The 8th U.S. Circuit Court of Appeals ruled Wednesday that a Wal-Mart shareholder lawsuit connected to bribery investigations in Mexico should continue in U.S. District Court in Texarkana.
The decision overrules U.S. District Judge Susan Hickey’s decision in favor of Wal-Mart, which said that the federal case should be put on hold until the disposition of similar action pending in state court in Delaware. Wednesday’s ruling out of St.Louis said there were issues of federal law that could not be decided in state court.
The April 2012 lawsuit states that Wal-Mart Stores Inc. and its directors - including several of the retailer’s top executives - did not protect shareholders’ interest and the company’s corporate reputation by purportedly “permitting operation of a widespread and systematic scheme to bribe Mexican officials for the purpose of obtaining various government permits.”
Wal-Mart spokesman Randy Hargrove said company officials are reviewing Wednesday’s ruling and are considering their options.
“It is our understanding that the court has not ruled out a stay,” Hargrove said.
Both lawsuits are shareholder derivative complaints, meaning that the plaintiffs are suing on behalf of the company.
In such lawsuits, the shareholder/plaintiff claims to be acting on behalf of the corporation, because the directors and management are failing manage the enterprise in the best interest of the company and its shareholders.
Five other shareholder derivative lawsuits were consolidated into the federal court case, where shareholder John Cottrell of Texas is the plaintiff.
In an SEC filing earlier this month, Wal-Mart said it incurred $224 million in expenses in the first nine months of this year related to investigations that the retailer violated the U.S. Foreign Corrupt Practices Act in Mexico and other countries. Part of that money was spent on the company’s global compliance programs.
Business, Pages 27 on 12/19/2013