Albertsons 2011 Annual Report Download - page 67

In December 2008, a class action complaint was filed in the United States District Court for the Western
District of Wisconsin against the Company alleging that a 2003 transaction between the Company and C&S
Wholesale Grocers, Inc. (“C&S”) was a conspiracy to restrain trade and allocate markets. In the 2003
transaction, the Company purchased certain assets of the Fleming Corporation as part of Fleming
Corporation’s bankruptcy proceedings and sold certain assets of the Company to C&S which were located in
New England. Since December 2008, three other retailers have filed similar complaints in other jurisdictions.
The cases have been consolidated and are proceeding in the United States District Court for the District of
Minnesota. The complaints allege that the conspiracy was concealed and continued through the use of non-
compete and non-solicitation agreements and the closing down of the distribution facilities that the Company
and C&S purchased from the other. Plaintiffs are seeking monetary damages, injunctive relief and attorneys’
fees. The Company is vigorously defending these lawsuits. Separately from these civil lawsuits, on
September 14, 2009, the United States Federal Trade Commission (“FTC”) issued a subpoena to the Company
requesting documents related to the C&S transaction as part of the FTC’s investigation into whether the
Company and C&S engaged in unfair methods of competition. The Company cooperated with the FTC. On
March 18, 2011, the FTC notified the Company that it has determined that no additional action is warranted
by the FTC and that it has closed its investigation.
On January 7, 2010, the Company received a subpoena from the Office of Inspector General for the
Department of Health and Human Services’ Milwaukee Field Office in connection with an investigation of
possible false or otherwise improper claims for payment under the Medicaid program. The subpoena requests
retail pharmacy claims data for “dual eligible” customers (i.e., customers with both Medicaid and private
insurance coverage), information concerning the Company’s retail pharmacy claims processing systems, copies
of pharmacy payor contracts and other documents and records. On February 11, 2011, a complaint was filed
by the United States Government and the States of California and Minnesota to intervene in a previously
sealed qui tam lawsuit in the United States District Court for the Western District of Wisconsin. The complaint
alleges that the Company improperly billed Medicaid claims with dual eligibility by charging Medicaid more
than the co-pay allowed by the primary payer in seven states. 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.
The Company is also involved in routine legal proceedings incidental to its operations. Some of these routine
proceedings involve class allegations, many of which are ultimately dismissed. Management does not expect
that the ultimate resolution of these legal proceedings will have a material adverse effect on the Company’s
financial condition, results of operations or cash flows.
The statements above reflect management’s current expectations based on the information presently available
to the Company, however, predicting the outcomes of claims and litigation and estimating related costs and
exposures involves substantial uncertainties that could cause actual outcomes, costs and exposures to vary
materially from current expectations. In addition, the Company regularly monitors its exposure to the loss
contingencies associated with these matters and may from time to time change its predictions with respect to
outcomes and its estimates with respect to related costs and exposures and believes recorded reserves are
adequate. It is possible, although management believes it is remote, that material differences in actual
outcomes, costs and exposures relative to current predictions and estimates, or material changes in such
predictions or estimates, could have a material adverse effect on the Company’s financial condition, results of
operations or cash flows.
NOTE 14—SEGMENT INFORMATION
Refer to the Consolidated Segment Financial Information for financial information concerning the Company’s
operations by reportable segment.
The Company’s operating segments reflect the manner in which the business is managed and how the
Company allocates resources and assesses performance internally. The Company’s chief operating decision
maker is the Chief Executive Officer.
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