Builders Sue Supervalu, Saint

MARK HAMSTRA

CHICAGO — A pair of real estate developers have filed a lawsuit in U.S. District Court here against Minneapolis-based Supervalu following reports that the retailer sought to block construction of Wal-Marts in the area under the cover of local grass-roots opposition.

Rubloff Development Group, based in Rockville, Ill., and McVickers Development, based in Buffalo Grove, Ill., allege in the suit that Supervalu, through its retention of Hingham, Mass.-based Saint Consulting Group, employed a “dirty tricks” campaign against multiple planned shopping-center developments in the area that were to contain Wal-Mart stores, including centers in Mundelein, Ill., and New Lennox, Ill. Supervalu was seeking to protect its own Jewel-Osco supermarkets, the suit claims.

The lawsuit also names Saint Consulting, which, as reported in the June 14 issue of SN, has been engaged by several supermarket operators to help block development of Wal-Mart stores around the country.

The suit claims that some of the tactics employed by Saint Consulting, such as filing “sham litigation” against the Mundelein shopping center, might have been illegal. It also accuses Supervalu and Saint Consulting of destroying evidence.

“Materials in plaintiffs' possession reveal that Supervalu secretly retained Saint Consulting in order to harass and interfere with the plaintiffs' proposed shopping center developments, and many other developments, where Walmart stores were planned because Walmart stores are a chief competitor of Supervalu's Jewel-Osco chain,” the lawsuit states. “Through various unlawful conduct, including false statements and sham litigation, Saint Consulting, acting at Supervalu's direction, interfered with and delayed the shopping center developments planned by plaintiffs, in some cases to the point where Walmart, as the anchor store for these developments, pulled out.”

The resulting delays “defeated the commercial purpose” of the developments and caused “tens of millions of dollars” in damages, including lost profits for the developers, the suit alleges. Rubloff said it expected profits of “over $20 million” from the Mundelein development, but it has lost its binding agreements with several potential tenants because of delays caused by opposition to the Wal-Mart supercenter.

Supervalu declined to comment, citing the pending litigation, and Saint Consulting Group could not be reached for comment.

In the case of the Mundelein shopping center, called the Mundelein Town Crossing, the development itself was initially approved by the town but has been tied up in the courts for the past three years after a land-use challenge lawsuit filed by local residents. Those local residents, the suit alleges, were backed by Supervalu and Jewel-Osco.

Meanwhile, Saint Consulting sent a letter to Rubloff asking for the return of the documents upon which the developers are basing their suit, which Saint Consulting claims were obtained in violation of a former employee's confidentiality agreement. Earlier last month the Wall Street Journal, citing reports from former Saint Consulting employees, wrote an in-depth article depicting the firm's activities to block Wal-Mart on behalf of several supermarket chains, including Jewel-Osco, Safeway and Giant Food.

In some cases, Saint Consulting, covertly employed by the supermarket operators and sending out its employees under false names, helped launch grass-roots citizens' actions against Wal-Mart.

Antitrust experts interviewed by SN said companies have broad legal protections under their rights to freedom of speech in such matters. Supreme Court decisions known collectively as the Noerr-Pennington doctrine allow companies to petition local governments under the guise of “concerned citizens” or other non-profit entities. However, they said companies engaged in such activities can be charged for sham litigation if it is found that their cases had no merit.