Costco Gender Discrimination Lawsuit Wins Class Action Status

Costco Wholesale Corp. workers who sued the retailer for gender bias will be able to proceed with their claims as a group. A judge said a years-old class action gender discrimination lawsuit against Costco Wholesale could move forward. Costco was stalling in hopes to stop the lawsuit, following a class-action gender discrimination case against Wal-Mart, which was thrown out by the U.S. Supreme Court.

The Costco case was put on hold for three years as the Wal-Mart case worked its way to the Supreme Court, which in 2011, said there were too many women (as many as 1.5 million), to be in a single class action case. It also said employees can pursue class action suits only if there is a company-wide policy that results in discrimination against women or minorities. After it was deemed that the Wal-Mart case was not a valid action case because Wal-Mart did not have a company-wide policy that created discrimination, lawyers for the female employees in the Costco class used company-wide promotion practices as the basis to gain approval to move forward with their class action.

After that decision, the Costco suit was revived in Northern California, where U.S. District Judge Chen certified the group of plaintiffs. This means the women were granted class action status, which means they will be able to proceed forward with their gender bias claims as a group, after which a court date will be set.

This ruling is significant because Costco had won a ruling last year that voided another judge’s decision to expand the complaint into a class action. The suit was originally filed by three women and sought to include hundreds. It was established that there was a set of company policies set at the corporate level and that senior management was involved in the decisions.

In his decision to let the case proceed, Chen cited evidence that Costco has a company-wide policy for deciding who runs its warehouses. Top management helps make those decisions, “including the maintenance of a Green Room at corporate headquarters where the photographs of potential promotees are displayed.”

Costco, the biggest U.S. warehouse-club chain, was sued in 2004 for allegedly limiting promotions of female employees to warehouse manager, assistant manager and general manager by failing to post job openings. They also targeted specific employment practices implemented company-wide under the influence and control of top management at Costco, including a “tap-on-the-shoulder appointment process” without applications or interviews, and a mandated lack of posting for open positions, Chen said. The company denies this.

It was reported that women received only 103 of the 561 promotions to assistant general manager between 1999 and August 2004.

The gender bias claim against the warehouse-club chain is not the first. In 2004, a lawsuit was filed against the company for similar gender bias, with the claim being the company limited promoting female employees by not posting the job openings. The case involves approximately 700 women passed over for jobs as warehouse manager and assistant manager because, the suit claims, Costco has a discriminatory system in which it does not post those positions or descriptions of them.

Lawyers for Costco workers went back to the trial court with a new proposal to limit the proposed class of employees to two management level positions, assistant general manager and general manager, according to Chen’s ruling.

Another difference between the Wal-Mart case and this Costco class, Wal-Mart permits store managers to apply their own subjective criteria when selecting candidates, while here the criteria plaintiffs allege to be subjective and invalidated derive from top management’s own instruction.

U.S District Judge Chen set a tentative trial schedule. In the first stage, a jury would decide whether Costco discriminated against women. Chen then would decide whether Costco’s practices had an adverse impact on the group and if he should issue an injunction against the company.

Depending on the outcome, individual hearings on back pay and compensatory damages would be held and punitive damages would be determined.

Do you think it is fair that out of 561 promotions, only 103 went to women?  This is discrimination and Costco, being the largest warehouse-club chain in the U.S. should be an example to other companies, that they will be held liable if they, too, discriminate against women or minorities.  Feel free to comment on this blog post.  Contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

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