging statute prices 

that increase due to “regional, national, or international market trends” and exempting “growers, 

producers, or processors of raw or processed food products”); S.C. Code Ann. § 39-5-

145(A)(5)(a)(i), (I) (excluding from the price gouging statute prices that increase due to “local, 

regional, national, or international market trends” and exempting “sales by growers, producers, or 

processors of raw or processed food products”); Tenn. Code Ann. § 47-18-5103(b)(1) (excluding 

from the price gouging statute “[p]rice increases in applicable regional, national, or international 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 36 of 132
29

commodity markets”). Put differently, the exact same egg sales Plaintiffs contend are somehow 

unlawful in Texas would be unquestionably legal in other states.

As it stands, Plaintiffs urge this Court to hold Defendants subject to suit in Texas for 

charging the same wholesale prices, to the same Retailers, and under the same contracts for which 

they sell identical goods in other states where the prices are indisputably legal. But if every state 

(or even multiple states) had a provision akin to Section 17.46(b)(27) of the DTPA, an egg 

producer buying and selling eggs both in and out of Texas would have to enter into a multiplicity 

of contracts with a single Retailer, all while trying to navigate and anticipate how enforcement 

might occur within the various regulatory frameworks in each state in which the Retailer operates. 

As such, Section 17.46(b)(27), and Plaintiffs’ application of that Section, unduly burdens interstate 

commerce in violation of the dormant Commerce Clause. See Healy, 491 U.S. at 337, 340 

(considering the impact on regional and national markets if all states had statutes “essentially 

identical to” the challenged statute); Frosh, 887 F.3d at 673-74 (finding that statute that “would 

force [defendants] to enter into a separate transaction for each state in order to tailor their conduct 

so as not to violate any state’s price restrictions” was a “real and significant” burden on interstate 

commerce); see also Kassel, 450 U.S. at 671-75 (invalidating state truck-length limitation 

unconstitutionally burdened interstate commerce).

There are no putative local benefits against which to weigh this excessive and undue 

burden. Pike, 397 U.S. at 142. Plaintiffs’ interference in interstate commerce through invocation 

of the DTPA does not serve the proposed class members’ or the public’s interest in having access 

to affordable groceries during the current emergency. Plaintiffs’ proffered application of Section 

17.46(b)(27) simply encourages the Defendants, and every other egg producer, to sell shell eggs 

in states other than Texas where market prices are permissible, or at the very least increases the 

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cost of doing business in Texas, all making it more difficult for Retailers in Texas to buy eggs to 

put on their shelves and consumers to access the eggs they want and need. Plaintiffs’ application 

of Section 17.46(b)(27) in this suit against the Defendants for offering prices entirely consistent 

with the egg market in Texas discourages these companies—and other national companies who 

fear being the next target of the State—from selling their products in Texas during a declared 

disaster when these prices are recognized as reasonable in other states, including under various 

other states’ price gouging statutes. See Am. Compl. ¶¶ 7 (pleading that the price of eggs increased 

“in Texas” generally), 34 (alleging that the “price for generic eggs in Texas” rose from about $1.00 

per dozen to $3.00 per dozen because of “increased demand[] caused by the emergency”). In effect, 

the Plaintiffs’ application of the statute would make it more difficult for Texans to access essential 

foodstuffs like eggs, not less. Without any “putative local benefits,” the burden on the Defendants 

imposed by Plaintiffs’ application of Section 17.46(b)(27) clearly outweighs any benefit. Pike, 397 

U.S. at 142.

IV.

CONCLUSION

For the abovementioned reasons, the Defendants respectfully request that the Court enter 

an Order in the form submitted herewith and dismiss the Amended Complaint in its entirety and 

with prejudice.

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Dated: November 20, 2020 Respectfully submitted,

/s/ Kathy L. Osborn 

Kathy L. Osborn (admitted pro hac vice)

Elizabeth B. Boggia (admitted pro hac vice)

FAEGRE DRINKER BIDDLE & REATH LLP

300 N. Meridian Street, Suite 2500

Indianapolis, IN 46204

Tel: 317.237.0300

Fax: 317.237.1000

Kathy.Osborn@Faegredrinker.com

Elizabeth.Boggia@Faegredrinker.com

E. Paul Cauley, Jr. (TX #4018900)

S. Vance Wittie (TX #21832980)

FAEGRE DRINKER BIDDLE & REATH LLP

1717 Main Street, Suite 5400

Dallas, TX 75201

Tel: 469.357.2500

Fax: 469.327.0860

Paul.Cauley@Faegredrinker.com

Vance.Wittie@Faegredrinker.com

ATTORNEYS FOR MIDWEST 

POULTRY SERVICES, L.P.

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/s/ Craig Stanfield

Craig Stanfield (TX #24051371)

KING & SPALDING LLP

1100 Louisiana Street, Suite 4000

Houston, TX 77002

Tel: 713.751.3200

Fax: 713.751.3900

cstanfield@kslaw.com

Livia M. Kiser 

(admitted pro hac vice) 

Zachary Fardon 

(admitted pro hac vice) 

KING & SPALDING LLP

353 N. Clark Street, Twelfth Floor

Chicago, IL 60654

Tel: 312.995.6333

Fax: 713.751.3900

lkiser@kslaw.com

zfardon@kslaw.com 

ATTORNEYS FOR CAL-MAINE 

FOODS, INC.

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33

/s/ Jeffrey R. Lilly

Jeffrey R. Lilly

Leslie Benitez

GORDON REES SCULLY MANSUKHANI LLP

816 Congress Avenue, Suite 1510

Austin, TX 78701

Tel: 512.391.0197

jlilly@grsm.com

lbenitez@grsm.com

Jay L. Levine

PORTER, WRIGHT, MORRIS & ARTHUR 

LLP

2020 K Street N.W., Suite 600

Washington, D.C. 20006

Tel: 202.778.3021

jlevine@porterwright.com

James A. King

PORTER, WRIGHT, MORRIS & ARTHUR 

LLP

41 South High Street

Columbus, OH 43215

Tel: 614.227.2051

jking@porterwright.com

ATTORNEYS FOR ROSE ACRE 

FARMS, INC.

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/s/ David P. Blanke

David P. Blanke (TX #02453600)

EWELL BROWN BLANKE & KNIGHT LLP

111 Congress Avenue, 28th Floor

Austin, TX 78701 

Tel: 512.770.4011

Fax: 877.851.6384

dblanke@ebbklaw.com

Jan P. Levine (admitted pro hac vice)

Robin P. Sumner (admitted pro hac vice)

Michael J. Hartman (admitted pro hac vice)

Robyn R. English-Mezzino (admitted pro 

hac vice)

TROUTMAN PEPPER HAMILTON

SANDERS LLP

3000 Two Logan Square

18th and Arch Streets

Philadelphia, PA 19103

(215) 981-4000

jan.levine@troutman.com

robin.sumner@troutman.com

michael.hartman@troutman.com

robyn.english-mezzino@troutman.com

ATTORNEYS FOR TRILLIUM FARM 

HOLDINGS, LLC AND CENTRUM 

VALLEY FARMS, LLP

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 42 of 132
35

/s/ Ashley Allen Carr

Ashley Allen Carr (TX #24082619)

DLA PIPER LLP (US)

401 Congress Avenue, Suite 2500

Austin, TX 78701

Tel: 512.457.7251

Fax: 512.721.2251

ashley.carr@dlapiper.com

Jeffery E. Tsai (pro hac vice anticipated)

John P. Phillips (pro hac vice anticipated)

DLA PIPER LLP (US)

555 Mission Street, Suite 2400

San Francisco, CA 94105-2933

Tel: 415.836.2500

Fax: 415.836.2501

jeff.tsai@us.dlapiper.com

john.phillips@us.dlapiper.com

ATTORNEYS FOR HICKMAN’S 

EGG RANCH, INC.

/s/ Michael D. Marin

Michael D. Marin (TX #00791174)

Boulette Golden & Marin, L.L.P.

2801 Via Fortuna, Suite 530

Austin, TX 78746

Tel: 512.732.8924

Fax: 512.732.8905

mmarin@boulettegolden.com

Christopher E. Ondeck (pro hac vice 

anticipated) 

Stephen Chuk (pro hac vice anticipated) 

PROSKAUER ROSE LLP

1001 Pennsylvania Ave., Suite 600S 

Washington, DC 20004 

Tel: (202) 416-5865 

Fax: (202) 416-5800 

Email: condeck@proskauer.com 

Email: schuk@proskauer.com 

ATTORNEYS FOR DAYBREAK 

FOODS, INC.

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 43 of 132
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/s/ Katherine P. Chiarello

Katherine P. Chiarello (TX #24006994)

WITTLIFF | CUTTER PLLC

1209 Nueces Street

Austin, TX 78701

Tel: 512.960.4524

Fax: 512.960.4869

katherine@wittliffcutter.com

Joseph S. Leventhal (admitted pro hac vice)

Shelby K. Kroeger (admitted pro hac vice)

DINSMORE & SHOHL LLP

655 W. Broadway, Suite 800

San Diego, CA 92101

Tel: 619.400.0498

Fax: 619.400.0501

joseph.leventhal@dinsmore.com

shelby.kroeger@dinsmore.com

ATTORNEYS FOR WEAVER

BROS., INC.

/s/ Alicia L. Downey

Alicia L. Downey (admitted pro hac vice)

Downey Law LLC

155 Federal Street, Suite 300

Boston, MA 02110

Tel: 617.444.9811

alicia@downeylawllc.com

Jason E. Wright (TX #24063896)

J. WRIGHT LAW PLLC

700 Central Expy S, Suite 400

Allen, TX 75013

Tel: 469.270.7820

Fax: 469.270.7822

jason@jwrightlaw.com 

ATTORNEYS FOR OPAL FOODS LLC

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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on November 20, 2020, the foregoing document was 

electronically filed with the Clerk of Court using the CM/ECF system, which will send notification 

of such filing to all counsel of record who are deemed to have consented to electronic service.

/s/ Kathy L. Osborn

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EXHIBIT B

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 83 of 132
CAUSE NO. 2020-25427 

STATE OF TEXAS, 

 Plaintiff, 

§

§

§ 

IN THE DISTRICT COURT OF 

v. 

CAL-MAINE FOODS, INC. D/B/A 

WHARTON and WHARTON COUNTY 

FOODS, LLC, 

 Defendants. 

§

§

§

§

§

§ 

HARRIS COUNTY, TEXAS

215TH JUDICIAL DISTRICT 

6/26/2020 7:53 PM

Marilyn Burgess - District Clerk Harris County

Envelope No. 44092133

By: Joshua Bovell

Filed: 6/26/2020 7:53 PM

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 84 of 132
TABLE OF CONTENTS 

I. Background ..........................................................................................................................4 

II. Standard of Review ............................................................................................................11 

III. Argument ...........................................................................................................................13 

A. DTPA § 17.46(b)(27) Is Unconstitutional Facially and As Applied .....................13 

1. DTPA § 17.46(b)(27) Is Unconstitutionally Vague ...................................13 

a. Unconstitutionally Vague on Its Face ............................................13 

b. Unconstitutionally Vague as Applied ............................................15 

2. DTPA § 17.46(b)(27) Violates the Dormant Commerce Clause by 

Regulating Extraterritorially and Impeding Interstate 

Commerce ..................................................................................................16 

a. DTPA § 17.46(b)(27) Has Impermissible Extraterritorial 

Effects ............................................................................................17 

on Interstate Commerce Far Outweighs Any Claimed 

Benefits ..........................................................................................19 

constitutional Taking Without Just 

Compensation ............................................................................................21 

a. Nature of the Government Action ..................................................23 

b. Economic Impact on CMF and WCF ............................................24 

c. Interference with Reasonable Investment-Backed Expectations ...26 

17.46(b)(27) Are Legally and Factually 

Baseless Because the State Admits CMF and WCF Charged Market Prices, which 

Are Not Exorbitant or Excessive as a Matter of Law ............................................27 

17.46(b)(27) Are Legally and Factually 

Baseless Because the State Admits CMF 

)(27) With Respect to Specialty Eggs 

Are Legally and Factually Baseless Because the State Admits that CMF and 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 85 of 132
ii 

17.46(b)(27) Are Legally and Factually 

Baseless to the Extent the State Asserts Claims Based on Transactions Exempt 

from the DTPA under DTPA § 17.49(g) ...............................................................33 

ims Are Legally and Factually Baseless 

Because the State Fails to Allege CMF/WCF Made Any Misrepresentations at 

V. Conclusion .........................................................................................................................38 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 86 of 132
TABLE OF AUTHORITIES 

Cases Page(s) 

In re Abbott, 

, 

887 F.3d 664 (4th Cir. 2018), cert. denied, 139 S. Ct. 1168 (2019) ............................17, 18, 20 

, 

No. CV MJG-17-1860, 2017 WL 4347818 (D. Md. Sept. 29, 2017), , 887 

F.3d 664 (4th Cir. 2018) ....................................................................................................15, 18 

Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 

595 S.W.3d 651 (Tex. 2020) ....................................................................................................12 

Brown v. De La Cruz, 

156 S.W.3d 560 (Tex. 2004) ....................................................................................................28 

, 

City of Austin v. Liberty Mut. Ins., 

City of Crowley v. Ray, 

Coates v. City of Cincinnati, 

402 U.S. 611 (1971) .................................................................................................................14 

, 

980 S.W.2d 425 (Tex. 1998) ........................................................................................13, 14, 16 

Comptroller of Treasury of Md. v. Wynne, 

575 U.S. 542 (2015) .................................................................................................................13 

Connolly v. Pension Ben. Guar. Corp., 

475 U.S. 211 (1986) .................................................................................................................23 

Dickerson v. Bailey, 

336 F.3d 388 (5th Cir. 2003) ...................................................................................................17 

E. Enters. v. Apfel, 

524 U.S. 498 (1998) .................................................................................................................23 

E. Hill Marine, Inc. v. Rinker Boat Co., 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 87 of 132
ii 

Fla. Rock Indus., Inc. v. United States, 

18 F.3d 1560 (Fed. Cir. 1994)..................................................................................................24 

Flores v. Millennium Interests, Ltd., 

185 S.W.3d 427 (Tex. 2005) ..............................................................................................28, 29

v. ProBalance, Inc., 

No. 3:15-CV-0677-N, 2016 WL 6646225 (N.D. Tex. Nov. 9, 2016) .....................................34 

Grand River Enters. Six Nations, Ltd. v. Pryor, 

425 F.3d 158 (2d Cir. 2005).....................................................................................................19 

Grayned v. City of Rockford, 

408 U.S. 104 (1972) .................................................................................................................13 

Green Tree Acceptance, Inc. v. Holmes, 

Guillory v. Seaton, 

Dist.] 2015, pet. denied) .........12, 36, 37, 38 

Healy v. Beer Inst., Inc., 

491 U.S. 324 (1989) .....................................................................................................17, 18, 20 

Hovel v. Batzri, 

Dist.] 2016, pet. denied) .........................28, 29, 30 

, 

622 F.3d 628 (6th Cir. 2010) .............................................................................................17, 19 

Jaster v. Comet II Const., Inc., 

438 S.W.3d 556 (Tex. 2014) ....................................................................................................29 

Kassel v. Consolidated Freightways Corp. of Del., 

450 U.S. 662 (1981) ...........................................................................................................18, 20 

., 

535 F.3d 1114 (10th Cir. 2008) ...............................................................................................19 

MHC Fin., Ltd. v. City of San Rafael, 

No. C-00-03785 VRW, 2008 WL 440282 (N.D. Cal. Jan. 29, 2008) .....................................24 

, 

483 U.S. 825 (1987) .................................................................................................................23 

Paske v. Fitzgerald, 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 88 of 132
iii 

Pelican Chapter, Associated Builders & Contractors, Inc. v. Edwards, 

128 F.3d 910 (5th Cir. 1997) .............................................................................................17, 19 

Penn Cent. Transp. Co. v. New York City, 

438 U.S. 104 (1978) ...........................................................................................................22, 23 

Penn. Coal Co. v. Mahon, 

260 U.S. 393 (1922) .................................................................................................................22 

Pharm. Research & Mfrs. of Am. v. D.C., 

406 F. Supp. 2d 56 (D.D.C. 2005), 

v. D.C., 496 F.3d 1362 (Fed. Cir. 2007) ..................................................................................17 

Pike v. Bruce Church, Inc., 

397 U.S. 137 (1970) ...........................................................................................................17, 19 

Sheffield Dev. Co. v. City of Glenn Heights, 

140 S.W.3d 660 (Tex. 2004) ....................................................................................................22 

Smith v. Goguen, 

415 U.S. 566 (1974) .................................................................................................................14 

SPRAJ Props. LLC v. Regions Bank, 

No. 3:13-CV-3472-N, 2015 WL 11120528 (N.D. Tex. May 12, 2015) ..................................34 

State v. Cent. Expressway Sign Assocs., 

302 S.W.3d 866 (Tex. 2009) ....................................................................................................38 

State v. Strong Oil Co., 

433 N.Y.S.2d 345 (N.Y. Sup. Ct. 1980) ..................................................................................16 

., 

560 U.S. 702 (2010) .................................................................................................................22 

of Consumer Affairs, 

876 F.2d 1013 (1st Cir. 1989) ......................................................................................22, 24, 25 

, 

413 U.S. 548 (1973) .................................................................................................................14 

U.S. Fid. & Guar. Co. v. McKeithen, 

226 F.3d 412 (5th Cir. 2000) .................................................................................23, 24, 26, 27 

United States v. L. Cohen Grocery Co., 

255 U.S. 81 (1921) ...................................................................................................................15 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 89 of 132
iv 

Vaqueria Tres Monjitas, Inc. v. Laboy, 

No. CIV. 04-1840 DRD, 2007 WL 7733665 (D.P.R. July 13, 2007), 

nom. Vaqueria Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464 (1st Cir. 2009) .........................22 

Wooley v. Schaffer, 

Dist.] 2014, pet. denied) ........................12, 16, 21 

Constitutions & Statutes 

FLA. STAT. ANN. § 501.160(1)(b), (5) ............................................................................................19 

KY. REV. STAT. ANN. § 367.374(1)(c) ...........................................................................................15 

S.C. CODE ANN. § 39-5-145(A)(5)(a)(i), (I) ..................................................................................19 

TENN. CODE ANN. § 47-18-5103(b)(1) ..........................................................................................20 

TEX. BUS. & COM. CODE ANN. § 17.45 ..........................................................................................18 

TEX. BUS. & COM. CODE ANN. § 17.46 .................................................................................. passim 

TEX. BUS. & COM. CODE ANN. § 17.47 ..........................................................................................28 

TEX. BUS. & COM. CODE ANN. § 17.49 ................................................................................3, 33, 34 

TEX. BUS. & COM. CODE ANN. § 17.4625 ......................................................................................14 

TEX. CONST. art. I, § 17 ............................................................................................................21, 22 

TEX. R. CIV. P. 59 .....................................................................................................................12, 13 

TEX. R. CIV. P. 91a ...................................................................................................1, 12, 21, 32, 35 

U.S. CONST. AMEND. V ..................................................................................................................21 

U.S. CONST. AMEND. XIV ..............................................................................................................22 

U.S. CONST. art. I, § 8, cl. 3 ...........................................................................................................17 

Other Authorities 

Excessive, MERRIAM-WEBSTER.COM, https://www.merriamwebster.com/dictionary/excessive (last visited June 25, 2020) ...............................................29 

Exorbitant, MERRIAM-WEBSTER.COM https://www.merriamwebster.com/dictionary/exorbitant (last visited June 25, 2020) ..............................................29 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 90 of 132
1 

The State believes it can govern and set prices for the national shell egg market and two 

egg producers. The U.S. and Texas Constitutions disagree. The pandemic does not change the 

ended when the government declares a state of 

In re Abbott ex. Apr. 23, 2020). Therefore, 

pursuant to Texas Rule of Civil Procedure 1 and 

file this Motion to 

CMF and WCF do not sell eggs to individual consumers and have no control of retail egg 

prices, which are set by reta

multi-billion-dollar retailers. For CMF 2 pricing is 

typically based on preexisting, negotiated agreements tied to independent third-party published 

pricing indexes, just like many other foods, grains, crops, oil and gas, and a host of other products. 

Nonetheless, the State has singled out only conventional fresh shell eggs, and only CMF and WCF 

within the conventional fresh shell egg market, to allege that CMF and WCF engaged in price 

gouging in violation of the Texas 

even while acknowledging that CMF and WCF charged market prices for fresh shell eggs based 

on prices tied to national and regional market indexes, the vast majority of which are fixed in 

longstanding pricing agreements. The State has gone too far. The State does not have the power 

1

 CMF has been incorrectly sued clear, CMF does not do business 

LLC is a separate and distinct legal entity 

from CMF. 

2

 Conventional fresh shell eggs, sometimes called generic eggs, are distinct from eggs that have 

been cracked and processed to be sold in liquid or in dried form, and are also distinct from specialty 

fresh shell eggs (e.g., organic, brown, or free range), which are typically priced on a cost-plus or 

fixed-price basis and for which the State concedes prices have not fluctuated. Disc. infra

Part III.D. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 91 of 132
2 

to regulate national pricing for eggs, or for any other products that are priced based on published 

indexes. 

the range of prices that were charged across the country for fresh shell eggs. It simply disagrees 

with the national market and believes it can act as central planner to decide what prices are and are 

not acceptable. But, like the DTPA itself, the St

price would be for a good whose wholesale (as opposed to retail) price varies significantly 

throughout the year during normal times (e.g., less expensive and usually sold at a loss in the 

summer, more expensive during fall and winter months and during the holidays, like Easter). Nor 

could it. This case really is about the 

manipulation) of the free market and existing contracts between sophisticated businesses. The 

mandate is to protect consumers, but the State 

is focused instead on sales to large national and regional retailers whose transactions are exempt 

from the DTPA. Disc. infra at Part III.E. 

Ultimately, the State proposes excluding Texas egg farmers, retailers, and consumers from 

the national market for shell eggs, instead requiring egg farmers to sell fresh shell eggs at an 

unknown and arbitrary price set by the State. In asserting these claims, the State blithely ignores 

the increased costs that CMF and WCF incurred to enact rigorous controls and screening to ensure 

the safety of their employees and the continued production and supply of shell eggs during the 

outbreak of COVID-19. The State likewise ignores that beyond the increased crisis pay, other 

employment costs, and costs of production, CMF and WCF also incurred other cost increases such 

as for additional transportation and logistics. Nor does the State acknowledge that CMF and WCF 

themselves paid market prices 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 92 of 132
3 

directly tied to the national a

seeking additional supply. Rather than acknowledge these business realities, the State seeks to 

punish CMF and WCF for these efforts with a scheme that would not actually protect Texas 

te, but would effectively divert fresh shell eggs away from Texas 

consumers, punish Texas farmers, and reward other companies involved in the production, sale or 

distribution of fresh shell eggs. That is not simply poor policy, but more importantly for this Court, 

it is also unconstitutional. 

udice for multiple, independent constitutional 

and inadequate pleading grounds: 

Constitutional Grounds

1. The DTPA is void for vagueness both facially and as applied. In particular, the statute 

thout any guidance as to what those terms 

mean, which the State has used to arbitrarily punish sales wholly in line with national and 

regional market prices. 

2. The DTPA statutory provisions at issue violate the dormant Commerce Clause by having 

an extraterritorial effect and by interfering with interstate commerce. 

3. sult in unconstitutional takings from CMF and 

WCF. 

Pleading Grounds

1. The State admits that CMF and WCF merely charged or offered market prices, which are 

the DTPA as a matter of law. 

2. The State admits in its Petition that CMF and WCF did not change their long-standing 

pricing structure or take any e disaster as required by the 

DTPA. 

3. The State failed to allege facts demonstrating that the transactions on which it bases its 

claims are not exempt from the DTPA under Section 17.49(g), which excludes from the 

DTPA any transactions or sets of transactions exceeding $500,000. 

4. entations must be dismissed because the 

statements at issue are true, as the State acknowledges. 

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I. Background3

CMF and WCF maintain chicken flocks and process conventional fresh shell eggs for sale 

to wholesale customers. See Pet. ¶ 22. CMF and WCF do not sell fresh shell eggs to individual 

consumers but to national and regional grocery store chains, club stores, and foodservice 

distributors. Id. ¶ 23. large corporations; in fiscal year 

lion in shell egg sales were made to some of the largest 

grocery store chains and suppliers in not only the United States but the entire world. Ex. 1, 

Cal-Maine Foods Inc., Investor Presentation 3rd Quarter - 2020, 

https://www.calmainefoods.com/media/1124/in

¶ 22 n.6); Ex. 2, Cal-Maine Foods, Inc. Feb. 29, 2020 

passim). CMF 

and WCF operate nationally with operations and sales in many states other than Texas. Ex. 1, 

CMF Investor Presentation at 7. 

While CMF and WCF produce the majority of conventional fresh shell eggs that they sell 

at farms owned and operated by CMF and WCF, they purchase a significant number of shell eggs 

from outside producers on the egg spot market. Ex. 3, Cal-Maine Foods, Inc. June 1, 2019 Form 

passim) (explaining that CMF purchased 

approximately 16% of the shell eggs it sold on the open market). Thus, CMF and WCF pay market 

prices for these eggs, yet the State claims it can punish CMF and WCF if they do not sell these 

eggs at a loss. 

3

 For purposes of this Motion and without waiving the right to later contest, CMF and WCF accept 

the allegations as true (although not all are) unless otherwise noted. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 94 of 132
5 

CMF and WCF sell two general categories of shell eggs, specialty shell eggs and generic 

shell eggs. Pet. ¶ 23. Specialty shell eggs include nutritionally enhanced, cage free, organic, and 

brown eggs. Id. ¶ 23, n.9. Specialty shell eggs are a much smaller part of the overall egg market 

and are typically priced on a cost-plus or fixed-price basis. As a result, their prices are not tied to 

a market index (that involve sales at profits or sales at losses depending on the movement of the 

market) and therefore specialty egg prices remain more stable than non-specialty shell eggs. See 

Ex. 2, CMF Feb. 29, 2020 10-Q at 32. 

Conventional or generic fresh shell eggs, in contrast, are much more abundant and widely 

bought and sold as standardized product by retail

the various types of generic conventional fresh shell eggs (medium 

large, extra-large, and jumbo). Pet. ¶ 29. As the 

the U.S. in the retail and foodservice channels are sold at independently quoted wholesale market 

Id. Consistent with this industry-wide practice, CMF and WCF sell generic 

shell eggs at the prevailing market price at the time of sale or pursuant to pricing agreements that 

specify a price based on a discount or premium to the prevailing market price and have done so 

for decades. Id. ¶¶ 5, 29. 

The shell egg production industry is highly fragmented and competitive, and market prices 

for generic shell eggs are extremely volatile. See Ex. 3, CMF 2019 10-K at 4, 8, 9, 22. Generic 

shell egg market prices fluc Id. at 7, 10, 

22. As the State recognizes in its Petition, the average market price for generic shell eggs before 

the pandemic have varied from as low as $0.72 a dozen in 2005 to $2.97 a dozen in 2015.4 

4

 The documents cited by the State in further aid and explanation of the allegations in the Petition 

identify average market prices for shell eggs in some regions varying to an even greater extent. 

See Urner-Barry Southeastern Regional Large 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 95 of 132
6 

Pet. ¶¶ 30, 33. This allegation thus confirms that over time, prices fluctuate by large percentages, 

with an approximately 312% difference between the 2005 low and 2015 high. The market prices 

for generic shell eggs are driven by the market forces of supply and demand and thus when demand 

for shell eggs increases, spot market egg prices generally increase. Id. ¶ 32. Small decreases in 

production or increases in demand can significantly impact shell egg prices because supply cannot 

be adjusted quickly to meet new demand as it entails growing additional hens to a mature laying 

age, which takes months. See Ex. 3, CMF 2019 10-K at 22. 

Wholesale shell egg prices fluctuate cyclically by season; generally, conventional fresh 

shell egg prices rise during the fall and winter months, and are highest around holidays, including 

Easter. Id. at 10, 22. Due to these fluctuations, conventional fresh shell egg producers experience 

periods of profitability followed by periods of significant losses, and financial results for CMF and 

WCF change dramatically even between quarters in the same fiscal year. Id. at 10, 22, 24. 

COVID-19 and Egg Prices 

On March 13, 2020, Texas Governor Greg Abbott issued a statewide disaster proclamation 

as a result of the global outbreak of COVID-19, which affected not just Texas, but the entire nation 

 Disaster Declaration, & Ex. B, 

eclaration. Of course, Governor Abbott was not alone in his 

declaration as most of America was ordered home to shelter in place. As a result, demand for 

Egg Market Price per dozen eggs, for our fiscal 2006-2019 ranged from a low of $0.55 during 

fiscal 2006 to a high of $3.00 dur e swings occur for a number of 

reasons related to fluctuations in supply and demand. For example, wholesale shell egg prices 

reached $3.00 in 2018, as noted above, due to the ilers increased demand 

by turning eggs into a promotional item to compete for customers. Id., Ex. 4, Brian A. Moscogiuri, 

2017-2018 YTD Egg Market Review, 13 URNER BARRY S REP. (No. 3) 10, 11 (2018), 

https://www.urnerbarry.com/reporter/issues/ReporterV13N3_WEB.pdf. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 96 of 132
7 

home groceries skyrocketed, with some estimating a 

shell eggs. Ex. 5, Coronavirus Special Report, URNER BARRY, 7 (Mar. 25, 2020). 

The State acknowledges that demand shifted dramatically from restaurant to home 

consumption. In particular, the read of COVID-19 in the United 

States resulted in restaurants shutting down and consumers stocking up on groceries as they shifted 

to eating almost entirely at home. Pet. ¶ 4. This sudden increase in demand for groceries in late 

March resulted in increased market prices for shell eggs across the country, along with increased 

prices for other grocery staples like beef, chicken, and dairy products. Ex. 6, Jaewon Kang &

Jacob Bunge, For Grocers, Eggs Are Getting More Expensive Amid Coronavirus, THE WALL 

STREET J. (Apr. 6, 2020), https://www.wsj.com/articles/forgrocers-eggs-are-getting-more2020, Cal-Maine and the re

commodity egg prices skyrocketed, with a regional market i

Pet. ¶ 34 (emphasis removed). This skyrocketing demand followed a period of losses for United 

States egg producers, including CMF; for the thirty-nine weeks ending in late February 2020, 

e same period the year before. Ex. 2, CMF 

Feb. 29, 2020 Form 10-Q at 27; see also Ex. 7, Megan Poinski, How Coronavirus Scrambled Eggs, 

FOOD DIVE (June 15, 2020), https://www.fooddive.com/news/how-coronavirus-scrambled-

(explaining that shell egg producers lost about 2.7 cents per 

dozen of eggs sold in 2019). As a result of these losses, egg producers had been shrinking their 

flocks to account for the demand-supply imbalance and depressed market prices, resulting in 

decreased supply just when consumers arrived to stores with abrupt, unanticipated and 

unprecedented demand. Ex. 2, CMF Feb. 29, 2020 10-Q at 20 (discussing decreased hen numbers); 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 97 of 132
8 

Ex. 6, WSJ Article. As it takes months to raise hens to egg-laying age, egg producers could not 

respond fast enough to increase supply. See Ex. 6, WSJ Article; Ex. 8, Watts and Associates, Inc., 

Final Study on Poultry Catastrophic Disease, U.S. DEPT. OF AG., 25 (Sept. 30, 2015), 

https://legacy.rma.usda.gov/pubs/2015/poultrydisease.pdf (explaining that hens cannot lay eggs 

until they are eighteen- to twenty-two-weeks-old) (cited at Pet. ¶ 10 n.24). 

The United States Food and Drug Administration recognized the supply problem and 

instituted a temporary policy on April 6, 2020, that permitted the sale to retail customers of shell 

eggs that were originally destined for the foodservice industry. Ex. 9, Temporary Policy 

Regarding Packaging and Labeling of Shell Eggs Sold by Retail Food Establishments During the 

COVID-19 Public Health Emergency, U.S. Dept. of Health and Human Servs., Food and Drug 

Admin. (Apr. 6, 2020), https://www.fda.gov/media/136671/download. This temporary policy 

helped meet the increased demand for home consumption and contributed to prices falling back to 

and below pre-COVID-19 levels.5

The spike in demand also corresponded with the Easter season, when fresh shell egg prices 

typically are at their highest.6 See Ex. 3, CMF 10-K at 10, 22; Ex. 12, Volatility of Egg Prices, 

5

 In fact, market analysts estima of at least $0.10 per dozen during 

GG MARKET SUMMARY AND OUTLOOK 1, 

cting that Urner Barry prices for white large 

shell eggs in the South Central region would average $0.91 during the month of June). 

6

 The State makes much of shell egg prices during emic in 2015 not rising 

as high as prices during COVID-19. See Pet. ¶ 36.a. Initially, it must be stated that the Urner 

Barry South Central price rose to $2.97 per dozen in 2015 due to AI. Ex. 3, CMF 2019 10-K at 

23. However, a number of factors makes these two situations different. COVID-19 caused a 

sudden shift of almost the entire country to eating at home instead of at schools or restaurants, 

which use different types of egg products than are sold at grocery stores; no such rapid shift 

occurred in 2015. In addition, AI impacted supply primarily during the summer, when demand 

for and prices of shell eggs are usually at their lowest every year. See Ex. 11, Cal-Maine Foods, 

Inc. Nov. 28, 2015 Form 10-Q at 14 (cited at Pet. ¶ 32 n.30). The COVID-19 spike in demand for 

shell eggs corresponded with the Easter holiday, when fresh shell egg prices are usually at their 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 98 of 132
9 

CAL-MAINE FOODS, INC., https://www.calmainefoods.com/investors/volatility-of-egg-prices/ (last 

visited June 24, 2020) (cited at Pet. ¶ 28 n.39) (explaining that shell egg prices are highest every 

year around the Thanksgiving, Christmas, and Easter holidays). Notably, prices decreased to 

pre-COVID-19 prices by May 2020, once producers were able to begin selling eggs originally 

packaged for the food service industry to retailers, panic buying slowed, and the demand spike 

dissipated (even though the pandemic has continued), and since then fell even more. See Ex. 7, 

Food Dive Article (presenting weekly average prices of a dozen white shell eggs at supermarkets); 

Ex. 10, LEAP Market Analytics at 1. 

ell egg prices are tied to regional or 

national market indexes as well as long-term pricing agreements tied to those same regional or 

the regional or national market indexes. Pet. ¶ 34. For the vast 

these price increases were self-executing based on the negotiated contract terms because the prices 

float up (and down) with the index prices. Retailers demand terms tied to these indexes because 

they enjoy very low prices for most of the ye

they are able to charge more. 

While market prices for conventional fresh eggs increased during the pandemic, the State 

s also increased. CMF and WCF incurred significant burdens 

and costs to continue to provide eggs to their 

COVID-19. For example, CMF and WCF employed additional screening and personal protective 

equipment for employees and all of

COVID-19. See, e.g., Ex. 2, CMF Feb. 29, 2020 10-Q at 21 (noting the implementation of 

highest, and followed a period of sustained losses due to low market prices. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 99 of 132
10 

procedures and policies according to Centers for Disease Control and other government health 

CMF and WCF 

hired temporary workers to try and keep up with demand and also provided hazard pay to all their 

employees. They also purchased fresh shell eggs on the open mark

s efforts have largely been successful, and as the State 

[CMF and WCF] ha[d] not experienced any supply 

State, however, fails to acknowledge the additional investment necessary and increased costs that 

CMF and WCF had to incur in order to continue to fulfill its contractual obligations resulting from 

unprecedented consumer demand. 

 to a market index but instead priced on 

a cost-plus or fixed-price basis. As a result, those prices did not generally increase and stayed at 

2019 levels during the pandemic. Pet. ¶ 36(c). The State apparently agrees that specialty eggs are 

not relevant to this action as it concedes that their specialty shell egg 

lly the same during the pandemic. Id.

The States Claims 

The State, indifferent to historic volatility and economic realities of the shell egg market 

and WCF have violated the DTPA simply by pricing conventional fresh shell eggs in the same 

manner that they have always priced fresh l and regional market 

indexes (and pursuant to longstanding contracts and pricing arrangements tied to those indexes 

that their own customers agreed to or demanded). ng, evidently CMF and 

WCF are the only fresh shell egg producers who are not allowed to price their eggs in line with 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 100 of 132
11 

national and regional indexes. d, also would rewrite contracts 

 CMF and WCF on the one hand, and some of the largest, most 

sophisticated retailers in the nation on the other. 

Specifically, the Petition alleges that CMF and WCF (1) violated DTPA Section 

17.46(b)(27)(A) and (B) by selling, or offering for sale, shell eggs at

ate of disaster by selling eggs at prices in line with national and regional 

market indexes. Pet. ¶¶ 37, 43; TEX. BUS. & COM. CODE ANN. § 17.46(b)(27). The State also 

alleges baseless misrepresentation claims under DTPA Sections 17.46(b)(5) and (24) based on 

representations by CMF and WCF that the State admits are true in its own Petition. See Pet. ¶ 44; 

TEX. BUS. & COM. CODE ANN. § 17.46(b)(5), (24). 

As purported remedies, the State seeks a temporary and permanent injunction against CMF 

prevent any written evidence related to CMF 

removed from the jurisdiction of the Court. Pet. ¶ 48. The State also requests certain discovery 

from CMF and WCF after any entry of a temporary injunction. Id. ¶ 50. Finally, the State requests 

the imposition of fines up to $10,000 per alleged violation, or $250,000 if the event impacts anyone 

over the age of sixty-five-years-old; restitution; a pre- and post-judgment 

interest; the appointment of a receiver or sequestration of assets; and a Court order that all fines, 

penalties, or forfeitures payable to the State are not dischargeable under bankruptcy. Id. ¶ 55. 

All of these claims fail as a matter of law and should be dismissed. 

II. Standard of Review 

Texas Rule of Civil Procedure party may move to dismiss a cause of 

action on the grounds that it has no EX. R. CIV.

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 101 of 132
12 

has no basis in fact if no reasonable person could belie Id. In evaluating the 

 facts supporting th City of Austin v. Liberty 

Mut. Ins.

e allegations, taken as true, together with 

inferences reasonably drawn from them, do not entitle the claimant EX. R.

CIV. P. 91a.1. 

Guillory v. Seaton st Dist.] 2015, pet. denied). 

Therefore, a claim is legally baseless under Rule 91a if it is barred as a matter of law. Wooley v. 

Schaffer [14th Dist.] 2014, pet. denied). 

 to dismiss based on affirmativ

Bethel v. Quilling, 

Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 656 (Tex. 2020). 

In considering a Rule 91a Motion, the Court may consider the pleadings, in addition to 

pleading exhibits permitted under Rule 59. TEX. R. CIV. P. 91a.6. Rule 59 describes pleading 

nts, constituting, in whole or in part, the claim 

body of the pleading in aid and explanations of the allegations in the petition . . . made in reference 

EX. R. CIV. P. 59. Accordingly, this Court may consider each of the 

documents on which the State cite

See id. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 102 of 132
13 

III. Argument 

A. DTPA § 17.46(b)(27) Is Unconstitutional Facially and As Applied. 

There are three independent constitutional ways 

are infirm: (1) void for vagueness, (2) violating the dormant Commerce Clause, and (3) resulting 

in a taking. Each justifie DTPA price gouging claims. 

1. DTPA § 17.46(b)(27) Is Unconstitutionally Vague. 

a. Unconstitutionally Vague on Its Face. 

DTPA Section 17.46(b)(27) is unconstitutionally vague facially and as applied by its 

s is addressed in turn. 

On its face, Section 17.46(b)(27) fails to provide constitutionally required notice of the 

void for vagueness if its prohibitions are not clearly 

Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). 

en to inhibit the exercise of 

Discipline v. Benton, 980 S.W.2d 425, 438 (Tex. 1998). Because Section 17.46(b)(27) burdens 

in interstate commerce, Section 17.46(b)(27) must be reviewed 

under this stricter vagueness standard. See Comptroller of Treasury of Md. v. Wynne, 

575 U.S. 542 (2015) (recognizing that laws that burdened interstate commerce are 

unconstitutional). 

Vague statutes violate due process in two ways. 

notice of what conduct may be punished, forcing 

Benton, 980 S.W.2d at 437 (citing Grayned, 408 U.S. at 108; 

Coates v. City of Cincinnati, 402 U.S. 611, 614 (1971)). Second, a ites arbitrary 

and discriminatory enforcement by failing to establish guidelines for those charged with enforcing 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 103 of 132
14 

ries to pursue their pe

Benton, 980 S.W.2d at 437 (citing Smith v. Goguen, 415 U.S. 566, 575 (1974)). 

Section 17.46(b)(27) does both. 

Section 17.46(b)(27) provides that the following consists of unfair trade practices: 

[S]ubject to Section 17.4625,7 taking advantage of a disaster declared by the 

governor under Chapter 418, Government Code, or by the president of the United 

States by: 

(A) selling or leasing fuel, food, medicine, lodging, building materials, 

construction tools, or another necessity at an exorbitant or excessive price; 

or 

(B) demanding an exorbitant or excessive price in connection with the sale 

or lease of fuel, food, medicine, lodging, building materials, construction 

tools, or another necessity; 

TEX. BUS. & COM. CODE ANN. § 17.46(b)(27). 

Starting with the plain language, the statute does not define 

 commonly determined. This failure makes it 

impossible for any person to understand or comply with the Section 17.46(b)(27). See Benton, 

980 S.W.2d at 437 (explaining that va r notice to those to whom [they 

Grayned, 408 U.S. at 112)). Additionally, the statute fails to provide 

 failing to provide the required 

that the ordinary person exercising ordinary common sense can 

sufficiently understand 

Carriers, AFL-CIO, 413 U.S. 548, 579 (1973). 

Without any guidance or clarity in the stat

 what prices are prohibited. The result 

7

 Section 17.4625 referenced in th

TEX. BUS. & COM. CODE ANN. § 17.4625. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 104 of 132
15 

is that it is impossible from a plain reading of the statute to know whether prices based on national 

 when the prices (and indexes) 

reflect how willing buyers and sellers price shell eggs across the country. We know of no other 

similarly vague statutes that have ever been upheld when challenged. Rather vague statutes that 

fail to give any indication of what constitutes an unlawfully excessive price are unconstitutional, 

as governing authority has long held. See United States v. L. Cohen Grocery Co., 255 U.S. 81, 89, 

(1921) (holding that st o make any unjust or unreasonable rate or charge 

in handling or dealing in or with any 

Accessible Medicines v. Frosh, No. CV MJG-17-1860, 2017 WL 4347818, at *11 (D. Md. Sept. 

29, 2017), , 887 F.3d 664 (4th Cir. 2018) (reversed and struck down statute on other grounds) 

(refusing to dismiss vagueness ch

must be evaluated in relation to a benchmark). Consequently, it is void for vagueness on its face. 

b. Unconstitutionally Vague as Applied.

Section 17.46(b)(27) is also vague as applied here because the State is claiming that prices 

in line with or based on national or regional shell egg market indexes somehow could be 

customary, usual, and normal prices, can be exorbitant or excessive, then there is no clear guide to 

determine acceptable prices during an emergency. See id. ¶ 29. Tellingly, laws in other states 

provide clarity, recognizing that market prices should be the baseline from which exorbitant or 

excessive prices are measured. See, e.g., KY. REV. STAT. ANN. § 367.374(1)(c) (explaining that 

 fluctuations in applicable commodity, regional, 

national, or international markets,

result of a price formula, esta State v. Strong Oil Co., 

433 N.Y.S.2d 345, 358 (N.Y. Sup. Ct. 1980) (holding that under the New York price gouging 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 105 of 132
16 

cionable price is a significant 

variant from the market price for these goods as defined by 

approach, Section 17.46(b)(27) fails to pass muster. 

The application of Section 17.46(b)(27) here results in the type of guessing that due process 

encounters prices it disapproves of, which is exactly what occurred here, where the State claims 

that admittedly market prices are somehow exorbitant or excessive. See Benton, 

icemen, prosecutors, and juries to pursue 

(internal citation omitted). Notably, although prices rose for 

numerous other goods, the State is selectively prosecuting a single fresh shell egg producer and 

one of its affiliates but not a single retailer or other producer. Because Section 17.46(b)(27) is 

s claims under Section 17.46(b)(27) are constitutionally barred 

and should be dismissed. See Wooley, 447 S.W.3d at 74, 76-78. 

2. DTPA § 17.46(b)(27) Violates the Dormant Commerce Clause by Regulating 

Extraterritorially and Impeding Interstate Commerce. 

d because Section 17.46(b)(27) violates the 

dormant Commerce Clause of the United States Constitution both facially and as applied in this 

case. Specifically, Section 17.46(b)(27) purports to regulate transactions wholly outside of Texas 

ection 17.46(b)(27) here unduly interferes with the interstate market 

for shell eggs. 

Because Congress has full power to regulate interstate commerce under the Commerce 

Clause, Article I, Section 8, Clause 3 of the 

lack the power to impede this interstate commerce with their 

Dickerson v. Bailey, 336 F.3d 388, 395 (5th Cir. 2003). 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 106 of 132
17 

State statutes that are protectionist or that 

per se invalid. Healy v. Beer Inst., Inc., 491 U.S. 324, 336 (1989); 

Boggs, 622 F.3d 628, 646 (6th Cir. 2010). A state law can also violate the dormant Commerce 

Clause if, as applied, it places burdens on interstate commerce excessive in 

Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); see 

also Pelican Chapter, Associated Builders & Contractors, Inc. v. Edwards, 128 F.3d 910, 918 

(5th Cir. 1997). 

a. DTPA § 17.46(b)(27) Has Impermissible Extraterritorial Effects. 

Section 17.46(b)(27) unlawfully impacts sales outside the state of 

e law with the practical effect of exterritorial control of interstate 

commerce violates the dormant Commerce Clau

extraterritorial reach was in Healy, 491 U.S. at 336. 

Price gouging statutes must not have the practical effect of 

for transactions that occur wholly outside the state. , 

887 F.3d 664, 666 (4th Cir. 2018), cert. denied, 139 S. Ct. 1168 (2019); see also Pharm. Research 

& Mfrs. of Am. v. D.C., 406 F. Supp. 2d 56, 67-71 (D.D.C. 2005), 

Indus. Org. v. D.C., 496 F.3d 1362 (Fed. Cir. 2007) (finding price gouging statute had a per se

invalid extraterritorial reach as it applied to transactions between manufacturers and wholesalers 

that occur wholly outside the District of Columbia). 

By setting prices at which national companies can sell their goods, including to national 

retailers, Section 17.46(b)(27) impacts upstream sales out-of-state by mandating only in Texas a 

certain price methodology that would necessarily impact pricing throughout the distribution chain, 

including for example for out-of-state sales to retailers with operations both in and outside of Texas 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 107 of 132
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ontracts applicable to sales to any retailer based on national and 

regional market indexes are invalid in Texas during any declared disaster). 

Like the unconstitutional price control statute in Frosh 

application to sales that actu nothing in Section 17.46(b)(27) limits 

its application to transactions in Texas. 887 F.3d at 671. Instead, Section 17.46(b)(27) applies on 

its face to all transactions in any state with re

EX. BUS. & COM. CODE ANN. 

§ 17.45(6). 

itorial impact is more evident when considering the effect 

of every state adopting similar legislation, a key test the United States Supreme Court outlined in 

Healy st be evaluated . . . by considering how the 

challenged statute may interact with the legitimate regulatory regimes of other States and what 

effect would arise if not one, but many or every, State adopted si

491 U.S. at 337. If every state had a different price gouging statute in effect during emergencies, 

with different definitions of unlawful prices, it would be virtually impossible for a company to 

conduct interstate business while complying with a patchwork of different statutes. See Kassel v. 

Consolidated Freightways Corp. of Del., 450 U.S. 662, 671-75 (1981). And as noted below, this 

web of conflicting state price gouging laws unfortunately is a reality here. 

Because Section 17.46(b)(27) is not limited to transactions in Texas and includes upstream 

transactions in other states, it has the practical effect of impermissibly regulating extraterritorial 

transactions and is thus per se unconstitutional under the dormant Commerce Clause.8 See KT & 

8

 The discovery sought by the State in this action demonstrates the extraterritorial enforcement of 

Section 17.46(b)(27): the State issued a third party subpoena to Grocers Supply International, 

LLC at its offices in New Hampshire. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 108 of 132
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., 535 F.3d 1114, 1143 (10th Cir. 2008) ( ill be invalid 

per se if it has the practical effect of extraterritorial control of commerce occurring entirely outside 

the boundaries of the stat Grand River Enters. Six Nations, Ltd. v. Pryor, 

425 F.3d 158, 168 (2d Cir. 2005)); see also , 622 F.3d at 645. 

b. As Applied to CMF and WCF, the DTPA en on Interstate 

Commerce Far Outweighs Any Claimed Benefits.

Even if Section 17.46(b)(27) were not per se unconstitutional by virtue of its impermissible 

extraterritorial effects as described above, the statute as applied in this case would still violate the 

dormant Commerce Clause, as the ce is clearly excessive in 

Pike, 397 U.S. at 142; Pelican Chapter, 128 F.3d at 918. 

As applied to CMF and WCF, who operate in a number of states across the country, the 

statute excessively burdens interstate commerce. As pointed out in documents that the State cited, 

CMF has significant agreements with national gro

which alone accounted for over thirty in fiscal year 2019. Ex. 3, 

s Club operate across the country, and CMF 

supplies eggs to them in several states. Several states, recognizing the volatility of food 

commodity pricing, exempt such commodities from those price gouging statutes or set market 

prices as the baseline price (if they have price gouging statutes at all). See, e.g., FLA. STAT. ANN. 

§ 501.160(1)(b), (5) (excluding from the price gouging statute prices that incr

national, or international market producers, or processors of raw 

CODE ANN. § 39-5-145(A)(5)(a)(i), (I) (excluding from the 

price gouging statute prices , national, or international market 

s, or processors of raw or processed food 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 109 of 132
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ENN. CODE ANN. § 47-18-5103(b)(1) (excluding from the price gouging statute 

Because of these varying statutes, and th

Section 17.46(b)(27) in this suit, CMF would have to enter into multiple contracts with most of its 

top customers: one contract for Texas stores, and others for contracts in other states. Therefore, 

s application of that Section would force CMF to

separate transaction for each state 

y burdens interstate commerce in violation of the dormant 

Commerce Clause. Frosh, 887 F.3d at 673-74; see also Healy, 491 U.S. at 337; Kassel, 450 U.S. 

at 671-75. 

terstate commerce through invocation of the 

having affordable goods and services during an 

emergency.9 Section 17.46(b)(27) simply encourages CMF and WCF, 

and any other egg producer, to sell shell eggs in states other than Texas where market prices are 

permissible, and at the very least increases the cost of doing business in Texas, all making it more 

difficult for Texas grocers to buy eggs and consumers to access groceries. 

of Section 17.46(b)(27) in this suit against CMF and WCF for offering market-based prices

her national companies who fear being the next target of the 

9

 shell egg prices; CMF and WCF sell shell eggs 

at wholesale only to retailers and grocers, not the public. These pricing agreements were reached 

and in place before the declaration with both sides bearing the risk that prices could go up or down. 

CMF and WCF under these circumstances, without addressing the 

prices that consumers actually pay, merely shifts profits from one group of companies to another. 

The DTPA was not created for a transfer of profit from one private entity to another. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 110 of 132
21 

a declared disaster when these prices are 

recognized as reasonable under various 

pplication of it here violates the dormant 

ms under Section 17.46(b)(27) are legally baseless and must be 

dismissed. See Wooley, 447 S.W.3d at 74, 76-78 (holding that claims that are legally barred are 

legally baseless under Rule 91a). 

3. constitutional Taking Without Just 

Compensation.

uld result in a taking in two distinct ways: (1) forcing 

CMF and WCF to sell fresh shell eggs that they purchased on the open spot market for less than 

they paid in all cases and (2) to sell fresh shell eggs for less than their fair market value pursuant 

to previously existing pricing agreements, regardless of whether those prices allow CMF and WCF 

to recoup the costs of producing these fresh shell eggs.10 In effect, the State seeks to take CMF 

compensation in violation of the Takings Clauses of the United 

States and Texas Constitutions. This unconstitutional action must be dismissed. 

The Takings Clause of the Fifth Amendment of the United States Constitution prohibits 

ic use, without just CONST.

10

Transfer Venue and Original Answer, Affirmative Defenses, and Special Exceptions to the State 

aphs 22, 23, 24, and 28 of the Petition are merely 

background allegations purporting rations, business, and market 

share; they do not even contain allegations of acts by CMF or WCF that the State claims are 

prohibited by the DTPA. Answer at 8. Taken at face value, the State asks this Court to enjoin 

CMF and WCF from operating their business at all.

claims for injunctive relief in the Petition at 

paragraphs 51 and 54 be dismissed or that the State be required to allege a claim for relief 

consistent with its allegations of conduct it alleges is unlawful under the DTPA. Id.

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 111 of 132
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AMEND. V. The Takings Clause applies to the states through the Fourteenth Amendment Due 

Process Clause. ., 560 U.S. 702, 

707 (2010). Article I, Section 17, of the Texas Constitution includes a provision similar the 

ken, damaged or destroyed for or 

applied to public use without adequate compensation being made, unless by the consent of such 

 guides application of the federal and Texas Takings Clauses. 

Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660, 669 (Tex. 2004); City of Crowley v. 

Ray

jurisprudence construing and applying the Fifth Amendment when analyzing article I, 

Beyond the physical taking of property, the Takings Clause also prevents government 

regulatory actions that Penn. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922); see 

also Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978). When the government uses 

regulations to force sellers to lower their prices below just and reasonable levels, to prices so low 

that merchants cannot recover costs or make a profit, these regulations constitute takings that 

require compensation. of Consumer Affairs, 876 F.2d 1013, 1023 

(1st Cir. 1989); Vaqueria Tres Monjitas, Inc. v. Laboy, No. CIV. 04-1840 DRD, 

2007 WL 7733665, at *38 (D.P.R. July 13, 2007), . Vaqueria Tres Monjitas, Inc. v. 

Irizarry, 587 F.3d 464 (1st Cir. 2009). 

17.46(b)(27) against CMF and WCF is an 

impermissible regulatory taking. To determine whether a regulatory action constitutes a taking, 

the Court will conduct a factually intense ad hoc analysis. Penn. Central, 438 U.S. at 124. The 

three most significant factors in the inquiry include: (1) the character of the government action, 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 112 of 132
23 

(2) the impact of the regulation on the defendant, and (3) the extent to which the regulation 

le investment-backed expectations. Connolly v. Pension 

Ben. Guar. Corp., 475 U.S. 211, 224-25 (1986) (citing Penn Central, 438 U.S. at 124). All three 

taking. 

a. Nature of the Government Action. 

lective prosecution of only CMF and WCF for 

alleged price gouging of conventiona her shell egg producers and no 

State has not sued the producers of other agricultural/food products whose products similarly 

experienced commodity price spikes during the pandemic due to changes in demand. In choosing 

to selectively prosecute CMF and WCF for pricing strategies employed by nearly all (if not all) 

egg producers, packers, and retailers that at all times before and after the pandemic remained 

ne for following regional and national market 

 people alone to bear public burdens, which, in all fairness and 

justice, should be borne by U.S. Fid. & Guar. Co. v. McKeithen, 

226 F.3d 412, 416 (5th Cir. 2000) (citing E. Enters. v. Apfel, 524 U.S. 498, 522 (1998)). 

The Takings Clause was created to prevent the government from unfairly targeting one 

charging market-dictated prices, the regulatory enforcement is more likely to be a taking. Nollan 

llans were being singled out to 

bear the burden of California oblems, although they had not 

contributed to it more than other coastal landowne

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 113 of 132
24 

might violate . . . the . MHC Fin., Ltd. v. City of San Rafael, No. C-00-03785 

VRW, 2008 WL 440282, at *16 (N.D. Cal. Jan. 29, 

ordinance that targeted one mobile home property owner with rent increase caps was a regulatory 

et-wide forces, not the unilateral decisions of 

ntional shell egg prices have long been pegged to market-wide 

forces, not the unilateral decisions of CMF or WCF (of which none were made in any event); thus, 

ould result in a taking. 

b. Economic Impact on CMF and WCF. 

The economic impact on CMF and WCF of the fines and price cap the State seeks would 

also weighing in favor of 

U.S. Fidelity & Guar. Co., 226 F.3d at 416. The analysis of 

the economic impact of the regulation requires the Court to consider the owne

recoup its investment or better as well as recoup losses from an investment due to a cyclical or 

fluctuating market. See Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560, 1567 (Fed. Cir. 1994) 

(explaining that analysis of economic impact of a regulation incl

opportunity to recoup its i Tenoco Oil Co

regulation which forces wholesalers to sell gasoline for a price which does not cover operating 

costs and a reasonable profit may, in short order, become so onerous that the wholesalers will be 

unable ever to recover their earlier cumulative losses through subsequent price increases and may 

Forcing CMF and WCF to charge prices for conventional shell eggs below their cost or 

market prices charged by others and/or set by contract would undermine their business. As noted 

previously, CMF and WCF purchase a significant portion of their shell eggs on the open market 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 114 of 132
25 

to fulfill customer demand; CMF, for example, purchases approximately 16% of the fresh shell 

eggs it sells from outside producers. Ex. 3, CMF 2019 10-K at 6, 23. The State now seeks to force 

CMF and WCF to sell the shell eggs they purchase on the market below their own cost. 

Moreover, due to the constantly fluctuating prices in the conventional shell egg market, 

CMF, WCF, and other egg producers experience periods of losses followed by periods of gains. 

Therefore, as in Tenoco Oil Co., 876 F.2d at 1027, if the State were to intervene in an efficient 

market and force CMF and WCF to sell shell eggs below market price, particularly around Easter, 

which is a more profitable period for CMF and WCF (allowing CMF and WCF to make up for 

losses that occur during other periods of the year), CMF and WCF would not be able to compensate 

for prior losses when market-set prices were lower, including recent losses due to the low market 

price of fresh shell eggs prior to COVID-19. See, e.g., Ex. 2, CMF Feb. 29, 2020 10-Q at 13 

(noting the losses suffered by CMF for the thirty-nine weeks ending in late February 2020 and 

disclosing that CMF had cumulative losses of $61.9 million); Ex. 3, CMF 2019 10-K at 7, 10 

(explaining that the cyclical nature of egg pri

ng holiday periods like Easter); Ex. 6, WSJ Article (noting that 

U.S. egg producers including CM in 2019, who lost an average of 2.7 cents 

per dozen eggs they produced last year). 

Additionally, CMF, WCF and their customers agree on pricing arrangements linked to a 

market index with full knowledge and expectation that there will at times be profits and at times 

losses, and the long term nature of the relationships equitably spread the risk for the mutual benefit 

of the parties. The State now seeks to force CMF and WCF to bear the entire risk of low markets 

without the opportunity to make those losses up during profitable times. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 115 of 132
26 

e prosecution is putting CMF and WCF at a competitive 

disadvantage. On top of the significant additional costs and burdens incurred due to Covid-19, 

CMF and WCF now have to spend considerable sums defending themselves against the State of 

Texas when their competitors and others in the shell egg markets do not. 

CMF and WCF to operate to profitability in 

Texas, it constitutes a taking that, if uncompensated, could drive CMF and WCF out of the Texas 

market completely. This economic impact is particularly hars

substantial investment in the Texas market. 

c. Interference with Reasonable Investment-Backed Expectations. 

wholesale fresh shell egg pri

nd unforeseeable to CMF, WCF, and their 

investors. Despite being passed in 1995, few cases interpret Section 17.46(b)(27), giving 

companies no indication as to how the statute would be enforced. And as noted in Part III.A.1, 

Section 17.46(b)(27) provides no direction on what prices are permissible (presumably those set 

in an efficient, national market following historical patterns would be permissible, but the State 

contends otherwise). But it was particularly unforeseeable that the State would assert that market 

prices, including market prices charged pursuant to longstanding customer pricing models, 

constitute price gouging. This attempt to collect fines for CMF 

legitimate expectations a U.S. Fidelity & Guar. Co., 226 F.3d at 418, 

between CMF and WCF and their customers engaged in longstanding distribution arrangements 

foodservice channels are sold at 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 116 of 132
27 

Pet. ¶ 29. See U.S. Fidelity & Guar. Co., 226 F.3d at 419 (considering whether parties suspected 

the retroactive enforcemen

It is unjust and unforeseeable for the State to force CMF and WCF to set fresh shell egg 

prices below regional or national market prices, to prevent CMF and WCF from recouping its costs 

of production along with a profit margin and the costs of shell eggs it has purchased on the spot 

market for resale, and to fine CMF and WCF for honoring the pricing terms in its many longstanding customer agreements that are pegged to the national and regional price indexes the State 

seeks to declare retroactively improper in the State of Texas. Combined w

requested relief constitutes an unconstitutional 

ims are legally barred and thus legally baseless and must be 

dismissed. 

* * * 

Any one of these constitutional grounds is su

claims under the DTPA with prejudice. 

B. PA § 17.46(b)(27) Are Legally and Factually Baseless 

Because the State Admits CMF and WCF Charged Market Prices, which Are Not 

Exorbitant or Excessive as a Matter of Law. 

baseless because as a matter of law, market 

prices are not exorbitant or excessive under DTPA. 

While the State repeatedly and in conclusory fashion alleges that CMF and WCF charged 

legal conclusion 

Liberty Mut. Ins., 431 S.W.3d at 826. Instead, the State is required to 

Id. The State fails to make any such 

factual allegations but merely alleges that CMF and WCF charged or offered prices consistent with 

ng March and April 2020, Cal-Maine and the rest of 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 117 of 132
28 

d, with a regional market index hitting $3.18 in 

 As noted above, Section 17.46(b)(27) does not define what prices 

Section nor does it set any standard for doing so and is thus 

unconstitutionally void for vagueness. This is particularly true if Section 17.46(b)(27) prohibits 

national or regional market prices as the State alleges. To the extent that this Court finds Section 

17.46(b)(27) is nonetheless constitutional, the Court must deter

 the United States and Texas Constitutions to 

determine whether the State has alleged that CMF and WCF have charged or 

of interpreting these terms, the State has failed 

to allege that CMF and WCF charged or o

Paske v. Fitzgerald

Statutes that impose civil penalties without reference to any actual loss or injury are penal statutes, 

Hovel v. Batzri, 490 S.W.3d 132, 148 

Brown v. De La Cruz, 

156 S.W.3d 560, 565 (Tex. 2004); see, e.g., Flores v. Millennium Interests, Ltd., 185 S.W.3d 427, 

for a daily penalty unrelated to actual losses must be strictly 

tion omitted). In strictly construing a statute is read 

in its entirety in a way that benefits the party facing the possibility of a penalty if a fair reading 

Hovel, 490 S.W.3d at 137. The purpose of strict protect individuals 

against whom liabil Id. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 118 of 132
29 

The State brings this action under Section 17.47, civil penalty to be 

 $250,000 if the event impacts anyone over the age 

of sixty-five-years-old, that is not based on compensable damages and the State specifically seeks 

55(a). Because the State seeks civil penalties 

for violations of Section 17.46(b)(2 strictly construed to protect 

See Hovel, 490 S.W.3d at 137 (internal citation omitted); see also Flores, 

185 S.W.3d at 433.

wide variety of sources, including dictionary 

Jaster v. Comet II Const., Inc., 438 S.W.3d 556, 563 (Tex. 2014). 

 According to the Merriam-Webster Dictiona

11 And the 

12

 

Accordingly, to determine what r Section 17.46(b)(27) 

and thus whether the State has alleged that CMF and WCF charged or offered an exorbitant or 

excessive price, the Court must determine what the customary, usual, or normal price is and if the 

prices the State claims are exorbitant or excessive exceed that price.13

11 Exorbitant, MERRIAM-WEBSTER.COM https://www.merriam-webster.com/dictionary/exorbitant 

(last visited June 25, 2020). 

12 Excessive, MERRIAM-WEBSTER.COM, https://www.merriam-webster.com/dictionary/excessive 

(last visited June 25, 2020). 

13 but these subjective 

terms are far too vague to provide any guidance as

and would permit the State to make arbitrary dete

would be blatantly unconstitutional as explained 

to strictly construe this penal statute against 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 119 of 132
30 

ity of shell eggs sold in the U.S. in the retail and foodservice 

channels are sold at independently quoted wholesale market prices for shell e

 are available publicly and . . . often trend 

slightly below regional Id. ¶ 30. As the State further admits, these market 

prices based on regional egg index prices have ranged from $0.72 a dozen in 2005 to $2.97 a dozen 

in 2015. Id. ¶¶ 30, 33. Because the price for shell eggs can and has ranged so dramatically 

historically (and certainly will again in the future due to the volatility of the market), no specific 

price or price range can be considered customary, usual, or normal. Instead, the only price that is 

customary, usual, or normal is the independently quoted national or regional shell egg index prices, 

which, as the State admits, is the generally accepted price in the industry at which the majority of 

shell eggs are sold in the United States. Id. ¶¶ 29-30. The only commonality among the prices for 

shell eggs historically is that they are pegged to national and regional shell egg indexes, and this 

is the only standard against which the customary, usual, or normal price can be determined in order 

Id. ¶ 34. The State further admits that the prices 

observed during COVID-19 were not unusual or abnormal but expected and completely normal 

based on the massive increase in demand nationally, admitting that due to the natural forces of 

s in which egg-yield declines or when demand jumps, spot 

id id. ¶ 5. 

In other words, the State alleges i.e., the customary, usual, or 

the State. See Hovel, 490 S.W.3d at 137. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 120 of 132
31 

and thus the customary, usual, or normal price charged by CMF and 

WCF, whose prices are automatically set based on market prices, likewise increased. 

Because the State fails to allege any facts demonstrating that CMF and WCF charged or 

stead merely alleges that CMF and WCF charged 

market prices consistent with the customary, usual, or normal 

Section 17.46(b)(27) are legally baseless. 

C. PA § 17.46(b)(27) Are Legally and Factually Baseless 

Because the State Admits CMF and WCF Did 

gally and factually baseless because the State failed to and 

cannot allege that CMF and WCF engaged in any acts that would constitute

ection 17.46(b)(27) requires that the State allege 

and prove not just that prices 

were charged or offered for the 

 DTPA § 17.46(b)(27). The State must therefore allege and 

ultimately prove that CMF and WCF took some action or changed its behavi

CMF and WCF in fact took no action. Instead, the State admits that CMF priced generic fresh 

shell eggs based on market prices before, during, and after the Declared Disaster. 

its eggs at the prevailing market price at the 

Id. ¶ 29. The State further admits that following the outbreak of COVID-19, 

id

March and April 2020, Cal-Maine and the rest of th gg prices skyrocketed, 

with a regional market index hitting $3.18 in Marc llowed that trend in 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 121 of 132
32 

id. ¶ 34 (emphasis removed). Notably, prices quickly dropped to about $1 per dozen. 

Ex. 13, Weekly Combined Regional Shell Eggs, USDA MARKET NEWS (June 26, 2020), 

https://www.ams.usda.gov/mnreports/wa_py001.txt (listing the average wholesale price for a 

dozen large shell eggs in the South Central region the week ending June 26, 2020 as $0.79). 

The State therefore admits that CMF and WC

d after the Declared Disaster and did not change 

their pricing structures or take any action to take advantage of the Declared Disaster. Pet. ¶ 5. The 

State cannot plausibly allege th ng and offering market prices 

for fresh shell eggs as they ntage of the disaster: their 

pricing model and behavior did not deviate from pre-pandemic practices. See TEX. R.CIV. P. 91a.1 

easonable person could beli

Absent any allegation by the State that CMF and WCF changed their behavior in any way 

in response to the Declared Disaster, the State has failed to allege any facts demonstrating that 

CMF and WCF took advantage of the disaster (and, in fact, 

claims under Section 17.46(b)(27) must be dismissed as baseless. 

D. With Respect to Specialty Eggs Are 

Specialty Egg Prices Have Not Changed. 

To the extent that the State alleges claims under DTPA § 17.46(b)(27) with respect to CMF 

 those claims must be dismissed as factually baseless, because 

the State does not allege any specialty shell egg prices during the Declared Disaster were excessive 

or exorbitant, and does not allege that the prices of specialty eggs changed at all following the 

Declared Disaster. Indeed, the St price of specialty shell eggs is 

remained at 2019 levels legation does not factually support a claim 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 122 of 132
33 

of price gouging. Accordingly, absent any allegations related to specialty shell egg prices, the 

 the extent the State asserts claims that specialty shell egg prices 

were excessive or exorbitant under Section 17.46(b)(27). 

E. Are Legally and Factually Baseless to 

the Extent the State Asserts Claims Based on Transactions Exempt from the DTPA 

under DTPA § 17.49(g). 

nd factually baseless to the extent that they allege claims 

under the DTPA for transactions and sets of transactions that are specifically exempt from the 

DTPA under Section 17.49(g) that involve total consideration of more than $500,000.14 

Section 17.49(g) specifically exempts from the DTPA claims that relate to: 

project, or a set of transactions relating to the same project, involving total consideration by the 

EX. BUS. & COM. CODE ANN. § 17.49(g). The exemption is 

intended to exempt large transactions between ypes of transactions 

between CMF/WCF and grocers on which the State bases its DTPA claims here. See E. Hill 

Marine, Inc. v. Rinker Boat Co.

In assessing the amount of a transaction or set of transactions under Section 17.49(g), the 

court must consider not just the amount sought in the action, but the total amount of consideration 

paid or for which a party was obligated to pay in the transaction or set of transactions related to 

the same project. , 142 S.W.3d 459, 473-74 (Tex. 

00,000 transaction was exempt from the DTPA 

14 a written contract if: (1) the contract relates 

to a transaction, a project, or a set of transactions related to the same project involving total 

consideration by the consumer of more than $100,000; (2) in negotiating the contract the consumer 

is represented by le EX. BUS. & COM. CODE ANN. § 17.49(f). Many of CMF and 

y exempt under Section 17.49(f), but based on the facts pleaded 

and documents relied on in the Petition, CMF and WCF for now address only those transactions 

for which the State has pleaded or cited documents demonstrating that they are exempt under 

Section 17.49(g) as involving transactions of greater than $500,000. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 123 of 132
34 

under Section 17.49(g) even though the amount in controversy for the DTPA claim was less than 

ansactions related to the same project can be valued 

determining the consideration involved, and that set of 

transactions may be based on multiple contracts. E. Hill Marine, Inc., 229 S.W.3d at 821. Under 

stribution relationship between two parties constitute[s] a 

SPRAJ Props. LLC v. Regions Bank, No. 3:13-CV-3472-N, 2015 WL 11120528, at *7 

(N.D. Tex. May 12, 2015); v. ProBalance, Inc., No. 3:15-CV-0677-N, 

2016 WL 6646225, at *5 (N.D. Tex. Nov. 9, 2016). 

For example, in Global International, a manufacturer entered into a series of purchase 

orders with a store for nutritional supplements. , 2016 WL 6646225, at *5. The 

store attempted to assert a DTPA claim against the manufacturer based on the sale of 

approximately $300,000 of the supplements. Id. at *4. Yet over the course of a more than oneyear relationship between the manufacturer and store, the store paid more than $1,000,000 to the 

manufacturer for various types of nutritional supplements. Id. The court found that this lengthy 

distribution relationship constituted a set of transactions relating to the same project involving total 

consideration by the consumer of more than $500,000 that were therefore exempt from the DTPA. 

Id. at *5.

The State alleges no facts demonstrating that any of the transactions on which it sues 

concern transactions or sets of transactions related to the same project of less than $500,000. 

for which the State asserts its DTPA claims involve these same types of ongoing distribution 

relationships involving sets of transactions between CMF and WCF and their customers of more 

than $500,000. For example, the Stat -Q for the third quarter of fiscal year 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 124 of 132
35 

2020, demonstrating that CMF sold $1.3 billion in shell eggs in fiscal year 2019, Pet. ¶ 20 n.1 

(citing Ex. 2, CMF Feb. 29, 2020 10-Q), and cites tation from Q3 2020 

demonstrating that 69.8% of those sales were to just ten large corporations, Pet. ¶ 22 n.6 (citing 

Ex. 1, CMF Investor Presentation at 12). Simila

states that just two of its largest customers account for approximately 30% of that $1.3 billion in 

sales for fiscal year 2019. Ex. 3, CMF 2019 10-K at 7. The State therefore cannot reasonably 

allege that any of the sales to these customers fall under the DTPA, as the set of transactions CMF 

and WCF had with each of these customers involved consideration of more than $500,000. See 

TEX. R. CIV. P. 91a. 

The State nonetheless asserts DTPA claims ba

Petition makes clear in its request for documents and information in the Petition specifically related 

Pet. ¶ 50(a), (b). Because the 

State fails to allege any facts demonstrating that its claims are for transactions or sets of 

transactions of less than $500,000, and admits in its Petition and the documents cited in its Petition 

that the vast majority of the transactions and sets of transactions for which it asserts claims are 

legally and factually baseless and must be 

dismissed. 

F. Legally and Factually Baseless Because the 

State Fails to Allege CMF/WCF Made An

Misrepresentations Directed

t to Sections 17.46(b)(5) and (24) of the 

DTPA should be dismissed because they are legally and factually baseless in that the State fails to 

allege any representations or acts that could conceivably fall under Sections 17.46(b)(5) and (24). 

And for all representations the State does allege CMF or WCF made, the State admits they are true 

in the Petition. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 125 of 132
36 

Sections 17.46(b)(5) and (24) of ting that goods or services 

have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do 

not have or that a person has a sponsorship, approval, status, affiliation, or connection which the 

information concerning goods or 

services which was known at the time of the transaction if such failure to disclose such information 

was intended to induce the consumer into a transaction into which the consumer would not have 

entered had the information been

n 17.46(b)(5) is baseless because the State does not identify 

any offending representations by CMF or WCF under the statute. Accordingly, because the State 

claims under Section 17.46(b)(5) must be dismissed. See Guillory, 470 S.W.3d at 240. 

are likewise baseless because the State does 

not identify any facts that CMF or WCF failed to disclose, much less any facts CMF or WCF failed 

and WCF into which they would not have otherwise entered. See TEX. BUS. & COM. CODE ANN. 

 under Section 17.46(b)(24) are therefore likewise baseless. See 

Guillory, 470 S.W.3d at 240. 

The statements the State claims are misleading fall under neither Sections 17.46(b)(5) 

nor (24), and in any event, in its own Petition the State admits that those statements are true and 

not misrepresentations. Specifically, the State asserts that CMF and WCF misled customers by 

market

Pet. ¶ 38 (emphasis added). Yet, the State does not allege that wholesale shell egg market prices 

are not. Instead, the State merely alleges that 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 126 of 132
37 

offer purchasers whichever pr

Pet. ¶ 38. Putting aside that CMF and WCF cannot in fact offer whatever prices they choose 

because most of the prices they offer are governed by long-standing pricing arrangements, even if 

CMF and WCF could offer any prices they choose, this has no bearing whatsoever on whether 

wholesale shell egg market prices are outside of in fact, they are). 

Because the State does not allege that wholesale shell egg market prices are within CMF and 

ion claim is legally baseless. See Guillory, 470 S.W.3d at 240. 

The State also alleges that CMF and WCF mislead their customers by stating in their 

market

e is a regulated market, which the State claims is false because 

exchange The State thus seeks to insert the 

atement is actually true as stated, alleging 

foodservice channels are sold at independently quoted wholesale market

Id. ¶ 29 (emphasis added). And the State repeatedly admits that shell egg prices are based on 

market prices. Id. ¶¶ 29, 32, 34. 

The State also fails to allege how a representation that there is an independently quoted 

wholesale market for eggs suggests that there is 

draw a comparison to a stock exchange. The State does not allege that CMF and WCF ever 

representation. Instead, the State nonsensically claims that a reference to a market or market price 

is a misleading reference to an exchange despit

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 127 of 132
38 

of markets and market prices a variety of markets where no exchange exists. See, e.g., State v. 

Cent. Expressway Sign Assocs.

when there is no real property exchange); Green Tree 

Acceptance, Inc. v. Holmes

nd market prices for used cars when there is no used car 

exchange); see also Ex. 14, Federal Trade Commission, Chapter 15, INVESTIGATION OF GASOLINE 

PRICE MANIPULATION & POST ATRINA GASOLINE PRICE INCREASES 81 n.1 (2006) (recognizing 

prices for petroleum products not traded on 

exchanges). 

Because the State admits in its Petition that there is a shell egg market and CMF and WCF 

base their prices on shell egg mark t that they base their prices 

on shell egg market prices is plainly true; therefore, th

baseless. See Guillory, 470 S.W.3d at 240. 

V. Conclusion 

For the foregoing reasons, defendants CMF and WCF therefore respectfully request that 

nd that the State take nothing by its suit and that 

the Court award CMF and WCF all relief to which they are justly entitled. 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 128 of 132
39 

Dated: June 26, 2020 Respectfully submitted, 

KING & SPALDING LLP 

/s/ Craig A. Stanfield 

Craig A. Stanfield 

Texas Bar No. 24051371 

cstanfield@kslaw.com 

Chad E. Stewart 

Texas Bar No. 24083906 

cstewart@kslaw.com 

1100 Louisiana, Suite 4000 

Houston, Texas 77002 

(713) 276-7417 Telephone 

(713) 751-3290 Facsimile 

ATTORNEYS FOR DEFENDANTS 

CAL-MAINE FOODS, INC. AND 

WHARTON COUNTY FOODS, LLC 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 129 of 132
40 

CERTIFICATE OF SERVICE 

 I hereby certify that a true and correct copy of the foregoing instrument was served 

pursuant to Rules 21 and 21a of the Texas Rules 

filing system on the 26th day of June, 2020, upon all counsel of record. 

/s/ Craig A. Stanfield 

Craig A. Stanfield 

Case 1:20-cv-00461-RP Document 139 Filed 12/01/20 Page 130 of 132
EXHIBIT C

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UnofficialCopyOfficeofMarilynBurgessDistrictClerk

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