On January 10, 2004, Sprawl-Busters reported that a court ruled that Wal-Mart had unlawfully taken survivor’s benefits away from families of deceased Wal-Mart employees. These life insurance policies are called ‘dead peasant’ policies — policies that a company takes out on its employees, naming the company — not the family’s survivors — as the beneficiary. A 5th. U.S. Circuit Court of Appeals in New Orleans, Louisiana ruled in support of a lower court ruling against Wal-Mart in tjat lawsuit originally filed in Houston, Texas. The Appeals Court agreed that the company “unlawfully took funds, that, under Texas law, rightfully belonged” to the relatives of the dead Wal-Mart workers. Now, roughly two years later, Wal-Mart has agreed to settle a $5.1 million class-action lawsuit, this time brought by the estates of 73 former employees in Oklahoma. According to the Associated Press, a federal judge in Tulsa gave final approval yesterday to the settlement, which calls for about a third of the money to go to the plaintiffs’ lawyers, and each plaintiffs gets between $35,000 to $50,000. These families had sued to get back the life insurance benefits they said Wal-Mart illegally took when their relatives who worked for the retailer died. “It was a fair result for these Oklahoma families,” said Michael D. Myers of Houston, one of the plaintiffs’ lawyers. The lawsuit charged that Wal-Mart had no “insurable interest in the lives of its rank-and-file employees.” Myers told the AP that “several million Americans are covered by these policies. Most were probably never told about the insurance on their lives, meaning that their families may not know that a claim may exist for policy benefits.” Before settling, Wal-Mart had tried to get the courts to dismiss the lawsuit. Once that failed, Wal-Mart decided to reach an agreement. Wal-Mart argued that it costs them millions to recruit, screen, and train its workers, so it should receive some compensation for that loss in investment when they die. “Corporate-owned life insurance (COLI) policies were products offered by life insurance companies, they were common and well-intentioned but are no longer available at Wal-Mart,” a spokesman for the retailer said. “With regard to the settlement, it’s the best possible resolution under the circumstances.”
In my book, “The Case Against Wal-Mart,” I wrote about these “dead peasant” policies, and the fact that Wal-Mart families had to take the company to court, and wait years to get the money that rightfully should have come to the survivors. The idea of Wal-Mart naming itself as beneficiary of a life insurance policy that many families knew nothing about, may strike most Americans as unethical and unconscionable. But even worse, when the families found out about the policies, Wal-Mart fought them all the way, and forced them to give up one-third of their benefits to lawyers. Wal-Mart’s slogan is: “Our people make the difference.” In this case, the difference came to $5.1 million. For the earlier story on the Texas case, search Newsflash by “dead peasant.”
