LUCKY SETTLES MEAT-LABEL INVESTIGATION

Laura Klepacki

SAN LEANDRO, Calif. -- Lucky Stores has agreed to pay $5 million in a settlement with California state and local authorities following an eight-month investigation into the chain's labeling of ground beef at its Northern California division here.

While Lucky has admitted no wrongdoing, the investigation found that during the last three years its meat departments mixed low-grade ground beef with more expensive cuts and mislabeled the mixed product as ground sirloin, ground round and ground chuck. The investigators, which included the state attorney general's office and two local district attorneys, said some meat departments also adulterated ground beef by mixing in other meats such as pork.

Terms of the settlement provide Lucky pay $1 million to assist in research and development of meat-testing technology; $2 million in civil penalties; $1.5 million in wholesale food donations to charity groups; and $500,000 in costs of the investigation.

Lucky also must establish a toll-free number for employees to report any conduct contrary to company policy, and randomly test meat products for the next three years.

Lucky executives could not be reached for comment last week.