Whole Foods Market Sues FTC in D.C. Federal Court

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Whole Foods Market Sues FTC in D.C. Federal Court

In the latest salvo in a prolonged duel between the nation's leading natural grocer and the nation's top agency governing the conduct of business, Whole Foods Market at a press conference this morning will disclose that it has filed an action in the U.S. District Court in Washington D.C. to bar the Federal Trade Commission from conducting a trial that Whole Foods said would violate its due process rights in defending its merger with Wild Oats.

Whole Foods is claiming that the FTC has already publicly prejudged the case against it, and has refused to give the grocer enough time to prepare for trial.

In filing its complaint, Whole Foods invoked the Queen of Hearts' famous pronouncement in "Alice in Wonderland," which it said exemplifies indifference to due process rights: "Now for the evidence," said the King. "And then the sentence." "No!" said the Queen. "First the sentence, and then the evidence."

Whole Foods' action claims, "The Defendant FTC has acted no less blatantly than the Queen of Hearts in violating both the Constitutional due process rights of Plaintiff Whole Foods Market, Inc."

"The violations of Whole Foods Market's due process rights here are stark and, therefore, hurt the FTC's credibility," said Lanny J. Davis, attorney for Whole Foods Market, who signed the complaint. "Even more so does the FTC's insistence on hearing this case rather than allowing an objective federal court to hear it."

The first count of the grocer's complaint quotes specific biased prejudgments the FTC made publicly in legal findings in 2008, including that the FTC declared "categorically, without qualification, that the Whole Foods Market-Wild Oats Markets merger reduced competition and was anti-competitive. In 2009, the FTC will be asked to review the same evidence and make a decision."

John Mackey, Whole Foods' co-founder and c.e.o., asked, "How can the same FTC sit as judge and jury sometime in the future of the very same case in which it has already declared that the Whole Foods-Wild Oats merger is illegal and its key expert testimony 'garbage'? The answer is - it shouldn't be allowed to. It has obviously already closed its mind. That's not our understanding of what due process and principles of fundamental fairness are all about."

The complaint's second count accuses FTC of another due process violation: "The FTC is forcing Whole Foods Market to go to trial in just five months and defend itself in 29 separate geographic jurisdictions in a merger that was not anti-competitive. That is unreasonable and impossible, and thus, a violation of Whole Foods' due process rights to a fair trial."

Whole Foods Market is asking the court to issue an injunction barring the FTC from holding the administrative trial, and from reviewing the case itself. Such relief is required, the complaint stateed, because the commission "cannot, consistent with fundamental principles of due process, preside over an administrative proceeding where it cannot present itself, in fact or in perception, as an objective and open-minded adjudicator."

With such an injunction in place, the FTC would still have the ability under current law to re-file the case in U.S. District Court, which, as Whole Foods Market has alleged, would allow a non-biased federal judge to decide the case, the chain said.

Following the press conference this morning, Whole Foods regional managers and store managers from around the country will visit their key members of Congress to ask for fair play from the FTC, the chain said.

Founded in 1980 in Austin, Texas, Whole Foods Market had sales of $8 billion in fiscal 2008. It runs more than 275 stores in the United States, Canada, and the United Kingdom, under the banners Whole Foods Market, Fresh & Wild, and Harry's Farmers Market, Wild Oats, and Capers Community Market.