A court orders Walmart to disclose information related to two funds in connection with allegations of excessive opioid distribution.
Walmart Inc. must disclose internal documents connected to its alleged mishandling of opioid painkillers sold at the retailer’s in-store pharmacies, according to nonpartisan Delaware Chancery Judge Travis Laster who ruled in favor of plaintiff investors. Walmart and other major pharmacy chains, including CVS Pharmacy, Endo Pharmaceuticals, Rite Aid and Walgreens, are facing litigation related to their dismissal of “red flags” associated with suspicious opioid orders and failing to report these to the Drug Enforcement Administration (DEA). The federal filings against the pharmacies indicate they put profits above consumer safety and that Walmart, specifically, fixed a hard limit on opioid quantities it would distribute to its stores, so its pharmacists would not have to report.
Two pension funds seeking release of the documents “quite clearly have a credible basis” to support the burden of proof, Laster said. “I don’t think this is a close call. I don’t think you can say with a straight face there isn’t any evidence of wrongdoing.”
The funds, which own Walmart shares, suggest in filings, “Evidence shows some executives of the retailer ensured a steady stream of opioids to so-called pill mills – doctors’ practices that routinely wrote hundreds of prescriptions for opioid painkillers that were then used for illegal purposes. When the federal government moved to investigate and then prosecute the chain, Walmart used its political clout to thwart any such enforcement action, causing career public servants to quit their jobs in frustration and disgust. Granting access to the company’s internal files is justified because investors have reason to suspect Walmart executives violated legal duties to shareholders.”
The plaintiff shareholders cite further that Walmart used its political clout to “thwart any such enforcement action, causing career public servants to quit their jobs in frustration and disgust,” when the company was questioned by the DEA.
David Wales, an attorney for the funds, said during the hearing to disclose, “The plaintiffs are seeking the internal files to get a better handle on the board’s oversight of opioid distribution.” Release of this information, the plaintiffs believe, will prove their position.
Walmart case documents submitted to the court previously stated, “Three Walmart pharmacies [in one county] sold 6.4 million opioid pills from 2006 through 2014. But Walmart did not file any suspicious order reports from those stores between 2007 and 2014, the period for which the plaintiffs have such data.”
“Still, the company failed to keep an eye on excessively large opioid sales within its 2,700 in-store pharmacies,” Wales said. “The investigation would focus on whether Walmart lived up to its agreement with the government.”
Ray Dicamillo, one of Walmart’s attorneys, responded at the most recent hearing, the funds it must disclose “have no evidence that directors were involved in the opioid issue and sales of the painkillers was a minuscule part of the chain’s business, constituting about 5% of its revenue. What’s missing is a direct link to board members or senior executives in connection with the alleged wrongdoing.”
The Walmart cases are Norfolk County Retirement System v. Walmart Inc., 2020-0482, and Police and Fire Retirement System of Detroit v. Walmart Inc., 2020-0478, Delaware Chancery Court (Wilmington).
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