Wal-Mart Stores Inc., trying to fend off lawsuits claiming it illegally fired corporate whistle-blowers, has hired the former chief lawyer for the Department of Labor, Eugene Scalia, and has begun to fire back at its accusers.
Three former employees claim they were fired for reporting misdeeds within the company, including relying on Latin American suppliers who forced women to take pregnancy tests and using staff members at a Texas optical laboratory to do car repairs for supervisors.
Wal-Mart denies it retaliated against the employees, but the allegations challenge a pillar of the company's corporate culture -- a guarantee that its 1.2 million U.S. employees can complain about any supervisor without fear of retribution. That promise, known as the "open door policy," could be seriously undermined if the employees win their cases, lawyers said.
The company said all three were fired for misconduct, not for sniffing out wrongdoing. Lawyers for the employees say the retailer is taking a hardball approach -- disclosing potentially damaging allegations about the workers' conduct early in the legal process.
It has accused one of fraternizing with a female subordinate, a second of failing to disclose a felony conviction on his job application, and a third of doctoring a college transcript on a job application.
Mona Williams, a Wal-Mart spokeswoman, said the retailer has become "a popular target" for employment lawsuits. "If an associate has been treated unfairly, we want to make it right. But we have absolutely no tolerance for those who think they can make a quick buck off Wal-Mart by crying wolf loudly and often."
Steve Kardell, who is representing two of the former employees, said the company's tactics "suggest it is very worried about these cases" and the consequences for its image.
Wal-Mart says that for a company of its size, it faces relatively few employee lawsuits in the United States -- 318 in 2004, or roughly one lawsuit for every 3,773 employees. Of those, it said, 217 were settled, 52 were dismissed and 37 were won through summary judgment. Of 12 that went to trial, Wal-Mart won 10.
The three pending cases vary widely. Jared Bowen, a former Wal-Mart vice president, said he was fired for blowing the whistle on Thomas M. Coughlin, who was ousted from Wal-Mart's board after allegedly misusing up to $500,000 in corporate funds.
Wal-Mart countered that Bowen participated in the very activities he challenged. Bowen "raised the issues months after he became aware of them, out of fear that his own misconduct was about to be discovered," said Marty Heires, a company spokesman.
The company also released documents it said show that Bowen submitted a forged college transcript with an inflated grade point average -- giving himself a 3.5, versus the 2.1 on an official version -- when applying for a job at Wal-Mart's headquarters. Bowen's attorney acknowledged that there was a discrepancy.
James W. Lynn, a mid-level manager at Wal-Mart who oversaw inspections of Wal-Mart suppliers in Central and Latin America, alleges he was fired for documenting "abysmal" factory working conditions, such as the pregnancy tests, padlocked fire escapes and lack of toilet paper, according to his lawsuit.
Williams, the Wal-Mart spokeswoman, said Lynn was fired for having "inappropriate contact with a woman who directly reported to him" -- a situation, she said, that both Lynn and his subordinate acknowledged. Lynn signed a statement saying he kissed the woman, according to his attorney, Shane Youtz, who said the kiss was "not the cause of his termination."
Rickey Armstrong, a quality control auditor at Wal-Mart's optical laboratory in Dallas, said he was terminated because he reported misuse of company resources by his superiors. According to his lawsuit, they directed maintenance staffers to perform work on their yards and cars.
Williams said Armstrong was fired for threatening to "break the necks" of two managers. In discussing his case, the company disclosed that Armstrong concealed a felony conviction on his job application, a firing offense. Armstrong denies making the threats. In an interview, he said the conviction was for stealing cars.
Scalia, who was solicitor of the Department of Labor from 2002 to 2003, is defending Wal-Mart against two of the lawsuits, those filed by Bowen and Armstrong under the Sarbanes-Oxley Act, which expanded whistle-blower protections for employees of public companies. Lynn's case was filed on different grounds.
Scalia, son of U.S. Supreme Court Justice Antonin Scalia, was in charge of enforcing the whistle-blower protections of the act after it was approved in 2002 and has become one of the nation's leading experts on the statute since returning to private practice at Gibson, Dunn & Crutcher LLP in Washington.
Wal-Mart's decision to retain Scalia has drawn fire from groups critical of the chain, such as Wal-Mart Watch and Wake Up Wal-Mart.
"Only in Wal-Mart's America can they think it's right to hire Eugene Scalia to defend them against the same whistle-blower law he was supposed to help enforce at the Department of Labor," said Chris Kofinis, a spokesman for Wake Up Wal-Mart. The group is closely linked to the United Food and Commercial Workers International Union, which has tried to organize Wal-Mart's nonunion labor force.
Scalia defended his role, saying, "I don't see anything unusual in a company seeking out the expertise of somebody who became familiar with the requirements of a new law, while serving as a federal law enforcement official."