A $16 Million Win For The Little Guy

Grocery store owner defeats major wholesaler

Jonathan F. “Johnny” Johnson, owner of the Community Pride supermarket chain, may have fallen from the ranks of the BE 100S, but he has recently bagged good fortune. In June, a Richmond, Virginia, circuit court jury reached a verdict that giant food-industry wholesaler Supervalu Inc. should pay Johnson $16 million in damages for underhanded business dealings that paralyzed his company.

Community Pride, which opened its first inner-city stores in 1992, grossed $77 million and employed 680 workers by 2002. As a result, the company earned the No. 44 ranking on the 2003 BE INDUSTRIAL/SERVICE 100 list. The next year, Community Pride was forced to close its stores.

Johnson blames his demise on Supervalu, contending that the $44 billion Eden Prairie, Minnesota-based corporation unfairly bullied Community Pride into bad deals (see sidebar). Community Pride relied heavily on Supervalu, which supplied the small grocer with food products on credit.

“I’ve finally been able to get my status back in the community that I feel like I earned by giving my customers what they wanted. I just want to be able to do it again,” says Johnson.

Johnson’s Claims Against Supervalu
n In 1999 Supervalu “forced” Johnson to buy the Rack & Sack chain of suburban stores in a rush deal without due diligence, threatening to stop supplying Community Pride if he refused. (Supervalu purchased the profitable parent company of Rack & Sack within hours of Johnson’s purchase of the failing Rack & Sack stores.)

Supervalu supplied Johnson’s Rack & Sack stores with $750,000 worth of unsellable products, including pumpkins during the month of May.

In 2002 Supervalu gave Johnson a five-year, $1.9 million loan on which he had to pay back $10,000 per week.

Between 2002 and 2004, Supervalu constantly “shorted” Johnson truckloads of merchandise.

In 2003 Johnson identified a good deal to acquire 18 Norfolk-area stores, but Supervalu put up roadblocks against Johnson’s purchase and informed Johnson’s competitors of the opportunity.

Johnson lost $12.5 million of “personal money” from the failure of the Norfolk acquisition deal, the termination of his consulting contract, and lost earnings.
bender will retain the bank’s minority status.

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