Court rejects $19 million award to ex-grocer Johnson

By Frank Green, Richmond Times-Dispatch – Sept. 13, 2008

Former Richmond supermarket owner Jonathan F. “Johnny” Johnson lost his $19 million court award in the Virginia Supreme Court yesterday.

He alleged he was forced out of business by Supervalu Inc., a large, Minnesota-based grocery wholesaler from which he agreed to buy merchandise in 1999. A Richmond Circuit Court jury agreed, awarding him $16 million, to which a judge added $3 million in interest.

Johnson was the head of Community Pride supermarket chain, which failed in 2004, leading to his suit and jury award.

However, Supervalu appealed the verdict, and yesterday the Virginia Supreme Court justices held that there was insufficient evidence to prove “constructive” fraud and intentional infliction of emotional distress.

Johnson, who rose from bag boy to the country’s most successful minority grocer, could not be reached for comment. His lawyer, L. Steven Emmert, declined to comment until he had had a chance to speak with Johnson.

Edward J. Fuhr, a lawyer for Supervalu, said, “We are most gratified that at the end of the day the highest court in Virginia agreed with what Supervalu has said in the beginning — it did not do fraud to Johnny Johnson and did not intentionally harm him in any way.”

“We wish Mr. Johnson the best of success in his future endeavors,” Fuhr said.

Supervalu’s lawyers argued to the justices last June that Johnson had presented no evidence of constructive fraud, defined as an innocent or negligent misrepresentation of past or present fact. “Actual” fraud is based on unkept promises.

Supervalu argued that the most damages Johnson could prove totaled $327,000. Supervalu also contended that it was unprecedented for emotional distress to be found in what essentially was a corporate fight.

Last June, Emmert argued that Supervalu’s misconduct was directed toward a man, Johnson, and not his company. As a result, he argued, Johnson lost his livelihood and a good deal of his emotional stability.

But the justices agreed with Supervalu yesterday.

They ruled that although a person may be so closely associated with a business that economic loss damages his emotional state, the evidence “completely failed to establish that Supervalu’s conduct was directed at harming Johnson.”

“In the absence of [improper] conduct directed at a person individually, the law will not recognize a claim of intentional infliction of emotional distress,” yesterday’s majority opinion said.

In a separate opinion, two justices said they would uphold Johnson’s constructive fraud claim but limit the damages to the $327,000. Justice Cynthia Kinser wrote that the “evidence supported the jury verdict in favor of Johnson on the constructive fraud claim.”

Johnson’s doctor testified during the trial that, among other things, Johnson suffered depression and other medical troubles, including post-traumatic stress disorder, stemming from the failure of his grocery-store business.

His $25 million suit alleged that Supervalu manipulated him with unfair and deceitful tactics to keep him from growing.

Supervalu argued that Johnson’s business was failing and not worth the risk of further loans or agreements that would allow him to purchase additional stores in Tidewater.