Lockyer to Sue Grocery Chains
California’s attorney general said Friday that he planned to sue the grocery chains involved in the state’s supermarket strike and lockout, alleging that their controversial mutual-aid pact violates federal antitrust laws.
The pact, whereby the stores agreed to share an undisclosed amount of cash to help each of them during the dispute, “hurts consumers by discouraging competitive pricing” between the chains, Atty. Gen. Bill Lockyer said in a statement.
The companies involved in the bitter, 3 1/2-month-old dispute -- Safeway Inc., which owns Vons and Pavilions; Kroger Co., parent of Ralphs; and Albertsons Inc. -- issued a joint statement denying that the pact had “caused prices to rise and consumers to be harmed.” The agreement is lawful, the statement said, “and we look forward to presenting our case in court.”
The three employers are bargaining as a single unit with the United Food and Commercial Workers union. They formed the mutual-aid pact as part of their collective effort but have kept the agreement shrouded in secrecy.
The suit, which Lockyer plans to file Monday in U.S. District Court in Los Angeles, seeks an injunction to bar the stores from implementing their agreement.
Lockyer, who has shown personal support for the UFCW in the dispute, subpoenaed the stores to give him a copy of the pact last month. If he successfully blocks the grocers from sharing funds, it would remove one of the financial buffers that has helped the companies endure the strike and lockout.
Lockyer’s office provided a copy of the lawsuit but not the pact. The stores have refused to release terms of the agreement but have made statements to indicate that at least tens of millions of dollars could be involved, although they’ve also said that no money would change hands until the labor dispute was over. So far, the chains have racked up an estimated $1 billion in combined lost sales due to the strike.
Analysts said it’s unlikely that Lockyer’s action would kick-start the stalled contract negotiations between the stores and the UFCW because the sides were so far apart on such major items as healthcare costs and wages for employees.
The parties haven’t held formal talks in more than a month, and none were scheduled as of Friday.
“I don’t see this being the key to unlock a settlement,” said Norman Jenkins, a labor specialist at law firm Jenkens & Gilchrist in New York.
Jonathan Ziegler, a principal at PUPS Investment Management, a Santa Barbara firm that focuses on the retail sector, agreed, saying that the grocery stores “are pretty dug in” on their demands and would not be derailed by Lockyer’s lawsuit.
The UFCW said the suit was a validation that the chains were waging an unfair fight. “We’re gratified that the attorney general agrees with what we believe is clearly an illegal scheme,” said Ellen Anreder, a spokeswoman for five of the seven UFCW locals involved in the dispute.
Lockyer said in his statement that the strike and lockout had “inflicted severe financial harm on thousands of workers and their families. They deserve, at a minimum, compliance with the law by the grocers.”
Lockyer has joined the UFCW’s picket lines several times and plans to attend its next rally today in Inglewood, his spokesman said. But Lockyer’s personal feelings and regulatory role remain separate, spokesman Tom Dresslar said.
“He’s been a strong supporter of labor and workers’ rights his whole career,” Dresslar said. “That position in support of the workers in this strike doesn’t change the law, doesn’t change the language of the revenue-sharing agreement, and he is obligated to enforce the law.”
The UFCW struck Vons and Pavilions on Oct. 11, and Ralphs and Albertsons locked out their union workers the next day. About 70,000 workers were idled at 852 stores in Southern and Central California.
Ralphs, Albertsons and Safeway agreed to the mutual-aid package Aug. 5, according to the lawsuit. The stores agreed “to share revenues and costs with each other” in the event of a strike, based on an unspecified formula that “essentially freezes the pre-strike market share” of each chain, the suit says.
The pact kicked in early in the strike, when the UFCW removed its pickets from Ralphs. That sent many shoppers to Ralphs, a windfall that Ralphs would share with Safeway and Albertsons under the agreement.
The mutual-aid agreement also includes another Kroger division, Food 4 Less, even though that chain isn’t involved in the labor dispute, the lawsuit says. That’s one reason the pact is illegal, the suit alleges.
The suit also alleges that the pact is illegal because it would extend for at least two weeks after the strike ends.
--- UNPUBLISHED NOTE ---
On February 12, 2004 the United Food and Commercial Workers Union, which had stated repeatedly that 70,000 workers were involved in the supermarket labor dispute in Central and Southern California, said that the number of people on strike or locked out was actually 59,000. A union spokeswoman, Barbara Maynard, said that 70,000 UFCW members were, in fact, covered by the labor contract with supermarkets that expired last year. But 11,000 of them worked for Stater Bros. Holdings Inc., Arden Group Inc.’s Gelson’s and other regional grocery companies and were still on the job. (See: “UFCW Revises Number of Workers in Labor Dispute,” Los Angeles Times, February 13, 2004, Business C-11)
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