The pension funds, Pinellas Park General Employees’ Pension Fund and the Pompano Beach Police & Firefighters Retirement System, are suing Safeway’s management and board, alleging the company has been decimated by rampant conflicts of interest, managerial bungling, deceit, and greed. The pension funds are represented by Milberg Weiss Bershad Hynes & Lerach, which says shareholder damages could run as high as $14.5 billion, according to the Associated Press.
For its part, Pleasanton, California-based Safeway says the suit is without merit, and says the cases are part of a smear campaign by labor leaders who represent striking workers at its Southern California Vons chain, according to the AP.
The civil complaints, filed last week in San Mateo County Superior Court, target Safeway’s board, which includes Peter Magowan, managing general partner of the San Francisco Giants, and Paul Hazen, former chief executive of Wells Fargo & Co. They also name investment firm Kohlberg Kravis Roberts & Co., which has played a significant role in reshaping the grocery store chain as part of a 1986 leveraged buyout.
The labor dispute began last month when workers went on strike at Vons and were locked out by two other chains, Ralphs and Albertson’s, under an agreement with Safeway. Following a month-long stalemate, representatives of both sides began meeting with a federal mediator two weeks ago. Another round of talks was scheduled Saturday.
Safeway’s market value has fallen by $22 billion since 2001 when the company’s shares traded as high as $61.38.