Plaintiff Files Reply Brief in §220 Action, Reiterating Stance That Wal-Mart Be Sanctioned

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By Michael Greene

Feb. 23 — The plaintiff in a fiercely contested §220 action has filed a reply brief reiterating its position that the Delaware Chancery Court should impose sanctions on Wal-Mart Stores, Inc. for failing to comply with a production order requiring the retailer to turn over internal documents.

In its Feb. 20 redacted supplemental reply brief, the Indiana Electrical Workers Pension Trust Fund IBEW states that since it served its inspection demand over two and a half years ago, Wal-Mart “repeatedly has sought to impede Plaintiffs’ investigation and to flout its responsibilities under Section 220 of the Delaware General Corporation Law.”

The plaintiff additionally contends that Wal-Mart has admitted to non-compliance with the court's production order in its responsive pleadings and that this alone warrants a finding of contempt.

Books and Records Dispute

On Dec. 8, Wal-Mart certified to the chancery court that it had fully complied with a July Delaware Supreme Court order requiring the company to release internal documents related to what directors may have known about claims that officials handed out bribes to facilitate Mexican real estate deals.

However, three days later, the IBEW filed a contempt motion claiming that the retailer failed to fully comply with the supreme court. The plaintiff asked the court to order the megastore to pay a $1 million fine and $10,000 per day until it complies with the production order.

Sanctions Dispute

In its Feb. 13 brief in opposition to the contempt motion, Wal-Mart stated that the plaintiff's “concerns are baseless” because the IBEW made no attempt to contact the retailer during the six weeks between the final production of documents and the motion for civil contempt.

Wal-Mart further asserted that any responsive documents that the company did not produce was the “product of human error, not bad faith.” The company has asked the court to allow it to undertake re-review of approximately 265,000 documents, which it anticipates to take 60-90 days to complete.

The IBEW now claims that Wal-Mart, in its response, has admitted to have knowingly failed to produce documents required under the court order.

“Regardless of whatever effort Wal-Mart is now making to comply with the Final Order, the fact that Wal-Mart violated the Final Order by failing to produce all Responsive Documents in the first place cannot be disputed,” the reply brief states.

The plaintiff also asserts that Wal-Mart has additionally admitted that it “falsely certified” to the court that its attorneys made determinations of responsiveness as required by the production order.

“By falsely certifying that ‘the responsiveness and privilege determinations were made by Gibson Dunn & Crutcher LLP and Potter Anderson & Carroon LLP,' Wal-Mart’s counsel conceded that they knew exactly what the Final Order required,” the brief states. “And by seeking a ‘do-over' to permit lawyers from these firms to actually review the documents, Wal-Mart concedes that its original efforts failed to comply with the Final Order.”

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To contact the editor responsible for this story: Kristyn Hyland at

The reply brief is available at