Ralphs, Food 4 Less owner agrees to $1.4 billion settlement with California, other states over opioids

Kroger, the supermarket parent company of grocers including Food 4 Less, Pay-Less, Foods Co. and Ralphs, has agreed to pay $1.4 billion to settle claims over its pharmacies’ role in the opioid crisis.

The Cincinnati, Ohio-based company, which has 321 stories in California employing over 32,000 workers, did not admit any wrongdoing or liability in the agreement. Nationwide, the company operates about 2,700 stores in 35 states and the District of Columbia.

California Attorney General Rob Bonta helped lead the negotiations with the retail giant, and the state will receive some of the settlement money.

Kroger, Bonta and attorneys general from other states announced the tentative settlement Friday, ahead of Kroger’s second-quarter earnings call. By the afternoon, the company’s stock had rallied.

The California Department of Public Health has tracked a rising death toll of opioid use. In 2016, the agency said, there were 5 opioid overdose deaths per 100,000 residents; by 2021, that rate had almost quadrupled. In 2021, there were 21,016 emergency room visits in the state related to opioid overdoses; 7,175 people died of such overdoses in the state that year. Most of the deaths — 5,961 — involved Fentanyl.

The National Institute on Drug Abuse says even prescription opioids can be “highly addictive.” Some of the most common prescriptions, according to the institute, are for Vicodin, OxyContin, Percocet, codeine, and Fentanyl.

In a news release about the Kroger settlement, Bonta said, “The California Department of Justice has worked aggressively with our coalition partners to hold accountable the corporate giants who fueled this public health crisis.”

Non-monetary elements of this settlement are still under negotiation. But Kroger has said that starting in December, it will spend 11 years paying up to $1.2 billion to states and $36 million to certain Native American governments for substance use abatement. Over six years, the company will pay out $177 million to cover the litigants’ attorneys’ fees.

The settlement comes as Kroger closes in on its acquisition of Albertsons’ line of supermarkets, which have a significant presence in California. The deal to merge with the Boise, Idaho-based company — which operates roughly 2,250 supermarkets across the U.S. including California mainstays Albertsons, Safeway, Vons, Pavilions and Andronico’s — is valued at $24.6 billion.

The sale, which would be the second major merger among grocery store chains in the last decade — is expected to be completed by early 2024.