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Judge: Ralphs 'Exalted Value of Profits' Above Law
November 14, 2006 · Wire Services
The Ralphs grocery chain was formally sentenced under a deal in which it paid $70 million to settle charges it illegally hired locked-out workers during the Southland supermarket strike.
The company's actions show that its ''pervasive and powerful corporate culture exalted the value of profits and win at any costs'' above the law, U.S. District Judge Percy Anderson said in imposing the sentence.
The judge said that in an effort to gain a tactical advantage in the labor dispute, Ralphs harmed its workers, its union, and the benefit funds that did not receive contributions when union employees worked under false names.
''... Ralphs' conduct not only eroded public confidence in the collective bargaining process, it tarnished Ralphs' reputation,'' Anderson said.
Under the deal, Ralphs entered a guilty plea in July to five federal counts, including conspiracy, concealment of facts from an employee benefit plan and identity fraud.
The company also agreed to cooperate with prosecutors in an ongoing investigation that could lead to charges being brought against individuals in its management.
One of the prosecutors on the case, Assistant U.S. Attorney Adam Braun, said outside court that the government has made ''substantial progress'' in that investigation.
''(Ralphs) has certainly made a number of witnesses available to us in an expedited manner, as we greatly appreciate,'' Braun said.
The prosecutor added that he is grateful that the company will have to pay what he called a ''significant fine,'' as well as restitution that will be distributed to its workers.
Under the sentence, $50 million will go to some 17,000 Ralphs grocery clerks and their unions, and the company will pay a $20 million fine.
The indictment in the case stemmed from the strike and lockout that began in October 2003 and lasted until March 2004, making it the longest and largest supermarket labor dispute ever in the United States.
The government alleged Ralphs violated federal laws by secretly rehiring nearly 1,000 locked-out workers to help keep its stores open during the labor dispute, which also involved Vons and Albertsons.
Ralphs' parent, Cincinnati-based Kroger Co., admitted some store managers falsified records to rehire workers, but denied their actions were sanctioned by the company. The company estimated that fewer than 300 of the temporary workers who filled in during the strike were locked-out employees
.Ralphs' attorney, Lawrence Barcella, said in court that the company ''did and does accept full responsibility for the acts of its employees.''
In addition to paying the $70 million, Ralphs is implementing policies and procedures to ensure the situation does not repeat itself, Barcella said.
Barcella noted the ongoing investigation, and said the U.S. Attorney's Office ''will make any assessment of that that it feels is necessary based on the evidence.''
When Anderson approved the deal last month, he cited the cooperation agreement, saying it increases the chances that individuals may be held accountable for the illegal rehiring. The judge also said the deal ''imposes meaningful financial punishment on Ralphs.''
The company must also spend three years on probation, during which time Anderson said he will impose additional economic sanctions if the company is not holding up its end of the arrangement, which includes the policy changes.