Legal Discovery Often Hits Walmart Wall

Legal Discovery Often Hits Walmart Wall
Tim Webb, a 31-year Walmart employee before being laid off in 2017, was asked to sign over to Walmart patents for devices he invented and submitted through a company incentive program. His lawyer, Mark Henry, had seen Walmart’s discovery responses before. (Bob Coleman)

When Fayetteville lawyer Mark Henry squared off against Walmart Inc. in 2017, his complaints about missing documents in the case’s discovery process led to a $400,000 punishment for the Bentonville retailer for withholding files and designating documents as confidential.

Three years later, representing a former Walmart employee in a patent case in Benton County Circuit Court, Henry received a batch of 147,000 documents from the world’s largest company, almost all marked “confidential” — including some otherwise blank pages of paper and files that were public information. Walmart was under court order beforehand to examine each document before declaring confidentiality.

“This is not good faith; somebody’s going to be held in contempt,” Judge Robin Green said in October, according to a court transcript obtained by Arkansas Business. “I need to know who I’m holding in contempt.”

Ordered to provide the name of the employee who marked a blank piece of paper “confidential,” Walmart’s attorney, Stuart Miller, asked the judge for a recess. After 10 minutes, he returned to tell the judge that both sides had reached a settlement.

The episode underscored something that Henry and other attorneys have alleged for some time: that Walmart has made abuse of the discovery process a reliable legal tactic, clogging the process even more frequently than other top companies.

“It is clear to me that, as a company, Walmart sees discovery — and the whole of civil litigation — as a game,” said attorney David Bright of Sico Hoelscher Harris of Corpus Christi, Texas, who has been involved in lawsuits against Walmart for 35 years. “Walmart’s plan is to win this game through noncooperation, obstinance and even defiance of court orders.”

Walmart denies it does anything wrong in discovery, Randy Hargrove, Walmart’s spokesman, told Arkansas Business via email. “We evaluate our discovery approach depending upon the unique allegations and facts of each case, as well as the rules of the jurisdiction where the case is pending,” he said. It’s unknown how many times Walmart — or any party — has been punished for discovery improprieties because there’s no public archive of that information. But since 2010, judges have sanctioned Walmart at least 10 times, according to court documents.

Some plaintiffs’ attorneys put Walmart near the top of the list of discovery scofflaws, though a handful of other businesses have similar records, including insurance companies, Bright said. He also sues other large companies, most in automotive product liability cases.

“It’s also a cautionary tale for the civil justice system, because our courts are clogged with this kind of nonsense,” Bright said. “It needlessly clogs the courts, and keeps both civil and criminal litigants from getting in front of a court. It delays justice for everybody.”

Bright said that other large companies evaluate a case to see if it’s possible that they might be at fault and settle. Not Walmart, he said. “Walmart has a cookie-cutter, one-size-fits-all approach to litigation, and that is resist, resist, resist.” Bright said Walmart apparently thinks the delays will cause some plaintiffs to lose interest in litigation or grow desperate to settle.

Hargrove, Walmart’s spokesman, disputed Bright’s assessment of its litigation practices. “That is inaccurate,” he said via email to Arkansas Business.

Hargrove also said that Walmart has a large litigation portfolio. In U.S. District Courts, Walmart was involved in nearly 2,000 lawsuits filed in 2021. The company, with annual revenue of nearly $560 billion, has more than 4,700 stores in the United States and employs 1.6 million U.S. workers.

“The number of cases involving litigated discovery disputes, and certainly those in which Walmart has been sanctioned, is minuscule compared to the number of cases Walmart litigates,” he wrote. “We respect the rules of the court and take our discovery obligations seriously. We appropriately defend ourselves based on the distinct factors of every litigated matter.”

Regardless of the proportion of sanctions to total cases, lawyers pointed to litigation in Ohio, Texas and Arkansas to illustrate their concerns.

Recent Sanctions

In October, attorneys representing two Ohio counties in prescription opiate litigation asked for sanctions against Walmart, saying it failed to comply with discovery duties.

In that case, the plaintiffs were awarded their motion for sanctions and allowed to call a former Walmart director of Health & Wellness Practice Compliance to testify in the November federal jury trial.

“It was incredibly powerful testimony and a more-than-appropriate sanction,” attorneys Laura Fitzpatrick and Jayne Conroy of Simmons Hanly Conroy of Alton, Illinois, said via email to Arkansas Business.

The attorneys were two of the lawyers who represented plaintiffs in a case against CVS Pharmacy Inc. of Woonsocket, Rhode Island; Walgreen Co. of Deerfield, Illinois; and Walmart. The counties alleged the pharmacies became a public nuisance and contributed to the opioid epidemic by filling dubious prescriptions for massive amounts of pills.

After eight weeks of testimony and deliberation, a jury found in favor of the plaintiffs in the liability phase of the trial.

Walmart, “as the largest Fortune 500 company, has taken an unprecedented aggressive and obstructive approach to this litigation,” the plaintiffs’ attorneys said in their email. Walmart “has been the subject of more Motions for Sanctions for their discovery failures in this case than any other defendant.”

Hargrove said Walmart couldn’t comment on that case because it’s pending.

In 2020, Walmart received a $35,000 sanction in a Texas state court case over allegations of deliberately withholding relevant documents, according to a news release from law firm Hilliard Martinez Gonzales of Corpus Christi, Texas.

“It is a scorched-earth litigation style that is designed to do one thing, which is exhaust most, if not all, plaintiffs’ lawyers, and then settle with the plaintiffs’ lawyers who are aggressive enough and have the resources to fight them,” said Alex Hilliard, an attorney at the firm, which has handled more than 40 cases against Walmart. But he said that he’s noticed other Fortune 500 companies employ similar legal strategies.

Hargrove denied Hilliard’s assessment of how Walmart handles cases. “We appropriately defend ourselves based on the distinct factors of every litigated matter,” he said.

Arkansas Case

Tim Webb of Rogers worked for Walmart for more than 30 years before being laid off as part of a company downsizing in 2017.

While working for Walmart as a technical expert in the security area, Webb routinely submitted ideas and inventions via a company incentive program that offers bonuses up to $5,000 for ideas that result in U.S. patents.

Webb was named Walmart’s inventor of the year at least four times. He submitted more than 40 ideas for inventions through the program.

Webb, who grew up outside of Bentonville, said he always loved computers and technology. “Most of my patents that I did with Walmart had to do with emerging technology,” he said.

Walmart sought patent applications for at least 26 of his ideas, with at least 13 receiving patents, according to the lawsuit filed by Henry, the Fayetteville attorney.

But after Walmart dismissed Webb two weeks before his 32nd anniversary at the company, he was asked to sign over the patents, Webb told Arkansas Business.

“I didn’t have legal representation, so before I signed I wanted to talk to an attorney,” Webb said. “I turned my trust over to the justice system and let them decide what is fair.”

Webb contacted Mark Henry, the Fayetteville attorney whose federal case led to sanctions against the company in 2017.

“While the Court agrees that 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,” U.S. District Judge Timothy Brooks wrote in a January 2017 order in the case brought by California digital design firm Cuker Interactive LLC.

“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 [me].”

Brooks said that over time Walmart’s practices have had the effect of turning complicated and expensive but manageable cases into “bet-the-company litigation for the opposing party and countless hours of wasted time for court staff.”

In the federal case, a jury awarded Henry’s client Cuker $12.4 million in 2017, but Brooks later reduced the amount to just $745,000. Brooks also ordered Walmart to pay Cuker’s attorney fees, taxable costs and sanctions, which totaled $2.7 million.

Henry feared that Walmart would have the same litigation strategy in Webb’s case that he had faced in Cuker’s.

“If history repeats itself, I anticipate Walmart will do nothing more than issue blanket objections when it does elect to respond …,” Henry wrote in a Dec. 11, 2020, email to one of Walmart’s attorneys, Karen Freeman of the Rogers office of Mitchell Williams Selig Gates & Woodyard.

Freeman disagreed with Henry’s assessment. “In my experience with Walmart, they are extraordinarily thorough and conscientious in responding to discovery requests in a fair, honest and reasonable way, within the rules governing discovery,” Freeman said in an email response to Henry. “I expect nothing less in this case.”

Protective Order

Hilliard, the attorney from Texas, said Walmart pressures plaintiffs’ lawyers to sign protective orders at the beginning of a case that allow Walmart to put a confidential stamp on any document that it wants to.

Documents that are stamped confidential have to be redacted before being filed at a courthouse. Confidential documents also result in two sets of briefs being filed, one for the judge to read and a redacted copy to be filed with a court clerk to place on the public docket. “Arkansas Courts are public venues; there is a strong policy argument to not permit litigation in secret,” Henry wrote to Walmart’s attorneys in August 2021 about the overuse of confidential markings.

Hargrove said that Walmart’s protective orders are designed to foster, not hinder, the exchange of information in discovery. “And these orders are routinely entered in cases involving intellectual property — so much so that the major patent litigation courts have model protective orders or contemplate entry of a protective order in their model scheduling orders,” Hargrove said.

In an Aug. 6 letter to Walmart’s attorneys in the Webb patents case, Henry said that the company marked “virtually everything as confidential.”

He said he agreed that emails and other documents internal to Walmart representatives discussing business decisions would be marked as confidential — but not public patent documents. “Ironically, you did not designate as Confidential my client’s employment and pay history,” Henry wrote.

At a hearing to compel Walmart to provide discovery material, Henry told Circuit Judge Green, “I began this case warning you that this is what we would expect from Walmart.”

Henry said after he sent Walmart the motion to compel, it “appears to have changed its tune on designating documents as confidential.”

The week before the hearing, Walmart provided an additional 40,000 documents to Henry, and only 20% were marked confidential.

Even though the case had been going for about 10 months, Stuart Miller was Walmart’s fourth lawyer on the case and had been working on it for only 25 days. Miller, with the Rogers office of Mitchell Williams, told Green that Walmart was going through Webb’s documents to give Henry what he wanted.

“I think I have 18 people at Walmart that are reviewing Mr. Webb’s emails just simply for privilege, nothing else, not confidentiality,” Miller said.

Miller said Henry would get the emails as long as they didn’t contain privileged information.

In any case, the litigation came to an abrupt end.

After three hearings, Green suggested she was going to hold a person who marked the blank document confidential in contempt and demanded to know the person’s name.

“I’ve had to have this third babysitting hearing because Walmart keeps playing the game,” Green said. “Are we talking $10,000 fine? Are we talking $1,000 fine? Are we talking jail? I’m done.”

“Your Honor, may I proceed?” Miller said.

“I’d like to know who marked this,” Green said.

“OK,” Miller said.

“That’s my third time I’m asking, Mr. Miller.”

“Your Honor, … we need to take a break to determine that,” Miller said.

Green announced a 10-minute recess.

When both sides returned, Miller said the case was settled.