Posted Jul 24, 2014 09:30 pm CDT
Upholding a ruling by an influential state business court, the Delaware Supreme Court unanimously agreed Wednesday that Wal-Mart Stores Inc. must produce—for a pension trust fund that is a large shareholder—documents related to an investigation of possible bribery involving the retailer’s Mexican stores.
Agreeing with the state’s Court of Chancery, the Supreme Court said attorney-clientprivilege does not apply to documents that are needed to prove a potential breach of fiduciary duty by the company, Reuters reports. Although the Indiana Electrical Workers Pension Trust Fund IBEW has not made such a claim, the books-and-records request it is now litigating is often a precursor to shareholder derivative litigation, the article notes.
At issue in the case is whether Wal-Mart complied fully with an earlier document production order by the chancery court.
In an appeal brief (PDF), the company had argued that “The scope of production ordered by the chancery court is unprecedented.”
However, the Supreme Court has previously OK’d broader corporate production, it says in its written decision (PDF). The court also found that the chancery court had appropriately exercised its discretion to determine what “necessary and essential” documents needed to be produced, and said IBEW had a proper purpose for requesting the documents.
After the Supreme Court’s decision, a spokeswoman for Wal-Mart told Reuters that the procedural ruling does not address the merits of previously reported claims that the company might have violated the Foreign Corrupt Practices Act while opening new stores in Mexico. “The allegations against the company have been the subject of an ongoing, thorough internal investigation that has not yet reached final conclusion,” spokeswoman Brooke Buchanan also said.
Attorney Stuart Grant of Grant & Eisenhofer represents the pension fund. “We are very pleased with the Supreme Court’s ruling compelling Wal-Mart to finally come clean with documentation of how the company handled the bribery allegations and subsequent investigation,” he said in a statement provided to the ABA Journal. “After nearly two years of efforts to block shareholders in the courts, Wal-Mart must now comply with our request and we very eagerly await the release of these documents and the truths they will reveal.”
Bloomberg also has a story.
ABAJournal.com: “Potential Cover-up Liability in Wal-Mart FCPA Case Could Dwarf Mexican Bribery Claims, Experts Say”
ABAJournal.com: “Wal-Mart Says Retailer Is Investigating Possible Foreign Corrupt Practices Act Issues in Mexico”