Waste Not, Wal-Mart

Wal-Mart (NYSE: WMT  ) is in trouble again. Only this time, the allegations are all trash. In a filing with the Securities and Exchange Commission on Tuesday, the company disclosed that it is the subject of a criminal investigation into how it handles certain types of hazardous waste, including hair spray and charcoal.

At issue is how Wal-Mart used its own trucks to transport the materials, instead of vehicles certified to carry hazardous waste. In doing so, the company may have violated the Resource Conservation and Recovery Act. The U.S. Attorney's office in Los Angeles is leading the investigation.

Before you type that email bemoaning the Feds sticking it to Wal-Mart, consider that this marks the second time in less than 45 days that the company has been involved in a high-profile law enforcement action. The last one, in mid-November, featured the arrest of 120 workers on immigration violations.

And don't forget a long-standing class action suit that accuses it of discriminating against women employees in terms of salary and advancement.

Wal-Mart hasn't formally answered the latest charges. But a company spokesman gave a modest defense by telling Reuters that the government wasn't challenging the way it disposes of waste, only how it transports it.

Look, I'm not going to bash Wal-Mart. After all, the retailer has developed a superior business that has provided investors with generous returns over decades. But at some point, the flood of lawsuits will raise fundamental questions. Here are two: Just how far does Wal-Mart go to deliver rock-bottom prices? And are those practices legally sustainable? The anecdotal evidence suggests these lawsuits won't be a serious threat to Wal-Mart, but I suspect it will be some time before we know for sure.

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Fool contributor Tim Beyers only takes out the trash. He refuses to dig through it. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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