Chancery Court Orders Wal-Mart To File Response to Contempt Motion

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By Michael Greene

Feb. 2 — A Delaware Chancery Court judge is directing Wal-Mart Stores Inc. to file a “substantive response” setting forth its opposition to a contempt motion that accuses the megastore of failing to comply with a court order in a high-profile §220 action.

“I fail to understand why Defendant Wal-Mart Stores, Inc. cannot address the serious issues raised in the contempt motion at this time,” Chancellor Andre G. Bouchard wrote in a Jan. 30 letter to counsel. He demanded that the company file a substantive response by Feb. 6.

In a statement to Bloomberg BNA Jan. Feb. 2, Randy Hargrove, a Wal-Mart spokesman, said that the company takes “our obligations seriously, and we will file our brief consistent with the court's letter.”

Long-Disputed §220 Action

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 Indiana Electrical Workers Pension Trust Fund IBEW, the plaintiff that filed the §220 books and records demand, filed a contempt motion claiming that “[t]here are numerous examples of documents that plaintiff's counsel is aware of that Wal-Mart counsel knows to exist, but has nevertheless failed to produce,” and that the production reflects substantial over-redactions.

In response to the plaintiff's request for sanctions, Wal-Mart sent a Jan. 8 letter to the court proposing a scheduling order that would allow the retailer to undertake a complete re-review of approximately 265,000 document before filing its opposition to the contempt motion. The letter stated that the company anticipated the re-review process to take 60-90 days.

Dissatisfied with this response, the plaintiff filed a Jan. 19 reply brief requesting that the court impose immediate sanctions, such as ordering the megastore to pay a $1 million fine and $10,000 per day until it complies with the production order.

Bouchard's letter further demands that Wal-Mart inform the court the date it commenced its re-review and the earliest practicable date the process will be completed.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

Bouchard's letter is available at http://www.bloomberglaw.com/public/document/CONS_W_CA_7726_CS_CONF_ORD_ON_DISC_Indiana_Electrical_Workers_Pen/5.