Supermarket giant Albertsons has filed a lawsuit against Haggen, accusing the grocer of fraud in failing to pay more than $36 million as part of the sale of 146 grocery stores.
Haggen, a Pacific Northwest chain, bought those stores from Albertsons and Safeway, which were forced by the Federal Trade Commission to sell them as part of a merger. Among the stores are 83 in California, mostly in the south.
According to the lawsuit filed in federal court in California, Albertsons says that Haggen refused to pay for $36 million of inventory at 32 stores it acquired. Nearly $5 million in inventory at an additional six stores will be past due Tuesday -- bringing the total to more than $41 million, the complaint said.
FOR THE RECORD:
Albertsons lawsuit: In the July 21 Business section, an article about Albertsons' filing of a fraud lawsuit against Haggen in connection with the sale of 146 grocery stores said that the suit was filed in federal court in California. It was filed in Superior Court.
Haggen waited until deals closed on all 146 stores before notifying Albertsons that it would not pay for the inventory, the lawsuit alleged. The reasons -- related to unspecified issues that Haggen contends occurred during the acquisition process -- are "baseless," the lawsuit said.
"Haggen's acts were fraudulent in nature and done with malice and a willful disregard for Albertsons' rights," the lawsuit said.
In a statement, Haggen said it notified Albertsons in June of Albertsons' violations under the purchase agreement and possible further violations related to requirements of the Federal Trade Commission and various state attorneys general. Haggen declined to disclose those alleged violations.
By filing a lawsuit, Haggen said Albertsons appears to be trying to avoid "addressing its wrongful conduct."
Haggen "had hoped that the parties could amicably address these issues," the company said. "Haggen will mount a vigorous defense and aggressively prosecute its counterclaims."
Haggen has had to cut staff hours and lay off workers as it struggles to make headway in the competitive Southern California market.
Many shoppers have complained that Haggen's prices are higher than the supermarket it replaced. Analysts said nearby grocery stores are also rolling out discounts in a fierce battle to win over customers.
Last week, Haggen acknowledged in a statement that it is facing "unprecedented" competition in the Southwest.
Follow Shan Li on Twitter @ByShanLi