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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,
v.
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.

          OPINION

          Richard Mills United States District Judge.

         Pending is the Relators' motion for sanctions.

         In their reply brief, the Relators also request an in camera review of Defendants' litigation holds.

         I.

         The 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.

         The 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.

         The 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.

         The 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.

         Christopher 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.

         Dan 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.

         In a 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 district.

         The 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.

         The 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.

         The 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 ...


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