US food group Post Holdings has reached an agreement to settle anti-trust class action claims against its Michael Foods unit.
Michael Foods will settle all class claims brought under a class action lawsuit, filed in Pennsylvania in 2008 by direct purchasers of shell eggs, with a US$75m payment, Post said in a statement. Post acquired Michael Foods in 2014.
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The class action lawsuit was certified in 2015 in the US District Court for the Eastern District of Pennsylvania by Judge Gene Kreyche Pratter. Twelve companies were originally cited in the class action, including Michael Foods. Several of the companies involved have already reached settlement agreements.
The co-lead counsel for the direct purchasers Michael Hausfeld claimed in 2015: “For over a decade, the egg industry has undertaken a concerted effort to restrict the supply of eggs and raise prices under the pretext of animal welfare.”
The terms of the settlement with Post “must be formally documented and are subject to approval by the court following notice to all class members”, Post said. “While Post expects the settlement will receive the needed approval, there can be no assurance that the court will approve the agreement as proposed by the parties.”
“This settlement does not affect the action filed on behalf of indirect purchasers of shell eggs (who were unsuccessful in class certification), or dismissed claims by direct purchasers of egg products (which dismissal is being appealed),” Post said.
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By GlobalDataPost president and CEO Rob Vitale said: “While we remain confident that our conduct has at all times been lawful and entirely appropriate, we believe this settlement is in the best interest of our shareholders, employees, customers and consumers because it effectively eliminates the distraction, expense, and exposure of this complex litigation.”
Post said it expects to record a pre-tax charge in the first quarter of its fiscal year 2017 for the settlement of the lawsuit, “which will be treated as an adjustment for purposes of calculating adjusted EBITDA and other non-GAAP measures”. Under current law, the settlement is deductible for federal income tax purposes, Post said.
