A federal grand jury has brought an indictment against Kroger Co.’s Ralphs Grocery Co. division for allegedly hiring replacement workers illegally during the 2003-04 labor strike in California.
Ralphs could face more than $100 million in fines and five years of corporate probation. Arraignment will be set for early 2006.
Earlier this year, Kroger admitted that some store managers let striking workers use false names and/or Social Security numbers to work during the nearly five-month strike. Ralphs disciplined the managers, and Kroger made contributions to employee benefits plans. Kroger cooperated with the investigation led by the U.S. Attorney’s Office for the Central District of California.
But Ralphs disputes the AG’s allegation that its management approved or overlooked the fraudulent rehiring in order to prolong the strike.
“Ralphs hired more than 50,000 temporary workers during the strike and we believe less than 1%, or about 200 of them, were locked-out employees who were rehired unlawfully. We regret that misconduct, but it had no effect whatsoever on the duration or outcome of the labor dispute,” said Kroger Senior VP Paul Heldman in a statement. “Although we believe many of these managers acted for humanitarian or personal reasons, their actions nonetheless were wrong and contrary to explicit company policy.”
Ralphs and Albertsons locked out union workers after the United Food & Commercial Workers Union struck their competitor, Vons (owned by Safeway Co.), in October 2003 when the union’s contract with all three grocery companies expired, and negotiations over health benefits stalled. The bitter strike involved 65,000 to 70,000 workers and ran until March, 2004— longest grocery workers’ strike in the U.S. (March 2, 2004 Xtra)
The indictment against Ralphs carries 53 counts, including allegations that Ralphs used false Social Security numbers and stole identities; falsified government forms; cashed the paychecks it issued under false names; obstructed a 2004 federal grand jury investigation; and lied to the National Labor Relations Board during its 2004 investigation (which could have cost Ralphs $50 million to $100 million in back pay). The NLRB dismissed the claims against Ralphs; that decision is now under appeal.
Under the current indictment, Ralphs faces fines of more than $100 million— the amount it gained via criminal conduct— up to five years of corporate probation, and be required to pay restitution.
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