The New York Times reported this weekend that a judge upheld $7,000 fine OSHA levied against Walmart for the trampling death of a worker a couple of years ago. Ho-hum.
But what’s interesting is how hard Walmart has fought it:
Wal-Mart had mounted an aggressive defense to overturn the $7,000 fine, causing OSHA officials to complain that the company had spent more than $2 million on legal fees in the case. OSHA officials said federal employees had to devote more than 4,700 hours of legal work in response to Wal-Mart’s effort to block the $7,000 fine.
Walmart spent $2 million fighting a $7,000 fine—and then had to pay the fine anyway. In other words, it could have paid 285 trampling fines with the money it blew trying to remove this one.
Why would a company do something like that? Why is it spending more money by appealing the ruling? And why would it fight that $7,000 fine when it ended up settling for $2 million to injured customers and Nassau County a few weeks before OSHA handed it down?
Perhaps Walmart is fighting on principle alone. Or maybe it wanted to send a brushback pitch high and inside on the Labor Department.
A Times story back in July on the case reported this:
The company has made so many demands that Labor Department officials said they would not discuss the case except on condition of anonymity because they feared being subpoenaed about their discussions with a reporter.
And one in six man hours in the Labor Department’s New York legal department from February to July last year were consumed with Walmart’s fight. It’s unclear how much time it has consumed since then.
I reckon this has relevance for why financial regulators are so gunshy with the big companies they oversee. Think about the mismatch of resources between regulators and Wall Street. The SEC’s $1.4 billion budget is $600 million less than the marketing budget of Bank of America alone, as Halah Touryalai pointed out last month.
Walmart, for its part, says it’s unfair to say it should have prevented the trampling, which happened at 5 a.m. after 2,000 shoppers queued up by a sign that said “Blitz Line Starts Here.” But it also says this (emphasis mine):
“OSHA wants to hold Wal-Mart accountable for a standard that was neither proposed nor issued at the time of the incident,” said David Tovar, a Wal-Mart spokesman. “The citation has far-reaching implications for the retail industry that could subject retailers to unfairly harsh penalties and restrictions on future sales promotions.”
Wal-Mart is spending $2 million fighting a $7,000 fine at least in part because it thinks OSHA is going to stop it from doing Black Friday promos?
Clearly we don’t have much of an answer here, and that’s why it’s good that the Times is keeping this story in the public eye.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.