On August 17, 2004, a female employee filed suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. section 2000e, and the Fair Employment and Housing Act, California Government Code section 12940, against Costco Wholesale Corporation in United States District Court in the Northern District of California. The plaintiff, represented by private counsel, asked the Court for declaratory and injunctive relief, as well as damages, alleging that Costco discriminated against her and other similarly situated females. Specifically, the plaintiff contended that Costco's management discriminated against her based on her sex when granting promotions and that the defendant retaliated against her after she complained.

The original plaintiff filed the suit by herself, but was soon allowed to add two more plaintiffs as the case progressed. These named plaintiffs, on behalf of themselves and others similarly situated, charged that Costco's managerial promotion methods had a pattern and practice of gender discrimination, and disparate impact on women. Because the defendant's failed to notify employees of specific promotion opportunities through job postings, or any other alternative means, female employees were unable to apply for promotions. This practice, in combination with a promotion decision-making process that was arbitrary and done by a nearly all-male managerial force, led the plaintiffs to file suit.

On January 11, 2007, the District Court (Judge Patel) granted class certification. The District Court certified a class of all current and former female Costco employees nationwide who have been denied promotion to General Manager or Assistant General Manager positions or denied promotion to Senior Staff positions since January 3, 2002. The Court did not certify the plaintiffs claims over FEHA, only those made under Title VII. With the certification, the Court granted an opt out opportunity to be provided in the class notice. The Court granted the class certification for the claims of damages and injunctive relief. 240 F.R.D. 644.

The defendants appealed the District Court's decision, arguing that the District Court abused its discretion in certifying the class. The Ninth Circuit Court of Appeals heard the appeal after the Supreme Court gave its decision in Dukes v. Walmart (a class action case with a similar fact pattern) and issued an order on September 16, 2011. The court held that one plaintiff had standing to bring the suit and was adequate representation but the two other plaintiff representatives may be inadequate representation because they were former employees. The Circuit Court also held that the District Court used the wrong legal theory in determining that the class met the commonality and typicality requirements for class certification. The case was remanded for the District Court to determine if the two plaintiffs could be adequate representation and to apply the correct standard in determining if the class met the commonality and typicality requirement. 657 F.3d 970.

The plaintiffs filed their third amended complaint on March 23, 2012, altering their prayer for relief. In an attempt to alleviate the Ninth Circuit's concern over the adequacy of representation, the plaintiffs requested certification with one plaintiff as the representative of the injunctive relief class and one plaintiff as the representative of the monetary relief class.

On September 25, 2012, Judge Chen, writing for the District Court, granted class certification once again. After reviewing the case on remand from the Seventh Circuit, the District Court still held that the plaintiffs provided significant evidence of company wide policies and gender disparity to satisfy the commonality and typicality requirements of class certification. 285 F.R.D. 492.

After hearings and negotiations, the parties reached a settlement, and Judge Chen approved the settlement on May 27, 2014. Per the settlement, the three representative plaintiffs were awarded a $10,000 service fee, $3,950,000 for attorneys' fees, $633,959.64 for costs, and $300,000 for future work in administering the settlement. The settlement outlined the procedure by which the class members could claim their award out of an 8 million dollar settlement fund, with the possibility of individual claims ranging from $25,000 to $250,000. The settlement also outlined programmatic relief the class would receive, including a posting process for promotions, training of staff on hiring and promoting, and the use of a psychologist to conduct routine job analyses and evaluate promotion processes. The settlement lasted for two years. This case is now closed.

Following the settlement, one named plaintiff proceeded on individual claims of disparate treatment and retaliation, citing some facts not previously mentioned in the class action complaint. On May 22, 2015 Judge Chen granted in part and denied in part the defendant's motion for summary judgment with regard to this claim. Judge Chen narrowed the claims that the plaintiff would bring to trial to "(1) the disparate treatment claim and (2) the retaliation claim, but only with respect to failures to promote that took place 300 days prior to the DFEH charge for retaliation specifically (and not disparate treatment)." 2015 WL 2453158.

The parties then proceeded to engage in trial preparation and settlement talks simultaneously. On July 24, 2015, proceedings were held before Judge Chen, noting that the parties had settled the matter. This settlement agreement is not available on the docket. On July 28, the final named plaintiff voluntarily dismissed her claims against the defendant. This case is now closed

Matthew Aibel - 05/04/2008
Mackenzie Walz - 12/03/2017


compress summary