LOS ANGELES – A former vice president of the parent company of Ralphs supermarkets, and two ex-employees of the chain were acquitted today in Los Angeles federal court of conspiring to secretly hire locked-out union workers and falsify records during a grocery strike.

Ex-Kroger executive Scott Drew, 47; former Ralphs district manager Karen Montoya, 48; and ex-area vice resident Patrick McGowan, 49, were found not guilty of all charges. The downtown jury had deliberated less than five hours. The three were among those charged last September in a 23-count federal indictment alleging they committed labor fraud by directing subordinates to rehire hundreds of locked-out union employees under false names and false Social Security numbers to hide the activity from unions and the federal government during the 2003-04 Southern California grocery strike.

Two others named in the indictment have since pleaded guilty. "Unsurprising," said defense attorney Evan A. Jenness outside court after the verdicts. "They shouldn't have been charged in the first place. The prosecution couldn't meet its burden of proof."
Assistant U.S. Attorney Stephan Cazares declined to comment.

During the trial, Cazares told the six-man, six-woman jury that the defendants "encouraged the hiring of locked-out workers, in some instances using code words like `experienced clerks' and `Radio Shack employees' for the rehired employees. Documents were falsified as part of the conspiracy." But Jenness and other defense lawyers countered that Drew, Montoya and McGowan knew nothing about illegal rehiring of union members or falsified information. In many cases, the defense argued, honest Ralphs employees were fooled by corrupt grocery clerks who used fake identities and Social Security numbers in order to keep working during the strike. "These were the isolated acts of individual people and the people that hired them," said Jenness said.
Jurors apparently agreed. "The government didn't show evidence linking (the defendants) to the criminal conduct," said a juror who declined to give her name.

The strike and lockout began in October 2003 and lasted until March 2004, making it the longest and largest supermarket labor dispute ever in the United States. Prosecutors alleged that Drew and his co-defendants instructed that the locked-out, newly rehired workers falsely complete Internal Revenue Service and immigration forms, often using the names and Social Security numbers of the workers' family members. Although some 50,000 temporary workers were hired to work at Ralphs' 300 stores throughout Southern California during the strike, their lack of experience prompted the company's management to direct that nearly 1,000 striking workers be secretly rehired, Cazares alleged.

The trial before U.S. District Judge Percy Anderson lasted less than two weeks. Had they been convicted on all charges, Drew, Montoya and McGowan each faced maximum sentences of 30 years in prison and fines.
In November 2006, the Ralphs grocery chain was formally sentenced under a deal in which it paid $70 million to settle charges it illegally hired locked-out workers during the supermarket strike. In imposing that sentence nearly three years ago, Anderson said the company's "pervasive and powerful corporate culture exalted the value of profits and win at any costs." The judge said that in an effort to gain a tactical advantage in the labor dispute, Ralphs harmed its workers, its union, and the benefit funds that did not receive contributions when union employees worked under false names. A guilty plea was entered on behalf of Ralphs to five federal counts, including conspiracy, concealment of facts from an employee benefit plan and identity fraud. The company also agreed to cooperate with prosecutors in the investigation that led to the charges against Drew, Montoya, McGowan and others. Under the sentence, $50 million was earmarked for some 17,000 Ralphs grocery clerks and their unions, and the company paid a $20 million fine. Ralphs' parent, Cincinnati-based Kroger Co., admitted some store managers falsified records to rehire workers, but denied their actions were sanctioned by the company. Drew and his co-defendants were fired when the charges were revealed last year.

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