Costco Must Defend Gender Bias Claim

(CN) - Costco must face claims that it refused to promote women to management positions, a federal judge ruled, striking down the membership retailer's motion to deny class status in a long-running California lawsuit.

Shirley "Rae" Ellis, Leah Horstman and Elaine Sasaki sued Costco in 2006. Their putative class action alleged the company denied general and assistant general manager positions to female workers since 2002.

U.S. District Judge Marilyn Patel granted the action class certification in 2007. But, the Ninth Circuit affirmed in part, vacated in part and remanded the order for reconsideration in 2011, citing Wal-Mart Stores Inc. v. Dukes.

Costco filed a motion for an order eliminating class claims on remand, and the plaintiffs filed a cross-motion for class certification, leading to a Tuesday decision by U.S. District Judge Edward Chen.

In an 86-page ruling, Chen approved injunctive and monetary relief classes in the suit, and said a jury may decide whether the Issaquah, Wash.,-based business engaged in the alleged discrimination.

Current and future female employees constitute the injunctive class, the ruling states, while former employees subject to Costco's system for promotion after Jan. 3, 2002, are included in the monetary class.

About 700 women may join the suit, Chen added.

According to the Ninth Circuit, Costco promotes almost entirely from within. Only assistant general managers are eligible for general manager positions, and the company has no written guidelines for or informs employees about promotions.

Nonetheless, the appeals court added, Costco imposed uniform policies and practices with regard to its promotion system.

However, Chen countered, "Plaintiffs' statistical evidence demonstrates class-wide - as opposed to fragmented or localized - gender disparities supporting its contention that defendant's class-wide practices yield class-wide effects."

Chen added: "Because Plaintiffs have presented significant proof of companywide policies and companywide gender disparities - essentially, purported common 'causes' and common 'effects' - the court finds plaintiffs have satisfied the requirement for commonality under Rule 23(a)(2) for purposes of their disparate treatment claim."

Chen called individualized hearings in the case "narrow in scope," and said "multiple and substantial" questions on class-wide issues trumped claims for individual relief.

"There are numerous common questions of fact and law, the answers to which are apt to drive the resolution of this case," Chen said, referring to Costco's promotion system as a "tap-on-the-shoulder appointment process."

Costco operates nearly 600 warehouse-style clubs worldwide, selling items from groceries to electronics. On average, a Costco general manager earns $116,000 annually. Assistant general managers command about $73,000 per year.

Chen appointed Sasaki, a current Costco employee, as representative of the injunctive relief class. Ellis, Horstman and Sasaki will act as class representatives of the monetary class.

Chen also appointed Impact Fund; Lewis, Feinberg, Lee, Renaker & Jackson P.C.; Davis, Cowell & Bowe LLP; Lieff, Cabraser, Heimann & Bernstein LLP; and Altshuler Berzon LLP as class counsel.

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