A class-action lawsuit filed in the U.S. District Court for the District of Connecticut, claimed that U.S. Foodservice, Inc. (also known as US Foods or USF), improperly inflated the purported cost of the goods it sold to its customers between 1998 and 2005. The suit said that by relying on cost-plus arrangements, USF thereby breached its contracts with its customers and violated federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) laws. USF denied that it did anything wrong.
Both sides settled this lawsuit out of court. As a result of the settlement with USF, a settlement fund of $297 million, less certain fees and expenses that the Court may order, has been established to pay benefits to class members in exchange for a release of claims against USF.
The settlement with USF offers payment to qualifying customers who, between 1998 and 2005, purchased a product from USF pursuant to an arrangement that defined a sale price in terms of a cost component plus a markup (“cost-plus arrangement”), and for which USF used a value-added service provider (“VASP”) transaction to calculate the cost component.
This agreement is believed to be one of the largest civil RICO class action settlements in recent history.
Gray & White is proud to have been part of the team of excellent law firms representing the class of plaintiffs in this very important class action lawsuit.