## Facts

- A group of Wal-Mart shareholders, including a labor union and religious organizations, submitted a shareholder proposal for inclusion in Wal-Mart’s proxy materials under SEC Rule 14a-8.
- The proposal requested board-level reports on Wal-Mart’s equal employment opportunity (EEO) and affirmative-action policies and on efforts to inform suppliers of those policies and purchase from minority- and female-owned suppliers.
- Wal-Mart refused to include the proposal, asserting the Rule 14a-8 “ordinary business operations” exclusion.
- Wal-Mart sought and received an SEC staff no-action letter indicating the staff would not recommend enforcement action if Wal-Mart omitted the proposal from the 1992 proxy materials.
- The shareholders sued in federal district court to compel inclusion of the proposal; the dispute ultimately focused on inclusion in the 1993 proxy materials.
- The parties filed cross-motions, with Wal-Mart seeking dismissal and the shareholders seeking summary judgment.

## Issues

1. Whether the proposal was excludable under Rule 14a-8’s “ordinary business operations” exclusion or instead presented a significant policy issue requiring inclusion in the proxy materials.
2. What weight a court should give an SEC staff no-action letter when interpreting and applying Rule 14a-8.
3. Whether the proposal could be required to be included only after modifications to avoid directing day-to-day management decisions.

## Decision

- The court granted summary judgment to the shareholder plaintiffs.
- The court held that, with modifications, the proposal did not relate to Wal-Mart’s day-to-day business operations but concerned significant policy issues.
- The court enjoined Wal-Mart from omitting the modified proposal from its proxy materials for the 1993 annual meeting.
- The court treated the SEC staff no-action letter as informative but not controlling on the legal meaning of Rule 14a-8.

## Legal Principles

- Rule 14a-8’s “ordinary business operations” exclusion does not permit omission of a shareholder proposal that is properly framed to address significant corporate policy issues, even if implementation may implicate operational matters.
- Proposals seeking reports, disclosure, or board-level policy evaluation are more likely to be includable than proposals that prescribe specific operational actions.
- SEC staff no-action letters reflect enforcement intent and may be considered, but they do not bind courts deciding whether a proposal must be included under Rule 14a-8.

## Conclusion

The court required Wal-Mart to include, in modified form, a shareholder proposal requesting reports on EEO/affirmative-action policies and related supplier practices, concluding the proposal addressed significant policy concerns beyond ordinary business and that an SEC no-action letter did not control the court’s Rule 14a-8 analysis.


Amalgamated Clothing & Textile Workers Union v. Wal-Mart Stores, Inc., 821 F. Supp. 877 (S.D.N.Y. 1993)