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October 22, 10

NEWS / Wal-Mart Will Pay $775,000 and Revise its Business Practices to Settle States Lawsuit

NEWARK – Wal-Mart, following a finding that it sold or offered to sell expired infant formula and non-prescription drugs to consumers, has entered into settlement with the state to pay $775,000 and revise its business practices to comply with state laws and regulations, under terms of a Final Consent Judgment that resolves a 2008 lawsuit.

The settlement comes following a ruling by Judge Thomas P. Olivieri in August that the Office of the Attorney General and State Division of Consumer Affairs had proven four of the eight counts in their lawsuit – including that Wal-Mart had sold or offered to sell infant formula and non-prescription drugs beyond their marked expiration dates and that items on sale scanned at incorrect prices. The remaining counts, which charged various instances of unconscionable business practices among other violations, were to be the subject of trial scheduled to begin yesterday in State Superior Court in Hudson County.

Under the terms of the settlement, the company will pay $500,000 in civil penalties, plus reimburse the state $160,000 for its legal expenses and $40,000 for its investigative costs. Additionally, Wal-Mart will pay $75,000 to fund a consumer education initiative.

The settlement also requires that Walmart maintain uniform policies for the periodic inspection of non-prescription drugs and/or infant formula and for monitoring the price accuracy of merchandise at Walmart Stores in New Jersey, to ensure that merchandise is not sold at a price in excess of the posted price.

“This settlement puts the onus on Wal-Mart to check expiration dates when stocking its shelves, to periodically recheck stocked items, and then remove from sale any infant formula or non-prescription drugs that are past expiration,” Attorney General Paula T. Dow said. “A responsible retailer should do no less and we expect full compliance at Wal-Mart’s 54 New Jersey stores.”

Wal-Mart admitted no liability or wrongdoing in reaching settlement with the state. This settlement supersedes a Consent Order between Wal-Mart and New Jersey entered in April, 2004 to resolve similar allegations that the company sold or offered to sell expired infant formula and non-prescription drugs.

“Whether the company is the world’s largest retailer or a mom-and-pop operation, we will act whenever laws are violated and the well-being of our consumers are at risk,” said Thomas R. Calcagni, Acting Director of the New Jersey Division of Consumer Affairs. “Our consumer protection laws will be followed -- no excuses, no exceptions.”

The Office of the Attorney General and Division of Consumer Affairs sued Wal-Mart, Target and Drug Fair in September, 2008, alleging each retailer had violated the state’s Consumer Fraud Act and Weights and Measures Act. Target settled with the state in November, 2009, paying $375,000 and agreeing to revise its business practices. Drug Fair went out of business before the state’s lawsuit could be resolved.

Deputy Attorneys General Lorraine K. Rak, Chief of the Consumer Fraud Prosecution Section, and Nicholas Kant, represented the state in this matter. Investigators from the Office of Consumer Protection and State Weights and Measures officers conducted the inspections of the stores.


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