Dive Brief:
- A group of consumers from Michigan, California, Texas, Florida and New York filed a class-action lawsuit against Vital Farms in federal court, accusing the publicly traded pasture-raised egg company of deceiving the public into buying their eggs at super-premium prices. The plaintiffs say that contrary to its public positioning, Vital Farms uses cruel and unethical practices in raising its chickens. The lawsuit was filed with the assistance of attorneys from the People for the Ethical Treatment of Animals Foundation.
- In a written statement emailed to Food Dive, Vital Farms refuted the claims in the lawsuit and said the company is committed to doing right by its stakeholders — which also include animals. The company said their animal welfare practices are consistently and independently audited by Certified Humane and some retailers. Their organic farms are audited by Oregon Tilth and Bioagricert, as required by the USDA.
- Vital Farms went public last August. At the time, CEO Russell Diez-Canseco said the company could best deliver on its commitment to conscious capitalism if it was answering to the public. In its most recent quarter, net revenue was $58.5 million, up 23% from a year before.
Dive Insight:
In the filing, the plaintiffs accuse Vital Farms of portraying itself as something it is not and using that perception to get people to spend much more on its eggs than they would otherwise.
“The truth about Vital’s unconscionable, inhumane, and horrific chicken practices is anything but humane, ethical, and transparent,” the lawsuit says. “Far from being stewards of farmed animals, and on an ‘ethical mission,’ Vital is engaged in hidden, unethical, and inhumane agricultural practices—that, because of the unequal balance of sophistication and knowledge between Defendants and Plaintiffs, as well as other reasonable consumers, are beyond the latter’s ability to sufficiently investigate.”
The lawsuit specifically states that Vital Farms’ hens have their beaks tipped — which means a portion is cut off in order to minimize how much they can damage themselves and others through pecking. It disputes that hens spend time outdoors to be “pasture raised” because the companies’ practices tend to keep hens inside barns. After hens can no longer lay eggs, they are shipped away, the lawsuit says, often to be used as pet food. And by purchasing hens from hatcheries, the lawsuit says, Vital is supporting the process of chick culling, in which males are killed. The lawsuit also faults Vital Farms for touting its investment in a company that was developing technology to determine chick gender before eggs hatch in marketing appeals, but that Vital Farms has sued for not delivering.
In its written response, Vital Farms said that while PETA and others may believe eating vegan food is the only ethical choice, there are millions of people who enjoy eating eggs.
“We are pleased to offer products that value animals including by providing hens a meaningfully better life than the confinement they would face in the industrialized food system,” Vital Farms’ statement reads.
PETA has used this kind of action before to target a food company that promotes itself as ethical. The group filed a similar lawsuit against Whole Foods in 2015, saying the grocery store’s rating system for “humane meat” was no different than industry standards, and consumers were duped into paying more. In 2016, a federal magistrate judge dismissed the case, ruling that PETA failed to prove anyone was defrauded, and the grocery chain’s marketing claims did not violate any laws.
Regardless of whether a judge looks at Vital Farms’ ethical claims in the same way, the company already faces a lot of outside scrutiny about how it upholds its values. Vital Farms is a Certified B Corporation, a coveted certification that shows the business holds the highest ethical values, considering all stakeholders including suppliers, consumers and the environment in its decision making. It’s also a public benefit corporation, meaning its commitment to the world community at large is enshrined in its charter. Diez-Canseco said last year these certifications are important ways to show the world the company stands behind its mission. And as a publicly traded company, investors support Vital Farms’ mission with their money.
PETA has used other tactics against publicly traded companies. Last year, the group bought shares in Hormel, Sanderson Farms, Kraft Heinz, Tyson, Smithfield and Maple Leaf Foods, Meat + Poultry reported. The group planned to use its position as a shareholder to directly urge the companies to switch to all vegan products. So far, this positioning has not resulted in any changes, though some of these manufacturers have launched new plant-based products since then.
Judging from the wording of the lawsuit, PETA might have taken the litigation route toward Vital Farms because it thinks the company has the money to pay damages. The lawsuit says Vital Farms’ IPO made “several of Vital’s officers and equity sponsors immensely rich” by using what it characterized as false claims to “make an almost unbelievable fortune from a business that is traditionally barely profitable.”
