Why Walmart is Spending $2 Million to Fight a $7,000 Fine

It may seem crazy, but Walmart (WMT) is spending big to fight a $7,000 fine from the federal Occupational and Health Safety Administration (OSHA) over a death that occurred in a New York store. Why? It's the principle of the thing -- a principle Walmart is concerned could come back to bite it later if it lays down on this one. Walmart has already paid $2 million to county prosecutors to settle criminal charges in the case, in which a temporary worker was crushed in a Black Friday stampede. It's agreed to make changes in its crowd-control efforts (which were already substantial). For instance, this year it stayed open around the clock Thanksgiving eve to avoid a crush of customers at opening time.

Walmart set up a victims fund and given to charity. It's agreed to review and improve its crowd-control procedures.

What more does OSHA want? The fine amount is obviously pin money to Walmart. Meanwhile, Fox News reported OSHA prosecutors are spending an inordinate amount of time defending the case, in which Walmart is filing motion after motion.

One key point: OSHA is trying to fine Walmart based on a rule that wasn't in place at the time of the accident...which does seem wrong.

But the National Retail Federation is applauding Walmart's move for another reason: Fear that this tiny little OSHA case could set a big, nasty precedent that could spell future headaches and more regulation surrounding special-event management for all retailers. "Walmart is fighting this battle for the industry, and we should all be thankful," writes NRF senior asset protection advisor Joe LaRocca on the association's Big Blog.

LaRocca's point is that retailers prepare for big events -- but things can go wrong. As long as they are diligent in their efforts to avoid injury, they shouldn't be penalized. Should the city of Oakland pay an OSHA penalty for injuries that happened when the town rioted after the BART officer trial verdict? LaRocca's argument is retailers shouldn't be held specially responsible for mob actions that no one can predict or control. In its court filings, Walmart argues the OSHA citation "has far-reaching implications for the retail industry that could subject retailers to unfairly harsh penalties and restrictions."

This is a reasonable argument, but it ignores one fact: Somebody died here. Customers were injured, including a pregnant woman. People shouldn't die because they went to a sale, or were working one. That is different from an angry mob rioting after a court decision.

While OSHA shouldn't be retroactively fining retailers, if sale events are a danger to the public safety, maybe such events need to be more closely regulated. Retailers shouldn't be afraid of that either, as it could save lives. But apparently, some retailers fear regulation more than the horror and community backlash that comes of having a death in store aisles. Instead, the NRF is advocating for the usual -- self-regulation in improving store security, and avoiding the passage of new laws.

Walmart's come down on the side of fighting regulation. There's almost no downside to fighting the OSHA fine, as the company has already taken the bad-PR hit for this one. Likely Walmart will win, and the issue will fade away for now.

Until the next time someone dies.

Photo via Flickr user bsabarnowl