The new message from Edward Lampert, chairman of Sears Holdings Corporation, in connection with the release of the company's most recent financial report has much in it that is both intriguing and debatable.
One area we found most interesting was the section of litigation reform. All told, Mr. Lampert spent 609 words railing against trial lawyers and those who bring frivolous lawsuits against the company.
According to Mr. Lampert, the size of the Sears Holdings means it finds itself facing several lawsuits every day.
"The cost of defending even one of these cases can run into the hundreds of thousands of dollars - sometimes the millions - even when the claims asserted have no basis," wrote Mr. Lampert. "The lawyers who bring these cases against corporations figure that rather than paying defense lawyers and taking a chance on the judicial system, companies will pay the plaintiffs (or, rather, plaintiffs' lawyers) to go away."
Mr. Lampert said the only way to rectify the situation is in the area of tort reform. He applauded the Private Securities Litigation Reform Act of 1995 and the Class Action Fairness Act of 2005, but said further action was needed by Congress and state legislatures.
In the end, he wrote, Sears Holdings intended to take an aggressive approach in defending itself against suits.
"We have challenged our company's lawyers to try cases when doing so makes sense. This means that, from time to time, we will lose some cases. Sometimes, we may even lose big - but even then, we will continue to fight as long as we believe we are right and can find a forum that will fairly adjudicate the controversy. Over time, we believe this strategy will achieve the best long-term results for our shareholders. We know that our company and our associates are good and fair and ethical, so we are confident we will win far more cases than we will lose."
Discussion Questions: Is Edward Lampert on target about the impact of lawsuits on retailers? Is this an issue relevant only to large retailers or to all? What are your thoughts on class-action suits?