U.S. District Judge Percy Anderson has formally sentenced Ralphs Grocery Co. under a plea agreement in which Ralphs pleaded guilty in July to felony charges including indentity theft, money laundering, obstruction of justice, false use of a social security number and conspiracy arising from the company's ill-fated plan to secretly rehired striking or locked-out workers during a work stoppage in 2003 and 2004. The court imposed a $20 million fine and ordered Ralphs to pay $50 million in restitution to an 19,000 workers and their unions. Attorneys for the company reported to the court that the workers have already been paid. The worker restitution awards were intended to cover seven weeks of back pay.
Unlike the standard language in typical civil settlements, Ralphs accepted responsibility for its conduct. Judge Anderson remarked that the company's conduct displayed a "pervasive and powerful corporate culture that exalted the value of profits and win at any costs above the rule of law." As part of the agreement, Ralphs and its parent company, Kroger Co., agreed to cooperate with prosecutors in an ongoing probe that could lead to charges being brought against Ralphs officials or their attorneys. Prosecutors Jeremy Matz and Adam Braun made comments that suggested that the second investigation was gaining steam.
The Daily Journal reported earlier this month that several law firms may be facing an investigation into their role in the criminal conduct by their Ralphs Grocery Co. officials. The plea agreement included a waiver of some attorney-client privileged communications. Those communications could be made available to prosecutors as early as this week.
The Daily Journal cited an anonymous source who identified Thelen Reid & Priest LLP, which was among the most prominent of the outside counsel representing Ralphs during the lockout, as one firm likely to be subpoenaed. Attorney George Newhouse, who led the Thelen Reid legal team working on the lockout, reportedly declined comment. Seeking to determine whether there was any obstruction of justice on the part of attorneys or the client, prosecutors are investigating whether attorneys advised Ralphs to label unprivileged documents as attorney-client communications or attorney work product.