Grocers Plan to Sue City of Los Angeles

 A trade group takes aim at a law limiting the ability to fire workers at a newly acquired firm.

May 4, 2006 · Los Angeles Times

The California Grocers Assn. announced Wednesday that it intended to sue the city of Los Angeles over a law that makes it harder to immediately fire grocery store employees swept up in a takeover.

The City Council voted 11 to 2 in December to approve the "worker retention" ordinance just before Supervalu Inc. agreed to buy more than 1,000 Albertsons Inc. stores a month later. The measure sought to limit a new company's ability to replace a previous owner's employees for at least three months.

The suit — expected to be filed today — would argue that the ordinance is preempted by federal labor relations laws, conflicts with state health and safety laws and improperly dictates rules of employment.

"This ordinance violates equal protection requirements by singling out a certain class of grocery retailers without placing similar requirements on competitors," said Peter Larkin, president of the grocers association.

The association represents 500 retail members operating more than 6,000 food stores in California and Nevada.

Larkin also argued that the law hurts consumers by making it more difficult for new companies to buy stores. He said it would especially harm South Los Angeles and other economically disadvantaged neighborhoods where existing stores might be forced to close if they could not be sold.

"It's not a step toward making the city business-friendly," said Rusty Hammer, president of the Los Angeles Area Chamber of Commerce.

Supporters of the law noted that its legality was researched and validated by City Atty. Rocky Delgadillo.

"I don't think [grocers] are going to prevail," said Rick Icaza, president of United Food and Commercial Workers Local 770.

Icaza, whose union represents 28,000 grocery workers, said the current climate of mergers and company takeovers puts workers at risk.

"It just creates a situation where the people who basically built these companies are dispensable," Icaza said. "The ordinance does not require them to be kept on indefinitely. It just provides them a period of time so they have an opportunity to show their ability."

City Councilwoman Jan Perry also defended the law Wednesday as justified. "It brings a measure of protection to people who are vulnerable," Perry said.

The law, which took effect in February, requires the purchasers of grocery stores larger than 15,000 square feet to keep existing employees for at least 90 days unless there is cause to fire them.

After that, the acquiring company is required to conduct a written performance evaluation of employees and consider offering a job if the evaluation is satisfactory, before hiring from outside. The ordinance also would require that workforce cutbacks after 90 days be determined according to seniority.

Union officials supported the measure, saying otherwise the sale of supermarkets could be used as a method to replace workers with those not represented by a labor organization.

The grocers association believes the ordinance was put forward in response to a labor dispute in 2003 that pitted major Southern California supermarket chains against unions over proposed cuts in pension plans and benefits.

"Although the city asserts its true intention is to ensure the health and safety of its residents, the reality is that the city, encouraged by local unions, is attempting to dictate the terms of employment in only one sector of the retail food industry — the one which experienced a long and contentious strike," said a copy of the proposed suit made available to The Times.

Hammer said it was not the city's business to single out an industry for laws protecting union gains. "If a union wants to make a case that employees should be in a union, they can make that case," he said.

He also challenged the argument of some council members that the law was needed to protect Los Angeles consumers because the sale of stores might otherwise result in replacing experienced food handlers with workers unfamiliar with health rules. "Hospitals handle food too," he said.

"It's ill-conceived, it's discriminatory against one industry and it did not have the light of public discussion," Hammer said. "It was jammed through at the last minute."

Larkin said he was not aware of any sale of a supermarket that has been affected by the law.

While the ordinance was unprecedented at the time it was approved in Los Angeles, similar laws have since been adopted in San Francisco and Gardena, Larkin said.

Officials said the lawsuit would be filed in Los Angeles Superior Court and focus only on the Los Angeles law, but the outcome of such a case could affect other cities.