Wal-Mart Needs More Than ?Spin? (Editorial)

There is a commercial Web site dedicated to tracking litigation involving the world’s largest corporate citizen. Wal-MartLitigation.com, the cottage industry of a Tennessee lawyer, is primarily a resource for lawyers who want to study their adversary. But it also offers a searchable database of “lawyers who sue Wal-Mart.”

No wonder Lee Scott, Wal-Mart’s generally low-key CEO, is feeling picked upon, with lawyers standing by the phones in anticipation of yet another opportunity to sue the Bentonville firm.

Wal-Mart definitely has been the victim of an unknown number of baseless, frivolous claims. For instance, a Florida woman who claimed she was trampled in a mad day-after-Thanksgiving crush of Wal-Mart shoppers grabbing $29.87 DVD players, turned out to be a serial plaintiff.

It isn’t paranoia if they really are out to get you.

Reuters news service reported Sept. 8 on Scott’s comments to an analyst conference in New York. “Many Wall Street analysts consider the lawsuits and bad publicity to be among the biggest obstacles to Wal-Mart’s store expansion plans and even profit growth,” reporter Emily Kaiser wrote.

The really scary litigation, from Wal-Mart’s point of view and that of potential investors, isn’t the repeat slip-and-fall artist. It’s the federal discrimination case that, unless an appeal is successful, could include more than a million woman as plaintiffs. It’s the class-action claims of failure to pay overtime. It’s the complaints Wal-Mart itself has to file in order to overcome protectionist zoning restrictions tailored specifically to keep Wal-Mart out of town. These are the battles that finally persuaded the management of Wal-Mart that delivering consumer goods cheaply isn’t all there is to being the best.

“Our message has not gotten out to the extent that it should … We thought we could sit in Bentonville, take care of customers, take care of associates, and the world would leave us alone,” Scott said.

Scott seemed to imply that Wal-Mart’s legal problems are primarily a PR failure, but we hope the company intends to do more than retool its message.

Wal-Mart needs to take its day in court and prove it follows the rules on hiring and wages. It needs to back up its claims that having Wal-Mart in your community is, in the long-run, a good thing for the standard of living of the local population.

The knee-jerk position that Wal-Mart is a bad actor because it kills off mom-and-pop businesses is simplistic in the extreme (and conveniently ignores the fact that Wal-Mart was killing off mom-and-pop competitors even when it, too, was a mom-and-pop business). But being the Fortune 1 also comes with the responsibility to prove that you did it by playing by the rules.

When Wal-Mart does that, Lee Scott and his army of corporate lawyers can go back to Bentonville and concentrate on opening more stores and rolling back more prices.