‘We’re Going To Quit Breaking The Law’

More of Flagler Video’s treasure trove of Wal-Mart videos have been uncovered by Steve Painter of the Arkansas Democrat-Gazette. Read the whole thing if you have time, but here’s a few of the better excerpts:

Managers mocking a 12 year old boy who was badly burned by an exploding Wal-Mart gas can:

One tape from a meeting features a skit involving gas cans. When the display of cans is scattered by a riding lawn mower, an executive remarks that it’s a good gas can, “It didn’t explode.”

Lee Scott, concerned that Wal-Mart’s bullying of suppliers would attract Congressional action:

“The real danger you hear being talked about Wal-Mart is that Wal-Mart’s purchasing power will become so large that the impact will have a negative impact somehow on the suppliers who deal with Wal-Mart. And that we will dictate terms that are in fact bad for suppliers and anticompetitive in a sense that they won’t be able to do what they need to do for their shareholders or their employees or their other customers.”

Regional Vice President, Larry Williams:

“We’re going to quit breaking the law. The OSHA laws we have, the wage and hour laws that we have, the federal firearms law, we’re going to quit breaking the law.—”

Keep dreamin’ boss.

2 pay bills with Wal-Mart tapes [Arkansas Democrat-Gazette]:

LENEXA, Kan. — In cramped, leased office space bordered by self-storage units in suburban Kansas City, Mo., Mary Lyn Villanueva and Greg Pierce spend their days figuring out how to keep the bills paid.

Not long ago, the company they own, Flagler Productions Inc., was a $ 10 million-a-year audio-video production and showstaging business with nearly 20 employees and one whopping big client: Wal-Mart Stores Inc. of Bentonville.

That ended more than two years ago, shortly after the pair bought the company from founder Mike Flagler. A new guy, Mark Henneberger, was in charge of shows and events at Wal-Mart. He had some different ideas about how to do things. Flagler was out.

“In 2006 we were brilliant, and in 2006 we were fired,” Villanueva said.

Flagler was left without its main source of income but with one potentially whopping big asset on videotape: 15, 000 hours of the history, culture and business of a small Arkansas discount chain that grew to be America’s largest company as measured by revenue.

The collection is proving to be a big draw for attorneys suing Wal-Mart over claims as large as sex discrimination against millions of female employees and as small as injuries resulting from slipping and falling on a wet floor. The lawyers are looking for comments from company executives — the higher up, the better — that might bolster their cases.

Business scholars also have been drawn to seek an inside peek at how the huge retailer changed and adapted as it grew and why it succeeded when others failed.

There’s a video of company founder Sam Walton, urging store managers to care more about their customers and warning district managers to make sure they weren’t overworking their store managers and assistant managers or they’d be gone, reminding them, “I’m still chair- man.”

There’s H. Lee Scott, current president and chief executive officer, cautioning Wal-Mart buyers that Congress might get involved in the company’s affairs if the buyers get too heavy-handed with suppliers.

There’s a regional vice president telling store managers, “We’re going to quit breaking the law.”

There’s John Tate, former labor lawyer and board member, railing at “bloodsucking” unions that have never succeeded in organizing workers at Wal-Mart’s U. S. stores.

It’s all there, all for sale under licensing agreements, by two people who never envisioned this is what they’d be doing for a living.

“I’d really rather be doing our production work that we’re so good at,” Villanueva said. “I really never wanted to be a librarian.”

Wal-Mart claims ownership of the video library, but also has offered to buy it. The two sides are nowhere close to agreement on a price.

Flagler initially said it would sell the tapes for $ 150 million. Wal-Mart countered at $ 500, 000. Flagler lowered the price to $ 145 million.

Lacking a deal, Flagler charges clients $ 250 an hour for research and $ 300 per video minute to license portions of the archive.

Before losing the Wal-Mart business, “We never, ever told anybody this library even existed,” Villanueva said. “We felt like we were part of the Wal-Mart team. That’s why it was such a shock when we lost Wal-Mart, and no one even wanted to talk about it.”

Flagler had worked for Wal-Mart for three decades with no formal business agreement.

That work went well beyond showing up to videotape the proceedings. The company was, in effect, the executive producer of Wal-Mart’s events, turning Wal-Mart’s ideas, graphics and other materials into live events ranging from small groups to thousands of employees.

What Flagler didn’t have, it hired, with Wal-Mart ultimately paying the bill. That included such work as arranging the lighting, hanging huge speakers from ceilings, scheduling sound and camera crews and having a video truck on-site — from which the director selects and switches what attendees see on-screen.

When Flagler handled the 2004 combined Wal-Mart and Sam’s Club meeting at the Dallas Convention Center, Villanueva said, it took 61 semis full of gear, including stadium seating.

Flagler’s last bid for a Wal-Mart job was late in 2006, for the Kansas City year-beginning meeting in January 2007.

Villanueva says a change by Wal-Mart after the original request for proposals added an expedited setup schedule and an extra day to the plan, which Flagler used to draft its bid.

Wal-Mart spokesman Daphne Moore said all bidders got the same request for proposal. She said Flagler was one of five companies that bid. Another company with a better bid was selected, she said.

Flagler again was invited to bid on the 2007 shareholders meeting in June but declined, Moore said. “If a customer falls down and sprains their ankle or their leg or cuts their arm, I mean rush over there and give them all the tenderloving care you can. Take them to the hospital. Take them wherever they..., take them home. I mean, care about them. Call up about them the next two or three days, see how they’re doing. Let’s don’t treat them like an enemy.” — Video of Sam Walton at a managers meeting, Little Rock,

1988 Diane Breneman, a Kansas City, Mo., attorney representing a boy who was badly burned when a gasoline can exploded, stumbled onto information about Flagler and its video archive while searching the Internet for former Wal-Mart employees. Wal-Mart sold the plastic gas can. She sued Wal-Mart and the manufacturer, Blitz USA Inc. She subpoenaed the archive, unaware of its size, and soon received a frantic message from Flagler’s lawyer, David Sexton. “I still had no idea. I just thought they might have a couple of videos laying around,” she said.

It would have taken a tractortrailer to deliver all the tapes to the federal courthouse in downtown Kansas City, Villanueva said.

Breneman, Sexton and Villanueva sat down to talk. Breneman learned about the huge archive and the proprietary software the company developed to manage it. Pick a topic: leadership, 4, 016 items; diversity, 444; wages, 53.

“The old defense lawyer in me just got nauseous,” Breneman said. “I have just been stunned at the breadth of what they have there.”

One tape from a meeting features a skit involving gas cans. When the display of cans is scattered by a riding lawn mower, an executive remarks that it’s a good gas can, “It didn’t explode.”

The then-12-year-old boy she represents poured gasoline on a smoldering fire as he was trying to burn a pile of tree limbs after an ice storm. Breneman, who said she’s represented nearly 20 burn victims involving plastic gas cans, contends that a flame arrestor that would add about 2 cents to the cost of the cans would prevent such accidents.

Wal-Mart and Blitz contend in court filings that the can was misused for a purpose they could not have anticipated. They also have filed a counterclaim, alleging the boy’s mother was negligent in failing to supervise her son’s actions.

Alto Watson, a Beaumont, Texas, attorney, has developed a practice based on suing Wal-Mart. He estimates he has been involved in 50 cases against the retailer in the past decade, though often it’s behind the scenes, helping other attorneys.

A recent case, he said, involved spilled paint that an employee neglected to clean up. Training videos on the importance of cleaning up spills, and how to do it, are among Flagler’s archives.

In this case, he said, store employees did not help the customer who slipped on the paint and fell, resulting in an injury that still causes enough pain in one arm to prevent his client from returning to work. The customer drove himself to the hospital, Watson said.

“That’s not what Mr. Sam said to do,” Watson said.

He said the archive also is important because studies have shown that jurors retain about 65 percent of what they see on video but only about 20 percent of what they read.

“The importance of Flagler cannot be underestimated,” he said. “I could spend days there. There’s just a wealth of information that is just really important.” “ We’re going to quit breaking the law. The OSHA laws we have, the wage and hour laws that we have, the federal firearms law, we’re going to quit breaking the law. — Video of Larry Williams, regional vice president, at a store managers meeting, Tulsa,

1994 “Labor unions are nothing but bloodsucking parasites living off of the productive labor of people who work for a living.” — Video of John Tate, former Wal-Mart labor lawyer and board member, at a 2004

meeting in Dallas Two years ago, Nelson Lichtenstein says, he would have camped out at Flagler Productions for weeks to gather material for his soon-to-be-published book, Sam’s World: Wal-Mart and World Capitalism. Unlike lawyers looking for a smoking gun to help their cases, the University of California at Santa Barbara professor of business and labor history would have been looking at videos and reading transcripts of executives talking to managers, describing problems, advising how to handle various situations.

“This is good stuff, this is useful. They have thousands of pages of this,” Lichtenstein said. “This is [about ] how you run the company, internally.”

Tate, he said, was the architect of Wal-Mart’s anti-union policy dating back to the 1970 s.

Lichtenstein describes his forthcoming book as a history of Wal-Mart as an innovative company in a retail-dominated economy. He said he’s been through the business archives at General Motors Corp. and found nothing remotely resembling the Wal-Mart tapes.

Wal-Mart faces dozens of lawsuits that involve allegations that employees were required to perform off-the-clock work.

But the biggest looming employment case claims Wal-Mart has systematically discriminated against women in its hiring and promotion practices. The company has appealed certification of the case, known as Dukes v. Wal-Mart, as a class action.

That appeal is pending in the 9 th U. S. Circuit Court of Appeals in San Francisco.

On one tape, from a 1999 meeting in Dallas, Scott describes a store at which the management is referred to as “the boys’ club,” which regularly goes to dinner together and has a weekly poker night, has a “code 21” that means an attractive woman has entered the store, and has “an assistant manager who is born to be God’s gift to women, and his goal is to make sure that every woman understands that.”

The assistant manager’s behavior escalates from groping a female employee to inviting her to a motel, offering to pay for sexual favors and, finally, exposing himself to her, Scott said.

The employee complained to the district manager, he said, but the issue was dropped because no written complaint was filed.

The assistant manager was fired, Scott said, adding he “can’t really go into much more about this. We did settle because, would you want to read this in the paper ? Do you want to sit at Thanksgiving dinner with the same family we talked about earlier, and have them have read in a newspaper that this is what a Wal-Mart store is like in 1999 ?”

Lawyers for plaintiffs in the Dukes case have reviewed some of Flagler’s tapes for possible use if the case goes to trial. “The real danger you hear being talked about Wal-Mart is that Wal-Mart’s purchasing power will become so large that the impact will have a negative impact somehow on the suppliers who deal with Wal-Mart. And that we will dictate terms that are in fact bad for suppliers and anticompetitive in a sense that they won’t be able to do what they need to do for their shareholders or their employees or their other customers.”

— Video of H. Lee Scott, Dallas, 2004, talking to buyers Scott expressed concern at the meeting that Wal-Mart would increasingly become the target of special legislation in Congress. As Wal-Mart grows to become 35 percent to 40 percent of some suppliers’ business, he said, “Don’t kid yourself that they will not go to the U. S. government without you knowing it and push for reforms within Wal-Mart and reduction of our power.” He goes on to say suppliers ’ interests are the same as Wal-Mart’s because higher prices result in less consumption, which means less business for the suppliers.

Still, he says, individual cases of buyers exerting excessive pressure on suppliers to hold prices down could cause a backlash.

“It’s only going to take five or six of these issues in front of Congress before we get painted with a broad brush that, ‘ Here’s our negotiating tactic, it’s our way or the highway, ’” he said.

The following year, as organized opposition to Wal-Mart ramped up in the form of unionfunded groups Wal-Mart Watch and WakeUpWalMart. com, Scott talked to district managers in Dallas about efforts to lessen the company’s environmental impact.

He said the “outside world” wanted to know such things as “what are you doing about the chemicals that are put in the rivers in China so that the product can be dyed and shipped to the U. S. at a much less price, but the price is paid by the children downstream from the factory that then develop tumors and the other issues that come with that type of pollution.”

“There’s an expectation that this company, as a member of this society, with a huge footprint, is going to step up to that,” he said. “We got involved in it and found out that, you know what, we can be a lot better for the environment, and save money.”

Wal-Mart’s environmental initiatives, which include promoting energy-saving compact fluorescent light bulbs, making its fleet of trucks more fuel-efficient and adopting energy-saving features in its newest stores, have been credited with some improvement in the company’s public image. “At the rate we’re growing, we will pass everybody. It’s inevitable that we will pass everybody and have this opportunity to be the largest company in the world, and the best company in the world.” — Video of H. Lee Scott,

Dallas, 1999 Wal-Mart did pass everybody. And now a tiny company it severed ties with holds a chunk of the documentation of how it got there. Since word got out, Villanueva and Pierce have come to expect the unexpected. People have shown up at their door, seeking information but declining to identify themselves. One guy introduced a companion as “the secret weapon against Wal-Mart,” Pierce said. “We’ve got ex-Wal-Mart associates calling us and e-mailing us to be very, very careful,” he said.

Added Villanueva: “We don’t know what that means.”

The tapes are stored in many locations, partly because Villanueva and Pierce couldn’t hold on to the company headquarters building. Once their bank learned the Wal-Mart business was gone, it called their loan.

They sold their headquarters — at a substantial loss, Villanueva says — laid off the rest of the staff and moved to much smaller facilities.

But the multiple storage sites are also a security feature, said their attorney, Sexton.

“They have a healthy fear that maybe they [the tapes ] could be stolen,” he said. This month, Flagler plans to attend the annual convention of the American Association for Justice, formerly the Association of Trial Lawyers of America, to market the archive. Sexton said he’s not concerned about Wal-Mart’s claim to ownership of the archive because the company offered to buy it for $ 500, 000. “It’s a clear admission that you don’t own the library. Why would you offer to buy something that you own ?” he said. Villanueva sees the archive as Flagler’s business for the foreseeable future. “Unless somebody comes in and buys the whole lock, stock and barrel — which would be great, because then I could disassociate myself from it — but until that happens, I’m pretty much tethered to it,” she said.

Posted by Eric Bull on Monday, July 07, 2008