Legal

Daffy's Inc., the 19-store chain selling discount designer brands in the U.S. Northeast, filed for bankruptcy court protection after saying it would shut down because of weak consumer spending. The Secaucus, New Jersey-based company listed assets of as much as $100 million and debt of as much as $50 million in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Manhattan. Daffy's said July 16 in an e-mailed statement that it would close stores and liquidate merchandise during the next few months.

U.S. authorities are considering launching a wide-ranging examination of the retail industry for violations of an anti-foreign bribery law after Wal-Mart and other retailers have come forth with their own potential offenses, people familiar with the matter said. Retailers have been reviewing their international operations in light of a bribery scandal at Wal-Mart's operations in Mexico that's the subject of investigations by the Justice Department and the Securities and Exchange Commission.

A federal lawsuit against Wal-Mart was filed on Wednesday by disability rights advocates claiming that payment machines are inaccessible to California customers in wheelchairs and on scooters. Although the group admits that most retailers place point-of-sale terminals out of reach of disabled customers, it readily admits it's targeting Wal-Mart because “they are the biggest retailer in the world … They should be able to do it right,” said Arlene Mayerson, directing attorney at the Disability Rights Education & Defense Fund. 

Online sales are soaring. State budget deficits are growing. And tax-free internet sales are once again in the spotlight. Congress is considering bills that would level the playing field by allowing states to require all online merchants doing business in that state to collect sales tax. Web retailers have largely had a free ride since a 1992 Supreme Court ruling that only merchants with a physical presence in a state are responsible for collecting sales tax.

Wal-Mart announced it's opposed to the proposed settlement of a civil antitrust lawsuit against Visa, MasterCard and their card-issuing banks. “Wal-Mart, along with a growing number of consumer groups and merchants, is disappointed in the proposed credit card interchange fee settlement,” the company said in a statement. “The proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year.”

Unhindered by federal background checks or government oversight, the 24-year-old man accused of killing a dozen people inside a Colorado movie theater was able to build what police called a 6,000-round arsenal legally and easily over the internet, exploiting what critics call a virtual absence of any laws regulating ammunition sales. With a few keystrokes, the suspect, James E. Holmes, ordered 3,000 rounds of handgun ammunition, 3,000 rounds for an assault rifle and 350 shells for a 12-gauge shotgun — an amount of firepower that costs roughly $3,000 at the online sites in the four months before the shooting.

The Direct Marketing Association (DMA) has formed a new group, the True Simplification of Taxation Coalition, which will lobby Congress regarding taxes of online purchases. Other members of the new coalition include the American Catalog Mailers Association, Electronic Retailers Association and NetChoice. Congress currently is considering three different bills — the Main Street Fairness Act, Marketplace Fairness Act and Marketplace Equity Act — which would authorize states to require online retailers to collect sales tax. Absent federal authorization, states arguably violate the constitution by attempting to require out-of-state companies to tax consumers. 

J.C. Penney said Monday it's raised $248 million and taken its first step toward shedding noncore assets by selling off part of its stake in a Simon Property Group unit. Following the transaction, the real estate unit for Penney — JCP Realty — will hold about 205,000 limited partnership units in Simon’s operating partnership. Also on Monday, J.C. Penney CEO Ron Johnson unveiled a trio of in-store shops, slated to open at 683 J.C. Penney stores across the United States starting on Aug. 1. The three in-store concepts all feature denim offerings. 

In its struggle against surging online retailers such as Amazon.com, Wal-Mart has unleashed a weapon long shunned by Sam Walton: lobbying. On July 24, the U.S. House of Representatives Judiciary Committee will hold a hearing on a bill to let states collect sales tax from out-of-state merchants that sell to their residents. If passed, online retailers, which now mostly don't collect sales tax, will lose a price advantage that's helped them take business from brick-and-mortar stores.

Three former managers at Wet Seal, a nationwide apparel retailer for young women, filed a federal race discrimination lawsuit last week, asserting that the company had a high-level policy of firing and denying pay increases and promotions to African-American employees because they didn't fit its "brand image."