Wednesday, November 16, 2005


Give Wal-Mart Stores credit for one thing--the company certainly doesn't scare easily. The world's dominant retailer has been facing a tidal wave of negativity--from community activists trying to keep its stores out of their neighborhoods, to local governments mandating that Wal-Mart supply workers with health insurance, to opportunistic lawyers trying to strike it rich by bringing on endless lawsuits. Critics--many of whom are as financially motivated as Wal-Mart is--are accusing the company of everything from discriminating against women, to mistreating illegal aliens, to denying overtime pay. Thousands of customers who slip and fall in a store aisle are also trying to reach into the company's deep pockets....

Management experts say the company's strategy of confronting the charges head-on while not wavering from its low-price business model is the most effective formula over the long haul. "When you're just about the largest company in the world, it's tough to breathe without offending someone," said Kathryn Harrigan, a professor at Columbia Business School.

Indeed, suing Wal-Mart is now a cottage industry, with some 5,000 lawsuits filed against the company each year. After one of Wal-Mart's 1.2 million employees gets to work at 9 A.M., three lawsuits will be filed against the company by the time he or she takes a 10:30 A.M. coffee break. By lunchtime, the count is up to six. By the time the employee heads home at 5 P.M., no fewer than 17 people or groups have brought a complaint in court. The same pattern will repeat itself tomorrow, and the next day, and the day after that.

The message is clear. To some, the American dream is no longer just about being successful, it's about not being too successful. Or it's about being successful enough for others to leech off of you.

The company is generally loath to settle all but the smallest suits, opting instead to take on plaintiffs' complaints while hammering home its message of "Everyday Low Prices" to the public. The more serious class-action complaints, each of which can potentially result in hundreds of millions of dollars in liability, are complaints the company has decided it won't take lying down.

Larry McQuillan, a director at the Pacific Resource Institute, a free-market think tank, said fighting the lawsuits makes the most long-term sense, based on building momentum for tort reform, and because winning some of these cases would deter more organizations from filing suits. The trial bar's strategy against corporate America up to now has been to file a suit, depress the stock price and bring the company to the table to get a settlement out of it, he said. "Wal-Mart has been a leader in not bowing to those pressures, unlike many companies that are afraid of bad publicity and want to settle," McQuillan said. "If you don't defend yourself early on, and be persistent, you will be steamrolled."

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