CAL-MAINE FOODS INCCALM
CAL-MAINE FOODS INC Commitments Disclosure
Note 16 - Commitments and Contingencies
Civil Investigative Demand
In March 2025, the Company received a Civil Investigative Demand (“CID”) from the Department of Justice (“DOJ”) in
connection with an antitrust investigation to determine whether there is, has been or may be a violation of the antitrust laws by
anticompetitive conduct by and among egg producers. The Company is complying with the CID and cooperating with the
investigation. Management cannot predict the eventual scope, duration or outcome of these investigations and is unable to
estimate the amount or range of potential losses, if any, at this time.
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
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 September 29, 2023, the
Supreme Court of Texas denied the Company’s Petition for Review and remanded to the trial court for further proceedings. The
district court entered an order scheduling pre-trial proceedings and a pre-trial conference for August 11, 2025. On November 30,
2024, the State filed an amended petition, primarily to address a procedural deficiency that required the State to generally plead
it was seeking monetary relief over $
1.0
proceedings are progressing in accordance with the court’s schedule. Management believes the risk of material loss related to this
matter to be remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
On September 25, 2008, the Company was named as one of several defendants in numerous antitrust cases involving the U.S.
shell egg industry. The Company settled all of these cases, except for the claims of certain plaintiffs who sought substantial
damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These remaining plaintiffs are Kraft Food
Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and, until a subsequent settlement was
reached as described below, The Kellogg Company.
On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in the
United States District Court for the Eastern District of Pennsylvania, In re Processed Egg Products Antitrust Litigation, MDL No.
2002, to the United States District Court for the Northern District of Illinois, Kraft Foods Global, Inc. et al. v. United Egg
Producers, Inc. et al., Case No. 1:11-cv-8808, for trial. The Egg Products Plaintiffs alleged that the Company and other defendants
violated Section 1 of the Sherman Act, 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 attacked certain features of the
United Egg Producers animal-welfare guidelines and program used by the Company and many other egg producers.
On October 24, 2019, the Company entered into a confidential settlement agreement with The Kellogg Company dismissing all
claims against the Company for an amount that did not have a material impact on the Company’s financial condition or results
of operations. On November 11, 2019, a stipulation for dismissal was filed with the court, and on March 28, 2022, the court
dismissed the Company with prejudice.
The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the Egg Products
Plaintiffs $
17.8
defendants, jointly and severally, totaling $
43.6
for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment. On December 13, 2024, the court
granted defendants’ November 20, 2024 motion to stay enforcement of the judgment and entered an agreed order requiring the
defendants to post security during post-judgment proceedings and appeal, and stayed proceedings to enforce the judgment until
the disposition of the post-judgment motions and ultimate appeals. On December 17, 2024, the Company posted a bond in the
approximate amount of $
23.9
court’s decision. Another defendant posted a bond for the remaining amount. The Company intends to continue to vigorously
defend the claims asserted by the Egg Products Plaintiffs.
If the jury’s decision is ultimately upheld, the Company would be jointly and severally liable with other defendants for treble
damages, or $
43.6
Plaintiffs’ reasonable attorneys’ fees. During our second fiscal quarter of 2024, we recorded an accrued expense of $
19.6
in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Income and classified
as other noncurrent liabilities in the Company’s Condensed Consolidated Balance Sheets. Although less than the bond posted by
the Company, the accrual represents our estimate of the Company’s proportional share of the reasonably possible ultimate
damages award, excluding the Egg Product Plaintiffs’ attorneys’ fees that we believe would be approximately offset by the credits
noted above. We have entered into a judgment allocation and joint defense agreement with the other defendants remaining in the
case. Our accrual may change in the future to the extent we are successful in further proceedings in the litigation.
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. On June 12, 2023, the court ordered the parties to mediate before
retired Tenth Circuit Chief Judge Deanell Reece Tacha, but the mediation was unsuccessful. On June 26, 2024, the district court
denied defendants’ motion to dismiss the case. On September 13, 2024, a status hearing was held and the court scheduled an
evidentiary hearing for December 3, 2024, to determine whether any legal remedy is available based on the now 14 year old
record and changed circumstances of the Illinois River watershed. On June 17, 2025, the court entered an opinion and order that
found that the State satisfied its burden to show that conditions in the Illinois River watershed have not materially changed since
the original trial and the case in not moot. The court instructed the parties to submit proposed forms of final judgment. 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 14 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 litigation with the State of Oklahoma, 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 22, 2025 | Showing above |
| 2024 | Jul 23, 2024 | |
| 2023 | Jul 25, 2023 | |
| 2022 | Jul 19, 2022 | |
| 2021 | Jul 19, 2021 | |
| 2020 | Jul 20, 2020 | |
| 2019 | Jul 22, 2019 | |
| 2018 | Jul 23, 2018 | |
| 2017 | Jul 24, 2017 | |
| 2016 | Jul 18, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.