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Ralphs to Pay $70 Million to Settle Strike Charges

Monday, October 16, 2006

LOS ANGELES, October 16, 2006 (KABC) -- Ralphs Grocery Co. will pay $70 million under a deal OK'd in federal court Monday to settle charges it illegally hired hundreds of workers under fake names during a 2003-2004 grocery strike and lockout.

In accepting the deal, U.S. District Judge Percy Anderson harangued the supermarket chain for its actions.

"Ralphs subverted a process designed to ensure labor disputes are resolved fairly and equitably," Anderson said. "The plea agreement imposes meaningful financial punishment on Ralphs."

In July, as part of an agreement with federal prosecutors, the chain pleaded guilty to five of 53 counts in an indictment returned last year. The counts covered allegations of conspiracy, identity fraud, false representation of Social Security numbers, concealing facts relating to employee benefit plans and causing employees to falsely represent information to government agencies.

Formal sentencing was scheduled for November.

"It's a terrific outcome," said Assistant U.S. Attorney Adam Braun. "The company admitted and has been convicted for a wide rage of criminal offenses."

Ralphs spokesman Terry O'Neil said the company was "pleased" with the plea agreement.

"We are taking responsibility for what happened, and this step moves us closer to closure on the matter," he said.

Under the terms of its deal with prosecutors, Ralphs will pay $20 million in criminal fines and $50 million into a restitution fund for Ralphs employees who were locked out during the labor dispute. Local union chapters will also be able to collect from the fund if they paid lockout benefits.

The chain will be placed on three years probation and, in a coup for prosecutors, will cooperate with the government as it pursues criminal cases against individuals in the company.

During the nearly five-month labor dispute, some 19,000 Ralphs workers were kept from their jobs at Southern California stores starting in October 2003. The company has estimated that fewer than 300 people worked illegally, through prosecutors put the number a closer to 1,000.

Appearing in court Monday to give the judge their take on the deal, union officials were supportive but some workers appeared conflicted.

Jackie Gitmed backs the agreement - even though she guesses it will help her recoup only $3,000 of the $15,000 she lost when Ralphs locked her from her cashier job at one its San Fernando Valley stores.

"I really think Ralphs got off easy," she said.

At the same time, she's hoping the agreement will strengthen workers' hand next year when it comes time to negotiate a new contract.

Said Gitmed, addressing Ralphs' lawyers in court: "I want you guys to play on the up and up."

Ralphs - owned by Cincinnati-based Kroger Co., - locked out employees after Southern California grocery workers voted to strike against Safeway Inc.'s Vons and Pavilions chains.

At the time, Ralphs, Safeway and Albertsons Inc. were negotiating with the workers' union. Ralphs brought in replacement workers to keep its stores running. In all, about 59,000 workers were idled at 859 sites.

The strike cost store owners more than $2 billion by some estimates and resulted in steep customer defections.

Kroger stock closed up less than 1 percent at $22.09 a share Monday.

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