Walmart will payout $19.3M in hand sanitizer case

After a two-week trial ended in This two week trial took place in Washington County, Arkansas Circuit Court, a jury awarded a supplier $19.3 million in a lawsuit against Walmart Inc. The trial came after the retail giant canceled the  contract of the supplier — K2 Distribution Co. LP of Chicago, Ill. — to deliver hand sanitizer to its stores across the country in the early stages of the pandemic, reports Arkansas Business. 

The verdict is believed to be the largest award of damages in the history of the Washington County Circuit Court. Walmart spokesman Randy Hargrove told Supermarket News that Walmart values its supplier relationships and does not agree with the breach of contract verdict. 

“We value our supplier relationships and disagree with the verdict. We continue to believe our business dealings with K2 were appropriate, and we are reviewing our options, including the filing of post-trial motions,” Hargrove said.

The dispute goes back to the early stages of the COVID-19 pandemic when hand sanitizers were in short supply and hard to get. Walmart reached out to the supplier, K2 Distribution, to receive a long-term supply of hand sanitizer and dispensers for Walmart’s employees and customers, according to K2 Distribution’s 61-page amended complaint.

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“In the following months, Walmart entered into a contract with K2 whereby K2 would be Walmart’s exclusive supplier of hand sanitizer for at least one year and would supply the large volume of hand sanitizer Walmart needed for more than 5,000 Walmart facilities,” one of K2 Distributor’s attorneys, Tom Mars of Rogers, said in an email to Arkansas Business.

The court filing also reveals that K2 Distributors spent more than $35 million delivering thousands of items — 44,000 custom-designed sanitizer dispensers and cases of sanitizer for more than 5,000 Walmart and Sam’s Club stores — to Walmart, but eventually, Walmart refused to pay for the order and later ended its contract.

“However, a couple of months later, WMT [Walmart] Finance noticed that the contract between Walmart and K2 had caused Walmart Sourcing to be $16 million over budget,” Mars wrote. “After less than 48 hours of internal discussion, and with no notice to K2, Walmart abruptly stopped purchasing K2’s hand sanitizer.”

Walmart has denied the allegations of wrongdoing in court filings and filed a counterclaim stating that K2 Distribution was bound by a Walmart realty supplier agreement, which has ultimately been rejected by the jury.  

That said, the retail giant is still looking at its options, including the filing of post-trial motions.

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