Allegations of bribery in Mexico, and an ensuing cover-up by company executives, have rocked Wal-Mart this week. And though the company has been lauded in recent years for various sustainability initiatives, this week’s revelations are a reminder of the more troubled side of the company’s history — and further fodder for critics who want to keep its stores out of their neighborhoods. (Hello, New York and D.C.) Simply put, this is hardly the first time the retail giant has felt the glare of negative headlines or legal hot water.
Just since 2009, according to Bloomberg, Wal-Mart has been either a plaintiff or a defendant in 3,044 federal court lawsuits, 358 of those involved employment issues. And while some of the company’s legal tangles have fallen under the “Wal-Mart sued after customer bruises knee” category, several cases and incidents have set records for settlements. Here’s a rundown of some of the more infamous:
Wal-Mart v. Dukes
Before there was bribery in Mexico there was Wal-Mart v. Dukes. In June, the Supreme Court tossed this massive and high-profile class-action discrimination suit brought against Wal-Mart on behalf of around 1.5 million female workers.
In a 5-4 ruling, the justices said the plaintiffs’ lawyers hadn’t identified a common corporate policy that led to gender discrimination, Bloomberg reported at the time. “[The workers] provide no convincing proof of a companywide discriminatory pay and promotion policy,” Justice Antonin Scalia wrote for the majority. All nine justices, though, voted to overturn an appeals court decision that approved the class action.
The Court’s decision was seen as a tightening of rules for large class-actions. Explaining the ruling for The New Yorker’s News Desk blog, Jeffrey Toobin noted that “[t]he dissenters thought another theory might work better for the plaintiffs… But it’s worth noting that there was a good degree of ideological agreement in this case–that there are some things simply beyond the abilities of our federal courts. And cases with a million plaintiffs are among them.”
The 63-For-1 Special
In late December 2008, Wal-Mart announced that it had settled 63 wage and hour class-action lawsuits in both federal and state courts, and agreed to pay at least $352 million — and up to $640 million. At the time, lawyers told The New York Times that it was the largest settlement ever for wage violations. The lawsuits accused the retail giant of forcing employees to work unpaid off the clock, preventing lunch breaks, and erasing hours from time cards.
“Resolving this litigation is in the best interest of our company, our shareholders and our associates,” Wal-Mart general counsel Tom Mars said in a statement at the time. “Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today.”
The end of Mars’ statement was echoed this week by current Wal-Mart spokesman David Tovar, who said in a statement reacting to the Times’ bribery expose that “Many of the alleged activities in The New York Times article are more than six years old. If these allegations are true, it is not a reflection of who we are or what we stand for.”
The Immigration Oopsie
A four-year federal investigation into allegations that Wal-Mart used illegal immigrants to clean its stores ended in March 2005, with an $11 million settlement that did not include any admission of wrongdoing on the company’s part. While a small sum for a giant company like Wal-Mart, the settlement was called a record for civil immigration case.
“Today we are acknowledging that our compliance program did not include all the procedures necessary to identify independent floor cleaning contractors who did not comply with federal immigration laws,” Wal-Mart general counsel Tom Mars said at the time.
At a press conference in Washington D.C., Assistant Secretary for Homeland Security Michael Garcia said 12 contractors had admitted guilt and agreed to pay $4 million.
“This case breaks new ground not only because this is a record dollar amount for a civil immigration settlement, but because this settlement requires Wal-Mart to create an internal program to insure future compliance with immigration laws by Wal-Mart contractors and by Wal-Mart itself,” Garcia said, according to MarketWatch.
The DVD Settlement
Just this past November, Wal-Mart agreed to pay $27.25 million to settle a lawsuit brought by Netflix subscribers in 2009. The subscribers charged that Netflix and Wal-Mart colluded when they agreed to 2005 to stay out of each other’s way, with Wal-Mart staying out of the DVD-by-mail game and Netflix promoting the retailer’s DVD sales business, CNN reported at the time.
According to Time, $6.9 million of the settlement was claimed for attorney fees, and $1.7 million went to “other costs,” so the remaining $18.7 million divided among the estimated 40 million Netflix subscribers who signed up between May 9, 2005 and September 2, 2011 means each person would receive around 47 cents.
The $86 Million Vacation
In May 2010, Wal-Mart agreed to pay between $43 million and $86 million to settle a wage-and-hour class-action lawsuit in California brought on behalf of around 232,000 people.
According to Reuters, Wal-Mart had been accused of failing to pay vacation, overtime, and other wages to thousands of former workers, and the settlement was the equivalent of around two days of after-tax operating profit for the company.
There was also a $78 million 2006 jury verdict in Pennsylvania over rest breaks and unpaid work, a $172 million 2005 verdict in California over meal breaks, a $54 million settlement in Minnesota in 2008, and a $40 million settlement in Massachusetts in 2009.
The Rogue Exec
In December 2004, Thomas Coughlin retired as vice chairman of Wal-Mart Stores, after more than 25 years with the company. By August 2006, he had pleaded guilty to stealing money, merchandise, and gift cards from the retailer, and was sentenced to 27 months of home detention by a federal court. He was also ordered to pay a $50,000 fine and $400,000 in restitution.
The Associated Press reported that Coughlin admitted in court that, even though he was earning a huge salary, he defrauded the company to pay for care for hunting dogs, to lease a private hunting area, to upgrade his pickup truck, and to buy liqour and a cooler — along with $3,100 in cash.
