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Wal-Mart Files Motion to Dismiss Class Action Lawsuit Brought by Foreign Factory and California Grocery Store Workers

Wal-Mart today asked the U.S. District Court of Central California to dismiss the Doe v. Wal-Mart class action lawsuit involving apparel and toy factory workers in five foreign countries and union employees of two California grocery stores. The lawsuit, filed last September in LosA ngeles, has no legal merit and we are seeking a dismissal of all claims.

Wal-Mart and others involved in ethical sourcing are focused on seeing conditions in overseas factories improve and we all agree there is still much progress to be made. But since Wal-Mart does not own or manage any factories, the plaintiffs have sued the wrong party.

Wal-Mart takes a proactive approach in monitoring supplier factory conditions and if any of our suppliers’ factories are unwilling to correct problems, we end our relationship with them. We ask suppliers to use factories that comply with our Standards for Suppliers which cover such areas as health and safety, compensation, working hours and discrimination.

Although we have a code of conduct and audit supplier’s factories, these factory workers are not third-party beneficiaries of Wal-Mart’s supplier contracts, as the lawsuit alleges.

These workers and their supporters are attempting to place almost unlimited liability on Wal-Mart and other U.S. businesses that import products from foreign countries by making us guarantors of wages, benefits and working conditions for millions of factory workers over which we have no employer-employee relationship. Such broad unlimited liability has the potential of bringing the global trade system to a standstill. It also could cause companies to back away from codes of conduct and auditing supplier factories to the detriment of the very workers who have brought this lawsuit.

The unionized California grocery workers’ claims also are without merit. The unions are overstretching the law when they claim they should be compensated for any reduction in wages and benefits because their employer had to compete with Wal-Mart. This is contrary to the principles of our country’s free market economy.

The U.S. courts are not the appropriate forum for negotiating better workplace conditions in foreign countries. This is a matter for those countries, the owners of those factories, and U.S. Government bodies that negotiate and approve trade agreements. Nor do the U.S. courts have the expertise, resources or authority to regulate daily ongoing events in thousands of factories in foreign countries around the world.

Although Wal-Mart believes it has been singled out because of its size, this lawsuit would affect all U.S. retailers and importers.

About Wal-Mart’s Ethical Standards Program

Wal-Mart seeks information and looks for problems in its supplier factories and works with its suppliers to improve conditions in their factories. If Wal-Mart finds that any of its supplier factories are unwilling to correct problems after multiple attempts, Wal-Mart ceases accepting products from those supplier factories. For certain serious problems or an uncooperative attitude by the owners of the supplier factories, Wal-Mart will stop accepting products immediately. Wal-Mart continuously works to strengthen its efforts in monitoring supplier factories.

• In 2005, Wal-Mart audited on average 35 supplier factories a day or 13,600. We increased the number of unannounced audits to 20 percent.

• Last year Wal-Mart trained more than 11,000 suppliers and their factory managers to increase their familiarity with Wal-Mart’s Standards for Suppliers and to encourage use of accepted practices.

• Wal-Mart’s Standards for Suppliers are periodically updated to reflect the accepted practices of the ethical sourcing community.

• Wal-Mart believes sustainable results will come if we are able to teach our suppliers and their factories that achieving our Standards for Suppliers is an investment -- not a cost.

• Factories covered by the program are audited at least once a year with more frequent follow-up audits if problems are found. Wal-Mart works constructively with the supplier to correct violations. If the supplier is unable to change the practices, Wal-Mart ceases doing business with them.