clock menu more-arrow no yes

Filed under:

Large part of suit by Wal-Mart dismissed

BENTONVILLE, Ark. — An Arkansas judge Tuesday dismissed a large part of Wal-Mart's multimillion-dollar lawsuit against former Vice Chairman Tom Coughlin, saying the parties had agreed not to sue one another over any events that happened during Coughlin's tenure.

Wal-Mart Stores Inc. said it would amend its lawsuit and try again to void Coughlin's retirement package. The world's largest retailer said Coughlin negotiated a lavish deal last year knowing he had misused $500,000 in Wal-Mart cash and property.

"We are disappointed the court did not rule on Wal-Mart's fraud claims against Mr. Coughlin but instead upheld the release agreements on a technicality," Wal-Mart spokeswoman Mona Williams said. "We will file an amended complaint with additional evidence of fraud and fraudulent inducement."

The decision in the civil case does not affect a federal grand jury in Fort Smith that is looking into possible federal crimes based on Wal-Mart's allegations against its former executive.

Benton County Circuit Judge Jay Finch, whose courtroom is about a mile from Wal-Mart's headquarters, said Wal-Mart failed to show that Arkansas law required a company officer to disclose any improprieties before signing a general release from liability.

"A plain reading of the mutual release indicates that Wal-Mart must have considered the possibility that Coughlin's actions were potentially problematic when it released him of all known or unknown claims," Finch wrote in his order.

Finch said Wal-Mart can still pursue losses that occurred after Jan. 22, when the company and Coughlin waived their right to sue over past events. Wal-Mart says it gave Coughlin $400,000 in April because of a benefits calculation error and wants the money returned.

Coughlin attorney William W. Taylor III said the ruling meant it was time for Wal-Mart to respect the retirement pact and drop its claims.

"There is no legal or factual basis for Wal-Mart to pursue any further claims against Tom, and we hope and expect that Wal-Mart will put this matter behind them," Taylor said in an e-mail to The Associated Press.

Wal-Mart, the world's largest retailer, had sued the 28-year company veteran this summer after referring its allegations to federal prosecutors.

But an agreement between Coughlin and Wal-Mart said they would release each other "from any and all liability from claims, causes of actions, demands, damages, attorneys fees, expenses, compensation or other costs or losses of any nature whatsoever, whether known or unknown."

Coughlin in August filed a motion to dismiss the lawsuit, saying the release barred Wal-Mart from acting against him. Wal-Mart's lawyers countered that Coughlin was obliged as a high-ranking company officer to disclose any wrongdoing and that by not doing so, he had defrauded Wal-Mart into signing the pact.

But the judge said Wal-Mart had failed to provide any specific Arkansas legal case that would require an executive to make that disclosure as a prerequisite for a mutual release.

Finch's order said Wal-Mart could only pursue claims for any alleged wrongs that occurred after the release was signed.

"We grant Coughlin's motion to dismiss that part of Wal-Mart's complaint of all allegations occurring prior to signing the mutual release," Finch wrote. "With regard to Wal-Mart's post-release allegations, we deny Coughlin's motion to dismiss."