Ralphs Expects Plea Deal on Hiring

The Ralphs grocery chain plans to plead guilty to charges that it illegally rehired hundreds of locked-out workers during the bitter Southern California supermarket dispute more than two years ago, the company’s parent said Thursday.

Cincinnati-based Kroger Co. said in a regulatory filing that Ralphs “expects to enter into an agreement that will include a plea of guilty to some of the charges” in a 53-count indictment handed up in December by a federal grand jury in Los Angeles.

There were indications Thursday that an agreement could be announced as early as today.

In addition to resolving the criminal charges against Ralphs, a settlement would end the grocery chain’s case at the National Labor Relations Board, the company said in the filing.

A Kroger spokeswoman declined to comment beyond the filing with the Securities and Exchange Commission. A spokesman for the U.S. attorney’s office also declined to comment.

Kroger didn’t reveal how much Ralphs would pay as a result of the expected settlement. In December, prosecutors said the chain could face fines of more than $100 million if convicted on all counts, as well as back pay and restitution for Ralphs workers and their union.

When it released its first-quarter results last week, Kroger said it was bolstering its accounting reserve estimating the costs of its exposure to the federal charges. The addition to the reserve reduced earnings by about 3 cents a share, or roughly $20 million. Kroger didn’t say how much was in the reserve before it was increased.

The indictment stemmed from a strike and lockout that roiled the local supermarket industry from October 2003 until the dispute was settled almost five months later.

All three of the region’s major grocery chains -- Ralphs, Vons and Albertsons -- were involved in the dispute, which affected more than 59,000 workers at 852 stores in Southern and Central California.

The government alleged that Ralphs violated federal law by secretly rehiring about 1,000 locked-out workers to help keep stores open during the dispute. The company used fake names and Social Security numbers to conceal the effort with the “tacit approval, if not encouragement” of Ralphs senior management, the indictment alleged.

Kroger has admitted that some store managers falsified records to rehire workers but has denied that the actions were sanctioned by the company.

The United Food and Commercial Workers union, which represented the grocery workers, had filed a complaint with the labor board during the dispute alleging that Ralphs had violated federal labor laws. The complaint was dismissed by the agency’s Los Angeles office, but the union is appealing the October 2004 dismissal.

A spokesman for the union’s Local 324 in Orange County declined to comment on Kroger’s filing. The labor board didn’t return calls seeking comment.

Kroger said it could “provide no assurance” that an agreement to settle the criminal charges and the regulatory complaint would be successfully concluded, and noted that if an agreement was reached, it would require court approval.

The criminal case was due to go to trial Aug. 15, and one industry expert said the supermarket chain might have decided not to risk the fallout from a long legal battle.

“What they’re going to do is to try to avoid this thing getting into court and getting long and drawn out,” said George Whalin, president of Retail Management Consultants.

Whalin added that a guilty plea would have only “a minimal impact” on Ralphs’ business.

At this point, he said, the labor dispute “has been settled, the stores are open and doing business, and life goes on.”

Ralphs and the other chains still face a state antitrust lawsuit over a pact to financially support one another during the dispute.