Court Lets Wal-Mart Block Investor Proposal on Gun Sales

By Paul Ziobro And Joann S. Lublin 

A U.S. appeals court ruled that Wal-Mart Stores Inc. could reject a shareholder proposal calling on the retailer's board to review management decisions to sell semiautomatic rifles with high-capacity magazines and other controversial products.

The ruling Tuesday reverses an earlier district court decision that ordered Wal-Mart to include the measure from New York's Trinity Wall Street church in its coming corporate ballot that is shipping out this week ahead of Wal-Mart's June 5 annual meeting. Wal-Mart had argued that the shareholder resolution was overreaching and is at odds with decades of guidance from the Securities and Exchange Commission.

While Trinity's measure touched on a controversial issue, like Wal-Mart's sales of some high-capacity, assault-style rifles, it was being closely watched by corporate governance experts as a guide to how much influence shareholders should have over a company's day-to-day operations. Wal-Mart argued that allowing the earlier ruling to stand would force companies to consider all sorts of shareholder proposals that deal with basic business matters.

The two sides argued their case this month, with the decision announced just before Wal-Mart's deadline to get the measure on the coming ballot. The court says it will issue a full opinion at a later time.

Wal-Mart spokesman Randy Hargrove said the court reached the right decision.

A Trinity Wall Street spokesman said the church will consider its options, including whether to file an appeal to the U.S. Supreme Court, after the court issues its full opinion. "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," the church said in a statement.

Write to Paul Ziobro at [e-mail] and Joann S. Lublin at [e-mail]

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