Albertsons executives deleted texts about Kroger merger to destroy evidence, FTC says (2024)

Federal regulators accused Albertsons executives of deleting text messages relevant to a lawsuit challenging the Boise, Idaho, company’s merger with Kroger, according to a filing in a federal court in Portland, Oregon.

But a judge on Friday rejected the Federal Trade Commission’s request for a ruling that would have let the judge draw an adverse inference from absent or withheld evidence. Such an inference would have been a strike against Albertsons in a lawsuit the FTC filed to block the merger.

The FTC said that four executives, who are all witnesses testifying in the case, deleted the text messages well after its investigation began and “after receiving a preservation hold and numerous reminders.” The four executives include: CEO Vivek Sankaran; Pacific Northwest Division President Carl Huntington; Colorado Division President Todd Broderick; and Vice President of Customer and Market Intelligence Lisa Kinney.

The FTC said that while it will never know the full extent of the lost communications, their deletion obscures internal views about the effects of the proposed merger.

Cincinnati-based Kroger, which operates the Fred Meyer chain in the Northwest, announced its plan to acquire Albertsons in October 2022. The companies say they need to merge to boost their buying power and compete more effectively in the changing grocery industry. Their competitors include two other retail giants: Walmart and Amazon.

But they face stiff opposition. The FTC sued to block the merger. So have attorneys general from several states.

“At least one thread — although stripped of its full context — still reveals one Albertsons executive’s assessment that the merger will likely increase prices,” the filing said.

The FTC first noticed the omitted text messages in October 2023. It said a string of texts involving Broderick were missing one side of the conversation. In November, Albertsons said that it “may have been because of settings on the iPhone that automatically delete files after a period of time.”

In January, the FTC requested a detailed accounting from Albertsons as to how the text messages were lost and what efforts had been taken to recover them. Albertsons did not respond for nearly four months, according to the filing. Only some text messages were recovered. The company “continued to produce dribs and drabs” of previously unseen text messages, the FTC said.

The filing noted that the issue isn’t limited to the four executives, though those four “exhibited a pervasive practice of deleting business-related text messages,” the filing said.

It mentioned that the company initially brought forth only nine texts from Chief Operating Officer Susan Morris. But later, after repeated inquiries and after Morris was deposed, Albertsons “suddenly” found 900 new messages involving her.

The FTC filed a motion asking the court to draw an adverse inference about the content of the missing texts. An adverse inference is a negative conclusion drawn by a court based on the absence or withholding of evidence, according to the Department of Justice.

“Albertsons’ executives’ claimed use of an ‘auto-delete’ feature does not change the analysis,” the FTC said. “Courts have found that an employer’s failure to automatically preserve communications — i.e., an employer’s decision to give individual employees discretion to decide how and what to preserve — is sufficient to show willful destruction of evidence.”

The deleted texts were reported earlier by multiple Boise-area and nonlocal news outlets.

Albertsons responded to the allegations in a filing Tuesday and asked the court to deny the FTC’s motion. It said there is “zero evidence” that shows executives intended to withhold documents. The company instead alleged that it had instead gone to great lengths to preserve, collect and produce documents related to the case.

A spokesperson for company told the Idaho Statesman in a statement that the FTC’s motion for an adverse inference was denied by U.S. District Judge Adrienne Nelson at a pretrial hearing Friday.

Albertsons and Kroger face off against the FTC in a trial that was scheduled to begin Monday in Nelson’s courtroom in Portland.

Meanwhile, Kroger sued the FTC on Monday, Aug. 19, claiming that the agency’s challenge of the merger in administrative court proceedings is unconstitutional, the Washington Post and other outlets reported. Those proceedings are separate from, and in addition to, the FTC’s lawsuit.