Independently owned New Leaf store in Felton | Photo, Reynaldo Barrioz
SIDEBAR | New Leaf’s Wild Roots in the Santa Cruz Mountains
By Mara Reynolds
When New Seasons Market bought out New Leaf Markets in 2013, shoppers in the Santa Cruz area were comforted that the changes to come would mean more of a good thing — for consumers, for the community, for local growers and for the environment.
In reality, the buyout meant that New Leaf was now owned by Endeavor Capital, a private hedge fund that since 2009 has held a majority stake in New Seasons Markets.
With Endeavour have come protests decrying allegedly unsafe working conditions, worker complaints citing retaliation and intimidation, and New Seasons hiring a Trump-friendly union-busting firm.
Founded in 1985, New Leaf Community Markets began as Westside Community Market with 13 employees in a Santa Cruz warehouse, and was dedicated to stocking local, organic items long before words like “sustainable” or “green-washing” became part of everyday vocabulary.
In contrast, Portland-based New Seasons aims to be “the ultimate neighborhood grocery store,” and is known in the Pacific Northwest for stocking a significant proportion of conventional items alongside natural or organic options.
New Leaf, though, did not expect to make such changes, and when the buyout came, New Leaf was to maintain a distinct brand from its new parent company. The joint companies would focus on the green markets of Portland, Seattle and the greater Bay Area, and would become partners against significant changes and competition in the grocery industry.
The sister companies’ certifications as the very first B-Corp grocery stores soon after the acquisition seemed to assuage any concerns about a corporate takeover. A B-Corp is a for-profit company that pays a fee and is rated by the international nonprofit B Lab on good corporate governance, treatment of workers, community relations and environmentalism.
Considered the “sustainable business” analogy to Fair Trade or USDA Organic certifications, B-Corp certification has become a prominent element of New Seasons and New Leaf’s claim to fame. But while many shoppers may be comforted by the stamp of approval, some have questioned whether the certification might be “replacing unions as the standard bearers of workers’ rights.”
As pioneers of the local natural foods movement, both New Leaf and New Seasons markets built their brands on a commitment to the so-called “triple bottom line”: people, planet, and profit. Navigating the difficult path of a capitalist company boasting traditionally non-profit missions, the companies have largely been embraced and celebrated by the progressive communities where they originated. They distinguish themselves from their competition as progressive, community-oriented workplaces, deeply rooted in social responsibility and the greater good.
For New Leaf, partnering with New Seasons was supposed to invite new opportunities for growth. As The Oregonian reported in 2013, “by joining forces with a larger chain, New Leaf gains more clout in going after locations for new stores.” At the time of the acquisition, New Leaf had eight stores. New Leaf founder Scott Roseman (who joined the New Seasons’ board of directors) told the Santa Cruz Sentinel that New Leaf was “ready and willing to go to Aptos” and said he hoped to add one to two stores a year.
Five years on, the partnership with New Seasons has not delivered on those expectations: New Leaf’s San Jose location was converted to a New Seasons in 2015, and New Leaf shuttered its Pleasanton location early last year. New Leaf has plans to open just one new store, in Aptos this fall — the first since the now-closed Pleasanton branch opened just months before the New Seasons buyout in 2013.
ENTER THE HEDGE FUND
New Seasons, however, kept on growing. In 2013, the chain had 13 stores; it currently has 18 in the Portland area, one in San Jose and one more in the Seattle area, with plans to open two more there. But in California, its stores under the New Seasons name haven’t taken off as expected. After a concerted push to expand into the greater Bay Area, New Seasons announced in early February it would be closing its Sunnyvale location after only six months, and that it was scrapping plans to open stores in near-complete sites in Emeryville, San Francisco and Carmel. “In California,” their announcement assures, “the company will focus growth through its sister company, New Leaf Community Markets.”
At the same time New Seasons announced this shift, it also announced the resignation of CEO Wendy Collie.
Before joining New Seasons, Collie had spent nearly 18 years expanding Starbucks Coffee into the ubiquitous brand it is today. Less than a year after her arrival at New Seasons, the grocery chain purchased New Leaf. Collie, who stated in a press release that her abrupt departure after five years with New Seasons was “strategic” and that she was leaving the company on good terms, cited “today’s disruptive retail landscape” among the reasons for the company’s sudden changes. She named Forrest Hoffmaster and Kristi McFarland (Chief Financial Officer and Chief People Officer, who will retain their previous titles) as “co-presidents” in her stead. Both have corporate backgrounds: New Seasons’ employee profiles say Hoffmaster joined the company directly from Whole Foods, while McFarland’s resume includes such brands as Peet’s Coffee and Tea, The Gap, Williams-Sonoma and Banana Republic.
While most Central Coast shoppers remain unaware or unperturbed by changes taking place at New Seasons, many in the Northwest have been sounding alarms for years. New Seasons Markets caught the attention of Portlanders back in 2009, when a majority stake in the company was purchased by hedge fund Endeavour Capital and an aggressive expansion campaign began. Endeavor’s stake in New Seasons is roughly 60 percent, according to The Oregonian.
A private equity investment firm described in Business Wire as “a West Coast source of capital and long-term partnership for lower middle market companies across the western US,” Endeavour Capital’s investments have generated an estimated billion dollars in profit since 2004, according to Crunchbase.com.
The investment in New Seasons has netted the firm a reported $17.6 million in profits so far.
Endeavour Capital aims to distinguish itself from so-called “vulture capitalist” firms that focus on quick turnarounds and high profits, often by slashing jobs. Endeavour’s website says it has “longer average investment periods (5-10+ years) and fund life compared to most investors.” This year is year nine for New Seasons. The recent shake-up in leadership at New Seasons led one news analyst to speculate that “Endeavour already has owned New Seasons longer than it wanted to. Right now, I suspect, it is just looking for an exit ramp.”
Endeavour has come under increased scrutiny by consumers and employees of New Seasons in the Pacific Northwest, particularly as the grocery chain vied for expansion into the Seattle area (where most grocery stores are unionized) while simultaneously pushing back against workers who expressed concerns about allegedly unsafe and unfair labor practices following Endeavour’s takeover.
Portland’s Local 555 of the United Food and Commercial Workers, or UFCW, recently launched a website, High Cost Endeavour to promote their “Endeavor Investor Watch” campaign and “raise awareness about the ethical implications and potential legal liabilities within Endeavour Capital’s investment portfolio.”
One key criticism of Endeavour (and in turn New Seasons) arises from ties to the M.J. Murdoch Charitable Trust, whose investments in various Endeavour funds brought more than $4.5 million in revenue for the trust’s grant-making operation in 2015. The trust, whose mission is “to strengthen the (Pacific Northwest) region’s educational, scientific, spiritual and cultural base in creative and sustainable ways,” has come under sharp criticism for its millions of dollars in annual charitable contributions to a wide range of evangelical, homophobic, anti-choice, anti-union and anti-science efforts. These include The Alliance Defending Freedom (deemed a hate group by the Southern Poverty Law Center) that sponsored the so-called “bathroom bills”; Americans United for Life, the “legal architect of the pro-life movement”; and The Freedom Foundation, whose “number one stated focus is to defund the political left,” to name a few.
The possibility that profits from New Seasons stores may be funding such efforts has fueled a vocal public resistance to the expansion of the grocery chain into the Seattle area, where six of nine Seattle City council members have joined nearly 30 local groups and elected officials in a letter outlining New Seasons’ “failure to meet our community standards.”
UNREST IN PORTLAND
The chain’s hedge-fund ownership wasn’t high on the list of concerns for employees in Portland when they began to organize informally about 10 years ago. (Though criticisms have been renewed in recent weeks following the announcement of leadership changes, with a protest and a petition targeting New Seasons’ ties to Endeavour and the Murdoch trust).
Well before the arrival of Wendy Collie or Endeavour Capital, New Seasons workers — mainly from the Seven Corners location in Southeast Portland — have held regular informal gatherings to discuss their concerns and priorities as the company grew.
They had some success — one of the workers’ early victories was winning trans-inclusive medical benefits, then available to any staff member working 20 hours or more per week. More recently, workers successfully lobbied for gender-neutral bathroom accommodations, have pushed for more diverse hiring, better training for management, and raised the starting wage from $12 to $13 per hour.
But alarm about the company’s apparent willingness to dismiss workers for organizing such efforts amplified in early 2012 following the firing of the so-called “tofu bandit,” Ryan Gaughan. According to the Portland Mercury, Gaughan was fired after nine years on the job for failing to pay for two scoops of rice and two scoops of tofu.
Gaughan says he was terminated less than a month after raising concerns over cost-of-living salary increases, and that the company combed through camera footage of him for five days following his complaint in search of a fireable offense. Gaughan declined to participate in the company’s proposed mediation process, describing it as “unfair because employees never learn the name of the mediator who reviews their testimony — which is passed through New Seasons’ human resources department — or even the name of the third-party mediation company New Seasons uses.”
Asked to describe the mediation system New Seasons uses for employee concerns or following a disputed termination, New Seasons spokeswoman Nicole Brooks said: “From the beginning, we’ve known that respecting and empowering staff is what makes us special.” Brooks lists a number of store methods for communicating with staff, such as annual surveys and an anonymous “staff ethics reporting” hotline. “New Seasons staff are part of an open and healthy community of dialogue and two-way communication and have significant input on decisions and priorities of the company.”
Gaughan’s complaint with the National Labor Relations Board was denied following appeal due to insufficient evidence showing New Seasons acted with animus based on protected activities. Since his incident, at least two former employees have filed formal complaints with the NLRB, saying they were fired for protected efforts. The two most recent claims were also dismissed last week for insufficient evidence, but remain open for appeal. Since 2012, at least three similar complaints were withdrawn — one as recently as last month.
Voices spoke with Reyna Gillet, who works with UFCW Local 555, Jobs with Justice and other organizers to support the New Seasons Workers United campaign in Portland. She worked for New Seasons for two and a half years and was among the early group of worker organizers. Gillet says that since Endeavour Capital replaced the management team in 2013, drastic changes at New Seasons happened “overnight.” With the restructuring that often occurs during such transitions, departments and positions were combined, the number of lead positions was halved, and employees who’d been with the company for years were demoted and asked to re-apply for the jobs they had previously held.
In its branding and employee communications, New Seasons often promotes its “speak up” culture, citing its regular “coffee talks” where staffers can voice concerns to management and feel heard.
“Sure, they’ve got an open door policy,” Gillet says, “but they’re real clear to point out there’s an exit sign over that door, and if you don’t like it you can leave.”
Increasingly, employees of New Seasons can no longer afford to live or shop in the neighborhoods where they work, Gillet says. Many can’t afford to buy groceries at the stores — even with a 20 percent employee discount — and are reliant on a diminishing supply of “blue slips,” expired and damaged foods that would otherwise be composted, donated or tossed. Even these, one employee said, are hard to get: there are no longer enough managers to coordinate employee access before the goods are donated.
When Voices reached out to current New Seasons employees for comment, the conversations were all on condition of anonymity.
“I’d love to have my name on this,” one employee explains, “but I know I’m being watched.”
The employee says she was cited by management for “time-theft” — taking a break that was a minute too long. The manager who complained wasn’t on the floor but had watched the employee on the store’s surveillance cameras. Learning they were observed this way was “kind of dehumanizing” and “insulting,” the employee says, particularly since she’d been recognized for going above and beyond to help coworkers and customers during un-clocked time. Asked about the alleged incident, News Seasons’ Brooks says, “we do not use cameras for the purpose of monitoring or surveilling employees.”
As a worker who’s been with the company more than 11 years, the employee says that while New Seasons boasts a higher-than-average starting wage and advocates for raising the minimum wage, as workers move up the ladder their raises don’t keep up with industry norms or cost-of-living increases. In the five years since Endeavour entered the picture, she says her hourly wage has gone up less than a dollar. The employee says she and other workers feel frustrated because New Seasons credits its success to “a wholesome, small hometown message of being a company that cares about its employees,” but internally has “a second message that everyone is completely replaceable.”
She and other workers feel “chewed up and spit out,” she says. “The reason I’m still with New Seasons is I’m a member of my community and both live and work in my store’s neighborhood. I have genuine connections to customers who are loyal, even if misguidedly loyal, and I care about the people and families I work with. It’s difficult to go into a building full of loved ones who are not being treated well. To see the treatment get worse every quarter is upsetting.”
Worker and community concerns about the discord between brand and practice have amplified with New Seasons’ expansion strategy. As described in a 2016 article in The Oregonian, Jerry Chevassus, New Seasons’ chief development officer, “outlined New Seasons’ strategy for choosing locations: It targets neighborhoods in the process of gentrification, he said. Often, the addition of a New Seasons will push rents and home values higher, adding to that process.”
Brooks, however, says the company looks for “neighborhoods that share our values around healthy food and healthy communities. We are deeply invested in hiring from our local communities, supporting vendors in local communities and advocating for policies that positively impact the people we serve.”
Meanwhile, the Portland workers’ meetings expanded beyond living room conversations. A growing number of employees gathered at the local branch of Jobs With Justice, and before long the UFCW answered calls for additional support.
On November 1, 2017, New Seasons Workers United, or NSWU, went public with their campaign to educate New Seasons employees about their right to collective bargaining and to hold the company accountable for their public brand and image. The group released a statement of principles, to date signed by more than 300 current and former employees, and has since gained the support of local unions, representatives, senators, commissioners, and political candidates. According to the Northwest Labor Press, workers attempted to present Collie with their petition and a letter, asking her to agree to a proposed code of conduct and to contact UFCW to set up a meeting.
The proposed conduct code read:
- Sit down with us, discuss our concerns, and begin to map a shared path forward.
- Publicly commit to respect workers’ right to organize and not oppose these efforts.
- Publicly commit to not hire “union busting” firms whose purpose is to undermine our efforts
- Comply with federal, state, and local labor laws.
- Rehire with full back pay any worker terminated because of their involvement in worker-led efforts to improve standards at New Seasons.
Three months later, Collie has resigned.
Her replacements took the helm March 1. The workers’ group — which asserts they are not part of a broader union but are a united group of employees merely representing themselves as a protected activity — never received a direct response from Collie.
ENTER THE UNION BUSTERS
The same day NSWU launched their campaign, however, Collie sent out a staff letter titled “Speaking Up: A Value We Hold Dear,” inviting employees to speak “directly” to the CEO, management and human resources. A new “Labor Relations Q & A” page appeared on the New Seasons company website, explaining that “if a group wants to officially represent our staff, they need to be officially elected and certified by the National Labor Relations Board. The group you’ve seen mentioned in the news hasn’t been through this process and currently comprises only a small fraction of our entire staff. We are communicating directly with those staff to whom we are accountable.”
A Nov. 17, 2017 letter from Collie to employees with the subject “Doing our Research on Unions Together” told staff, “We always want our conversations to be directly with you” and said the fledgling union “would seek to act, speak and make decisions on your behalf … You have rights. The right to … speak on your own behalf about your working conditions and employment. This situation would involve federal laws, possible secret ballot elections, and a majority vote by staff to authorize a union to act on your behalf. Again, none of this is happening now but it’s possible.”
In a pamphlet handed to customers titled “What’s Going on Here?” during protests at stores, New Seasons representatives wrote, “Democracy is complicated sometimes, but it sure is better than the alternative.”
Asked if New Seasons considers itself a democracy, Brooks said, “New Seasons Market puts people first. Our staff are the heart and soul of our company, bringing the mission to be the ultimate neighborhood grocery store to life every day.”
New Seasons never did sit down with the NSWU. Instead, it hired Lupe Cruz & Associates, which, according to the firm’s website, specialize in “achieving employee buy-in for new business realities, often in come-from-behind situations.” Department of Labor Records describe the firm as specializing in “union avoidance,” according to the Washington Post.
Or, in plain English, union-busting. “Few experiences in business are as counter-productive as a union organizing campaign,” the Cruz website declares.
The same firm was hired in 2015 by the Trump Organization to block unionization efforts of custodial workers at Trump Hotel Las Vegas. Workers there ultimately appealed to the NLRB and won. Also that year, an NLRB judge ruled that a “labor consultant” from Cruz & Associates working on behalf of Con-Way Freight “indicated a willingness to resort to physical violence to protect his interests” and that “this conduct was reasonably construed as a threat.”
Brooks says the company is unaware of the NLRB complaints or rulings about Cruz & Associates, and that “our relationship with the firm was to hold voluntary staff information sessions offering unbiased information about the unionization process. Those sessions and our work with them is now complete.”
When Cruz & Associates held their “Union Information Meetings” at New Seasons stores in the Portland area, it wasn’t immediately clear to many workers that the meetings were optional. Employees say staffer’s names were listed on a roster showing them which meeting to attend, implying it was part of their expected schedule for the week. At the meetings, facilitators had printed out the names of everyone who’d signed the New Seasons Workers United Statement of Principles and put the papers on the wall. But they used old totals, giving the impression the group was smaller than its current size, the workers say.
One employee who attended the meeting described the tactic as “intimidating,” with the inference that anyone who signed the agreement publicly would be subject to monitoring and public shaming. Unions were presented by the associates as “an outside force that wanted to take our rights.” Meanwhile, the employee said, “it was like pulling teeth” trying to get the hosts to identify who they worked for or who they had worked with in the past. “It was a pretty ugly day.”
On December 7th, New Seasons workers issued a formal complaint to B Lab, urging the group that certifies B-Corps “to hold NSM accountable for their unfair and illegal labor practices.” The workers say they have not received any “meaningful follow up” on the subject.
At this point, with less than 10 percent of current staff publicly signed on to their statement of principles, NSWU has no immediate plans to call for a union vote among New Seasons’ 3,200 employees. Nor has the group made formal overtures to workers at their sister company in California, New Leaf. For now, the group is simply waiting for the new bosses to publicly affirm that employees will not be retaliated against if they educate and inform fellow workers about their right to consider unionization.
To be sure, there’s much debate among grocery workers as to where New Seasons stands on the spectrum of good employers, as well as the relative value of being a union store. But in a company that brands itself as “the friendliest store in town,” clearly some workers are finding it harder to keep smiling.
What isn’t clear is what the changes in New Seasons’ upper management mean for New Leaf shoppers and employees. Then there’s whatever fallout comes — or not — from the unfair labor practice allegations that could still be appealed. And finally, Endeavour could decide to cash out its investment at any point.
New Leaf spokeswoman Kate Halper says, “New Leaf Community Markets stores will remain business as usual and we look forward to continuing to serve our local communities. And we are thrilled to be joining the Aptos community as we open our New Leaf store in Aptos this fall.”
But if the results of a recent online petition and related consumer activism are an example, shoppers’ voices — and dollars — may prove to be a determining factor for the brand.
A January petition titled “Keep New Leaf organic” expressed dismay after Santa Cruz’s Westside New Leaf began stocking conventional products such as “Karo syrup, C&H sugar, and Cheerios as required by their parent company, New Seasons.”
Twenty-four hours, nearly 400 signatures and dozens of comments later, petitioner Hamsa Merlet reported that the offending cereal was no longer on the shelves. But as she notes in an update after speaking “at length” with New Seasons’ community liaison, “what I learned boils down to the basic fact that New Seasons openly states they are not a ‘health food’ chain, their store model is a mix of conventional and organic, akin to Safeway. They are now applying that model to New Leaf stores to see if it is a success.”
While Endeavour and the sister companies continue to frame New Seasons and New Leaf as like-minded, Merlet says “New Seasons doesn’t think stores devoted to ‘health food’ are what consumers want.”
Reflecting on the recent changes in management and strategy, one New Seasons employee suggests the company will again try to expand aggressively into California. But recognizing that the New Seasons name is slipping in the Pacific Northwest, they’ll likely do so under the “more proud, friendly brand” of New Leaf.
“There will be a lot more New Leafs coming,” she predicts.
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