A new lawsuit claims grocery chain rivals Kroger and Albertsons colluded during a 2022 strike in Colorado to diminish the union’s leverage at the bargaining table, resulting in lower wages and benefits than workers otherwise would have won.
The lawsuit filed Monday targets the same alleged “no-poach” deal that Colorado Attorney General Phil Weiser said Kroger and Albertsons Cos. agreed to when members of the United Food and Commercial Workers Local 7 went on strike against King Soopers.
Weiser said in a lawsuit challenging a proposed $24.6 billion merger of Albertsons and Kroger, which owns King Soopers and City Market in Colorado, that emails between the two chains show that Albertsons agreed not to hire King Soopers employees or solicit the company’s pharmacy customers during the strike. Weiser is seeking a $1 million civil penalty from each company for what he calls an unlawful restraint of trade.
The lawsuit by King Soopers employee Valarie Morgan is seeking higher wages, benefits and damages for thousands of grocery workers whose bargaining rights it says were undercut by a deal between Kroger and Albertsons. Attorneys for the nonprofit law firm Towards Justice and Edelson PC have requested the complaint be certified as a class action.
“These companies rigged the system against us, undermining our right to fight for better pay and fair treatment through our unions,” Morgan said in a statement.
The Colorado attorney general’s office declined to comment on the new lawsuit because the issue is part of the state’s effort to block the Kroger-Albertsons merger on anti-trust grounds. A decision by Denver District Judge Andrew J. Luxen is pending in the case.
Kim Cordova, president of United Food and Commercial Workers Union Local 7, said while progress was made with the contract in 2022, she believes it could have been better. The contract approved soon afterward with Albertsons was similar to the King Soopers’ agreement.
“Had we known the companies were working in tandem, in a coordinated effort to hurt the members, we believe the outcome would have been different,” Cordova said.
The union would have changed its strategies, Cordova added.
Kroger and Albertsons, which owns Safeway stores in Colorado, have previously denied cutting any deals. Requests for comment were left with the companies Monday.
But the lawsuit filed in Denver District Court by Morgan claims that an agreement between the two grocery chains artificially reduced the union’s bargaining power while increasing Kroger’s leverage. The complaint said a company dealing with a strike can face pressure if competitors hire away workers and lure away customers.
“This competition places pressure on an employer to bring a strike to an end, including by making more concessions to workers at the bargaining table,” the lawsuit said.
However, in the case of the strike against King Soopers, the “anticompetitive agreement” resulted in wage scales that were lower than they would have been if the collusion hadn’t occurred, according to the lawsuit.
“Kroger and Albertsons’ agreement reduced Local 7’s bargaining power while increasing Kroger and Albertsons’ bargaining power because it helped Kroger mitigate the types of competitive and financial pressures it would normally face during a strike,” the lawsuit said.
Albertsons knew that King Soopers’ contract would provide the baseline for its own upcoming bargaining with the union, the lawsuit claimed.
And the impact extended beyond union members because in practice the companies set the wages of non-union employees based on wage scales in the collective bargaining agreements, according to the lawsuit.
“We certainly think that on its face, it appears there is strong evidence the workers would have gotten a much better deal had their bargaining power not been artificially undermined in an anticompetitive way,” David Seligman, executive director of Towards Justice, told The Denver Post.
Seligman said the goal is to establish from testimony from people involved in the negotiations and labor economists what kind of contract union members could have achieved if their bargaining power had not been subverted.
The 10-day strike against King Soopers started in early January 2022. Thousands of employees walked off the job in metro Denver. King Soopers and UFCW Local 7 filed federal lawsuits accusing each other of unfair labor practices.
The union opposes the proposed merger of Kroger and Albertsons, saying it will harm workers, customers and local farmers and ranchers. The companies announced the plan in October 2022.
Colorado’s lawsuit in Denver District Court is one of three aimed at blocking the merger, which the Federal Trade Commission said would be the largest supermarket consolidation in U.S. history. A judge could announce a decision in Washington state’s case against the merger in a Dec. 10 hearing.
And a decision is expected in a trial in Oregon in which the FTC sued to block the merger until it can complete an administrative proceeding. The FTC is fighting the plan on grounds that the combination of the national chains would increase prices for millions of Americans and drive down competition.
Kroger and Albertsons executives have said the merger will position them better to compete against such non-union grocery giants as Walmart and Costco and discount stores such as Dollar General. Kroger has said it will invest $1 billion in improvements, wages and benefits, including $40 million in Colorado to lower prices
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