Walmart Seeks to Force Disclosure of Opponents’ Funders

By Ann Zimmerman and Timothy W. Martin 
First published by the Wall St. Journal, Sept 22, 2010

Wal-mart Stores Inc. is fighting back against a longtime corporate-sabotage campaign undertaken by grocery competitors to slow its growth.

The Bentonville, Ark.-based retailer recently asked judges to require its opponents to disclose who is footing the legal bills in four out of the dozens of California lawsuits against Wal-Mart that have helped delay the company’s expansion.

Lawyers for Wal-Mart want to know if the protracted environmental suits have been funded not by grass-roots activists, as the company long thought, but rather by competitors. “We believe the court and the community have a right to know who is funding the suits,” said Wal-Mart spokesman David Tovar.

Wal-Mart filed the discovery motions after a June article in The Wall Street Journal said grocery competitors Safeway Inc., Supervalu Inc. and Ahold NV secretly funded hundreds of lengthy battles across the country opposing Wal-Mart’s efforts to open supercenters, which sell groceries and general merchandise. In some instances, the grocery chains’ efforts were aided by grocery-worker unions, which fear that Wal-Mart will suppress industry wages and benefits.

The grocers hired Saint Consulting Group, a land-use firm based in Massachusetts, to carry out antidevelopment campaigns against Wal-Mart using political tactics and suits to delay or derail the opening of Wal-Mart stores, the Journal said.

In two of the four California cases involving Wal-Mart, the Journal reviewed internal Saint documents that showed the consulting firm was hired by Safeway to thwart Wal-Mart’s expansion.

In all, Safeway hired Saint to organize more than 30 campaigns against Wal-Mart projects in the state in the past eight years.

One of them resulted in a court decision that made it more difficult to build big-box stores in California, according to Saint internal documents that list the company’s projects, clients and billing numbers.

Safeway, based in Pleasanton, Calif., didn’t return calls seeking comment.

Pat Fox, president of Saint, acknowledged his firm was hired to organize opposition to hundreds of Wal-Mart projects, but he declined to name his clients.

“The work we do helps to level the playing field as regular citizens try to fight back against the world’s largest retailer and the impact of big-box development in their communities,” Mr. Fox said.

Saint maintains that the Journal’s account came from disgruntled company employees who want to harm the firm.

Wal-Mart lawyers estimate that about a third of the company’s stores in California were challenged by local groups prior to 2002, but once it began trying to open supercenters selling groceries, almost every store faced opposition.

Wal-Mart recently combed through dozens of legal cases brought against it. It zeroed in on suits involving the California towns of Merced, Realto, Elk Grove and Galt, all of which claimed that Wal-Mart-based developments violated the California Environmental Quality Act, which requires cities to subject building projects to stringent environmental-impact studies before approving them.

Wal-Mart says it chose these cases because they were at a procedural stage that permitted the filing of discovery motions.

The Journal’s review of Saint documents indicates that Safeway hired Saint to organize opposition in Merced and Elk Grove, though the documents don’t specify whether Saint paid the plaintiffs’ legal fees. The judge handling the Merced case has granted Wal-Mart’s request for discovery.

Wal-Mart has been trying to open a distribution center in Merced for four years. The city has an unemployment rate of about 20%, and the company projects the center would provide about 1,200 jobs with average pay of $17.50 an hour for fulltime workers.

But a group calling itself the Merced Alliance for Responsible Growth is vehemently opposed. In advance of a summer 2009 city council vote on the project, it published a 12-page newspaper with such headlines as “Wal-Mart Jobs Threaten Lives.”

One article, citing a trucking magazine story about Federal Bureau of Investigation prostitution stings at public truck stops, suggested that the distribution center could be a magnet for prostitution, drugs and crime, possibly involving the local high school.

The anti-Wal-Mart newspaper was paid for by Saint using Safeway and union funds, according to two former Saint employees who were interviewed by the Journal.

The Merced Alliance didn’t return calls seeking comment. Saint’s Mr. Fox declined to comment on specific allegations or events.

In 2008, the United Food and Commercial Workers union in California spent $58,000 on the Warn Merced Project, described as a Wal-Mart project in an annual report filed by the union with the U.S. Labor Department.

“Hiring Saint and other organizations…is within our First Amendment rights,” said Jill Cashen, a union spokeswoman.

Merced’s city council approved the distribution center in September 2009. The Merced Alliance for Responsible Growth filed suit 30 days later, claiming that Wal-Mart’s environmental review was flawed. A judge heard oral arguments on the case earlier this month, but hasn’t yet ruled.

The Merced case follows a battle against Wal-Mart in Bakersfield, Calif., earlier in the decade.

A group called Bakersfield Citizens for Local Control consisted of a Saint employee who used an alias and posed as a resident volunteer, several union workers, and a Bakersfield resident who was paid by the plaintiffs’ lawyers who brought the case, according to former Saint employees.

To dissuade the Bakersfield city council from approving one of two shopping centers that were to include Wal-Marts, the group tried to prove that the site was a habitat for the endangered San Joaquin kit fox.

Then, when the city council nonetheless approved the project, Bakersfield Citizens sued, arguing that the two Wal-Marts might force other stores to close.

In 2005, a California appellate court agreed that the potential for blight should be taken into account, overturning the city’s approval of the two shopping-center sites.

But a more extensive environmental impact report concluded that the area could accommodate the Wal-Mart stores. One opened in fall 2009 and the other in March 2010.