Albertsons 2008 Annual Report Download - page 22

ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various lawsuits, claims and other legal matters that arise in the ordinary course of
conducting business, including certain matters of the Acquired Operations, none of which, in management’s
opinion, is expected to have a material adverse impact on the Company’s financial condition, results of
operations or cash flows. Accruals for certain pre-acquisition legal contingencies related to the Acquired
Operations were included in liabilities assumed due to the Acquisition.
In April 2000, a class action complaint was filed against Albertsons, as well as American Stores Company,
American Drug Stores, Inc., Sav-on Drug Stores, Inc. and Lucky Stores, Inc., wholly-owned subsidiaries of
Albertsons, in the Superior Court for the County of Los Angeles, California (Gardner, et al. v. American Stores
Company, et al.) by assistant managers seeking recovery of overtime based on the plaintiffs’ allegation that they
were improperly classified as exempt under California law. In May 2001, the Court certified a class with respect
to Sav-on Drug Stores assistant managers. A case with very similar claims, involving the Sav-on Drug Stores
assistant managers and operating managers, was also filed in April 2000 against Sav-on Drug Stores in the
Superior Court for the County of Los Angeles, California (Rocher, Dahlin, et al. v. Sav-on Drug Stores, Inc.),
and was certified as a class action in June 2001 with respect to assistant managers and operating managers. The
two cases were consolidated in December 2001. New Albertsons was added as a named defendant in November
2006. Plaintiffs seek overtime wages, meal and rest break penalties, other statutory penalties, punitive damages,
interest, injunctive relief and the attorneys’ fees and costs. The Company is vigorously defending this lawsuit.
Although this lawsuit is subject to the uncertainties inherent in the litigation process, based on the information
presently available to the Company, management does not expect that the ultimate resolution of this lawsuit will
have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
On October 13, 2000, a complaint was filed in Los Angeles County Superior Court (Joanne Kay Ward et al. v.
Albertson’s, Inc. et al.) alleging that Albertsons, Lucky Stores and Sav-on Drug Stores provided terminating
employees their final paychecks in an untimely manner. The lawsuit seeks statutory penalties. On January 4,
2005, the case was certified as a class action. In December 2007, the parties agreed to settle this matter, subject to
court approval. Based on the terms of settlement agreed to by the parties, the Company does not expect that the
ultimate resolution of this lawsuit will have a material adverse effect on the Company’s financial condition,
results of operations or cash flows.
On February 2, 2004, the Attorney General for the State of California filed an action in the United States District
Court Central District of California (California, ex rel Lockyer v. Safeway, Inc. dba Vons, a Safeway Company,
Albertson’s, Inc. and Ralphs Grocery Company, a division of The Kroger Co.) claiming that certain provisions of
the agreements (the “Labor Dispute Agreements”) between Albertsons, The Kroger Co. and Safeway Inc. (the
“Retailers”), which provided for “lock-outs” and revenue sharing in the event that any Retailer was struck at any
or all of its Southern California facilities during the 2003-2004 labor dispute in Southern California when the
other Retailers were not and contained a provision designed to prevent the union from placing disproportionate
pressure on one or more Retailer(s) by picketing such Retailer(s) but not the other Retailer(s) during the labor
dispute violate Section 1 of the Sherman Act. The lawsuit seeks declarative, injunctive and other legal and
equitable relief. On March 26, 2008, the parties filed a Stipulation and Request to Enter Final Judgment and, on
March 27, 2008, the Court entered Final Judgment. Under the Stipulation and Final Judgment, the Attorney
General abandoned any right to trial on its “per se” or “quick look” theories of liability under Section 1 of the
Sherman Act but preserved the right to appeal the Court’s summary judgment determination on this issue. The
Court also dismissed with prejudice the Attorney General’s claim that the revenue sharing provisions of the
Labor Dispute Agreements violated Section 1 of the Sherman Act based on a full “rule of reason analysis” and
the Attorney General abandoned any right to appeal this determination. Also under the Stipulation and Final
Judgment, the Court found that the non-statutory labor exemption to the antitrust laws does not immunize the
Labor Dispute Agreements from the Attorney General’s claims in this case, and the defendants reserve the right
to appeal this determination. Although this lawsuit is subject to uncertainties inherent in the litigation process,
based on the information presently available to the Company, management does not expect that any further
appellate resolution of this action will have a material adverse effect on the Company’s financial condition,
results of operations or cash flows.
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