Tuesday, April 15, 2008

Flagler Productions vs. Wal-Mart: when a handshake deal turns into giving the finger

Poor Wal-Mart, if they weren't so big and ugly I'd almost - but not quite - feel bad for them, but there's ample finger-pointing and finger-giving in this story to go around, that's for sure.

If you haven't seen this particular bit of news, Flagler Productions, a tiny little Kansas-based company that for thirty years had a handshake deal with Wal-Mart to produce their events - store manager meetings, sales meetings, annual meetings, Board of Directors' meetings (!) - was dumped without notice in 2006.

Flagler lost over 90% of its business, but hung on to a treasure trove: the videos they'd made of all the events they produced - including all sorts of company meetings like the ha-ha one that's starring on YouTube in which a bunch of W-M execs in drag - presumably wearing dowdy dresses and clunky shoes purchased at the store - cavort around at a company meeting. Given Wal-Mart's reputation as perhaps not the best place in the world for women to work, this one is definitely not one that the execs at Wally want to get around - especially when Mr. Big pats one of the drag-execs on the fanny. Ho-ho. Well, too late for that. It's out there now.


(And while on the subject of drag, I get that it can be funny and, in the hands (wigs and makeup?) of skilled practitioners, pretty darned entertaining. But this drag show doesn't even have the wit of a Hasty-Pudding style collegiate event. It's just a bunch of men looking ungainly, swanning around in what they suppose is a womanly fashion. It would have been A LOT funnier in my book if the W-M female execs - if there were any at the time - got to strut their drag stuff by donning cheesy W-M suits and polyester ties and swaggering around. Just might have given some of those men pause to ask the question, 'is that how we appear to women'?)

In any case, Flagler - nearly driven out of business by Wal-Mart's buzzer-in-the-last-handshake, has decided that living well - which they didn't manage to do - is not the best revenge. (By the way, one interesting side note to this brouhaha, as reported by GaryMcWilliams in The Wall Street Journal Online - which I think requires a subscription - is that Mike Flagler, Flagler Production's founder, sold the company to two employees 9 days before the company was dumped by W-M. Depending on what side of the check-writing transaction you were on, that sure sounds like another whole story, doesn't it?)

If Flagler, absent over 90% of its business, couldn't live well, they did choose a pretty out there best revenge: making the tapes available to anyone who wants them for fee. But not before they offered them to Wal-Mart. But Flagler wanted several million dollars*, while W-M was only willing to offer $500K:

...arguing the footage wouldn't be of interest elsewhere.

Apparently, Wal-Mart was wrong, and Flagler is now doing a brisk business among unions, plaintiffs in actions against Wal-Mart et al. who are eager to get a Candid Camera look into the company.

Among the more incendiary material:

Plaintiffs attorney Diane M. Breneman stumbled across the videos while working on a lawsuit she filed in 2005, on behalf of a 12-year-old boy, against Wal-Mart and the manufacturer of a plastic gasoline can sold in its stores. Her client was injured when he poured gasoline from the container onto a pile of wet wood he had been trying to light, and the can exploded. The lawsuit alleges that the containers are unsafe because they don't contain a device that prevents flames from jumping up the spout and exploding.

Wal-Mart's lawyers have argued in court filings that the retailer couldn't have known that the product "presented any reasonable foreseeable risk...in the normal and expected use."

...

Ms. Breneman says Flagler Productions located videos of product presentations to Wal-Mart managers in which executives gave parody testimonials about the same brand of gasoline can. In an apparent coincidence, one manager joked about setting fire to wet wood: "I torched it. Boom! Fired right up." In a separate skit, an employee is seen driving a riding lawn mower into a display of empty gasoline cans. A Wal-Mart executive vice president observing the collision jokes: "A great gas can. It didn't explode." The tapes were made before the lawsuit was filed.

Ms. Breneman argues the footage provides evidence that the retailer could have foreseen the risk that customers would use the gas cans when starting fires. She says she plans to ask the Kansas City, Mo., federal court handling the case to allow the footage to be used as evidence. Wal-Mart's lawyer on the case didn't return calls seeking comment.

Well, that should make interesting viewing in a court of law. (Can you say, "Settle out of court"?)

Understandably, Wal-Mart - which had advised Flagler to just re-use the tapes by writing over them - does not believe that Flagler has any right to the tapes.

But this deal is only as good as the paper it was written on.

I'm sure that W-M viewed the Flagler outstretched hand as a blackmail shakedown - and it's really hard to see it as much else. Still, as dumb as Flagler was to hold all it's eggs in the Wal-Mart basket, you'd think that Wal-Mart wouldn't have been so callous as to put this company out of business without a second thought.

Once again, Wal-Mart manages to make a penny wise, pound foolish decision. My guess is that, if a few more gems like the exploding gasoline can "skit" are unearthed, this is going to cost the Boys from Bentonville a lot more than the measly amount that Flagler was looking for.

Flagler sure has had no problem biting the hand that used to feed them.

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*I based this post on articles prior to the story that noted that the sum that Flagler was originally looking for was $145M-$150M - not "several million" as the WSJ had it. Here's the link to the post where I updated the story: http://pinkslipblog.blogspot.com/2008/04/for-few-dollars-more-update-on-flagler.html.

If you want to look at Flagler's site, here you go. It doesn't appear to have been updated since they were jettisoned by W-M (at least not when I last looked).

Also read for this post: Marcus Kabel in AP.

Prior Pink Slip posts on Wal-Mart:

Rules are Rules

You Gotta Start Giving Employees a Break

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