Wal-Mart Inc. Claims the 14th Amendment

Lawsuit Says a City’s Limits on Big Box Stores Violates the Corporation’s Equal Protection Rights
By John Holland
Published by the Modesto Bee Feb 12, 2004

Editor’s Note: Communities nationwide are recognizing the need to proactively plan commercial development and many are setting maximum square footage for new “big box” stores. The following story is specific to one California community, but the threat posed to Turlock’s ability to govern applies nationally.

Wal-Mart’s legal challenge is partly grounded in the claim of “Corporate Personhood” — the claim that corporations should enjoy the full protections of the U.S. Constitution. Wal-Mart is attacking similar laws in several California communities via lawsuits and by using its immense wealth to place initiatives on election ballots (and then spending huge sums on PR campaigns to get the result it wants). These initiatives are typically employed to overrule the decisions of local elected officials charged with making the laws on zoning and land use issues.

We don’t present theTurlock law in question as model legislation. In our view, it is too lenient in its size limit and poorly worded in some important ways. Our aim is to encourage smarter proactive planning and raise opposition to the dangerous precedents that would be set if Wal-Mart succeeds in these cases.

Wal-Mart has since lost its suit in two different courts and Turlock is now seeking changes in state law to force the corporation to repay the legal fees it generated for Turlock citizens.

For information on how to do effective size caps and related local ordinances, see The New Rules Project. For information on proactive community organizing to support local, independently-owned businesses, see the American Independent Business Alliance.

MODESTO, CA– Wal-Mart sued the city of Turlock (CA) Wednesday for blocking the retail giant’s plan to put a supercenter on Fulkerth Road.

The discount chain filed a pair of lawsuits aimed at overturning Turlock’s month-old ban on most large discount stores with substantial grocery departments.

“They cannot discriminate against Wal-Mart as opposed to other businesses in the area,” said Fresno-based attorney Timothy Jones, representing the company. “Certainly, our belief is that Wal-Mart was the subject of the ordinance.”

Mayor Curt Andre, who supported the ban as a way to prevent traffic congestion and damage to competing grocers, said the city will “vigorously defend” it.

“The overwhelming majority of people that have talked to me have been fervent in their desire to keep any kind of superstore out of Turlock,” he said.

Andre added that he does not expect the city’s legal costs to be excessive.

One of the lawsuits, filed in U.S. District Court in Fresno, claims that the ban interferes with Wal-Mart Stores Inc.’s constitutional rights to conduct interstate commerce and to equal protection under the law.

The other filing, in Stanislaus County Superior Court, contends that the City Council violated state law by using zoning to regulate competition. That lawsuit also claims that the council was wrong in finding that the effects of the ban do not need detailed study under state environmental law.

Wal-Mart supporters said earlier that the proposed store actually would ease congestion and air pollution by providing one-stop shopping.

“Targeting Wal-Mart with irrational restrictions is not a legitimate function of city government,” company spokesman Peter Kanelos said in a press release from his San Diego office.

Jones said the lawsuits ask judges to suspend the ban while the cases are heard.

The litigation is the latest chapter in Wal-Mart’s effort to bring 40 of its supercenters to California in the next five years. More than 1,200 of the stores, which combine a traditional Wal-Mart and a supermarket, have been built in other states.

The chain last month sued Alameda County over a ban on supercenters in unincorporated areas. And Wal-Mart is sponsoring a March 2 ballot measure that would overturn a similar ordinance in Contra Costa County.

Opposition on several fronts

Talk of a possible supercenter in Manteca has stirred no evident opposition so far, but Wal-Mart has run into protests in Lodi, Fresno, Los Angeles and several other cities.

The Turlock ordinance, approved unanimously by the City Council Jan. 13, bans most new or expanding discount stores that exceed 100,000 square feet and devote at least 5 percent of the space to groceries and other nontaxable goods.

The move foiled Wal-Mart’s plans for a 225,000-square-foot supercenter near its smaller, 11-year-old store on Fulkerth just east of Highway 99.

Supporters of the ban said a supercenter would clog traffic as shoppers make multiple crosstown trips each week for groceries and other items. They also said the store could drive out supermarkets that anchor small shopping centers around Turlock, leading to neighborhood blight.

Wal-Mart supporters countered that the ban was pushed by competing grocers and their labor unions at the expense of residents who would save money at the supercenter.

The debate, which twice attracted overflow crowds to hearings at City Hall, also was over whether Wal-Mart indeed would offer the lowest prices for groceries. Critics claimed that the chain achieves its savings by paying employees poorly, a point the company disputes.

Residents behind city’s position

Turlock resident Soraya Fregosi, a supporter of the ban, said city officials “absolutely” should defend it in court.

“What is the point of having a City Council if a company like Wal-Mart can say, ‘The heck with you. We’re doing what we want anyway?'” she said.

Another resident, Kathy Wright, said she believes health benefits for Wal-Mart employees are inadequate, but nonetheless thinks a supercenter would be a boon to low-income shoppers.

“Everybody should be able to get their money’s worth,” she said.

Wright said the ordinance also is unfair because it exempts a Costco Wholesale Corp. store approved by the council last week near the southwest corner of Highway 99 and Monte Vista Avenue.

City officials have said they exempted Costco and other membership stores because their customers tend to shop infrequently and buy in bulk, thus not causing traffic congestion. They also said the Monte Vista store, rather than competing with other Turlock grocers, would capture business now lost to Costco outlets in Modesto and Merced.

Wal-Mart conceivably could seek a supercenter on a site just outside the Turlock city limit, but Kanelos said he knows of no such plan.

Stanislaus County Planning Director Ron Freitas, who oversees land-use applications outside the cities, said he had not heard of any inquiries by Wal-Mart.

He also said he knows of no commercially zoned site near Turlock that would be large enough for a supercenter as well as have access to the public water and sewer service required for such a project.

© 2004 The Modesto Bee

Update: Dec 22, 2004. See “Court Upholds Superstore Ban