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Things Have Gone Very Badly for Haggen and They’re Going to Court

October 28, 2015

Posted in Business Litigation, Corporate Law

photo - Haggen v. AlbertsonsSupermarkets Haggen and Albertsons are involved in multiple lawsuits that could be worth a billion dollars. The two have filed lawsuits against each other after Haggen purchased 146 stores from Albertsons, 83 of them in California.

In August Haggen, based in Bellingham, Washington, sued Albertsons in federal court in Delaware because of its alleged “systematic efforts” to eliminate Haggen as a competitor in five states, including California, according to the Los Angeles Times. The lawsuit’s allegations include,

  • Albertsons engaged in its efforts after it sold the stores to Haggen. The sale was forced by the Federal Trade Commission as part of an agreement to a merger by Albertsons and Safeway.
  • Albertsons made “false representations” about its commitment to help transform the stores sold to Haggen into competitors.
  • These representations influenced Haggen’s decision to purchase the stores and its strategies going forward.
  • Albertsons alleged actions include premeditated acts of unfair and anti-competitive conduct that were done to avoid Albertsons’ obligations under federal antitrust laws, Federal Trade Commission orders and contractual commitments to Haggen.
  • Such actions include illegally accessing Haggen’s confidential data and providing “false, misleading and incomplete” pricing data which has caused Haggen to inflate its prices.
  • Due to Albertsons’ actions, Haggen claims it was forced to close 26 of the newly acquired stores and more may close in the future.

Haggen seeks more than $1 billion in damages. Albertsons states the allegations “are completely without merit.”

Albertsons sued Haggen in July accusing it of fraud because it hadn’t paid for inventory that came with some of the new stores. Albertsons claims Haggen owed it about $41 million as of July for inventory at 32 stores Haggen bought from it in June, according to the Orange County Register. Haggen paid for the inventory for the first 108 stores it bought without any complaints, but waited until the deal closed for the last 38 stores before informing Albertsons it wouldn’t pay for inventory, according to the lawsuit.

Haggen may have bitten off more than it could chew. With the purchase of the Albertsons stores, Haggen went from a local player in the groceries field (18 stores) in Oregon and Washington to a major player (more than 160 markets) on the West Coast. It has made lay offs and cut back employee hours due to “unprecedented” competition. Shoppers report Haggen’s stores are charging higher prices than Albertsons for the same products.

The Food Marketing Institute estimates that as of 2014, the country had 37,716 supermarkets with more than $2 million in annual sales, employing 3.4 million people generating $638 billion in sales. The United Food and Commercial Workers Western States Council states that a study it commissioned shows that about 400,000 people work in California’s food retail industry, or three percent of all workers in the state. Over the previous ten years the industry has grown more than two percent per year.

Sales and purchases of businesses large and small can encounter problems and the situation may be severe enough to justify legal action. If your business is considering a purchase or sale, or it has already happened, and you have concerns about legal issues, contact our office. We can talk about the situation, the possible issues involved and how your legal rights can be protected.