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FCPA Blog Daily News

« FDIC orders compliance makeover at Burke & Herbert Bank | Main | WSJ: Money laundering probe could hold up Commerzbank sanctions settlement »
Monday
Sep292014

Open letter to the ‘New Walmart’ about Delaware litigation

Image courtesy of Walmart Stores IncWalmart has not produced any of the files ordered released by the Delaware Supreme Court in its July 23 opinion. The Delaware case could be dismissed in a chain reaction involving a similar case in Walmart’s home state, Arkansas, before any files are produced.

That’s the odd legal landscape described in letters to the court this month from the shareholder’s counsel and rebuttal from Walmart. It could happen like this:

First, the Arkansas case is dismissed because its complaint does not describe the allegations of misconduct with sufficient detail that are in the files Walmart is still withholding. (This “Catch 22” situation was actually discussed during oral argument before the Delaware Supreme Court and reported in my prior post.) Then the Delaware case is terminated because the Arkansas case was dismissed, due to a bar against re-litigating the same issues twice (collateral estoppel).

In the end, the files are never produced for court review, and the allegations of director and officer misconduct are never decided on their merits.

Is the "new Walmart" well served by this? Below is my letter of concern to Walmart asking for its review of this situation and a public response. The referenced documents are available on the court’s online site.

The Delaware Supreme Court opinion is here (pdf).

Readers might also wish to know about the New York Times business section editorial critical of Walmart’s withholding of evidence under privilege claims.

*     *     *

Walmart Stores, Inc.
702 SW 8th Street
Bentonville, Arkansas 72716

Attention: Audit Committee of the Board of Directors 

September 29, 2014

Re: IBEW v. Wal-Mart Stores, Inc., C.A. No. 7779-CB

Walmart recently implemented a new world-class global compliance and ethics program that demonstrates the company’s undertaking to put the past behind it. The company’s cooperation with Department of Justice investigation by a continuing worldwide review of allegations of bribery and misconduct is well known.

In contrast to these commendable efforts to move forward, counsel for the company in the Delaware litigation has declined to release any of the files ordered produced by the Delaware Supreme Court in its July 23, 2014 opinion. And, according to counsel for the shareholders, Walmart may move to dismiss all judicial proceedings before the files are made public. (See September 3rd and 10th letter exchange and the company’s September 23rd motion.)

The files ordered released by the Delaware Supreme Court contain factual information, which the Court concluded is critical to the resolution of the allegations of director and officer misconduct under judicial scrutiny. Without that information, the litigation is in danger of being dismissed prematurely because it is too vague, lacking the detailed description of the past events that may be in the withheld files, a “Catch 22” situation. The company’s and the public’s interests are served only by having the allegations of the past resolved on the merits.

Walmart is committed to transparency and compliance with the law. This situation calls for prompt review and a public explanation.

Sincerely,

Mike Scher

_________

Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He can be contacted here.