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'B2B' RICO Class Action Settles for $300 Million but Firm Client Owes Nothing

08.06.2014
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HARTFORD, CT — On July 14, 2014, a federal judge approved a $297 million settlement in a business-to-business RICO class action against U.S. Foodservice, Inc. and its former parent company, Koninklijke Ahold, N.V. Connell Foley LLP’s client in the case, the only individual defendant named, paid nothing as part of the resolution

The settlement amount paid by U.S. Foodservice is believed to be one of the largest civil RICO class action settlements in recent history and was reached on behalf of a class of customers, primarily hospitals and restaurants, who purchased products from U.S. Foodservice under cost-plus arrangements between 1998?2005. The class claimed that it was defrauded by U.S. Foodservice when it created six companies that it controlled to inflate the “cost component” of the products that were subject to the arrangement.

Connell Foley’s client operated companies that provided supply chain services for U.S. Foodservice and denied any wrongdoing associated with pricing practices complained about by the plaintiffs.  In 2008, after the case had been pending for two years, Connell Foley partner Peter J. Pizzi negotiated an agreement whereby, in exchange for the client’s agreement to cooperate in discovery, the class plaintiff would dismiss all claims against the client following court approval.  Connell Foley partner and RICO practitioner Marc D. Haefner assisted Pizzi in the representation as did white collar litigator John P. Lacey

The firm’s client was extremely pleased by the result:  “Connell Foley has been my counsel for many years in a wide range of matters.  With excellent timing and a deft touch, Peter Pizzi achieved a resolution of this case for me that did not involve any monetary contribution on my part.  A better outcome could not be imagined.”

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