In Detail PRN’s Dispute With Walmart

Late on Thursday we wrote ‘You Are Being Sued By Plaintiff PRN ^[1]‘ which was the first public mention of their case against Wal-Mart Stores Inc. that WAS in front of San Francisco’s superior court.

It’s worth repeating what we said yesterday that we don’t think that PRN would have filed suit unless they REALLY felt betrayed by Wal-Mart and on reading the court paper through a couple of times now you definitely get that impression – PRN felt betrayed.

In some detail then, the actual complaint is for: –

1. promissory estoppel ^[2]
2. quantum meruit ^[3]/unjust enrichment
3. unfair business practices

I don’t have a clue what that means in ‘legalese’ but basically the complaint is that Walmart’s Smart Network is, we quote from the court papers “the result of millions of dollars in research and development by PRN” and PRN want it (the money) back (and it seems future media sales revenue that they were allegedly promised – a whopping 25% as we shall see later).

We’ve picked up some of the more interesting points below (though the whole document is actually quite a good read).

Point 7. One of the keys to the dispute, and again we quote “For over a decade, PRN has worked with Walmart to deliver the retailer’s in-store media network and programming. The networks PRN developed for Walmart evolved over time culminating in the much anticipated and highly successful Smart Network….. “ … (it goes on)

Point 8 “Of course it took years on the part of PRN to develp this type of network for use in Walmart stores” – another key claim “the discussion between Walmart and PRN regarding a new network began as early as 2006, more than 2 years before the first Smart Network screens were installed …. In sum, the Smart Network is the result of millions of dollars in research and development by PRN”

Two documents shown to the court ‘The Walmart Smart Network Summary of Terms’ (August 2008) and a ‘Purchasing Agent Agreement’ a contract allegedly agreed a month or so later are also mentioned. The former document is really interesting (and useful).

In December 2008 it is said that the parties agreed that PRN would receive 25% of all advertising sales and point 14 claims “Walmart ultimately breached its promises to PRN, but only after PRN had invested millions of dollars and thousands of employee hours in the Smart Network, all of which benefited Walmart substantially”

It goes on (its 33 pages long so forgive us) and on.

Point 35 “It was not until March 2009, years after PRN first began developing what is now referred to as the Smart Network and months after it received a promise from Walmart that Walmart attempted to materially change the terms of the promise”

Point 40 asks for the court to award PRN damages – no mention is made of a specific sum though it does say “in excess of the jurisdictional minimum of the Court for consideration of the promise, the value of which is the benefit of the bargain which would amount to all sums to be earned pursuant to the Summary of Terms to PRN”

This is obviously going to be the millions lost in development and the 25% of future media sales earnings (at least for four years or so) and associated costs.

Exhibit A is a very interesting document that it would be worth many getting their hands on – it’s the summary of terms outlining “PRN’s proposal for design, development, deployment and operation of the Walmart Smart Network” – it’s 11 pages long on its own and its something we would like to cover in a separate story later if possible. Really interesting.