Albertsons 2013 Annual Report Download - page 94

future purchase obligations. The Company is a party to a variety of contractual agreements under which the
Company may be obligated to indemnify the other party for certain matters, which indemnities may be secured
by operation of law or otherwise, in the ordinary course of business. These contracts primarily relate to the
Company’s commercial contracts, operating leases and other real estate contracts, financial agreements,
agreements to provide services to the Company and agreements to indemnify officers, directors and employees in
the performance of their work. While the Company’s aggregate indemnification obligation could result in a
material liability, the Company is not aware of any matters that are expected to result in a material liability.
Refer to Note 16—Subsequent Events in the accompanying Notes to Consolidated Financial Statements for
information regarding the Company’s guarantees of certain debt obligations of American Stores Company, a
subsidiary NAI, subsequent to February 23, 2013.
Legal Proceedings
The Company is subject to various lawsuits, claims and other legal matters that arise in the ordinary course of
conducting business. In the opinion of management, based upon currently-available facts, it is remote that the
ultimate outcome of any lawsuits, claims and other proceedings will have a material adverse effect on the overall
results of the Company’s operations, its cash flows or its financial position.
In September 2008, a class action complaint was filed against the Company, as well as International Outsourcing
Services, LLC (“IOS”), Inmar, Inc., Carolina Manufacturer’s Services, Inc., Carolina Coupon Clearing, Inc. and
Carolina Services, in the United States District Court in the Eastern District of Wisconsin. The plaintiffs in the
case are a consumer goods manufacturer, a grocery co-operative and a retailer marketing services company who
allege on behalf of a purported class that the Company and the other defendants (i) conspired to restrict the
markets for coupon processing services under the Sherman Act and (ii) were part of an illegal enterprise to
defraud the plaintiffs under the Federal Racketeer Influenced and Corrupt Organizations Act. The plaintiffs seek
monetary damages, attorneys’ fees and injunctive relief. The Company intends to vigorously defend this lawsuit,
however all proceedings have been stayed in the case pending the result of the criminal prosecution of certain
former officers of IOS.
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 each
other. Plaintiffs are seeking monetary damages, injunctive relief and attorneys’ fees. On July 5, 2011, the District
Court granted the Company’s Motion to Compel Arbitration for those plaintiffs with arbitration agreements and
plaintiffs appealed. On July 16, 2012, the District Court denied plaintiffs’ Motion for Class Certification and on
January 11, 2013, the District Court granted the Company’s Motion for Summary Judgment and dismissed the
case regarding the non-arbitration plaintiffs. Plaintiffs have appealed these decisions. On February 12, 2013, the
8th Circuit reversed the District Court decision requiring plaintiffs with arbitration agreements to arbitrate and
the Company filed a Petition with the 8th Circuit for an En Banc Rehearing.
On October 24, 2012, the Office of Self-Insurance Plans, a program within the director’s office of the California
Department of Industrial Relations (the “DIR”), notified the Company that additional security was required to be
posted in connection with the Company’s California self-insured workers’ compensation obligations of New
Albertsons and certain other subsidiaries pursuant to applicable regulations. The notice from the DIR stated that
the additional security was required as a result of an increase in estimated future liabilities, as determined by the
92