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A flood of lawsuits has turned Dillard's into a master of defense

By Bob Burtman 

No matter the facts of the case, taking on a corporate giant like Dillard's is about as easy as bagging a hummingbird with a longbow. Even those who have successfully sued the retailer say they're disinclined to repeat the experience. "It's a large corporation with lots of political clout and an endless supply of money," says Ohio attorney David Malik, whose client says she was raped by a Dillard's security guard. "Contrast that with the victims. It's very hard to level the playing field."

The obstacles presented by Dillard's and its phalanx of high-priced attorneys are formidable. They begin with the process of discovery, when the company is asked to turn over materials that may be relevant to the case. Malik's case is typical: Dillard's stymied his efforts to obtain documents for almost a year, claiming that they either weren't important or didn't exist at all. An exasperated judge recently ordered that Dillard's produce the requested material or explain why it couldn't: "Any disputed discovery…which defendant claims does not exist shall be supported by an affidavit of Dillard's Inc. officer."

Documents that shed light on possible racial discrimination at Dillard's have been harder to come by since early 1998, after San Antonio lawyer Stephen Lazor found incriminating evidence that Dillard's had been racially profiling its customers. Lazor represented the family of Mexican businessman Eli Montesinos Delgado, who was killed by a Dillard's security guard in front of his family. Incident reports, security log books and other documentation from the store in question -- which Dillard's produced only after a court order -- exposed overwhelming evidence against the guard and other store employees that helped leverage a settlement.

On March 31, 1998, Dillard's general counsel Paul Schroeder issued a memo to all district managers ordering that any old incident reports or other documentation of security activity be returned to the corporate office at once, no exceptions. A new, bare-bones form was created to log "suspicious shopper" and other nonarrest activity, with careful instructions to avoid descriptions of customers. After entering the information from the new forms into the computer, the memo instructed, "the forms should be destroyed."

Some store managers apparently failed to get the message, because Schroeder sent out a virtually identical memo two years later. After that, corporate auditors checked stores for compliance; one Phoenix audit unearthed in a lawsuit found illicit security logs that included references to a pair of black females who "looked like ho's" as well as a guard who pointed his gun at suspected shoplifters. "They've had several recalls" of documents, says retail security expert Chris McGoey, an outspoken critic of Dillard's security procedures. In fact, Houston attorney Cletus Ernster went to court in December 2002 on an emergency motion prohibiting Dillard's from destroying any such records.

Beyond trying to eliminate the paper trail, Dillard's employs a variety of legal arguments to shield itself from liability. One of the most successful stems from the company's decision in 1990 to hire exclusively off-duty cops as security guards. In state court actions, Dillard's almost always claims that the security guards are acting in their official capacity as law enforcement officers when confronting suspected shoplifters or other miscreants, not as Dillard's employees. And as law enforcement officers, they're simply following the rules and procedures established by their respective agencies.

That may have been a key reason why Dillard's switched to an all-cop security force in the first place, and why the company maintains that strategy even as other retail chains have moved away from it. "False arrest, malicious prosecution and assault litigation plague retailers in America today," states the 1990 memo announcing the change. The new policy has been developed "in order to keep this costly litigation to a minimum."

The acting-as-cop argument, which courts have generally said must be decided on a case-by-case basis, has worked in several instances, including the wrongful death suit brought by the family of Roy Don Bearden in Arlington. "Dillard's is able to hire off-duty police officers as its private police force, and when they act like police officers," the company says it has no control over them, says attorney Tom Carse, who represented the Bearden family. "It's a sorry state of affairs."

But Dillard's has also lost that argument, dating back to an Arkansas Supreme Court decision in the early 1970s. In the Darryl Robinson hog-tying case, for example, the jury found that the security guards were indeed acting as Dillard's employees when they took the actions that killed Robinson. McGoey points out that Dillard's security guards sign forms that compel them to abide by the company's rules while on the clock, which means they're not police officers or sheriff's deputies when demanding that suspected shoplifters empty their bags. "To me, when you're off-duty, you're off-duty," McGoey says.

The use of police officers has another benefit: When one of their own is on the line, law enforcement usually rallies to the cause. The San Antonio officer who killed Montesinos received a promotion. In almost every death case, internal police investigations have cleared officers of wrongdoing. Judges often find this support compelling. "You're constantly trying to plug holes in the dike the police create," says Montesinos attorney Lazor.

When Dillard's is in federal court, on the other hand, the company takes a decidedly different tack. A federal law cited in a Cleveland discrimination case requires that violators be acting as official agents of the state, since the laws don't cover the actions of private entities. Dillard's and the officer in question have claimed immunity -- because when he accosted a suspected shoplifter and ordered her strip-searched, he was discharging his duties as a Dillard's employee, not as a cop.

"In state court they want to argue that he's acting as a police officer," Lazor says. "In federal court they want to argue" the opposite.

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