The parish of Trinity Wall Street has filed suit in a Delaware Federal court against the Wal-Mart Corporation, alleging the company’s refusal to allow it to distribute proxy material at its April 22 annual meeting violates its rights as a shareholder.
On 1 April 2014 the parish filed a complaint asking the court to compel Wal-Mart to allow materials to be distributed to shareholders that calls for the company’s board to regulate the sale of products that offend “family values.”
The suit follows a ruling by the Securities and Exchange Commission that held Wal-Mart may lawfully exclude Trinity Wall Street’s proposals from the meeting.
In its complaint the church stated the sale of products that were dangerous to the public, may hurt the company’s reputation or offend family values, such as the sale of ammunition clips that hold more than 10 rounds or music that endorses violence and sex harmed the company’s market value.
The complaint, Trinity v. Wal-Mart, 14-cv-00405 U.S. District Court, District of Delaware (Wilmington), asks the court to overturn Wal-Mart’s refusal to allow the church’s proposal to come before shareholders, and to award it legal fees and expenses.
In a letter to his congregation, the rector of Trinity Wall Street, the Rev. James Cooper wrote:
As you know, Trinity Wall Street has long recognized that our considerable resources give us both a responsibility and an opportunity to engage constructively with businesses in which we invest where opportunities exist to enhance returns for both shareholders and society.
As part of this effort, we recently initiated dialogue with certain companies toward assuring they balance the benefits of selling certain products against the risks these sales pose to the public and to the companies’ reputation and brand value. As responsible investors, not just socially responsible investors, we have done so in a manner which we believe is consistent with the business interests of each company. We wanted to let you know of developments with respect to one of these companies: Wal-Mart.
We sought to introduce a Proposal for inclusion in Wal-Mart’s proxy, to be voted on by the company’s shareholders at its upcoming Annual Meeting. The Proposal asks that Wal-Mart’s Board of Directors oversee the development of policies and standards to guide management’s decision whether or not Wal-Mart should sell products falling in one or more of three categories: products that are 1) especially dangerous to the public, 2) pose a substantial risk to Wal-Mart’s reputation, and 3) would reasonably be considered offensive to the community and family values that Wal-Mart seeks to associate with its brand. The Proposal provided that it was intended, among other things, to cover policies and standards that would be applicable to determining whether or not Wal-Mart should sell guns equipped with magazines holding more than ten rounds of ammunition (“high capacity magazines”).
To be clear: this is not an “anti-gun” proposal. Nor is it a proposal to end the sale of certain products. We are simply asking that shareholders be allowed to consider whether the Board has an obligation to assure that the company’s standards and values are uniformly considered and applied when the sale of certain products can have momentous consequences. We note that Wal-Mart has previously refused to sell products such as music that depicts violence or sex, as well as high capacity magazines separate from a gun, out of respect for family and community interests.
After Wal-Mart refused to include the Proposal in its 2014 Proxy Materials and in the wake of a “no action” letter from the SEC’s Corporate Finance Division, which we believe departs from its past rulings, Trinity Wall Street filed a lawsuit in Delaware Federal District Court that asks the Court to require inclusion of the Proposal so that all shareholders may reflect on this important question of Board oversight.
We cannot predict the outcome of this legal step, but we believed it was important to proceed given our commitment to our Parish’s precepts and our dedication to assuring that matters of importance to our congregation, and society, are raised and given the consideration they deserve.