(Adds details from decision, comments, background, case citation, byline)
By Jonathan Stempel
April 14 (Reuters) – A federal appeals court on Tuesday lifted an injunction that would have required Wal-Mart Stores Inc to let shareholders vote on a proposal to tighten oversight of its sale of guns with high-capacity magazines.
In a brief order, the 3rd U.S. Circuit Court of Appeals vacated a permanent injunction imposed in November by U.S. District Judge Leonard Stark that would have required a vote at Wal-Mart’s annual meeting in June.
Wal-Mart had objected that allowing a vote on the proposal from Trinity Church, a historic church in downtown Manhattan, would “open the floodgates” to more shareholder proposals, and cause excessive interference in day-to-day business operations.
The church’s proposal would have required Wal-Mart’s board to more closely examine the sale of products that might endanger public safety, hurt Wal-Mart’s reputation, or offend “family and community values” integral to Wal-Mart’s brand.
Trinity said these products might include guns with clips holding more than 10 rounds, a type it said “enabled” mass killings in Newtown, Connecticut and Aurora, Colorado.
It also said such products could include music that depicts sex or violence, the sale of which Wal-Mart already limits.
In Tuesday’s order, the appeals court said “Wal-Mart may exclude Trinity’s proposal from its 2015 proxy materials.”
The court will explain its reasoning in a forthcoming opinion. It ruled six days after hearing oral arguments.
“We are disappointed with the ruling, but pleased that we have been able to draw attention to an important issue of corporate governance and social responsibility,” Trinity said in a statement.
The church said it will decide its legal options once an opinion is issued.
Randy Hargrove, a spokesman for Wal-Mart, said on Tuesday: “The 3rd Circuit reached the right decision.”
Wal-Mart does not sell guns in all its stores, but has said it is committed to selling them “safely and responsibly.”
Groups submitting briefs supporting Wal-Mart included the U.S. Chamber of Commerce and the Business Roundtable. The church drew support from the Law Center to Prevent Gun Violence and a group of more than 30 law professors.
Trinity sued after the U.S. Securities and Exchange Commission issued a “no action” letter signaling it would not punish Wal-Mart for excluding the church’s proposal.
The proposal likely would have failed, given that Wal-Mart’s founding Walton family owns roughly half of the Bentonville, Arkansas-based retailer’s shares.
The case is Trinity Wall Street v. Wal-Mart Stores Inc, 3rd U.S. Circuit Court of Appeals, No. 14-4764.
(Reporting by Jonathan Stempel in New York and Tom Hals in Wilmington, Delaware; Editing by Jonathan Oatis)
- Consumer Discretionary
- Wal-Mart Stores Inc
Source Article from http://finance.yahoo.com/news/wal-mart-defeats-bid-shareholder-215439148.html