Big box retailers: discovery abuse.

Consumers injured while shopping at retailers like Wal-Mart and Kmart find that in the courtroom the customer is anything but king.

The U.S. retail landscape has changed drastically over the last 15 years. One major change has been the emergence of the "big box retailer." These retail giants, like Wal-Mart and Kmart, keep their stores open 24 hours a day. In addition to selling traditional retail items like electronics and sporting goods, they also sell groceries and provide in-store access to services--like hairdressers, optometrists, and banks--to create "one-stop shopping."

These multinational corporations have significant power and financial resources, and they can make litigation difficult for injured victims and their counsel. You haven't really experienced hardball litigation tactics until you've been up against a big box retailer. To help clients obtain just and reasonable compensation, you must confront these tactics head-on.(1)

One of the principal defenses large retail stores use in litigating any type of claim is to attempt to confine the scope of the litigation to just the store in question and the millisecond that the injury occurred. You must respond to this defense quickly by showing that the retailer had previous knowledge of dangerous conditions or activities on its premises and that it failed to respond appropriately.

Most, if not all, large retailers are self-service stores. Customers select and retrieve items from store shelves. The only contact most customers have with a store employee is when they are greeted at the front door and when they check out.

Merchandise is often stored dangerously. Sometimes, items are stacked as high as the ceiling will permit. A familiar old slogan attributed to Wal-Mart was "stack it high, and sell it cheap."(2)

A "just in time" selling strategy also means that dangerous stocking activity is performed at various times of day, including while customers are present.(3) And because one-stop shopping often means shoppers are concentrated in one store instead of being divided among several stores, as they would have been in the past, the high volume of people in a store at any one time further jeopardizes their safety.(4)

You should not assume that your client's case is unique. While you might think that being struck by falling merchandise in a retail store is an uncommon occurrence, it happens thousands of times each year.

You should also be aware that the mechanism of your client's injury is most likely not unique. Big box retail stores are all designed uniformly, and they all have similar merchandise and stacking policies. While incidents involving transitory conditions will happen at Wal-Mart stores, injuries are usually caused by problems found in most, if not all, stores. These include improper placement of shelving, improper stacking of material, improper training of personnel, and inadequate surfacing.(5)

The uniform design of the stores is meant to give shoppers a feeling of familiarity regardless of a store's location. Shoppers in Arkansas, Mississippi, and Texas will find stores set up the same way. Customers can find the items that they need without being confused by different layouts.

While this "uniformity of premises condition" may be good marketing for the retailers, it can also be a great advantage to a plaintiff in litigation if used properly. Your litigation strategy must be designed to fully discover and demonstrate the defendant's knowledge of the dangerous conditions that caused the plaintiff's injury. The relevance of these prior similar incidents is "correspondingly heightened by proving the largest number of extraneous incidents possible."(6)

Retailers use sophisticated computer tracking of customer injuries. For example, Wal-Mart uses a system that classifies falling merchandise incidents using 14 categories, including the name of the injured person, the item that fell, and the store involved.(7) Lists of falling-merchandise claims have been produced in previous litigation, especially involving Wal-Mart.(8)

In one case, Wal-Mart produced a list showing more than 18,000 falling merchandise incidents over five years. This list was ruled admissible by the Ninth Circuit to prove notice.(9) More recently, discovery abuse related to the same list was used by a federal court in Georgia to find that the list was accurate, to strike Wal-Mart's answer, and to issue sanctions against the company for discovery abuse.(10)

Inadequate security is another problem common among big box retailers. They often encourage customers to enter their premises at all hours of the night. While large retailers employ security personnel and use hidden cameras to prevent shoplifting, most have no security outside stores to prevent attacks.(11)

Many retailers have performed crime-prevention studies of their premises, including the parking lots. In 1994, Wal-Mart conducted a nationwide study that showed that 80 percent of nonshoplifting crimes committed at its stores occurred in store parking areas.(12)

Wal-Mart concluded that by spending only $45,000 per year on each store, crime outside the stores could drop to zero and sales and customer counts would increase.(13) In essence, the security program would more than pay for itself.(14) These results were published in 1996 by Wal-Mart Vice President of Loss Prevention Dave Gorman and have been admitted into evidence in several recent inadequate security cases.(15) Sadly, even given this awareness, security in store parking lots is nonexistent at some stores and substandard at others.

To avoid damaging evidence like the Gorman study, big box retailers will attempt to keep the focus of the case on the store where the attack against your client occurred. Companywide discovery should reveal that the defendant knew that crimes were being committed on its premises nationwide, knew of measures it could take to prevent these crimes, and did not effectively implement these measures. Given the Gorman study's results, any big box retailer that does not take security precautions to reduce the crime outside its stores to "zero" should be held accountable for this failure.(16)

Discovery abuse

Another litigation tactic of many big box retailers is to engage in discovery abuse. Often, defendants' attorneys will either ignore discovery requests or file answers with false, incomplete, nonresponsive, or "half-hearted" responses.(17)

This strategy can be explained, in part, by the retailers' use of outside counsel and the way these attorneys are paid. For example, Wal-Mart pays most of its outside attorneys a flat fee, much like an HMO pays its doctors.(18) As such, these attorneys have a potential financial incentive to work as little as possible--the less work flat-fee lawyers perform on a case, the more their hourly rate. This can result in, if not encourage, less than satisfactory compliance with the rules of discovery.

The strategy can be summed up briefly.

* The retailer pays its outside attorneys a flat fee, almost guaranteeing the attorneys will not adequately participate in the discovery process.

* The retailer does not adequately participate in the discovery process, thereby lowering its overall costs in the most expensive area of litigation.

* Motions for sanctions are filed by plaintiff's counsel, but the court is reluctant to enter sanctions, believing that the litigant can be brought into compliance, and, instead, issues mere admonitions.

* Motions for sanctions are filed again. Even if the court orders the ultimate sanction--striking the defendant's pleadings and entering judgment for the plaintiff(19)--the retailer is still ahead because it only has to pay what it would most likely have had to pay if the case went to trial.

Simple math reveals this strategy--given the large number of premises cases these retailers have--is a winning one for the retailer. By failing to produce damaging evidence, the retailer will win many cases it otherwise would have lost. By capping attorney fees at a flat rate, the retailer does not run the risk of paying high attorney fees. And by failing to engage honestly in the discovery process, the retailer substantially reduces its overall litigation costs and risk of an adverse verdict.

A Westlaw search of 1999 cases involving Wal-Mart brought up more than 250 published opinions.(20) That is a rate of about one published opinion per business day.

Given the volume of premises cases and the stringent burden of proof on plaintiffs, it is less expensive for retailers to litigate cases than settle them.

Plaintiffs will also meet with frustration just trying to contact a retailer's lawyer. The flat-fee structure is profitable only if it is also coupled with large numbers of cases. As such, counsel for these retailers are extremely busy. Getting them on the phone is close to impossible, and attempts to schedule hearings or discovery by agreement meet with impasse.

Some attorneys have failed to show up at court-ordered meetings, with sanctions being levied more than once against Wal-Mart for this.(21) And the chief circuit mediator for the Sixth Circuit's Office of Circuit Mediators recently wrote that they have stopped scheduling settlement conferences in cases involving Wal-Mart because the company has been unwilling to negotiate settlements in cases on appeal.(22)

However, trial dates eventually come up, and since the plaintiff has the burden of proof, the retailer will demand its right to trial by jury, stating there has been adequate time for discovery and the company produced everything it could find.

Fighting back

A genteel response to this discovery abuse will meet with dismal failure. We do not advocate fighting hardball tactics with hardball tactics, but you will have to be aggressive and creative.

You must first request extensive and broad discovery of information regarding the defendant's knowledge of its premises. Much of this information can be obtained from computer databases. For example, Wal-Mart maintains databases containing information on incidents at all its stores.(23)

When sending discovery requests, consider sending at the same time a notice for a hearing on objections. The notice should indicate the hearing will be held 50 days after the requests have been sent. Most state and federal courts require some type of conference before parties can bring motions to compel.(24) As mentioned above, because defense attorneys in these cases are so busy, it is usually difficult to schedule conferences within a reasonable time period. By setting a hearing date at the same time you send a discovery request, you have a date certain on which to hear the defendant's objections.

More often than not, big box retailers will object to every request and provide little or no information in any response they do give. This is a common delay tactic.

When the responses do come in, immediately send a letter to defense counsel setting up a meeting before the hearing date to try to resolve discovery objections. Your certificate of conference, if required, can then be filed if the retailer does not meet with you, if your differences cannot be resolved, or if the defendant remains unwilling to withdraw its objections or produce discoverable evidence.

Waiting until the answers come in before setting a hearing date for the defendant's objections means you will have to wait additional time to get a mutually agreeable hearing date. Then, once the date arrives and the judge grants a motion to compel, the defendant will often be given a certain number of days (commonly 30) to comply with your requests.

You are now more than three to four months down the road, at the earliest, from the time that you sent out the discovery requests, and you still do not have answers to questions that are, except for the facts of the accident, solely in the retailer's possession. Given the usual time constraints on discovery, your ability to hire experts, obtain information from witnesses while their memories are fresh, and keep the case moving is severely compromised.

Many big box retailers prefer to litigate in federal court if possible. In some jurisdictions, you can avoid this by suing the manager of the store. Claims against a manager may include failure to adequately budget, failure to properly maintain the store, failure to properly train employees, and failure to provide proper security. This joinder of a local resident prevents removal to federal court.(25)

You may also want to obtain an order requiring the retailer to list more than one attorney in charge of the case. This can help vitiate the problem of defense attorneys being unavailable for hearings, depositions, or meetings.

The best way to fight discovery abuse is to request a sanction every time a defendant engages in it. Some courts have actually found that some retailers, like Wal-Mart, have "chosen extreme discovery abuse as a litigation strategy."(26)

Judges must be educated about this strategy early on so it can be dealt with effectively. At the first hint of discovery abuse, request a sanction against the retailer or its attorneys, or both. Sanctions include admonitions, evidence preclusion, monetary fines, and striking of a party's pleadings.(27)

Do not hesitate to ask for a monetary sanction of costs and attorney fees relating to motions to compel. Federal Rule of Civil Procedure 37 specifically allows for "reasonable expenses incurred in making the motion, including attorney fees."(28) However, do not bring motions to compel frivolously. If your motion is denied, the court may award costs and expenses against you under Rule 37.(29)

Obtaining a written order overruling objections and compelling responses to discovery is of utmost importance. This will eliminate the convenient "misunderstanding" that flat-fee attorneys may have regarding their obligations to obtain discovery from their clients and opens up the potential for a contempt ruling for failing to follow the court's written order.(30) Have the order prepared and ready for the judge to sign before you come to court.

If you seek sanctions each time a defendant fails to cooperate with discovery requests, you will likely see a change in the way defense counsel handles the case. Answers to discovery will usually be more informative. The less discovery abuse is tolerated, and the more it is exposed and sanctioned, the more likely lawyers for big box retailers will stop engaging in it.

Online resources

With recent advances in computer technology, big box retailers can now track buying trends, and this information can be used to increase consumer traffic and sales. These same technological advances can help consumers who have been injured while shopping at the retailers' stores.

On several Web sites, customers can share their experiences and post complaints. Some sites focus on just one ratailer, like http://www.walmartsurvivor.com. Others, like http://www.tuckernews.com and http://www.sprawl-busters.com, are more general in their approach.

Additional online resources include http://www.atla.org, ATLA's Web site, which offers list serves specifically tailored to various areas of practice. An e-mail request for information goes out instantly to thousands of attorneys who will respond by providing information and strategy hints.(31)

These Web sites offer access to documents used in litigation.(32) They can also introduce you to a network of individuals who can provide other helpful information. Failure to use the Internet and list serves will shortchange your client and other litigants who go up against large multinational retail giants.

Big box retailers are here to stay. But their litigation tactics have to go. By following the strategies outlined in this article, you can help to stop these defendants from abusing the U.S. legal system while helping your clients obtain fair and just compensation for their injuries.

Notes

(1.) Bob Van Voris, Wal-Mart's Pennywise Lawyering: Are Fixed Fees ,md Hardball Tactics Making the World's Largest Retailer Pound-Foolish? CORP. COUNS., Oct. 1999, at 30, 32.

(2.) See Craig Gordon, Airline Is Going Your Way, NEWSDAY, Nov. 15, 1998, at F9; see also Stephanie Anderson Forest, Look Who's Thinking Small, BUS. WK., May 17, 1999, at 66.

(3.) See William H. Borghesani Jr. et al., Food for Thought: The Emergence of Power Buyers and Its Challenge to Competition Analysis, 4 STAN. J.L. BUS. & FIN. 39, 51-53 (1999).

(4.) Posecai v. Wal-Mart Stores, Inc., No. 99-C-1222, 1999 WL 1072889, at *6 (La. Nov. 30, 1999) (Lemmon, J., concurring).

(5.) See, e.g., Hall v. Wal-Mart Stores, Inc., 125 F.3d 861 (10th Cir. 1997); Ray v. Wal-Mart Stores, Inc., 120 F.3d 882 (8th Cir. 1997); Thibodeaux v. Wal-Mart Stores, Inc., 729 So. 2d 769 (La. Ct. App.1999), cert. denied, 1999 WL 50662 (La. June 10, 1999); O'Shea v. Kmart Corp., 701 A,2d 475 (N.J. Super. Ct. App. Div. 1997); Lorinovich v. Kmart Corp., 516 S.E.2d 643 (N.C. Ct. App.), cert. denied, 351 N.C. 107 (1999).

(6.) See, e.g., John Deere Co. v. May, 773 S.W.2d 369, 373-74 (Tex. Ct. App.1989).

(7.) See Deposition of Pamela Lee Oliver, Systems Manager for Claims Management, Inc., Feb. 17, 1999 (available at http://www.walmartsurvivor.com/page1.html) (visited Jan. 8, 2000).

(8.) See Greenwalt v. Wal-Mart Stores, Inc., 567 N.W. 2d 560, 563-64 (Neb. 1997).

(9.) Shafer v. Wal-Mart Stores, Inc., 176 E.3d 484 (9th Cir. 1999).

(10.) Muse v. Wal-Mart, No. 3:97-CV-61 (N.D. Ga. Nov. 18, 1999) (full text is available at http://www.walmartsurvivor.com).

(11.) See, e.g., Gorman (An Interview with Wal-Mart's Dave Gorman on the Chain's New Parking Security Program), 7 PARKING SECURITY REP. 10 (June 1996) (only 276 of Wal-Mart's 2,500 stores have outside patrols and only 400 have outside cameras).

(12.) See David H. Gorman, Loss Prevention Racks Up Success, SECURITY MANAGEMENT, Mar. 1996, at 55 (available at http://www.securitymanagement. com/library/000098.html).

(13.) Id.; see also Gorman, supra note 11.

(14.) Gorman, supra note 11, at 10 ("The cost of doing it wasn't quite as expensive as what we had been doing. So we saved a little money and did much more efficient work.").

(15.) Posecai, No. 99-C-1222, 1999 WL 1072889.

(16.) See Gorman, supra note 12.

(17.) See, e.g., Bratka v. Anheuser Busch Co., 164 F.R.D. 448, 463 (S.D. Ohio 1995); see also Van Voris, supra note 1, at 34.

(18.) Van Voris, supra note 1, at 34.

(19.) See Empire v. Wal-Mart Stores, Inc., 188 F.R.D. 478, 481-83 (E.D. Ky. 1999) (citing several cases in which Wal-Mart was sanctioned).

(20.) These cases were found using the Westlaw query: ti(Wal-Mart) and date ([is greater than] 1998).

(21.) See Empire, 188 F.R.D. 478, 481.

(22.) Letter from Robert W. Rack Jr., Chief Circuit Mediator, Office of Circuit Mediators, U.S. Court of Appeals for the Sixth Circuit, to John D. Richardson, Attorney for Delta Square Shopping Center, McClung v. Wal-Mart Stores, No. 99-6605 (6th Cir.) (Jan. 13, 2000).

(23.) See Deposition of Pamela Lee Oliver, supra note 7; Greenwalt, 567 N.W.2d 560.

(24.) See, e.g., FED. R. CIV. P. 37(a)(2).

(25.) See 28 U.S.C. [sections] 1332 (1994).

(26.) Empire, 188 F.R.D. 478.

(27.) See FED. R. CIV. P. 37(b)(2)(A-E).

(28.) See FED. R. CIV. P. 37(a)(4)(A).

(29.) See FED. R. CIV. P. 37(a)(4)(B).

(30.) See FED. R. CIV. P. 37(b)(2)(D).

(31.) To access the list serves, ATLA members should go to http://www.atla.org and click on "Discussion Forums" and then on "Sections." A group of ATLA lawyers has formed the Wal-Mart Task Force as a subgroup of the Inadequate Security Litigation Group. The ATLA Exchange also maintains a significant number of documents and other information in its databases about litigation related to Wal-Mart and Kmart. For information about the task force, call [phone], ext. 306. For Exchange information, call [phone], ext. 265.

(32.) For example, in a case we handled that resulted in an $18 million sanction, the sanctions motion, supporting evidence, and hearing transcripts are available at http://www.depoconnect.com and can be downloaded or placed on CD-ROM for a nominal fee. The case is Meissner v. Wal-Mart Stores, Inc., A159,432 (Tex., Jefferson County Dist. Ct. Apr. 8, 1999).

Gilbert T. Adams III and Alto V. Watson III work at the Law Offices of Gilbert T. Adams in Beaumont, Texas.