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Wal-Mart sues Amazon, again

Seeking to bar the bookseller from hiring workers to gain access to trade secrets, the retailer files in Seattle, also naming Kleiner Perkins.

Feb. 6, 2002 4:56 a.m. PT

2 min read

Wal-Mart sought to bar Amazon.com from hiring its workers to gain access to trade secrets by filing a lawsuit in Seattle, after a judge in Arkansas dismissed part of another suit over the worker-raiding claims.

Wal-Mart filed suit in Washington state court, accusing Seattle-based Amazon and other Internet companies of hiring away its employees for their knowledge of Wal-Mart's computerized-retailing systems. Amazon wants those secrets to expand its Internet-retailing operations, Wal-Mart claims.

Wal-Mart executives said the suit was filed 15 minutes after an Arkansas judge dismissed on procedural grounds its suit over alleged misuse of trade secrets by Drugstore.com, a startup Internet drug seller, and Richard Dalzell, a former Wal-Mart executive.

"To make sure our trade secrets are protected, we need to have all the parties together in one suit," Wal-Mart spokeswoman Betsy Reithemeyer said. "We don't have any problem going to Seattle to get that. We feel that strongly about our case."

Amazon executives continue to maintain that they've done nothing wrong by hiring former Wal-Mart workers. "We think their claims are absolutely without merit, again," Amazon spokesman Bill Curry said. "We look forward to having the case heard on its merits."

The suit alleges that Amazon and Drugstore.com officials lured away Wal-Mart employees and consultants familiar with the chain's computerized merchandising and distributions systems so that they can copy them.

Amazon and Drugstore.com have ties to Kleiner Perkins Caufield & Byers, a West Coast venture-capital firm that funded both startups. A Kleiner Perkins partner serves as a director on both companies' boards and that allows a sharing of information, Wal-Mart contends. Kleiner Perkins also is named as a defendant.

Dalzell, who also is named in the suit, was an executive in Bentonville, Arkansas-based Wal-Mart's information-systems division before joining Amazon as its chief information officer.

Arkansas Circuit Court Judge Jay Finch threw out Wal-Mart's suit against Dalzell and Drugstore.com because they didn't have enough ties to the state to be sued there.

Wal-Mart now is asking a Washington state judge to order Drugstore.com, Amazon, and Kleiner Perkins not to share information gleaned from ex-Wal-Mart workers to help their companies compete with Wal-Mart. "We do believe there is a conspiracy and to get the relief we want, all parties should be part of it," Reithemeyer said.

"It doesn't really give us the protection we are seeking if some of the major players are let out of this."

Wal-Mart's shares fell .81 to 80.63, while Amazon's rose 33.69 to 354.94.