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Safeway to Pony Up $42M for Online Price Deceit

SAN FRANCISCO (CN) - Safeway will pay customers nearly $42 million in damages and interest for marking up its online grocery prices, bringing more than four years of litigation to a close.

Lead plaintiff Michael Rodman sued Safeway in June 2011 for violating its terms of service contract with online customers, which promised website prices would match in-store deals.

With a bench trial set to begin next week, Safeway ended the class action on Monday by submitting a proposed order for damages that was promptly approved by the judge.

In August, U.S. District Judge Jon S. Tigar found a nationwide class of online customers was entitled to recover the total amount of markups for Web purchases from 2006 to 2011, calculated at $31.18 million by a Safeway expert.

The judge refused to rule on whether Safeway was liable for price markups prior to 2006, citing a lack of evidence on the grocery chain's previous terms of service with online customers.

In finding for the plaintiffs, Tigar rejected Safeway's arguments that customers knew they were paying higher prices online because one in seven of them told a survey they were "dissatisfied" or "very dissatisfied" about price differences.

"A customer's response that they were dissatisfied does not indicate that that customer knew of the existence of the markup or their right to price parity," Tigar wrote in his 30-page ruling.

The judge officially entered a judgment in favor of the class on Monday, ordering Safeway to pay $30.9 million in damages and $10.9 million in prejudgment interest.

Safeway was represented by Scott Baker of Reed Smith in San Francisco.

The class was represented by James Shah of Shepherd, Finkelman, Miller & Shah in Media, Pennsylvania.

Shah and Safeway's Northern California public affairs department did not immediately return phone calls seeking comment Tuesday morning.

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