Judge Slashes $12.4M Award Against Walmart

Judge Slashes $12.4M Award Against Walmart
Mark M. Henry, a registered patent attorney, won a $12.4 million verdict against Wal-Mart for a California web design firm. (Beth Hall)

There goes the $12.4 million jury award.

U.S. District Court Judge Timothy L. Brooks last month reduced the amount a jury awarded last year to a Southern California digital design firm against Walmart Inc. to just $745,000. (See A Look Inside a $12.4 Million Slap at Wal-Mart.)

He did, however, order Walmart to pay Cuker Interactive LLC’s attorney fees, taxable costs and sanctions, which totaled $2.7 million. (See Cuker Attorneys Seek $4.1M in Fees for Wal-Mart Case.)

If you recall, Walmart hired Cuker of San Diego in 2014 to improve the website for its United Kingdom grocery subsidiary ASDA Stores Ltd., a five-month job that would bring almost $600,000 to a company with about 20 employees.

But the relationship between the two companies soured and turned into a federal complaint and counterclaim. Walmart accused Cuker — pronounced “Sooker” — of breach of contract and Cuker accused Walmart of taking computer code written for the ASDA site and secretly shipping it off to teams in India and the United States to use in a website for Walmart2Go.

After what Brooks called an “extremely heated and tortured litigation over the next several years,” a Fayetteville jury found in favor of Cuker for $12.4 million, which Brooks initially reduced to $10.2 million. The Bentonville retailer then asked Brooks to reduce the amount.

In a 56-page order issued on March 31, Brooks said there was not enough evidence to support the jury’s finding of all of Cuker’s claims tied to the misappropriation of trade secrets. So he dramatically reduced that part of the jury’s award. He let stand the jury’s verdict for breach of contract and unjust enrichment.

“We’re pleased that the Court agreed that Cuker introduced insufficient evidence to support the jury’s verdict and as a result, reduced the damages awarded by the jury by 94 percent,” said Walmart’s spokesman Randy Hargrove in an email to Whispers. “We respect the rights of our vendors and business partners.”

He said the company is reviewing the order and said it would be “premature to comment further about the case.”

Walmart Scolded
After the jury trial, Cuker asked Brooks to sanction Walmart and its attorneys for alleged abuses the retailer committed over several years in the case.

Brooks agreed that while Walmart’s attorneys or employees “have on several occasions made inaccurate representations to the Court, it does not go so far as to conclude they ever did so intentionally or in bad faith.

“But suffice it to say that on the whole, and in cumulative effect, Walmart’s litigation practices in this case have likely been the most vexatious, oppressive, and abusive ever to have occurred in any case before the undersigned in this Court,” Brooks wrote. “And over time, those practices had the practical effect of unnecessarily turning a complicated and expensive but manageable case into bet-the-company litigation for the opposing party and countless hours of wasted time for court staff.”

Brooks imposed a sanction of $400,000 against Walmart.

“Hopefully Walmart understands going forward that such abuses will not be tolerated, that the Court’s orders must be obeyed in the first instance, and that this Court will not allow pointless trench warfare in discovery,” he wrote.

Hargrove, the Walmart spokesman, said that the company “had already acknowledged certain isolated mistakes, and even offered to pay appropriate sanctions as a result. We take our discovery obligations seriously and the ruling does not reflect our high ethical standards or the careful and reasonable approach we take in all litigation.”

Attorneys Praised
The attorneys who represented Cuker included Mark M. Henry of Fayetteville, his law partner at the Henry Law Firm, Adam Hopkins, and Callie Bjurstrom of the law firm of Pillsbury Winthrop Shaw Pittman LLP of San Diego. (Henry and Hopkins in November joined the Rose Law Firm of Little Rock.)

In his order, Brooks applauded Cuker’s attorneys for their work on the case.

“The Court finds all of Cuker’s billing attorneys to be well experienced and its attorneys who tried the case to be extraordinarily skilled,” Brooks wrote. “Walmart does not challenge this proposition in its briefing.”

Brooks continued: “Here both the subject matter and the legal issues were exceedingly complex, and Cuker’s counsel was among the best prepared that this Court has ever encountered.”