How Pontiac pensioners battled retail giant Walmart and won - Detroit Free Press

Bill Laitner Detroit Free Press

Published 6:00 AM EDT Apr 15, 2019

It was 2012 when a pint-sized David north of Detroit took on a well-known Goliath in Arkansas.

Last week, their epic struggle ended. Contrary to early predictions, a federal court in Arkansas decided in favor of David — that is, the puny City of Pontiac General Employees Union Pension Fund. 

After a seven-year slug fest in and out of court, Pontiac's pensioners prevailed in a lawsuit about stock investing against the world’s largest retailer, Walmart.

These 1,200 retirees of city government in Pontiac, who live on modest pensions, have yet to receive official notification. And their joint nest egg of about $500 million soon will get merely a modest infusion of perhaps $20,000 or $30,000 — the amount has yet to be calculated, their California lawyers say.

But that’s just a fraction of the total payout that retired city unionists in Pontiac have extracted from Walmart, on behalf of countless others nationwide and still more folks around the world.

Under a settlement approved by a judge last week, Walmart is on the hook for a daunting $160 million. That sum that will go to make whole not only the Pontiac retirees but every Walmart stockholder across the nation and around the world who was cheated when investors were misled in a 2011 Walmart report to investors, according to the legal settlement. The report white-washed a massive bribery scandal by Walmart in Mexico, according to a review of the evidence by U.S. District Judge Susan Hickey in the Western District of Arkansas.

More: AFSCME takes over Michigan state employee union, amid strife

Asked to comment, Walmart spokesman Randy Hargrove, from the company's headquarters in Bentonville, Arkansas, said last week: "There's really not much we're saying other than we're pleased with the final approval of this settlement."

Walmart had slightly more to say back in October, after the two sides reached a preliminary agreement to settle the lawsuit. At that time, Walmart Executive Vice President and General Counsel Karen Roberts said: "We are pleased both sides could reach a resolution that ends this litigation. Years ago, we began making investments that have established a leading, comprehensive, worldwide ethics and compliance program for our business."

The dollar amount of the recovery per share of stock won’t be a windfall. It will vary from shareholder to shareholder, according to the prices they paid to buy the stock during a specific period. Investors who qualify will get back only what they lost, attorneys said.

Still, the legal victory put a big smile this week on Pontiac’s former mayor, Walter Moore, 73, chairman of the city workers’ pension fund. Moore said he's proud that the city's pensioners stood up to Walmart on behalf of numerous stockholders.

“We in the public employee plans — we have to take on these big companies because if we don’t, nobody will,” Moore said this week, over a salad in downtown Pontiac.

Judge had a big stick

Moore has followed the twists and turns of the complex case, and he said he’s grateful to the federal judge in Western District of Arkansas: 

“She was amazing. She was soft-spoken but carried a big stick, you know?”

The settlement is poised to benefit thousands of Walmart stockholders across the nation — individuals as well as many pension funds, large and small — who as plaintiffs had charged they'd been cheated by the retailing behemoth, said San Diego attorney Jason Forge, one of nine lawyers from three law firms who argued on behalf of Walmart investors in the class-action lawsuit.

The Pontiac pensioners were the lead plaintiffs, suing “on behalf of all others similarly situated,” according to the lawsuit.

“There were many different class members, but Pontiac stepped up and represented everyone,” said Forge, who grew up in Farmington Hills and attended law school at the University of Michigan.

“They said, ‘On behalf of everybody who bought high and sold low, we want to sue to recover those losses.’ So this was for pensioners across the entire country,” he said.

As is typical in class actions, Forge and his colleagues spent years on the case without pay or any reimbursement for expenses, all the while hoping for a share of a big settlement. They'll get it. The three firms fighting for Pontiac's pensioners and for countless other stockholders would’ve earned nothing if their side had lost. Now they and the consultants they hired will share in a $48-million payday, Forge said.

He said owners of Walmart stock should be grateful to Pontiac’s former mayor, who steadfastly nudged the pension fund’s board members into suing.

“If it wasn’t for the Walter Moores of the world, a lot of individual shareholders would suffer in situations like this. The government doesn’t get the job done in these cases. It’s really up to the courts to expose these situations and punish corruption,” said Forge, who signed key briefs in the case on behalf of his law firm – Robbins Geller Rudman & Dowd in San Diego. Meanwhile, an investigation of Walmart by federal authorities is grinding slowly on with no end in sight, he said.

Blue vests and bribes

In the long-running securities class-action lawsuit just settled, which will be known to generations of future law school students as City of Pontiac General Employees’ Retirement System v. Wal-Mart Stores Inc., the small union pension plan represented any individual or group anywhere that bought "or otherwise acquired" Walmart stock between December 8, 2011, and April 20, 2012.

Walmart in 2018 was listed by Forbes magazine as the world’s largest company, both in revenues — more than $500 billion — and in staff size, with 2.2 million employees.

According to the judge’s Report and Recommendation in the lawsuit, the company also loomed large in unethical dealings. That judge's report said evidence showed that Walmart was guilty of years of corruption, as it spread about $24 million in bribes across Mexico so that it could rapidly overcome zoning and political hurdles to become in short order Mexico's biggest retailer. Then, after the bribes came to the attention of Walmart’s top executives, emails showed that company brass covered up the illegal deals for years.

More: Lawsuit: ACLU says Detroit court's bail system discriminates against poor defendants

Finally, just when the retailer’s to management learned that the New York Times would soon expose the bribery, after a former Walmart executive tipped off a reporter, Walmart — instead of coming clean with investors — filed false statements about the corruption with the Securities and Exchange Commission, misleading countless investors.

The result?

Investors, including many pension funds, bought the stock when it was priced above $60 and then saw it drop about 5% immediately after the New York Times’ Pulitzer Prize-winning article came out in April 2012, according to the litigation.

As seems to occur often in complex legal cases, the initial wrong-doing was not so much the stumbling block for this particular Goliath of a retailer. Instead, it was the subsequent cover-up of the corruption that made humongous Walmart vulnerable to the legal slings of a small pension fund situated 30 miles north of Detroit.

It isn’t often that the little guys beat a giant in federal court. Yet, the hope and promise behind this case were enough to draw the attention not only of the New York Times but also from numerous financial publications.

Last week, new stories about the historic settlement favorable to the Pontiac pension fund and to many other Walmart investors splashed Walter Moore’s name and references to Pontiac onto numerous legal and stock-watching websites, from Yahoo Finance to Law360.com, as well as into the pages of the New York Times.

The financial outcome, but even more the moral victory of Pontiac’s pensioners, “makes me feel so good,” Moore said. 

Contact: blaitner@freepress.com

Let's block ads! (Why?)

Read Again https://www.freep.com/story/news/local/michigan/oakland/2019/04/15/walmart-lawsuit-stockholders-pontiac-pension-fund-bribery-mexico/3444790002/

Bagikan Berita Ini