Commitments and Contingencies

6 Months Ended

Nov. 26, 2022

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 9 - Commitments and Contingencies

Financial Instruments

The Company maintained standby letters of credit (“LOCs”) totaling $

4.1

 million at November 26, 2022, which were issued

under the Company's senior secured revolving credit facility. The outstanding LOCs are for the benefit of certain insurance

companies and are not recorded as a liability on the consolidated balance sheets.

LEGAL PROCEEDINGS

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 filed a petition for review to the Supreme Court of Texas appealing

the First District court’s decision. On November 30, 2022, the State of Texas waived its response to defendant’s petition for

review. The court has not issued a ruling. 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 September 6, 2022, the plaintiffs’ filed their opposition to the motion to dismiss and the Company

and other defendants filed their reply on September 13, 2022. On December 7, 2022, 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 December 21, 2022, the plaintiffs filed Objections to the Magistrate’s Report and

Recommendation, but the court has not issued a ruling. 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

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.

On December 8, 2022, the court held a status hearing. The parties subsequently submitted an updated proposed pre-trial

schedule and the Court has set the trial 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. and affiliates, Cobb-Vantress, Inc., Cargill, Inc. and its affiliate, George’s,

Inc. and its affiliate, Peterson Farms, Inc. and Simmons Foods, Inc. The State of Oklahoma claims that through the disposal of

chicken litter the defendants have polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma.

The complaint seeks injunctive relief and monetary damages, but the claim for monetary damages has been dismissed by the

court. Cal-Maine Foods, Inc. discontinued operations in the watershed. Accordingly, we do not anticipate that Cal-Maine

Foods, Inc. will be materially affected by the request for injunctive relief unless the court orders substantial affirmative

remediation. 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.

The trial in the case began in September 2009 and concluded in February 2010. The case was tried without a jury, and the court

has not yet issued its ruling. Management believes the risk of material loss related to this matter to be remote.

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.