Commitments and Contingencies

12 Months Ended

Jun. 03, 2023

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 16 - Commitments and Contingencies

State of Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC 

On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State of

Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC, Cause No. 2020-25427, in the District Court

of Harris County, Texas. The State of Texas (the “State”) asserted claims based on the Company’s and WCF’s alleged violation

of the Texas Deceptive Trade Practices—Consumer Protection Act, Tex. Bus. & Com. Code §§ 17.41-17.63 (“DTPA”). The

State claimed that the Company and WCF offered shell eggs at excessive or exorbitant prices during the COVID-19 state of

emergency and made misleading statements about shell egg prices. The State sought temporary and permanent injunctions against

the Company and WCF to prevent further alleged violations of the DTPA, along with over $

100,000

 in damages. On August 13,

2020, the court granted the defendants’ motion to dismiss the State’s original petition with prejudice. On September 11, 2020,

the State filed a notice of appeal, which was assigned to the Texas Court of Appeals for the First District. On August 16, 2022,

the appeals court reversed and remanded the case back to the trial court for further proceedings. On October 31, 2022, the

Company and WCF appealed the First District Court’s decision to the Supreme Court of Texas. On May 10, 2023, the Company

filed its brief on the merits, and the State of Texas filed its brief on June 29, 2023. The Company filed its reply brief on July 14,

2023. Management believes the risk of material loss related to this matter to be remote.

Bell et al. v. Cal-Maine Foods et al. 

On April 30, 2020, the Company was named as one of several defendants in Bell et al. v. Cal-Maine Foods et al., Case No. 1:20-

cv-461, in the Western District of Texas, Austin Division. The defendants include numerous grocery stores, retailers, producers,

and farms. Plaintiffs assert that defendants violated the DTPA by allegedly demanding exorbitant or excessive prices for eggs

during the COVID-19 state of emergency. Plaintiffs request certification of a class of all consumers who purchased eggs in Texas

sold, distributed, produced, or handled by any of the defendants during the COVID-19 state of emergency. Plaintiffs seek to

enjoin the Company and other defendants from selling eggs at a price more than 10% greater than the price of eggs prior to the

declaration of the state of emergency and damages in the amount of $

10,000

 per violation, or $

250,000

 for each violation

impacting anyone over 65 years old. On December 1, 2020, the Company and certain other defendants filed a motion to dismiss

the plaintiffs’ amended class action complaint. The plaintiffs subsequently filed a motion to strike, and the motion to dismiss and

related proceedings were referred to a United States magistrate judge. On July 14, 2021, the magistrate judge issued a report and

recommendation to the court that the defendants’ motion to dismiss be granted and the case be dismissed without prejudice for

lack of subject matter jurisdiction. On September 20, 2021, the court dismissed the case without prejudice. On July 13, 2022, the

court denied the plaintiffs’ motion to set aside or amend the judgment to amend their complaint.

On March 15, 2022, plaintiffs filed a second suit against the Company and several defendants in Bell et al. v. Cal-Maine Foods

et al., Case No. 1:22-cv-246, in the Western District of Texas, Austin Division alleging the same assertions as laid out in the first

complaint. On August 12, 2022, the Company and other defendants in the case filed a motion to dismiss the plaintiffs’ class action

complaint. On January 9, 2023, the court entered an order and final judgement granting the Company’s motion to dismiss. 

On February 8, 2023, the plaintiffs appealed the lower court’s judgement to the United States Court of Appeals for the Fifth

Circuit, Case No. 23-50112. The parties filed their respective appellate briefs, but the court has not ruled on these submissions.

Management believes the risk of material loss related to both matters to be remote.

Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al. 

As previously reported, on September 25, 2008, the Company was named as one of several defendants in numerous antitrust

cases involving the United States shell egg industry. The Company settled all of these cases, except for the claims of certain

plaintiffs who sought substantial damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These

remaining plaintiffs are Kraft Food Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and,

until a subsequent settlement was reached as described below, The Kellogg Company.

On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in the

United States District Court for the Eastern District of Pennsylvania, In re Processed Egg Products Antitrust Litigation, MDL No.

2002, to the United States District Court for the Northern District of Illinois, Kraft Foods Global, Inc. et al. v. United Egg

Producers, Inc. et al., Case No. 1:11-cv-8808, for trial. The Egg Products Plaintiffs allege that the Company and other defendants

violated Section 1 of the Sherman Act, 15. U.S.C. § 1, by agreeing to limit the production of eggs and thereby illegally to raise

the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs are attacking certain features

of the United Egg Producers animal-welfare guidelines and program used by the Company and many other egg producers. The

Egg Products Plaintiffs seek to enjoin the Company and other defendants from engaging in antitrust violations and seek treble

money damages. On May 2, 2022, the court set trial for October 24, 2022, but on September 20, 2022, the court cancelled the

trial date due to COVID-19 protocols and converted the trial date to a status hearing to reschedule the jury trial. Trial is now set

for October 16, 2023.

In addition, on October 24, 2019, the Company entered into a confidential settlement agreement with The Kellogg Company

dismissing all claims against the Company for an amount that did not have a material impact on the Company’s financial condition

or results of operations. On November 11, 2019, a stipulation for dismissal was filed with the court, and on March 28, 2022, the

court dismissed the Company with prejudice.

The Company intends to continue to defend the remaining case with the Egg Products Plaintiffs as vigorously as possible based

on defenses which the Company believes are meritorious and provable. Adjustments, if any, which might result from the

resolution of this remaining matter with the Egg Products Plaintiffs have not been reflected in the financial statements. While

management believes that there is still a reasonable possibility of a material adverse outcome from the case with the Egg Products

Plaintiffs, at the present time, it is not possible to estimate the amount of monetary exposure, if any, to the Company due to a

range of factors, including the following, among others: two earlier trials based on substantially the same facts and legal arguments

resulted in findings of no conspiracy and/or damages; this trial will be before a different judge and jury in a different court than

prior related cases; there are significant factual issues to be resolved; and there are requests for damages other than compensatory

damages (i.e., injunction and treble money damages).

State of Oklahoma Watershed Pollution Litigation

On June 18, 2005, the State of Oklahoma filed suit, in the United States District Court for the Northern District of Oklahoma,

against Cal-Maine Foods, Inc. and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc., Peterson Farms, Inc. and

Simmons Foods, Inc., and certain of their affiliates. The State of Oklahoma claims that through the disposal of chicken litter the

defendants polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint sought

injunctive relief and monetary damages, but the claim for monetary damages was dismissed by the court. Cal-Maine Foods, Inc.

discontinued operations in the watershed in or around 2005. Since the litigation began, Cal-Maine Foods, Inc. purchased

100

%

of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg operation within the Illinois

River Watershed. Benton County Foods, LLC is not a defendant in the litigation. We also have a number of small contract

producers that operate in the area.

The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered

findings of fact and conclusions of law in favor of the State of Oklahoma, but no penalties were assessed. The court found the

defendants liable for state law nuisance, federal common law nuisance, and state law trespass. The court also found the producers

vicariously liable for the actions of their contract producers. The court directed the parties to confer in attempt to reach agreement

on appropriate remedies. On June 12, 2023, the court ordered the parties to mediate before the Tenth Circuit Chief Judge Deanell

Reece Tacha and instructed the parties to file a joint status report fourteen days following mediation. The mediation has not yet

been set but is expected to be in the September to October time frame this fall. While management believes there is a reasonable

possibility of a material loss from the case, at the present time, it is not possible to estimate the amount of monetary exposure, if

any, to the Company due to a range of factors, including the following, among others: uncertainties inherent in any assessment

of potential costs associated with injunctive relief or other penalties based on a decision in a case tried over 13 years ago based

on environmental conditions that existed at the time, the lack of guidance from the court as to what might be considered

appropriate remedies, the ongoing negotiations with the State on appropriate remedies and upcoming mediation, and uncertainty

regarding what our proportionate share of any remedy would be, although we believe that our share compared to the other

defendants is small.

Other Matters

In addition to the above, the Company is involved in various other claims and litigation incidental to its business. Although the

outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that the

final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.