Walmart 2014 Annual Report Download - page 57

Walmart 2014 Annual Report 55
led its reply brief on June 5, 2009. Oral argument was held before the
Pennsylvania Superior Court of Appeals on August 19, 2009. On June 10,
2011, the court issued an opinion upholding the trial court’s certication
of the class, the jury’s back pay award, and the awards of statutory
penalties and prejudgment interest, but reversing the award of attorneys’
fees. On September 9, 2011, the Company led a Petition for Allowance
of Appeal with the Pennsylvania Supreme Court. On July 2, 2012, the
Pennsylvania Supreme Court granted the Company’s Petition. The
Company served its opening brief in the Pennsylvania Supreme Court
on October 22, 2012, plaintis served their response brief on January 22,
2013, and the Company served its reply on February 28, 2013. Oral
argument was held in the Pennsylvania Supreme Court on May 8, 2013.
No decision has been issued. The Company believes it has substantial
factual and legal defenses to the claims at issue, and plans to continue
pursuing appellate review.
Gender Discrimination Class Actions: The Company is a defendant in
Dukes v. Wal-Mart Stores, Inc., which was commenced as a class-action
lawsuit in June 2001 in the United States District Court for the Northern
District of California, asserting that the Company had engaged in a
pattern and practice of discriminating against women in promotions,
pay, training and job assignments, and seeking, among other things,
injunctive relief, front pay, back pay, punitive damages and attorneys’
fees. On June 21, 2004, the district court issued an order granting in part
and denying in part the plaintis’ motion for class certication. As
dened by the district court, the class included “[a]ll women employed at
any Wal-Mart domestic retail store at any time since December 26, 1998,
who have been or may be subjected to Wal-Mart’s challenged pay and
management track promotions policies and practices.” The Company
appealed the order to the Ninth Circuit Court of Appeals and subsequently
to the United States Supreme Court. On June 20, 2011, the Supreme
Court issued an opinion decertifying the class and remanding the case
to the district court. On October 27, 2011, the plaintis’ attorneys led an
amended complaint proposing a class of current and former female
associates at the Company’s California retail facilities, and the Company
led a motion to dismiss on January 13, 2012. On September 21, 2012, the
court denied the motion. The plaintis led a motion for class certication
on April 15, 2013. On August 2, 2013, the court denied the motion. On
August 16, 2013, the plaintis led a petition for permission to appeal that
ruling to the U.S. Court of Appeals for the Ninth Circuit. On November 18,
2013, the Ninth Circuit denied that petition.
On October 28, 2011, the attorneys for the plaintis in the Dukes case
led a similar complaint in the United States District Court for the
Northern District of Texas entitled Odle v. Wal-Mart Stores, Inc., proposing
a class of current and former female associates employed in any Walmart
region that includes stores located in the state of Texas. On October 15,
2012, the court in the Odle case granted the Company’s motion to dismiss,
dismissing with prejudice the plaintis’ class-action allegations and the
individual claims of the lead plainti, Stephanie Odle. On March 19, 2013,
the U.S. Court of Appeals for the Fifth Circuit denied the plaintis’ petition
for permission to appeal. On October 2, 2012, the plaintis’ attorneys
led another similar complaint in the United States District Court for
the Middle District of Tennessee entitled Phipps v. Wal-Mart Stores, Inc.,
proposing a class of current and former female associates employed in
“Region 43, centered in Middle and Western Tennessee.” On February 20,
2013, the court in the Phipps case granted the Company’s motion to
dismiss, dismissing with prejudice the plaintis’ class-action allegations.
On September 11, 2013, the U.S. Court of Appeals for the Sixth Circuit
granted the plaintis’ petition for permission to appeal that ruling. On
October 4, 2012, the plaintis’ attorneys led another similar complaint in
the United States District Court for the Southern District of Florida entitled
Love v. Wal-Mart Stores, Inc., proposing a class of current and former
female associates employed in certain designated stores and clubs in
regions centered in the state of Florida. On September 23, 2013, the court
in the Love case granted the Company’s motion to dismiss, dismissing
with prejudice the plaintis’ class-action allegations. Finally, on February 20,
2013, the plaintis’ attorneys led another similar complaint in the
United States District Court for the Western District of Wisconsin entitled
Ladik v. Wal-Mart Stores, Inc., proposing a class of current and former
female associates employed in “Region 14, which includes Wal-Mart retail
stores located in parts of Wisconsin, Illinois, Indiana and Michigan.” On
May 24, 2013, the court in the Ladik case granted the Company’s motion
to dismiss, dismissing with prejudice the plaintis’ class-action allegations.
On June 13, 2013, the U.S. Court of Appeals for the Seventh Circuit denied
the plaintis’ petition for permission to appeal. Management does not
believe any possible loss or the range of any possible loss that may be
incurred in connection with these matters will be material to the
Company’s nancial condition or results of operations.
FCPA Investigation and Related Matters
The Audit Committee (the “Audit Committee”) of the Board of Directors
of the Company, which is composed solely of independent directors, is
conducting an internal investigation into, among other things, alleged
violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other
alleged crimes or misconduct in connection with foreign subsidiaries,
including Wal-Mart de México, S.A.B. de C.V. (“Walmex”), and whether
prior allegations of such violations and/or misconduct were appropriately
handled by the Company. The Audit Committee and the Company have
engaged outside counsel from a number of law rms and other advisors
who are assisting in the on-going investigation of these matters.
The Company is also conducting a voluntary global review of its policies,
practices and internal controls for FCPA compliance. The Company is
engaged in strengthening its global anti-corruption compliance program
through appropriate remedial anti-corruption measures. In November
2011, the Company voluntarily disclosed that investigative activity to the
U.S. Department of Justice (the “DOJ”) and the Securities and Exchange
Commission (the “SEC”). Since the implementation of the global review
and the enhanced anti-corruption compliance program, the Audit
Committee and the Company have identied or been made aware of
additional allegations regarding potential violations of the FCPA. When
such allegations are reported or identied, the Audit Committee and the
Company, together with their third party advisors, conduct inquiries and
when warranted based on those inquiries, open investigations. Inquiries
or investigations regarding allegations of potential FCPA violations have
been commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
The Company has been informed by the DOJ and the SEC that it is also
the subject of their respective investigations into possible violations of
the FCPA. The Company is cooperating with the investigations by the
DOJ and the SEC. A number of federal and local government agencies
in Mexico have also initiated investigations of these matters. Walmex
is cooperating with the Mexican governmental agencies conducting
these investigations. Furthermore, lawsuits relating to the matters under
investigation have been led by several of the Company’s shareholders
against it, certain of its current directors, certain of its former directors,
certain of its current and former ocers and certain of Walmex’s current
and former ocers.
Notes to Consolidated Financial Statements