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United States v. Supervalu, Inc.
United States District Court, C.D. Illinois, Springfield Division
November 15, 2019
UNITED STATES OF AMERICA, and THE STATES OF CALIFORNIA, DELAWARE, ILLINOIS, INDIANA, MASSACHUSETTS, MINNESOTA, MONTANA, NEVADA, NEW JERSEY, NORTH CAROLINA, RHODE ISLAND, VIRGINIA, ex rel. TRACY SCHUTTE and MICHAEL YARBERRY, Plaintiffs and Relators,
SUPERVALU, INC., SUPERVALU HOLDINGS, INC., FF ACQUISITIONS, LLC, FOODARAMA, LLC, SHOPPERS FOOD WAREHOUSE CORP., SUPERVALU PHARMACIES, INC., ALBERTSON'S LLC, JEWEL OSCO SOUTHWEST LLC, NEW ALBERTSON'S INC., AMERICAN DRUG STORES, LLC, ACME MARKETS, INC., SHAW'S SUPERMARKET, INC., STAR MARKET COMPANY. INC., JEWEL FOOD STORES, INC., and AB ACQUISITION LLC, Defendants.
Richard Mills United States District Judge.
is the Relators' motion for sanctions.
their reply brief, the Relators also request an in
camera review of Defendants' litigation holds.
Relators seek the entry of an Order imposing appropriate
sanctions against the Defendants for what they allege is (1)
Defendants' failure to timely issue a litigation hold;
(2) the intentional destruction of material evidence relating
to Defendants' price match program; and (3) their
subsequent efforts to conceal and obstruct discovery of their
spoliation of evidence, including the wrongful withholding of
material evidence of the spoliation until just days before
the close of discovery in this case.
Defendants claim (1) they timely issued a litigation hold in
this matter; (2) did not intentionally destroy material
evidence; and (3) did not attempt to conceal and obstruct
discovery of any alleged spoliation of evidence.
Defendants produced in discovery a January 27, 2012 email
from Christopher Basler, a pharmacy district manager for 33
Shop ‘n Save pharmacies, instructing those pharmacies
to “throw away all your competitor's price matching
lists and get rid of all signs that say we match
prices.” The email was sent seven days after the
January 20, 2012 government agents' visits to
Defendants' pharmacies, including one of Basler's
pharmacies, five days after Basler learned of the visit by a
Special Agent with the Department of Health and Human
Services, Office of Inspector General
(“HHS-OIG”), and three days after the Defendants
received a subpoena from the Government requesting documents
regarding the price match program.
Defendants claim that, after receipt of the subpoena, their
in-house counsel and current Vice-President, Litigation and
Regulatory Compliance, Daniel Day, “oversaw the
preparation of a litigation hold notice.” The Relators
say that the litigation hold was not sent to Defendants'
pharmacies until some time in March 2012, at least five weeks
after receipt of the government subpoena.
Basler testified that the January 27, 2012 email sent to the
Shop ‘n Save pharmacies directing them to throw away
all competitors' price lists and all price match signage
was prompted by a phone call he received that morning from
Dan Salemi, who at the time was SuperValu's Vice
President, Pharmacy Services. Basler testified that his
decision to throw away all competitor price lists and get rid
of all price match signage had nothing to do with the HHS-OIG
agent's visit to one of the pharmacies the week before,
was not done at the direction of Salemi, was his decision
alone and was “urgent” because he was tired of
taking calls from Salemi asking about the number of price
matches at his pharmacies.
Salemi testified that he recalled FBI agents visiting various
SuperValu stores. However, he did not recall the date of the
visits, the date of the HHS-OIG subpoena and did not recall
whether he was involved in responding to the subpoena.
Declaration, Basler states that in March 2012, he received a
litigation hold and a Pharmacy Store Action Manager (SAM)
task directive related to the Price Match Program, wherein he
was directed to review the categories of documents requested
by the subpoena and turn over documents to the legal
department. The Relators claim Basler's assertion is
disingenuous, as many of the price match ads and competitor
price lists had already been destroyed before the March 2012
litigation hold and SAM task were ever issued, pursuant to
his January 27, 2012 directive to all the pharmacies in his
Relators further allege it appears that another district
manager ordered the destruction of signage promoting the
Defendants' price match program after visits by
government agents and service of the HHS-OIG subpoena. One of
the Relators' deposition exhibits includes a handwritten
notation, “N/A those were destroyed per email, ”
which is next to the checklist item instructing pharmacy
managers to take a photo of any marketing or signage
promoting SuperValu's price match program. The notation
relates to one of the Defendants' pharmacies in
Corvallis, Oregon, which is outside Basler's district.
Relators say they do not know whether there exist other
communications similar to the January 27, 2012 Basler
directive and the email referenced by the Corvallis, Oregon
pharmacist ordering the destruction of evidence relating to
the Defendants' price match program. They allege the
Defendants waited until almost the end of discovery to
produce the January 27, 2012 email.
Defendants claim Oregon stores received instructions to
remove advertisements related to price matching before
issuance of the subpoena because of a change to Oregon's
“usual and customary definition” to specifically
include advertising savings and certain other discounts. As a
result, the Defendants concluded that advertising the price