Kroger's Grocery Case Summary

COMPANY PROFILE
Kroger:
o Kroger used to be the nation's #1 pure grocery chain in the US. o The company operates about 3,620 stores, including some 2,465 supermarkets and multidepartment stores, in about 30 states. o Kroger's Fred Meyer Stores subsidiary (acquired in 1999) operates about 125 supercenters, which offer groceries, general merchandise, and jewelry, in the western US.
Ralphs:
o The oldest grocer west of the Mississippi. o Ralphs Grocery Company runs about 260 Ralphs supermarkets in Southern California and also some 115 warehouse-style stores. o Ralphs closed about 20 stores in Southern and Central California in 2005, citing poor performance, and in 2006 began closing or selling stores in Northern California, including
the last of its stores in the Sacramento area.

PROBLEM CHRONOLOGICAL
 In 1996, six women sued Ralph for harassment
 In October 1998, Kroger acquired Ralphs
 In June 1998, jury reached a two part verdict (Found the supermarket chain liable for gender harassment and Penalty)
 In 1999, Misiolek (the Manager) demoted to working on loading dock
 In 2000, Ralph sent Misiolek Disciplinary letter, 14 months after that he quit
 In 2002, Judge argued that the punitive damages to excessive, and new verdict created
 July 2002, two women agreed and other four rejected

WHAT ROGER MISIOLEK HAS BEEN DONE? Grabbed inappropriately Hugged inappropriately Foul language / verbally abused Throwing object

CASE PROBLEM:
Should Kroger pay for the penalty that the Ralph employee did?
Suspected cause of problems:
• Discrimination to woman and minorities.
• Sexual harassment.
• Racist.
• Abusive.

ETHICAL CONCERN:
1. Is the judge right that a company as a whole should not be held responsible for his action? Should the company be responsible for policies that prevent complaints from reaching headquarters?
2. What kind of penalty do you believe would be appropriate for Ralph? Was the $33,3 million penalty exessive?
3. Should Kroger have to pay for events that happened before it took over the chain of supermarkets?
4. Is such a cap a good idea from an ethical point of view?
5. What can a company do to make sure that a situation like Misiolek’s does not occur? Why do you think Ralph allow Misiolek to continue managing stores?
Answers:
1.
Ralphs Grocery Co. should be held responsible because :
• Ralphs’ management did not facilitate feedback, complaints from employee to headquarter.
• There was also no control mechanism on Ralphs Grocery.
• The most important thing that should be underlined is in April 1996 several women already complained to Ralphs management but the company did not take any action to discipline Misiolek.
• Misiolek only demoted from his position as store manager to be on loading dock.
2. We do agree that the penalty should be compensatory and punitive damages.
It would be such a good idea based on compensatory justice principal. Was $33,3 million penalty excessive? It is actually depend on how much the cost to rehabilitate the victims and how much the victims was agrieved. We conclude that $33,3 million penalty was excessive. Because the psycological impact for some employees was not seriously same (not like raping). Except for those who was grabbed, touched, patted, hugged, touched their breasts (some kind like rape) should give much more than rehabilitation cost.

Adding Information:
According to Title VII of The Civil Rights Act, The Law permits penalties :
a. Lost Wages -> from the date harassment to date of trial
b. Future Lost
Wages
c. Compensatory Damages -> For emotional pain and anguish
d. Punitive Damages -> to punish the employer
e. Attorney Costs and Court Fees
f. Reinstatement or Promotion of the Victim
g. Our group think that Kroger should pay.
3.
Actually, when Kroger acquaire Ralph, Kroger should consider every aspect and obligations that Ralph owned, not only consider about the profit.
4. Do $300,000 on punitive damage for harassment case a good idea an ethical point of view? In our consideration, it is not a good idea for flattening punishment. The punitive damage should meet the cost to rehabilitate the victims and how much the victims was suffer. Beside punitive damage, jail punishment and rehabilitation also could be considered.
5. To make sure that the Misiolek situation does not occur anymore, the company should : (prevent is the best tools)
 Do thoroughly due dilligent and scrutinize all aspect when bought a company.
 Hire employee which has good track record (not hire employee which has historical problem)
 Including qualitative aspects and concerning subordinate feedback to evaluate performance
 Set ethical value as corporate culture
 Assure that the written rule of harrassment have been done and charges quickly, consistently, and effectively.
 If possible, Established ‘Discipline Committe’ as ‘early warning system’ in company and to solve conflict internally satisfying the
employees.
Ralph still keep Misiolek because Misiolek always shows good performance by gain a lot of profit. However, we should look from holistic perspective. Good performance not only represent by gaining profit but also provide subsidiaries satisfaction also.

GUIDELINES FOR A SEXUAL HARASSMENT POLICY
Understand Sexual Harassments
 Appreciate that you and your company can be held liable if your employees engage in sexual harassment
 Remember that every sexual harassment charge is extremely serious
 Realize that men as well as woman may be sexually harassed
Communicate Policy
 Issue a strong policy from the CEO against sexual harassment
 Provide a clear definition of sexual harassment using examples of inappropriate behavior
 Review the policy with your employees on a regular basis
 Discuss the policy with all new employees
Establish Procedures
 Appoint a senior corporate official to oversee the implementation of the policy
 Train your supervisors and managers to recognize and prevent sexual harassment
 Outline procedures to use in reporting sexual harassment
 Provide alternative routes for filing complaints
Enforce Policy
 Make sure employees who bring charges do not face retaliation
 Safeguard the rights of the accused
 Investigate all sexual harassment charges quickly and thoroughly
 Discipline appropriately any employee found to have engaged in sexual harassment

CONCLUSION
Should Kroger Pay for Ralph’s employee did?
We absolutely do agree that Kroger should pay for Ralph’s employee did. It is true that Ralph’s employee, Misiolek, did harrassment before Kroger bought Fred Meyer which have acquired Ralph. However, as consequences when Kroger acquire the company, Kroger have to take all responsibility including this harassment cases.

LESSON LEARN FROM THIS CASE
 Do thorough due dilligent all aspect when bought company.
 Company must provide rules to avoid sexual harrasment “Prevent is the Best Tools “
 Don’t try this at the workplace!!
 Be aware this could also happen to you!!!