Paul Greenberg / July 20, 2010

Wal-Mart Strikes Back

It’s quite a role reversal: The feds are complaining about getting dragged into court, having to file time-consuming paperwork, and generally being treated like any taxpayer who get crosswise with the IRS.

It seems Wal-Mart, the 800-pound gorilla of retailers, is challenging a fine in connection with the death of a clerk at one of its stores on Long Island, who was trampled to death the day after Thanksgiving of 2008. The poor guy was overrun by a crowd – or rather mob – rushing into the store for the biggest shopping day of the year.

As a result, Wal-Mart was fined $7,000 by OSHA, the federal job-safety agency. The company also settled a case with local prosecutors, and has taken all kinds of precautions on its own to assure that such a thing never happens again, adopting new crowd-control standards for all its outlets in this country. (Once again, hindsight has proven 20-20.)

Wal-Mart has also done something else, and that’s what’s got the feds riled. At last estimate, Wal-Mart had spent more than a million dollars fighting this relatively modest $7,000 fine, claiming no one could have foreseen the danger at the time, and that it’s being punished for violating an arbitrary standard that didn’t exist at the time. Ex Post Facto is the lawyerspeak for it.

What’s more, according to Wal-Mart, the citation from OSHA “has far-reaching implications for the retail industry that could subject retailers to unfairly harsh penalties and restrictions….”

What’s so new about a federal agency’s imposing still more rules and regs on the supposedly private economy? This: Wal-Mart has the resources to fight back. It may be the only outfit in the country with more lawyers in its employ than this branch of the Labor Department. And they stay busy. For once the feds seem to have picked on an outfit their own size, if not bigger. And OSHA doesn’t like it, not at all.

The federal agency claims its precious time is being eaten up by Wal-Mart’s legal maneuvers. Officials at the Department of Labor say that, over the past five months, 17 percent of the available attorney hours in its New York office have been devoted to this one little case, or the equivalent of five full-time lawyers.

Tell us about it. This kind of draining distraction may be new for OSHA, but private employers have to live with the threat of lawsuits every day.

It’s apparently a first for OSHA: No one there can remember such a thing happening before, at least in a case where the fine was less than $10,000. By now Wal-Mart has filed at least 20 motions in these protracted proceedings, and sources at OSHA say the retail giant has spent more than $2 million fighting this single citation. Much to OSHA’s consternation. Its people have an agency to run, you know, and lots of other things to do besides reply to Wal-Mart’s stream of court filings.

The feds’ complaint isn’t exactly novel. It’s just the source that’s new. The complaint itself will sound familiar to any business that has ever found itself in the toils of the federal bureaucracy, and lost in a fog of rules, regulations and administrative diktats. And obliged to hire lawyers by the gross.

But now the tables have been turned, and it’s the feds who are frustrated and flustered. They sound fit to be tied. In red tape. Why is Wal-Mart picking on them? Why is it doing this? This is intolerable. Why, it’s the reverse of the natural order of things!

You’d think OSHA would have its hands full just now investigating industrial accidents around the country instead of feuding with Wal-Mart over a freak accident, however horrifying. But now and then a private company will have the resources – and will – to stick up for itself.

Wal-Mart tends to go all-out in such instances, whether challenged by a frivolous lawsuit or some bureaucratic annoyance. Its stance in these matters is much the same as Winston Churchill’s during the Blitz: Never give in. Never, never, never, never. Not on a matter of honor or principle.

Whatever one thinks of the legalities involved in this dispute, there’s no denying the irony of it. Or the justice. The regulators suddenly find themselves regulated, or at least challenged. The mystification of the Labor Department – why is this happening to us? – would be familiar to any harried businessman, or just taxpayer, who’s forced to hire a platoon of lawyers, with a squad of CPAs to back them up, to defend his rights.

A lone businessman would need all the help he could get to thread his way through this bureaucratic maze, at the end of which there might be only a federal Minotaur waiting to gobble him up. Assets and all. If there were any assets left after all the legal fees were paid.

Remember George McGovern? He was the Barack Obama of his day, only he wasn’t elected president. By overwhelming popular demand. As the Democratic presidential nominee in 1972, he succeeded in coloring just about the whole electoral map Republican red. The lone exceptions were true-blue Massachusetts and the District of Columbia.

In his later years, Mr. McGovern would retire from politics and buy into a bed-and-breakfast up East, but it was no more successful than his presidential campaign. When it went bust in the early ‘90s, he blamed not just a recession but the trouble and expense of dealing with all those state, federal and local regulations – not to mention having to fend off frivolous lawsuits. The grand old man of American liberalism would wind up singing the businessman’s blues. Looking back on his mercifully brief time in the private sector, he would write:

“It’s been 11 years since I left the U.S. Senate, after serving 24 years in high public office. After leaving a career in politics, I devoted much of my time to public lectures that took me into every state in the Union and much of Europe, Asia, the Middle East and Latin America. In 1988 I invested most of the earnings from this lecture circuit in acquiring the leasehold on Connecticut’s Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility – complete with an experienced manager and staff.

"In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn’s 43-year leasehold. I also wish that during the years I was in public office I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.”

Once again, there are those in the forefront of public life who think that the magical solution to all the country’s fiscal ills lies in just taxing business more, in having “the rich” pick up the tab for the rest of us, and slapping still more regulations on businesses as small as the family-owned company in a little town or as vast as worldwide Wal-Mart.

So long as somebody else is paying for it, spare no expense! Let no profitable enterprise alone, and keep issuing citations it would cost too much for the average business to challenge. But something strange is happening on the way to the usual You Can’t Fight the Feds conclusion of this familiar story: Wal-Mart is fighting back.

Legal fees that eat up the budget? Never-ending litigation? That’s for private enterprise to worry about, not government operations. But something tells me that at least some federal bureaucrats are beginning to know what it feels like.


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