WAL-MART CITED FOR DISCOVERY ABUSE |
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by Bob Van Voris National Law Journal 4/26/99 Wal-Mart cited for discovery abuse $18 million fine seen as part of a pattern of violations the retail giant calls unfounded by Bob Van Voris WDWDW. A sign is posted in Wal-Mart's corporate legal department with those letters, which stand for "What did we do wrong?" -- a homey mantra handed down from the company's legendary founder, Sam Walton. When Wal-Mart is in the wrong, Sam believed, the company should pay, says Wal-Mart Asst. General Counsel Ron Williams. But when the answer to WDWDW is "nothing," Wal-Mart fights hard. Maybe too hard. And maybe even dirty, say Wal-Mart's legal adversaries. According to court files, Wal-Mart has been fined by judges for discovery violations in at least 15 cases during the past three years. This includes a recent $18 million discovery sanction against Wal-Mart in a Beaumont, Texas, case after the judge concluded that Wal-Mart and its Texas attorneys had withheld evidence. Judge James Mehaffy imposed the fine-which he calculated as one-thousandth of Wal-Mart's net worth-saying that Wal-Mart has "a corporate policy" of frustrating the discovery process in Texas courts. Meissner v. Wal-Mart Stores Inc. , A-159,432 (Tex. Dist. Ct. Jefferson Co.). Wal-Mart's lawyers say that the sanctions are unfounded, and they deny that there is any pattern of discovery abuse. "That's not what our company stands for. And that comes down from Sam Walton," says Mr. Williams. Wal-Mart has hired a former Texas Supreme Court judge to appeal the sanction, and they are confident that it will be overturned. But plaintiffs' lawyers across the country complain that Wal-Mart does have a pattern of abusing the legal system, and they point to many examples: A Florida judge sanctioned Wal-Mart a total of $7,000 for repeated discovery violations, including altering a safety training videotape. The case settled for a confidential sum just two days before the judge was to consider criminal contempt charges against Wal-Mart and its lawyers. Woska v. Wal-Mart Stores Inc. , No. 95-3998 (Cir. Ct. Orange Co., Fla.). In a personal injury case in which a customer claimed brain damage after being knocked down by merchandise falling off a high shelf, a Las Vegas federal court judge fined Wal-Mart $15,000 for violations that included destroying photographs of the accident scene. The plaintiff won a $4 million verdict at trial. The sanction was affirmed on appeal, although the verdict was sent back for the trial judge to itemize damages. Shafer v. Wal-Mart Stores Inc. , No. 95-650 (D. Nev.). In Nebraska, a trial judge imposed a $5,000 fine and struck Wal-Mart's answer, in effect preventing the company from putting on a defense on the issue of liability, after the company refused to turn over a document listing injuries to employees and customers nationwide from falling merchandise. After a trial limited to the issue of damages, the plaintiff was awarded $186,000. Greenwalt v. Wal-Mart Stores Inc. , 567 N.W.2d 560 (Neb. 1997). In another case in which falling merchandise landed on a customer, a federal magistrate judge in Austin, Texas, fined Wal-Mart $5,000 for numerous discovery abuses, laying the blame on the company and not its lawyers. "[I]t appears Defendant Wal-Mart has kept its counsel 'in the dark' on many issues," wrote Judge Stephen H. Capelle. Garcia v. Wal-Mart Stores Inc., No. 96-560 (W.D. Texas). A Texas state court judge hit Wal-Mart with $120,000 in sanctions in a sexual harassment case in 1996. Among the documents withheld, the court concluded, was a manual on Wal-Mart's policies for dealing with sexual harassment. An appellate court upheld the sanctions, along with a $656,000 judgment on the claim. Wal-Mart Stores v. Davis , 979 S.W.2D 30 (Tex. Ct. App. 1998). Wal-Mart: Big & Lean Like the small chain of Midwestern stores that grew into the world's biggest retailer with 2,400 stores, Wal-Mart's legal team mirrors at least two of Sam Walton's founding principles: lean staffing and volume business. Wal-Mart's legal department has approximately 26 lawyers keeping tabs on 9,000 to 10,000 cases, Asst. General Counsel Williams says, and most are personal injury claims. More than 100 law firms across the country represent Wal-Mart in court, many of them working on a flat fee per case basis. Mr. Williams says that complaints from the plaintiffs' bar may simply reflect a dislike of some of the tough stands Wal-Mart sometimes takes in litigation. But judges in several cases have suggested that foot-dragging and misrepresentation may be intentional Wal-Mart litigation strategies. In the Las Vegas falling merchandise case, for example, the magistrate, after being presented with affidavits detailing other Wal-Mart cases with missing photographs, wrote, "Although counsel's affidavits do not amount to conclusive proof that Wal-Mart has engaged in a nationwide policy of evidence spoliation, they do raise troubling questions about Wal-Mart's litigation tactics generally." And a clearly frustrated Alabama judge, considering sanctions he decided not to impose, asked, "[W]hat do they teach in Arkansas? Is there something in the drinking water in Arkansas that says perjury is all right?" Wal-Mart's legal troubles are arising in the midst of two broader, reinforcing trends, according to trial lawyers and academics. Judges are more willing to police the discovery process and punish abusive conduct than they were just a generation ago, when sanctions were practically unheard of, says Richard L. Marcus, an expert on civil procedure who teaches at the University of California, Hastings College of the Law. At the same time, plaintiffs' lawyers who take on big companies such as Wal-Mart are talking to one another. Bruce Kramer, of Borod & Kramer in Memphis, Tenn., started an informal Wal-Mart litigation task force at a meeting of the Association of Trial Lawyers of America a few years ago. His firm has a database of about 60 lawyers, journalists and others who have requested information about Wal-Mart. Frank Pasternak, one of the plaintiffs' lawyers in the Las Vegas case, had so many inquiries from other lawyers that he set up a Web site to post the depositions and trial transcripts, at www.execpc.com/~frank/Deps.zip. And a Texas woman who claims that she was totally disabled when merchandise fell on her head in a Wal-Mart store in 1993 maintains the recently created "Wal-Mart Personal Injury Survivor" Web site, which posts lawsuit information, at www.walmartsurvivor.com. They communicate by e-mail and any number of Internet bulletin boards. One lawyer searching for cases of Wal-Mart discovery abuse even advertised in a Washington, D.C., legal paper. The $18 Million Sanction But Alto V. Watson III, one of the lawyers in the $18 million Texas case, says that he used more traditional means to collect information about Wal-Mart's alleged discovery abuse: "I talked to one guy, who told me about another guy, who told me about another guy..." Still, lawyers who try to track discovery sanctions against Wal-Mart are hampered by the fact that the orders are rarely published -- and Wal-Mart isn't telling. An Alabama state court judge considering sanctions against the company recently ordered Wal-Mart to produce a witness to reveal how many times it has been sanctioned. No one showed up. Goodman v. Wal-Mart Stores Inc., No. 97-52 (Ala. Cir. Ct. Macon Co.). The Texas suit was brought by Donna Meissner after she was kidnapped from the parking lot of a Wal-Mart "superstore" in Beaumont and then raped. She sued, claiming that Wal-Mart should have had better security. The discovery dispute centered primarily on a survey of store security that Wal-Mart conducted in 1993. The survey, of 1,347 Wal-Mart stores, showed that 80% of the crimes committed on Wal-Mart property (not counting shoplifting), occurred outside the store. In 1996, a Wal-Mart official responsible for store security wrote an article in a trade journal that discussed the survey and revealed that at a store location in Tampa, Fla., with a high-crime rate, parking-lot crime dropped to zero after the store introduced a single security patrol vehicle. The official was also quoted discussing the survey in a newsletter later the same year. Ms. Meissner's lawyers argued, in four separate hearings before Judge Mehaffy, that lawyers across the country were getting different answers from Wal-Mart to similar discovery requests. Wal-Mart, the lawyers claimed, was doing everything it could to resist identifying the official or producing a summary of the survey or the articles. Wal-Mart's lawyer in the Meissner case, Alan Magenheim, of Houston's Magenheim, Bateman, Robinson, Wrotenbery & Helfland, says that the differences can be attributed to differences in the discovery requests and in the law that applies to each case. But the judge was unconvinced, particularly by Mr. Magenheim's argument that the 1993 project was a "survey," not a "study," which the plaintiffs' lawyers had asked for. "I hope the stockholders do learn about this, and I hope some pressure is applied to Wal-Mart to make it behave as a responsible corporate citizen," Judge Mehaffy stated in court. In addition to the $18 million fine, the court entered a default on liability in favor of Ms. Meissner and awarded Mr. Adams' firm $38,600 in fees and expenses. Judge Mehaffy also fined Mangenheim Bateman $50,000. Fairness Issue For plaintiffs, the increased availability of sanctions means that big companies can no longer deprive their clients of a fair trial by hiding evidence. But defense lawyers believe that their opponents often try to trap them by making broad discovery requests, then moving for sanctions when a document they already have from another source is not forthcoming. "The whole goal of the discovery game, as it's being played by the plaintiffs' bar, is not to try the case on its merits, but rather try the defendants' conduct in discovery," said Stephen Morrison, a former president of the Defense Research Institute. [AB-1] But Meissner lawyer Alto Watson sees a lesson in all this: "I think Mark Twain put it best: If you always tell the truth, you never have to remember what you said." _______________ American-Buddha Librarian's Comment: [AB-1] You gotta be a moron to believe this. A plaintiff's lawyer has NOTHING if he or she doesn't have discovery, and it has to be admissible. Document authenticating testimony is crucial. There are no "merits" without discovery. And the discovery process is NOT A GAME! This is simply the expression of prejudice against plaintiff's lawyers, a lot like racism, and authoritarianism. It's the Southern strategy. |