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By Michael Greene
March 2 — Wal-Mart Stores Inc. is once again requesting the Delaware Chancery Court find that it has discharged all of its obligations under a production order in a closely watched books and records action.
In a Feb. 27 letter to Chancellor Andre G. Bouchard, Wal-Mart claims it has completed its re-review of documents. The letter included a proposed order that states Wal-Mart has provided the Indiana Electrical Workers Pension Fund IBEW, the plaintiff that filed the §220 books and records demand, with all the responsive documents that were inadvertently omitted from its earlier document production.
Last December, 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.
Three days later, the IBEW filed a contempt motion claiming that the retailer failed to fully comply with the production order. The plaintiff is asking the court to order the megastore to pay a $1 million fine and $10,000 per day until it complies with the production order.
Wal-Mart is now requesting the court enter an order closing the books and records action once the pending contempt motion is resolved.
It its contempt motion, the plaintiff claims “[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.
Wal-Mart proposed it undertake a re-review of approximately 265,000 documents before filing its opposition to the contempt motion. The plaintiff, dissatisfied with this request, Jan. 19 filed a reply brief requesting immediate sanctions.
Subsequently, Chancellor Bouchard sent a Jan. 30 letter demanding the retailer file a “substantive response”.
In its Feb. 13 brief in opposition to the contempt motion, Wal-Mart claims the punitive sanctions sought by the plaintiff are “unprecedented” given the company's “extraordinary effort” to comply with the production order.
The plaintiff filed a Feb. 20 reply brief reiterating its position that the court should impose sanctions, claiming that Wal-Mart has “repeatedly has sought to impede Plaintiffs’ investigation and to flout its responsibilities under Section 220 of the Delaware General Corporation Law”.
In response, Wal-Mart moved to file for additional briefing, which was opposed by the plaintiff. In its publicly redacted sur-reply in opposition to the contempt motion, Wal-Mart claims that the IBEW has provided no clear and convincing evidence that the retailer intentionally disregarded the court order.
Wal-Mart further claims that its failure to produce documents was a result of “human error in a large-scale document review that undisputedly complied with industry best practices.”
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The letter is available at http://www.bloomberglaw.com/public/document/CONS_W_CA_7726_CS_CONF_ORD_ON_DISC_Indiana_Electrical_Workers_Pen/10.
The proposed order is available at http://www.bloomberglaw.com/public/document/CONS_W_CA_7726_CS_CONF_ORD_ON_DISC_Indiana_Electrical_Workers_Pen/11.
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