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NEW YORK -- Health First, a group claiming to represent citizens concerned about air quality, asked for a court block on construction of Tesco's grocery distribution center in Riverside, Calif., while the lawsuit the group filed against the company waits to go to trial. The block could cost the company upwards of $50 million if successful, Tesco said in a report by the Financial Times.
The Health First action is being handled by lawyers that also work closely with the United Food and Commercial Workers union (UFCW) and its allies, prompting some observers to speculate the court block is really an attempt by the UFCW to put more pressure on the company to unionize.
On word of the company's potential union-free status in the U.S., Los Angeles-based UFCW has stated it "will start a drive. We will let the public know that they are not going union and we will do what we can to stop them from developing stores here," Ricardo Icaza, the leader of the UFCW, said in January.
Health First is unknown to local environmentalists, and published reports have claimed the group was established solely to challenge the Tesco project. When Tesco requested information on the organization from its lawyers, Johnson & Sedlack, the company told the court it received "blanket objections and refusals to provide information or documents."
The legal move is not the first effort being brought to hinder the international retailer. Earlier this month UCFW spokesman Mike Vespoli said the union was responsible for the mailing and distribution of anonymous fliers in Phoenix asking residents to protest the company's applications for liquor licenses at many of the 20 Fresh & Easy stores planned to open in the Phoenix area.
Last week, the company successfully opposed a bid that would have secured a temporary restraining order to immediately halt work on the site. The court will rule on this second block in April.
In court documents, Tesco stated that it has secured leases for 71 sites to date, and that any delay in the facility's completion could cost the company more than $1.9 million each week. The facility will be the backbone of the company's distribution for its network of Fresh & Easy Neighborhood Markets.
The stores are expected to open in the second half of the year. A potential halt in construction from the end of February to the date of the trail in June could cost the company up to $60.9 million, with an additional $8.4 million each month the stoppage continues after June. In addition, if Tesco loses the case, it would be required to undo the work it had started on the site, the report stated.
In other Tesco news, H.J. Heinz Co. c.e.o. Bill Johnson predicted at the Reuters Food Summit in Chicago that the Tesco's entrance into the U.S. market could cause a seismic shift in the nation's grocery industry, spurring changes in the way other retailers stock their stores and the way that Americans shop for groceries.
"We'll be very interested to see the Tesco experiment on the West Coast, very interested because I think Tesco is an outstanding retailer," Reuters quoted Johnson as saying. "It will be interesting to see how that plays out. It's going to be an evolution in the way that American consumers buy products, and that the retail trade is going to have to address."
Johnson also theorized that retailers in urban areas will see more of an impact from Tesco than those in the middle of the country.
He added that Heinz is working on some products for the Tesco stores, but that he'd "rather not get into it at this point because they haven't been announced." He did share that Heinz will "have products tailored for the chilled aisle in the perimeter that they are well known for."