A report about the oral argument in the Walmart case before the Delaware Supreme Court that appeared in The Chancery Daily caught our eye.
By chance meeting at last week’s oral argument before the Delaware Supreme Court in Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, No. 614, 2014, hearing (Del. July 10, 2014), The Chancery Daily benefited from the perspective of an expert in the Foreign Corrupt Practices Act.
The Chancery Daily has followed the matter closely as an interesting, if not necessarily tectonic-plate-shifting, books and records action.
In the view of Michael Scher, who has written extensively on the Wal-Mart matter, it is a potential inflection point in the evolving role of corporate compliance. Where The Chancery Daily normally sees the role of a books and records action as limited to the parties involved, Scher views this action as having greater implications — including the efficacy of a reporting system where, in practice, red flags intended to be brought to the board’s attention can be diverted, silenced, or ignored.
As discussed in [Scher’s] recent post titled Walmart in Delaware: A tale of red flags ignored, documents sought in this action are likely the only available means of discovering the circumstances that led to the abrupt termination of an internal investigation in a manner that casts a pall over corporate compliance officers’ ability to perform the work prescribed under Caremark unimpeded, and without fear of retaliation for what that work might reveal …
The Chancery Daily’s initial characterization of Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW as a books-and-records case “limited to the parties” is a sharp contrast with Mike Scher’s “greater implications” view. How the court sees the case might control the outcome of the appeal and the scope of the opinion.
Kyle Compton, the founder and chief editor of The Chancery Daily and one of its regular writers, once worked for Judge Strine. The judge presided over the Walmart case in the Chancery Court and issued the discovery order that Walmart is appealing. Strine is now chief justice of the Delaware Supreme Court and recused himself from Walmart’s appeal.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.