Costco Faces Nationwide Gender Bias Class Action

U.S. District Judge Edward Chen

Hundreds of current and former women employees of Costco Wholesale Corp. may proceed with their sex discrimination claims as a nationwide class action lawsuit.  U.S. District Judge Edward Chen granted national class status to the 2004 lawsuit in an 86-page order issued late Tuesday.

The women have been trying since 2006 to gain class status for the case.  The certification has already been appealed by Costco to the 9th U.S. Circuit Court of Appeals once.  Costco prevailed and the case was sent back for reconsideration in light of the problems certifying a large class of women in a similar gender bias case against Wal-Mart.

In approving the Costco class status Tuesday, Chen said, “defendant offers numerous competing explanations for the observed gender disparity in promotions.  None of these explanations undermine the companywide nature of the challenged policies and their disparate effects discussed here.”

To represent the various groups of women in the class, he appointed the Impact Fund (which represented women in the Wal-Mart case), Davis, Cowell & Bowe; Lewis, Feinberg, Lee Renaker & Jackson; Lief Cabraser Heimann & Bernstein and the Altshuler Berzon firm.

The lawsuit alleges Costco’s promotion and management practices violate the Civil Rights Act of 1964 and that Costco has a pattern of discrimination against women in promotion to management positions, particularly general manager or assistant general manager positions.

The company operates 350 warehouse-style retail stores nationwide, selling groceries, books and electronics.  The company promotes almost entirely from within the stores, according to Chen.

Costco argued that any gender disparities are attributable to gender-differentiated supply in the pool of qualified employees  — in essence arguing that few qualified women were available.

Shirley Ellis, an assistant general manager, has worked at Costco 20 years and asked to be in the general manager selection process but has been passed over.  She filed the suit in 2004.

Similarly, Leah Horstman worked at Costco for 23 years beginning in 1981.  In 1996 she was promoted to senior staff manager and repeatedly sought promotion.  She was not promoted and resigned in 2004.

Chen distinguished the Costco case from Wal-Mart by saying Costco employs criteria that comes from top management.  By contrast, Wal-Mart allows store managers to use their own subjective criteria for choosing candidates.

Chen inherited this case after the retirement of Judge Marilyn Hall Patel, who originally granted class status in 2006.  That was turned back for reconsideration by the 9th Circuit.

The first phase of any trial, if the case gets that far, will be to have a jury decide whether Costco discriminates against women.

Case:  Ellis v. Costco, No. 04-cv-3341EMC




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