Courts Refuse State Agency’s Requests to Shut 2 Supermarkets

In a boost for the beleaguered California Market chain, courts in Los Angeles and Santa Ana on Wednesday refused a state labor agency’s requests to temporarily shut down supermarkets in Koreatown and Garden Grove.

The Superior Court rulings were a setback for the Division of Labor Standards Enforcement, which last week cited and told four California Market stores to cease business for allegedly operating without workers’ compensation insurance.

But the six-store company--one of the state’s largest Asian supermarket chains--defied the agency’s stop orders, saying it had just obtained the coverage from an insurance broker.

Labor officials, claiming they had verified that two of the stores are operating without coverage, pressed ahead by seeking temporary restraining orders.

But at one hearing early Wednesday, Judge Edward Ross in Los Angeles called the labor division’s petition “premature” and “ineffective,” according to lawyers. Later in the day, Superior Court Commissioner Jane Meyers in Santa Ana took a similar action, without comment.

“They didn’t have a leg to stand on,” said Ira Reiner, a former Los Angeles district attorney who argued the case for California Market in both proceedings.

Further court hearings on the matter are set for May 17 in Los Angeles and May 22 in Santa Ana.

Rick Rice, a spokesman for the state labor agency, said agents will continue to monitor the supermarkets for compliance. “We certainly plan to pursue this,” he said.

Managers at California Market declined to comment.

Wednesday’s court actions were the latest in a long-running legal battle between labor officials and California Market, owned by Richard Rhee.

The state agency is demanding that Rhee pay $2.2 million in back wages and penalties for alleged violations of overtime, minimum-wage and other labor laws. Rhee has also been charged with multiple criminal counts for allegedly failing to pay unemployment insurance tax, and he is being investigated by the state Department of Justice and the state Board of Equalization for allegedly underpaying sales taxes.

Reiner declined to comment Wednesday on those pending cases and investigations.

Last week, in issuing stop orders at four California Market stores, state labor officials took what they said was a “drastic but necessary” step to force compliance.

But the next day, labor officials acknowledged that one of the four stores, in Gardena, did have workers’ comp insurance. Officials also said it was unclear whether the California Market in Rowland Heights had coverage.

At the court hearing Wednesday in Los Angeles, Reiner showed a signed declaration from an insurance broker who said he wrote a “binder,” an agreement to provide insurance, for supermarkets in Koreatown and Garden Grove.

The binders were written on the day the stop orders were issued, and California Market said the paperwork provided temporary insurance coverage through California Compensation Insurance.

Labor officials said they were told by California Compensation Insurance that those binders were not valid, but Reiner argued in court Wednesday that a binder written by an agent for California Compensation Insurance is essentially a policy.

However, Reiner has previously said that the two supermarkets went for “some period” without workers’ comp insurance.

“All we wanted all along is for them to have workers’ compensation,” said the labor agency’s Rice. “We’ll be in court [in mid-May] to see that those binders are valid.”