Food Lion parent firm wins ruling

Food Lion's corporate parent, which is in court seeking a $6.9 million tax refund from the state, has won its bid to bar the public from viewing certain court filings despite the objections of the Department of Revenue.

Last month, Wake County Judge Ben Tennille issued a protective order requested by Salisbury-based Delhaize America that permits the supermarket chain to designate filings confidential if they contain “commercially sensitive” information.

Tennille also cautioned that the company and the Department of Revenue should use restraint in labeling confidential documents or risk his order being vacated.

The state contends that Delhaize America improperly tried to reduce its tax liability through “abusive tax shelters” it set up via Coopers & Lybrand, now PricewaterhouseCoopers.

In essence, the state's position is that Delhaize is hiding the company's “true income” in the state with a complex corporate structure that enables it to “arbitrarily” assign profits to an affiliate.

And the state had argued in a court filing that Delhaize's “effort to recoup millions of dollars from the state's treasury through the use of abusive tax shelters should not escape public scrutiny.”

The dispute is in many ways a smaller-scale version of Wal-Mart's effort to obtain a $30 million tax refund from the state, a bid rejected by a Wake County judge in January.

Wal-Mart is appealing that ruling.

The Wal-Mart case gained some notoriety when the giant retailer tried to obtain an order sealing court filings – a move it made after The Wall Street Journal posted court documents online. But, unlike Delhaize, Wal-Mart's request for a protective order was denied.

Officials with the state Revenue Department and Delhaize America had no comment on the case. Representatives with the state Attorney General's office, which represents the state in the case, and PricewaterhouseCoopers declined to comment.

Delhaize America, owned by Belgium-based Delhaize Group, has more than 1,500 stores in 16 states that operate under a variety of names, including Food Lion, Hannaford Bros., Harveys and Kash n' Karry.

That includes 500 North Carolina stores under the Food Lion, Bloom and Bottom Dollar Food names.

It filed a lawsuit in December seeking a $6.9 million refund in income taxes, interest and penalties assessed by the state for the 2000 tax year.