Two area independent grocery store operators have filed a federal lawsuit against SuperValu, alleging the food supplier breached contracts by improper use of pooled advertising money and misrepresented a marketing program known as Greenpoints.
The suit was filed by Jovijo Inc., North Huntingdon, a corporation formed by the Scozio Supermarket Group, and Franklin Foods Inc., Kittanning, Armstrong County. Both plaintiffs are seeking punitive damages and demand a jury trial. The suit was filed in U.S. District Court in Pittsburgh.
Eden Prairie, Minn.-based SuperValu supplies 87 Shop 'n Save outlets in western Pennsylvania, 68 of which are independently operated and 19 of which it owns. SuperValu also supplies 74 independently operated Foodland stores in the region.
"We feel there has been damages caused that bring up legal issues," said Mark Scozio, president of the family-operated company that has nine grocery stores.
"Our policy is not to comment on pending litigation," said Polly Deane, a SuperValu spokeswoman.
Ronald Olszewski of Franklin Foods, who operates a Shop 'n Save store in Kittanning, declined to comment.
Scozio has been distancing the family-owned company from SuperValu for several years. Scozio opened a Festival Foods store in Penn Township near Harrison City several years ago — the first Festival Foods outlet in Pennsylvania. Since then, he has unfurled the Festival Foods banner at stores in McMurray and Wexford, and plans to open another this summer in the North Hills. Festival Foods is supplied by Texas-based Fleming Cos.
Earlier this month, Scozio said the family plans to convert stores in Jeannette and Norwin from Shop 'n Save outlets into Sparkle Markets. SuperValu continues to supply Scozio-operated stores in North Huntingdon and White Oak.
According to the lawsuit, as part of its marketing efforts, SuperValu assesses "central advertising fees" that are collected and deposited into a common advertising fund used by SuperValu to pay for local advertising campaigns. Over the past four years, Jovijo has paid about $1.4 million into the fund, while Franklin Foods has contributed about $277,000.
The lawsuit contends that SuperValu "co-mingled" advertising funds collected from Shop 'n Save operators with those collected from Foodland operators, benefiting Foodland retailers who are in direct competition.
In addition, a year ago, SuperValu implemented a marketing initiative for Shop 'n Save retailers known as the "Greenpoints" program, where customers can earn points based on purchases, which can be redeemed for items of value.
The lawsuit says both Jovijo and Franklin Foods have been "invoiced" by SuperValu based upon the number of Greenpoints issued to customers.
Jovijo and Franklin Foods say they have paid $436,000 and $100,000, respectively.
However, both claim that due to the irreconcilability of SuperValu's invoices, they are unable to determine the exact status of their accounts, and whether they are due any refunds for overpayments made to SuperValu.
