Ahold Agrees to Settle US Foods Class-Action Dispute
Dutch retailer Ahold and its former subsidiary US Foodservice, now known as US Foods, have entered into an agreement to resolve a class-action lawsuit. Ahold will pay $297 million to settle the litigation, which accused its former US Foodservice distribution unit of allegedly “defrauding thousands of hospitals and restaurants through overcharges,” according to Reuters.
The lawsuit states that US Foodservice reportedly used shell companies and fake transactions and invoices to inflate prices it charged “cost-plus” customers from 1998 to 2005. The shell companies supposedly pretended to buy and resell food to US Foodservice at a higher “invoice cost,” which was then passed onto customers.
This inflation forced Ahold to restate its profits by nearly $1 billion and led to the resignation of its CEO and Chief Financial Officer, the Wall Street Journal reports. These events eventually led to the class-action lawsuit in 2006, as shareholders and former clients attempted to recover from any damages resulting from the overcharges.
Richard Wyatt, a Hunton & Williams partner representing the plaintiffs, believes that the settlement is “eminently fair” and that it represents “a very high percentage of the improper overcharges.”
The settlement is still subject to approval by the US District Court in Connecticut, but now that it’s out of the way, both US Foods and Ahold can continue focusing on their current businesses and other matters, including the US Foods and Sysco merger.
