PRIVATE-LABEL BROKER FILES SUIT AGAINST KASH N' KARRY

RICHARD TURCSIK

TAMPA, Fla. -- A private-label food broker here has filed a lawsuit against Kash n' Karry Food Stores and its "in-house" private-label broker, Cal Growers, charging "tortuous interference."

Meanwhile, a private-label broker suit against Albertson's and Federated Foods has been settled out of court, and on Jan. 25 a motion for summary judgment is scheduled to be heard in a case brought against Wakefern Food Corp. and Marketing Management Inc. by a group of private-label brokers.

In all three cases, the food brokers are represented by The Watje Firm of Bloomington, Minn. The case against Kash n' Karry here and Cal Growers, San Jose, Calif., was filed by one broker, Gilmore A. Dominguez, and his corporation, Certified Sales Inc.

According to Galen Watje, president of The Watje Firm, the Dominguez suit alleges that Kash n' Karry and Cal Growers "entered into an arrangement and have tortuously interfered with the arrangement between my client and his suppliers.

"We are seeking damages in an amount that exceeds $15,000. It is a suit of tortuous interference under the Florida racketeering statute," Watje told SN.

In a statement, Kash n' Karry said it hired Cal Growers as part of its financial restructuring a year ago to serve as its representative in dealings with suppliers of its private-label goods. Dominguez's contracts were phased out gradually between January and September 1995 as they expired, the statement said.

"The real dispute between Kash n' Karry and Mr. Dominguez focuses on whether he has a legal right to continue to serve indefinitely as Kash n' Karry's private-label broker and whether, in terminating that relationship, Kash n' Karry committed some wrong," Kash n' Karry stated.

Kash n' Karry contends that using a national firm allows it to obtain more service at a lower cost, increase its buying power and cut the cost of its goods, thereby passing on the savings to its customers.

"The replacement of local private-label brokers with larger, full-service marketing firms is a national trend that started in the 1980s . . . There are very few, if any, retailers not engaged in this trend because the failure to do so will put the retailers at a competitive disadvantage," Kash n' Karry's statement said.

"Kash n' Karry categorically denies that it has done anything wrong in terminating its relationship with Mr. Dominguez . . . Like any other retailer, Kash n' Karry has an absolute right to determine what goods it will buy and from whom it will buy them, and Kash n' Karry will vigorously defend its right to control the source of its goods."

A spokesman at Cal Growers said he was not aware of the lawsuit and therefore could not comment on it.

Unlike the Kash n' Karry and Cal Growers matter, the suits against Albertson's/Federated and Wakefern/MMI involve brokers who have banded together to fight what they claim are "in-house broker arrangements" where the retailers have selected one broker to represent all their product lines.

On Jan. 4, an out-of-court settlement was reached in the Albertson's/Federated case. No terms were disclosed. In the dispute, 13 San Antonio-area private-label brokers had sued Albertson's, Boise, Idaho, and Federated Foods, Arlington Heights, Ill., after the two companies entered into an agreement in the fall of 1992.

"The lawsuit has been settled to the satisfaction of all the parties. The parties have agreed to keep confidential the terms of the settlement. In settling the matter, Albertson's and Federated Foods have maintained that neither company has violated the law," David Dougherty, president and chief executive officer of Federated Foods, told SN.

"We will continue to work with Albertson's. I don't see any reason why we can't continue," he added. Officials at Albertson's could not be reached for comment.

Later this month, the brokers suing Wakefern and MMI plan to request summary judgment, while Wakefern and MMI are expected to seek dismissal of the suit.

Wakefern and MMI officials could not be reached for comment.