Wal-Mart, the nation’s largest gun retailer, is awaiting a verdict Wednesday to see whether it can continue to sell modern sporting rifles if enough investors think it’s a business the company shouldn’t be in.
Arguing that Wal-Mart’s willingness to sell high-capacity magazine rifles contradicts its promise to uphold community and family values, Trinity Wall Street Church in New York won its case in November, when the district court ruled shareholders could propose and vote on a resolution that would force Wal-Mart’s board of directors to review its gun sales policy.
Gun rights activists argue that the district court’s decision allows the church, which owns 3,500 Wal-Mart shares, and other political activists to push gun control via corporate policies rather than struggle to pass such laws in the electoral arena.
“Implications of the decision are already being felt in a wide variety of areas, like shareholders who want companies to divest in Israel or shareholders who wanted, prior to a few days ago, to invest in Indiana,” said Michael Hammond, legislative counsel for Gun Owners of America. “It’s sort of an ongoing effort by people who have been unable to use the political process to achieve political ends and are now trying to destroy corporations in order to achieve those political ends.”
Wal-Mart is worried that the court’s decision will give investors power to protest any of the items sold in Wal-Mart stores across the country.
“Trinity’s proposal would interfere with Walmart’s ordinary business operations by seeking to regulate Walmart’s daily decisions on the hundreds of thousands of products sold in our stores, wholesale warehouse clubs and online,” Wal-Mart spokesman Randy Hargrove said.
On Wednesday, a three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia has scheduled a hearing on Wal-Mart’s appeal of the district court ruling.
In a December letter posted on Trinity’s website, the Rev. James H. Cooper wrote that the church’s proposal was not “anti gun,” nor did it intend to end the sale of certain products.
The church is asking that investors be allowed to discuss with the board what policies and standards are applied for the sale of items that might be considered dangerous, could pose a substantial risk to the company reputation and would reasonably be considered offensive to the community and family values that Wal-Mart associates with its brand.
“Now and in the future, Trinity’s pastoral mission will maintain its focus on issues that the parish believes are critical to the welfare of communities and society, under the broad umbrella of justice and fairness that our faith represents,” Mr. Cooper wrote.
Mr. Hammond told The Times the church’s ideas of family values shouldn’t apply to the country as a whole.
“Trinity is right at the base of Wall Street and Broadway. You probably don’t see a whole lot of people hunting in Trinity’s graveyard, but, on the other hand, if you look at places like Arkansas and places like New Hampshire — anywhere but Broadway and Wall Street — families do, in fact, take their kids out hunting, families do engage in sport shooting, families do encourage their kids to engage in competitive shooting,” Mr. Hammond said.
Mr. Hammond added that if Trinity wants to focus its efforts on political activism rather than church activity, it should consider changing its nonprofit tax status to reflect those goals, calling it a “temple of political liberalism as opposed to a temple for the worship of God.”
Mr. Hargrove told The Times that the company, which now sells firearms in less than half of its 4,500 stores, has gun standards that go above and beyond what the law requires.
“In areas of the country where we sell firearms, we have a long-standing commitment to do so responsibly through trained associates in compliance with our standards, and those greatly exceed what’s required by law,” Mr. Hargrove said.
According to Larry Keane, senior vice president and general counsel for the National Shooting Sports Foundation, the rifles that Trinity is concerned about are the most popular guns being sold in the U.S. today.
While Trinity argues that Wal-Mart’s sale of sporting rifles would hurt the company’s image, the guns are so popular that it would actually be more financially harmful to Wal-Mart to stop selling them.
“The management for Wal-Mart should be making the decision for what products they sell, and if shareholders don’t like the products they sell, they should sell their shares on the open market,” Mr. Keane said.
In its appeal, Wal-Mart argues that Trinity’s proposal would be nearly impossible to implement because it is so vague.
Lynn Stout, a Cornell University professor of corporate and business law, and one of roughly three dozen law professors that submitted a friend of the court brief in support of Trinity, said Wal-Mart should want to hear the concerns of its shareholders on gun issues.
“It’s a bit of a mystery to me why they have worked so hard to not listen to their shareholders,” Ms. Stout said. “Wal-Mart argues that the proposal is too vague because no one agrees on what values are, and yet the Wal-Mart website states that the company wants to respect and work with its shareholders on governance and shareholder values.”
Ms. Stout explained that Trinity’s proposal does not give investors the ability to tell the company board what to do, it simply asks them to identify whether their sales policy is consistent with company values.
That request might seem small, but critics say if the appeals court rules in favor of Trinity, it could set up a precedent that derails the way major corporations operate.
Bernard Sharfman, an adjunct professor at George Mason University School of Business, said that investors do not have the authority or the knowledge to make decisions that govern the corporation.
“That kind of decision needs to be made by the board of directors. What is [in] the best interests of the corporation — that authority, by corporate law, is embedded by the board of directors. That’s why you have a board of directors: to make those decisions,” Mr. Sharfman said.
• Kellan Howell can be reached at khowell@washingtontimes.com.
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