Noe Valley Voice March 2009

Real Food Labor Settlement Reached, but Store Plans Still Hazy

By Liz Highleyman

A logjam has broken in the long-running saga of the vacant Real Food Company grocery store on 24th Street.

In mid-February, more than five years after the store's closure, a spokesman for the company announced at a Noe Valley town hall meeting that it had reached a settlement awarding back pay to its former employees, and that it still planned to rebuild and reopen the store.

"We want to prove we could have a great store. We always will be part of the community," said Sergio Diaz, vice president of Fresh Organics, Inc., a division of Utah-based Nutraceutical Corporation, which owns the store and building at 3939 24th Street.

As regular Voice readers will recall, Real Food closed over Labor Day weekend in 2003 with no advance notice to customers, suppliers, or 30 laid-off workers. While the company announced that it was closing for a remodeling, some ex-employees claimed they were fired and the store was shuttered to thwart their attempt to organize a union.

Over the ensuing years, neighborhood activists and District 8 Supervisor Bevan Dufty mobilized to demand a just settlement for the workers and community input on the store's future. Nutraceutical took ownership of the increasingly dilapidated building as part of a legal settlement with former owners Jane and Kimball Allen, and work on the site started and stopped several times. Meanwhile, an unfair labor practices lawsuit unfolded before the National Labor Relations Board (NLRB).

Town Hall a Hard Sell

Diaz's appearance at the packed meeting, sponsored by the Noe Valley Democratic Club at St. Philip's Church, came as a surprise to many, as Nutraceutical and its representatives had spent years evading community members, elected officials, and the press. While attendees acknowledged that it took guts for Diaz to show up, the overall reception bordered on hostile.

"This is the height of chutzpah," said Upper Noe Neighbors president Vicki Rosen. "You are out of touch with the reality of the neighborhood and what we want."

As Diaz explained, Nutraceutical filed a conditional use application in the spring of 2007 seeking to demolish the existing structure and replace it with a multi-story building containing a retail store, residential units, and possibly a community space. Rick Crawford of the San Francisco Planning Department told the Voice last fall that the agency asked for more details, but heard nothing further from the company.

Since then, the economy has gone into a tailspin, and Whole Foods has signed a lease for the former Bell Market space across the street (see story, page 1), calling into question the viability of Real Food's original plans.

"We do want to move the project forward, but we probably will scale it back," Diaz said, adding that he does not view Whole Foods as a competitor.

"We're a small health food store, and our commitment has always been to run neighborhood markets," he continued. "We feel the store belongs to you, it belongs to the neighborhood."

This assertion did not sit well with community members who have felt stonewalled for the past half decade.

"I'm astounded by the contention that Real Food is a small natural food company--it's a subsidiary of an enormous corporation," said Leslie Crawford, part of the group that founded the Noe Valley Farmers' Market in response to Real Food's closure. "We tried reaching out and we got no consideration. It feels insulting to say you want to be part of the neighborhood after five years."

After an audience member shouted that he hadn't heard an apology, Diaz said, "I do apologize for the pain of five years.... We did not deliver on time." He also acknowledged that the company "did make a lot of mistakes in closing the store," but he made no mention of the labor dispute.

Deal Basically Back Pay

The settlement Diaz announced appears to be the final step in a long and tedious process.

In November 2005, an NLRB judge ruled in favor of the former employees on nearly all counts, and a three-member panel upheld the decision in July 2007, ordering that the terminated workers be awarded back pay and offered jobs at other company stores. Nutraceutical filed an appeal, and the board asked the parties to enter negotiations with a court-appointed mediator.

The resulting agreement awards the ex-employees a total of $371,219 to cover back pay plus interest, contingent upon their waiving any right to reinstatement or preferential hiring should the store reopen.

The NLRB will allocate the funds to the workers based on a variety of factors such as whether an individual sought other employment and remained in the area, according to Karen Thompson, a compliance officer at the board's San Francisco office. Not all former employees will receive part of the award.

"We think it was ultimately a positive result for everyone," said Stephen Hirschfeld, the local attorney representing Nutraceutical. "My clients made the decision not to spend any more money on litigation and agreed to pay what was essentially severance pay."

"I have mixed emotions about the settlement," ex-employee Sarah "Mitch" Genlot told the Voice. "I'm glad that we won back pay, but disappointed not to have reinstatement be part of the deal. I want them to have to rehire me, if only to work long enough to see a union contract signed."

What Now?

As of the end of February, Nutraceutical had not yet filed an amended conditional use application. Diaz did not respond to repeated phone calls and e-mails from the Voice seeking further information about the company's intentions.

"I'm grateful they came to the meeting, but had hoped they would give a date for their plans," said Dufty. "It still seems a bit of a mystery to me."

Since Whole Foods announced its upcoming Noe Valley debut, support for Real Food's reopening appears to have diminished, with many now favoring alternative uses for the site. Dufty's suggestion at the town hall meeting that the company should consider selling the property was greeted with applause.

"I'm glad the workers finally won, but the decision doesn't begin to address the harm to the community that resulted from the closure of the store," said Peter Gabel, who spearheaded early efforts to negotiate with Nutraceutical. "Why not now donate the building to our public benefit corporation [the Noe Valley Association], take a tax deduction for their generosity, and allow the community itself to develop the property?"

"The settlement is a bittersweet vindication," Dufty concurred. "It's clear to me that across the political spectrum of Noe Valley, the consensus is that they should sell the site. I haven't heard from one person who thought it was a good idea for them to pursue a store opening."