Monday, Dec. 11, 2006 | Any designs that Wal-Mart had to open one of its controversial supercenters in San Diego appear dead following the City Council’s decision to keep the grocery-plus-retail emporiums from setting up shop in the city limits. But if history is any indication, the world’s largest retailer won’t shy away from fighting the council’s decision on legal grounds and in the political arena.
Wal-Mart regularly shifts its battles with local governments to the courtrooms and ballot when politicians have used laws to box out the big-box retailer.
The City Council’s decision last month to shut out the superstores that Wal-Mart is pushing in urban markets could prod the company to mount similar efforts in San Diego, where politicos from all sides agree that the ban is vulnerable to the corporate giant’s big bucks.
Wal-Mart officials said they are contemplating a challenge to the ban’s legality in court or placing the issue in front of the city’s voters in an upcoming election if the council, which passed the ban by a 5-3 margin, overrides the veto that Mayor Jerry Sanders has threatened to slap on the ordinance early next year.
“Anytime you have a lot of options available to you, you kind of have to explore what’s out there,” Wal-Mart spokesman Kevin McCall said. “We know there’s been a lot of response from community members because this is a bad ordinance.”
The law prohibits stores of 90,000 or more square feet that use at least 10 percent of their floor space for grocery sales – which matches the profile for the big-box grocers – from setting up shop in the city. Stores that sell food items in bulk, such as Costco, are exempt.
Wal-Mart has threatened to litigate the issue for the past three years. Additionally, the retail giant’s political organization and the visibility of its struggle against the city’s law have firmed up during the last few months, when it purchased newspaper and radio advertisements and hired some of the city’s best known lobbyists to pressure the council into rejecting the ban.
“Given what they did before the council vote, they probably could spend enough to try and fool the public,” said Art Castañares, the lobbyist for the coalition of traditional grocers and their unions that spearheaded the superstore ban. “It’s not even a campaign for them. It’s an investment.”
Although Wal-Mart officials remain tight-lipped about their strategy, case studies around the state – including a recent showdown in San Diego County – show a glimpse of what the city could be in for if Wal-Mart pursues overturning the law.
Wal-Mart has sued municipalities over the bans before, arguing that laws prohibiting the stores discriminate against the company and are anticompetitive.
In 2003, just as the council began considering a restriction on big-box stores that sell groceries, lawyers for Wal-Mart made the City Attorney’s Office aware that they would likely challenge any ban.
After the City Council voted in September to pursue regulations on the superstores, City Attorney Mike Aguirre changed the law to more closely mirror an ordinance that Turlock, a city in the Central Valley, passed in 2004.
The Turlock ordinance withstood a legal challenge from Wal-Mart when a state Court of Appeals ruled in April that it is OK for a government to pass laws that “address the urban/suburban decay” of a community. The California Supreme Court turned down a subsequent appeal in July.
Like Turlock, San Diego’s superstore ban is an attempt to curb environmental impacts – most notably, traffic congestion – and the flight of shoppers from the city’s neighborhood retail centers, proponents said. The behemoth grocers, they argued, contributed to both.
With the Turlock ruling in hand, some city officials said they believe they are safe from a legal challenge, although Wal-Mart attorney Tom Turner said last week that litigation is still “a distinct possibility.”
Attorneys not related to the case said it would make sense for the company to sue so that it can compile a legal record on an issue that has not been thoroughly vetted through the state’s courts.
“If it were litigated, and the court came to a different opinion, it offers the opportunity for conflict between the different appellate divisions that the state Supreme Court didn’t have before,” said Jerry Livingston, general counsel for the Building Industry Association of San Diego County.
More likely than a legal challenge, politicos say, is a voter referendum to overturn the ban.
One well-known Republican political consultant, who requested anonymity, has already tried to contact the company about working on a referendum, but said the company has not responded to his request. Others in the political community expect the company to wait for the council vote on overriding the mayoral veto – which would take just the same five votes that were needed to pass the ban – before announcing its plans.
Wal-Mart has regularly involved itself in electoral affairs of communities that have imperiled its entry.
In Rosemead, a Los Angeles-area enclave, the company spent a reported $213,000 to defend two city council members who were the subject of a recall because of their support for opening a superstore in the community. The recall failed.
In San Diego County, the company spent more than $100,000 in San Marcos to stop a 2004 proposition that would have outlawed the supercenters, although its effort was unsuccessful. San Marcos’ ban passed 61 percent to 39 percent.
The company is currently gathering signatures in Long Beach to place a referendum seeking to void that city government’s decision to similarly outlaw big-box grocers on an upcoming ballot.
Randy Gordon, president of the Long Beach Area Chamber of Commerce, which is working hand-in-hand with Wal-Mart on the referendum, said the company has already hired campaign consultants and conducted polling. Gordon claims that 65 percent of the respondents to a recent poll want to upend the ban.
Success for a similar proposition in the city of San Diego would also be likely, local Democratic consultant Christopher Crotty predicted. The area’s dominating ideology and the company’s fortunes make the prospects of a referendum appear promising for Wal-Mart, he said.
“It is a much more conservative crowd, and an initiative to qualify it would probably pass,” said Crotty, who noted that opposition to Wal-Mart was a key selling point for the congressional campaigns he worked on elsewhere across the nation this fall.
Crotty cautioned, however, that a pro-Wal-Mart measure could be defeated if it faced a well-organized opposition. The San Diego-Imperial Counties Labor Council, a perennial player in local elections, could furnish the fundraising prowess and campaign expertise that would be needed to keep pace with Wal-Mart’s big guns if a referendum were held.
Jerry Butkiewicz, the labor council’s secretary-treasurer, said he believed his organization would help stage a fight against the measure, but said he predicted that the small businesses, environmentalists and civic activists that pushed for the band would also become heavily involved in a campaign against Wal-Mart.
“I think you would see them organize like never before,” he said.
(Clarification: The original version of this story said that the law prohibited stores that use at least 10 percent of their floor space from operating in the city. It should have stated that the law prohibits stores who use 10 percent of their floor space for grocery sales from setting up in city limits.)