Wal-Mart Ads ‘Patently False,’ Group Claims

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The New York Sun

An anti-Wal-Mart group is demanding that the feel-good television advertising campaign the company launched this week be pulled off the air because the ads are misleading and inaccurate.

A labor-backed organization, Wal-Mart Watch, asked the attorneys general of Arizona and Nebraska to declare that the TV spots violate state consumer protection laws, but First Amendment advocates warned against involving government officials in the heated dispute.

“These advertisements are at best misleading and at worst patently false,” the executive director of Wal-Mart Watch, Andrew Grossman, wrote in complaint letters dispatched Tuesday. “We ask that your office investigate the accuracy of these statements and contact the appropriate entities to remove the misleading ads from public distribution in order to protect consumers in your state.”

Wal-Mart rolled out the ads in Omaha, Neb., and Tucson, Ariz., on Monday, and company officials said they would take the campaign nationwide if it is well-received. Wal-Mart is eager to rehabilitate its tattered public image, which has taken a beating from Democratic politicians and union activists who contend that the firm has flourished by underpaying workers and skimping on health benefits.

“It’s been said that when Wal-Mart comes to town it’s like getting a nice pay raise,” one of the new ads declares. “Our low prices save the average working family $2,300 a year.”

Wal-Mart Watch disputed the ads’ savings claim, as well as assertions that the company offers affordable health care insurance to employees and “created” tens of thousands of jobs last year.

The $2,300 figure comes from a 2005 study Wal-Mart commissioned from a California-based economic analysis firm. A competing study released in June by a labor-funded think tank, the Economic Policy Institute, found the savings to be negligible.

Mr. Grossman asserted that many of the jobs Wal-Mart claims to have created resulted from the elimination of higher-paying jobs elsewhere, particularly at grocery stores.

A law professor at Northwestern University, Martin Redish, said Wal-Mart’s claims are protected by the First Amendment unless they are shown to be out-and-out false.

“To exclude this kind of expression from protection on the grounds that it’s selectively misleading would be nonsense if it weren’t so dangerous,” Mr. Redish said. “It’s important to distinguish between fraud and advocacy. Fraud is not protected by the First Amendment, but advocacy is.”

The professor said the public should understand that both sides in a vigorous debate will cherry-pick facts that promote their views.

“You don’t expect the National Rifle Association to tell you about all the kids killed accidentally by guns, just as you don’t expect gun control people to tell you about all the crimes prevented by citizens using guns,” he said.

Mr. Redish said the idea of applying consumer protection laws to regulate Wal-Mart’s speech was particularly worrisome because it would have the effect of saddling Wal-Mart with a burden its critics do not share.

“That’s inconsistent with every notion of the First Amendment,” he said.

A spokesman for Wal-Mart Watch, Nu Wexler, said the group brought the legal complaints because Wal-Mart chose to air its assertions in television advertising, which has traditionally been regulated more heavily than other forms of expression. He said his organization had no objection to being fact-checked by government officials.

“We’re happy to discuss the content of our materials and Web site at any time,” Mr. Wexler said.

A spokeswoman for Wal-Mart, Sarah Clark, called the complaints a “union-funded stunt” and said they were part of critics’ effort to silence the retail giant. “What they don’t want are for working families to hear the real facts,” she said.

Ms. Clark said Wal-Mart was not concerned about any investigations. “That part, frankly, does not bother us because the facts are the facts,” she said.

While companies can be punished for making misleading claims about their products or services, it is unclear just how far the government can go in regulating firms’ more generalized speech about their labor practices, ethics, and reputation.

In 2003, the Supreme Court agreed to decide how much First Amendment protection an athletic apparel firm, Nike, deserved for its claims not to use sweatshop labor, but the court later rejected the case on procedural grounds.

A similar case against Wal-Mart is pending before a federal judge in Los Angeles. A lawyer with the International Labor Rights Fund, Natacha Thys, said the suit asserts that Wal-Mart’s code of conduct for suppliers is, in essence, a fraud, because the retailers’ demands for low costs and quick delivery of wholesale goods cause abuse of workers.

“In order to meet these deadlines, all types of labor violations have to occur,” she said. A hearing on Wal-Mart’s request to dismiss the case is set for early October.


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