November 3, 2005

Ted Frank on Wal-Mart's Mysterious Lawsuit

Most of you know that Wal-Mart fired Tom Coughlin for misuse of corporate funds. (Actually Coughlin retired in January, and was removed from the board in March). A big problem with Wal-Mart's civil claim against Coughlin is that the two signed a prior agreement basically absolving Coughlin from telling Wal-Mart about or litigating over conduct that -- as stupid as it sounds -- seems to include pilfering the company coffers. Wal-Mart wants that agreement void, but Ted Frank notes that this is not in Wal-Mart's long-run interest:

Surely the corporation would be better off on the whole with a legal rule that strictly enforces releases than one that judges the validity of a release on a case-by-case basis
The judge in the civil case has thrown out any and all claims by Wal-Mart for damages before they fired him.

Posted by Kevin on November, 3 2005 at 04:57 PM