Let's stipulate that in the eyes of the law Ralphs Grocery Co. is innocent until proven guilty.
That out of the way? Now, let's examine the tale of unparalleled sleaziness outlined in the 106-page indictment of Ralphs handed up last week by a federal grand jury in Los Angeles. The document's thrust is that, in 2003, Ralphs executives tried to undermine the United Food and Commercial Workers union through a full-bore criminal conspiracy.
The UFCW had called a strike that October against Safeway Inc.'s Vons and Pavilions chains in Southern California. Complying with a mutual-aid pact, Albertsons Inc. and Ralphs promptly locked out their unionized workers. A couple of weeks later, however, the union withdrew its pickets from Ralphs, hoping to pressure the other two chains into settling.
Needing to staff up quickly, the indictment says, Ralphs rehired hundreds of locked-out workers, a legal no-no, hiding the truth by employing them under fake names and Social Security numbers. The company shifted these workers from store to store so the unions wouldn't catch them, and issued them manifestly fraudulent paychecks -- the union even found one made out to a 4-month-old child. Those defrauded included the IRS, the Social Security Administration and employee benefit trust funds, to which Ralphs failed to make remittances on behalf of the surreptitious workers. The scheme arguably prolonged the labor dispute, which lasted more than four months, cost union locals millions and brought many of their 59,000 members to the financial brink.
It's worth noting that Ralphs already has confessed to most of these crimes, although on a smaller scale than the government alleges.
The company says that about 200 locked-out workers were rehired at scattered stores, and that it has trued up its payments to the trust funds and the government. Still, it hardly matters whether the rehired workers were a few or -- as the indictment alleges -- numbered nearly 1,000 working at 90% of the more than 300 Ralphs stores involved in the lockout. Ralphs says it's willing to take its medicine, but when it tried to negotiate what it says would be a "fair and reasonable fine" with the U.S. attorney, the talks broke down.
For the most part, the company is shoving blame for the affair onto low-level management -- store and zone managers in Southern California. (This "rogue employee" defense is beloved of corporate bigwigs in the dock -- think WorldCom's Bernie Ebbers and Enron's Ken Lay.) My sources say that as many as nine zone managers -- who typically oversee 18 to 20 stores -- have been fired or forced into retirement, and two others have been transferred out of state.
