Tesco warns of US delay costs

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An attempt to put a court block on Tesco’s construction of a grocery distribution centre in California could cost it over $50m if successful, the retailer claims.

The legal move is part of efforts to disrupt Tesco’s plans to establish a network of US stores that involve the leading US grocery workers union.

Lawyers who have worked closely with the UFCW union and its allies in the past are trying to win a court injunction that would require Tesco to stop work on its planned depot in Riverside county, some 50 miles east of Los Angeles.

The depot will be the backbone of Tesco’s distribution network for the new stores but it is facing a challenge under a California environmental law that will go to trial in June.

Last week, Tesco successfully opposed a bid to secure a temporary restraining order that would have blocked work on the site with immediate effect.

The court will rule on a second attempt to block construction in early April. In court documents, Tesco said it had secured leases for 71 of its new Fresh & Easy Neighborhood Market stores so far, and that any delay to the completion of the project would cost it more than $1.9m a week.

The retailer is planning to launch its stores sometime in the second half of the year, and has previously expressed frustration with delays in the approval process for its Riverside depot.

The company said a stoppage of work from the end of February up to the date of the June trial could cost it up to $60.9m, rising by a further $8.4m a month if the stoppage continued beyond the June trial date.

If Tesco loses the case, it will be required to undo the work done on the site.

The stoppage is being sought by the law firm representing a group called Health First, which says it represents local residents concerned about air quality.

However, the group is not known to other local environmentalists and is believed to have been established with the sole purpose of challenging the Tesco project. Tesco has requested information on Health First from its lawyers, Johnson & Sedlack, but has told the court it had received in reply “blanket objections and refusals to provide information or documents”.

At the same time, the UFCW has leafleted households in Arizona, asking them to oppose Tesco’s applications for alcohol licences for about 20 Fresh & Easy Neighborhood Market stores it is planning in the Phoenix area.

The leaflets cited incidents in the UK in which Tesco stores had been found to be selling alcohol to underage customers.

Tesco has said it has not reached a decision on the issue of union representation. While its established supermarket rivals in the US are unionised, Wal-Mart and a range of smaller growing chains such as Trader Joes and Whole Foods Market are not.

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