A San Francisco federal judge has bagged another attempt to use consumer lawsuits to block a merger between U.S. supermarket giants Kroger and Albertsons.
However, the $24 billion merger could yet be challenged by federal regulators, amid public opposition from labor unions and their left-wing allies in Congress and state governments, who claim the Kroger-Albertsons joining would harm grocery shoppers and workers.
On Dec. 20, U.S. District Judge Vince Chhabria, of the U.S. District Court for the Northern District of California, granted a request from the supermarket chains to dismiss for the second time a lawsuit purportedly brought on behalf of supermarket customers.
U.S. District Judge Vince Chhabria
| cand.uscourts.gov
In the ruling, Chhabria agreed the plaintiffs lacked legal standing to bring the lawsuit, as there were too many unanswered questions about their relationship with the stores.
"Of the 24 plaintiffs, only a few allege they have shopped at an Albertsons or Kroger store at all," Chhabria wrote. "And the allegations about those few plaintiffs barely say anything, simply intoning that they 'have shopped' at a store in their area (although elsewhere the complaint mentions in passing that they 'shop' at one of the stores).
"And they allege that if the merger goes through, they will be forced to pay higher prices. But the plaintiffs say nothing about whether (and how many) alternative grocery store options exist in the areas where they could realistically be expected to shop."
That lawsuit was filed in February by attorneys from the Alioto Law Firm; the Joseph Saveri Law Firm; the Law Office of Theresa D. Moor; The Veen Firm; and the Nedeau Law Firm, all of San Francisco.
The lawsuit was filed shortly after Kroger and Albertsons announced the merger of the largest and second-largest U.S. supermarket chains.
Kroger operates a host of different retail outlets under nearly two dozen names, including its eponymous supermarkets, Fred Meyer, Dillons, Harris Teeter and Ralphs, among others.
Alberstons operates supermarkets under is own name, as well as Safeway, Vons and 19 other brand names.
In all, the merger would result in a company that operates about 5,000 stores nationally, anout the same number of stores as Walmart.
The lawsuit asserts the merger would create a new supermarket monopoly across much of the U.S., allegedly in violation of federal antitrust law and other laws.
They note the companies have indicated they will sell off hundreds of stores nationwide. The lawsuit asserts the merger will result in higher prices for consumers and job losses, among other alleged economic harms, while enriching investors and directors at the companies.
They are asking federal courts to block the merger.
In public statements, Kroger representatives have said blocking the merger, instead, would harm consumers and workers, by allowing "nonunion retailers like Walmart and Amazon" to "become even more powerful and unaccountable."
Chhabria dismissed the consumer lawsuit earlier this year, but allowed the plaintiffs to amend their complaint.
In the new dismissal order, Chhabria said he still cannot allow the lawsuit to proceed, as the plaintiffs can't demonstrate how they, personally, will suffer any real harm from the deal.
However, the judge again will allow the plaintiffs another try, out of "an abundance of caution."
"... Dismissal without leave to amend could well be appropriate at this point. But ... the proposed merger—at least as described by the plaintiffs—does raise concerns about competition among grocery stores," Chhabria wrote. "It’s not out of the question that the plaintiffs could ultimately offer more detailed allegations that support antitrust claims, as well as standing to assert them."
Named plaintiffs in the lawsuit include Christine Whalen, of New Orleans; Gabriel Garavanian, of Tyngsboro, Massachusetts; Katherine R. Arcell, of New Orleans; Jose M. Brito, of Reno, Nevada; Jan-Marie Brown, of Carson City, Nevada; Rosemary D'Augusta, of Millbrae, California; Brenda K. Davis, of Forney, Texas; Pamela Faust, of Loveland, Ohio; Carolyn Fjord, of Winters, California;
Don Freeland, of Thousand Palms, California; Donna Fry, of Colorado Springs; Harry Garavanian, of Tyngsboro, Massachusetts; Yvonne J. Garnder, of Colorado Springs; Valarie Ann Jolly, of Mabank, Texas; Michael C. Malaney, of Grandville, Michigan; Len Marazzo, of Reno; Lisa McCarthy, of Naples, Florida;
Timothy Niebor, of Clarkston, Michigan; Deborah M. Pulfer, of Sidney, Ohio; Bill Rubinsohn, of Jenkintown, Pennsylvania; Sondra K. Russell, of Waco, Texas; June Stansbury, of Reno; Clyde D. Stensrud, of Kirkland, Washington; Gary Talewsky, of Sharon, Massachusetts; and Pamela S. Ward, of Garland, Texas.
The action is led by attorneys Joseph M. Alioto and Tatiana V. Wallace, of the Alioto Firm; and Joseph R. Saveri, Steven N. Williams, Cadio Zirpol and David H. Seidel, of the Saveri firm.
The new action in the lawsuit comes as Kroger and Albertsons and those opposed to the merger await a decision from the Federal Trade Commission over whether to go to federal court to challenge the merger, as well.
According to published reports, the FTC has been in talks with state attorneys general, who are also deciding whether to sue to challenge the merger.
Labor unions, including the Teamsters, have spoken against the deal, saying it will result in thousands of job cuts among their members.
A decision from the FTC on whether to file suit was expected in mid-December, but the deadline was extended to Jan. 17, according to a court filing in the consumer action.