Albertsons 2015 Annual Report Download - page 24

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Total Independent Business distribution center square footage as of February 28, 2015 was approximately 12 million, of which
18 percent was leased or owned by NAI and operated by the Company, comprised of 7 million used to provide wholesale
distribution to independent retail customers, of which 9 percent was leased, and 5 million used to provide wholesale
distribution to independent retail customers and Company-operated retail stores in the Retail Food segment, of which 30
percent was leased or owned by NAI and operated by the Company. The Company operates a facility in Pennsylvania that is
owned by NAI under an operating agreement that has an initial term of five years, subject to renewal at the Company's option
for two additional five-year terms and certain termination rights for both the Company and NAI. Total Save-A-Lot corporate-
owned store square footage as of February 28, 2015 was approximately 7 million, of which 93 percent was leased. The
Company’s Save-A-Lot operations are supplied by distribution centers with total square footage of 5 million, of which
approximately 28 percent was leased, as of February 28, 2015. Total Retail Food retail store square footage was 11 million, of
which approximately 84 percent was leased, and dedicated distribution center square footage was approximately 1 million
related to an owned facility that provides wholesale distribution to a Retail Food banner, as of February 28, 2015.
In addition to its principal executive offices in Eden Prairie, Minnesota, the Company maintains store support centers in Boise,
Idaho (which is owned by NAI and leased to the Company, but at which the Company has employees and provides services to
NAI and Albertson’s LLC) and St. Louis, Missouri.
The Company has 1 million of square footage of surplus retail stores and distribution centers, 87 percent of which are leased.
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. 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 that 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 that 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 June 7,
2013, the 8th Circuit denied the Petition for Rehearing and remanded the case to the District Court. On October 30, 2013, the
parties attended a District Court ordered mandatory mediation, which was not successful in resolving the matter. On May 21,
2014, a panel of the 8th Circuit (1) reversed the District Court’s decision granting summary judgment in favor of the Company
and (2) affirmed the District Court’s decision denying class certification of a class consisting of all retailers located in the States
of Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio and Wisconsin that purchased wholesale grocery products from the
Company between December 31, 2004 and September 13, 2008, but remanded the case for the District Court to consider
whether to certify a narrower class of purchasers supplied from the Company’s Champaign, Illinois distribution center and
potentially other distribution centers. On August 19, 2014, the 8th Circuit denied the Company’s petition for en banc review by
the 8th Circuit on the reversal of the summary judgment decision and specific issues raised thereunder. The case is now