UNION SEEKS ORDER FOR DOMINICK'S SALE

ELLIOT ZWIEBACH

CHICAGO -- Two locals of United Food and Commercial Workers Union here said last week they are seeking an order directing Safeway to open the process "in good faith" for the sale of Dominick's Finer Foods here.

UFCW Locals 881 and 1546, whose members work at Dominick's, sought the order through a grievance against Safeway, Pleasanton, Calif., which owns Dominick's and has been seeking a buyer for the 113-unit chain since last November, when contract talks between the unions and Safeway broke off.

In a statement issued here, the unions said Safeway violated a letter of agreement it signed last November by failing to act in good faith in its attempt to sell Dominick's. The grievance also alleges Safeway violated the agreement by failing to consider Yucaipa Cos. on the same basis as other potential buyers.

Brian Dowling, a spokesman for Safeway, said the company had "complied fully with the agreement, and conducted a fair and appropriate bidding process."

Yucaipa, a Los Angeles-based investment company, owned Dominick's from 1995 until 1998, when it sold the chain to Safeway.

In a statement last week, a Yucaipa spokesman told SN, "It's interesting that after almost 30 days [since it filed suit against Safeway], Safeway's investment bankers still have not said that they have a higher and better offer than Yucaipa's. Even the union, from a completely different vantage point than Yucaipa's, has come to the same conclusion that the Dominick's bidding process was unfair and that Safeway failed to give Yucaipa's bid the consideration it deserves."

In a separate statement, Yucaipa said, "If Safeway's investment bankers will simply certify there was another bidder who first made a better offer, Yucaipa will make its best efforts to assist this 'better' bidder with union negotiations to ensure that Dominick's employees continue to have stable and gainful employment."

Safeway selected a company other than Yucaipa to buy Dominick's -- a company presumed by most industry observers to be Supervalu, Minneapolis, although neither Safeway nor Supervalu are willing to confirm that speculation.

Yucaipa filed suit against Safeway in early August alleging Safeway had conducted a "biased and unfair" bidding process, and Safeway filed a counter-claim two weeks later, charging that Yucaipa's actions have jeopardized the chain's efforts to consummate the sale of Dominick's by communicating directly with the unions in violation of the letter of agreement.

Responding to the counter-claim, Yucaipa said it is still interested in acquiring Dominick's. It also said it believes its bid was higher and came in earlier than other bids.