A federal judge on Monday approved Ralphs grocery chain’s guilty plea to felony charges that it illegally rehired locked-out workers during the Southern California supermarket labor dispute almost three years ago.
U.S. District Judge Percy Anderson said the company’s pledge to cooperate in a continuing investigation was a key factor in his decision to approve the agreement. The government is investigating the actions of “a number of Ralphs employees,” the judge said, and the plea deal doesn’t restrict the probe.
Ralphs has agreed to waive attorney-client privilege, giving investigators access to interviews and memos from the company’s internal investigation of the scheme, Assistant U.S. Atty. Adam Braun said.
Braun declined to comment on how high up the company’s chain of command the probe could lead.
According to the plea agreement, “Ralphs’ vice president of human resources, at least one group vice president and a number of zone managers encouraged, condoned, permitted or directed the rehiring of locked-out employees under false names and Social Security numbers during the lockout.”
The executives are not named in the documents, and neither the government nor the company would identify them.
Under the agreement, Ralphs will pay $20 million in fines and $50 million into a fund to reimburse workers and their union.
A Ralphs spokesman declined Monday to comment on the investigation.
The government has said it won’t prosecute rank-and-file workers who were illegally hired as long as they cooperate with investigators.
The charges against the supermarket chain stemmed from the company’s secret rehiring of about 1,000 locked-out workers during the dispute. Ralphs admitted using fake names and Social Security numbers to hide the identities of the workers. The dispute lasted from October 2003 until February 2004 and involved Ralphs and rival Southern California supermarket chains Vons, owned by Safeway Inc., and Albertsons, now owned by Supervalu Inc.
The three chains are gearing up for talks on a contract to replace the current one, which expires in March.
Ralphs’ parent, Cincinnati-based Kroger Co., has admitted that some store managers falsified records to rehire workers, but it has contended that the practice wasn’t as widespread as the government alleged and wasn’t condoned by upper management.
Anderson signed off on the plea bargain over the objections of a handful of Ralphs workers who appeared in court to protest that their employer was getting off too lightly.
“This plea agreement is neither fair nor equitable,” said Michael Ward, a 20-year veteran of Ralphs and Alpha Beta, which merged with Ralphs in the mid-1990s. “They are being allowed to settle for dimes on the dollar.”
Other employees spoke in favor of the agreement.
“Would I like more? Of course I would. Nothing’s perfect,” said Faye Gibson, a 30-year Ralphs employee. “It’s been a long time. We really need a sense of closure.”
Anderson approved the appointment of a so-called special master to oversee the $50-million restitution fund. Most of the money from the fund will be paid to Ralphs employees who were locked out during the strike and apply for restitution.
Officials at the United Food and Commercial Workers, which represents the supermarket workers, estimated that some could receive as much as $3,000 from the settlement.
Money from the fund will also be used to reimburse the union for benefits paid to workers during the dispute.
In addition to paying the fine and restitution, the deal calls for Ralphs to be placed on three years’ probation and establish court-supervised training programs for its workers.
Although he approved the plea agreement, Anderson postponed formal sentencing until Nov. 1.
Ralphs agreed June 30 to plead guilty to five felony charges included in a 53-count grand jury indictment returned against the company in December. The grocery chain pleaded guilty to violating federal laws regarding identity fraud, pension reporting and Social Security and Internal Revenue Service record keeping, as well as one count of conspiracy.
Shares of Kroger rose 14 cents to $22.09.