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Hundreds of Benefit Fund Trustees Question Viability of Rite Aid Pharmacy Benefit Management Company
Date:11/4/2007

Rite Aid Is Seeking Business From Union Benefit Funds But Many Fund Trustees Say They Won't Do Business With The Company: 'Rite Aid Wants Union

Money, But Won't Respect Workers' Rights'

ANAHEIM, Calif., Nov. 5 /PRNewswire-USNewswire/ -- More than five hundred attendees at the International Foundation Employee Benefits conference in Anaheim, CA., walked through the convention center in the opening hours of the convention on Sunday carrying bags that say: Trust Rite Aid? Think Twice! Most of the attendees are involved in administering union health care and pension trusts.

Their message is related to Rite Aid, the nation's third-largest drug chain and its attempt to boost its fledgling two-year old pharmacy benefits management company (Rite Aid Solutions) at the conference. Problems plague the company as they struggle with plummeting stock, a consumer fraud suit and escalating labor disputes. They are unsuccessfully trying to integrate 1,854 recently acquired Brooks and Eckerd stores. In addition, Rite Aid remains under the watchful eye of federal billing fraud monitors.

A labor coalition brought together 1199SEIU (Service Employees International Union), the nation's largest health care union; ILWU, the International Longshore and Warehouse Union, and UFCW, (United Food and Commercial Workers). At a packed reception at the conference Wendell Young, of UFCW said, "We're here with SEIU and the ILWU and we represent a lot of members between our unions. Rite Aid used to be the kind of company you could work with, but when they changed management their executive suite took an anti-union turn. This company has become a real problem."

Young is referring to the fact that Rite Aid is violating its contractual obligations and federal labor law and running aggressive anti-union campaigns on both coasts.

On the East Coast:

- The current UFCW and 1199SEIU contracts signed by the Rite Aid

Corporation include legally binding language that directs Rite Aid's

conduct when there is a merger or takeover like that of the

Eckerd/Brooks stores. Rite Aid is required to recognize the union as

the collective bargaining agent for, and apply the terms of the contract

to, any acquired stores within the contract's geographic area when the

union demonstrates majority support.

- The company has instructed Eckerd store managers to:

1) deny union organizers access to stores so that they cannot inform

workers of their rights;

2) confiscate union literature;

3) interrogate and take other action intended to intimate workers.

- Rite Aid's management has publicly stated that they seek to "operate in

a union-free environment."

On the West Coast:

- The ILWU is currently in a heated struggle with Rite Aid over union

recognition for the workers at the company's distribution center in

Southern California.

- When workers began to organize, Rite Aid launched an anti-union effort

that included firings, suspension and arbitrary discipline of union

supporters. The National Labor Relations Board found enough evidence to

try Rite Aid on 49 violations of labor law. Rite Aid settled rather

than face an NLRB judge. The Board is now investigating new charges.

Peter Olney, of the ILWU told conference attendees, "The workers at Rite Aid's distribution center came to us wanting to organize in March 2006. What followed from Rite Aid was something you'd expect from Wal-Mart, not from a company that's 40 percent unionized."

In the past two months, the Canadian and US media have reported that the new CEO of Jean Coutu Group Inc., who in June sold 1,800 U.S. Brooks and Eckerd stores to Rite Aid, is urging shareholders to be patient after earnings were eroded by $24.8 million from its interest in Rite Aid Corp. Jean Coutu stock has dropped by almost 20 per cent in the last three months, and Rite Aid is struggling to integrate the Canadian chain's former U.S. stores.

Many are concerned that at a time when industry analysts and institutional stockholders are watching Rite Aid closely to see whether it will be able to successfully pull off the integration of the Eckerd/Brooks chain, Rite Aid has made a choice to fight with workers and their unions and in doing so, risk losing business and spoiling the integration of the operations of the drug store chains.

Furthermore, several Rite Aid business practices have been questionable and the company has settled millions of dollars in lawsuits.

- Rite Aid is using the Eckerd/Brooks acquisition to create a second-tier,

non-union workforce that will replace union workers. This will cost

jobs and depress wages in the affected areas.

- Over the last 10 years, Rite Aid settled more than a half-dozen lawsuits

alleging consumer fraud. The charges included selling expired goods,

charging higher than the advertised prices at the checkout line and

overcharging the elderly and uninsured.

- The most recent consumer fraud suit was filed a year ago by the state of

New Jersey.

- The company paid $6.7 million to settle a class action by workers who

alleged that Rite Aid forced their pension fund to buy overvalued

company stock.

- The company paid $5.6 million to the government and $1.4 million to 28

states to settle charges of Medicaid fraud.

The conference will continue from Sunday through November 7 at the Anaheim Convention Center Yvonne Armstrong of 1199SEIU said, "We're asking all conference attendees to stop by Rite Aid's booth and tell them to think twice about trusting them with their business until they do the right thing."

http://www.riteaidinsider.com discusses issues of concern to investors, consumers, and seniors.

http://www.riteaidworkerstogether.org discusses issues of concern to Rite Aid,. Eckerd and Brooks employees


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SOURCE 1199SEIU; UFCW; ILWU
Copyright©2007 PR Newswire.
All rights reserved

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