Costco 2009 Annual Report Download - page 84

A case purportedly brought as a class action on behalf of present and former hourly employees in
California, in which the plaintiff principally alleges that the Company’s routine closing procedures and
security checks cause employees to incur delays that qualify as uncompensated working time and that
effectively deny them statutorily guaranteed meal periods and rest breaks. The complaint was filed on
October 2, 2008, and the Company’s motion to dismiss was partially granted. Discovery is ongoing.
Anthony Castaneda v. Costco Wholesale Corp., Superior Court for the County of Los Angeles, Case
No. BC-399302. A similar purported class action was filed on May 15, 2009, on behalf of present and
former hourly employees in California, claiming denial of wages and false imprisonment during the
post-closing jewelry and till “pull,” when security measures allegedly cause employees to be locked in
the warehouses. This complaint has not yet been served on the Company. Mary Pytelewski v. Costco
Wholesale Corp., Superior Court for the County of San Diego, Case No. 37-2009-00089654.
A putative class action, filed on January 24, 2008, purportedly brought on behalf of two groups of
former California employees—an “Unpaid Wage Class” and a “Wage Statement Class.” The “Unpaid
Wage Class” alleges that the Company improperly deducts employee credit card balances from final
paychecks, while the “Wage Statement Class” alleges that final paychecks do not contain the accurate
and itemized information legally required for wage statements. On May 29, 2008, the court granted in
part a motion to dismiss, dismissing with prejudice the wage-itemization claims. On May 5, 2009, the
Court denied the Company’s motion for summary judgment. Plaintiff’s class certification motion is
pending. Carrie Ward v. Costco Wholesale Corp., United States District Court (Los Angeles), Case No.
CV08-02013 FMC (FFM).
Claims in these actions are made under various provisions of the California Labor Code and the
California Business and Professions Code. Plaintiffs seek restitution/disgorgement, compensatory
damages, various statutory penalties, punitive damages, interest, and attorneys’ fees.
A case brought as a class action on behalf of certain present and former female managers, in which
plaintiffs allege denial of promotion based on gender in violation of Title VII of the Civil Rights Act of
1964 and California state law. Shirley “Rae” Ellis v. Costco Wholesale Corp., United States District
Court (San Francisco), Case No. C-04-3341-MHP. Plaintiffs seek compensatory damages, punitive
damages, injunctive relief, interest and attorneys’ fees. Class certification was granted by the district
court on January 11, 2007. On May 11, 2007, the United States Court of Appeals for the Ninth Circuit
granted a petition to hear the Company’s appeal of the certification. The appeal was argued on
April 14, 2008. Proceedings in the district court have been stayed during the appeal. The parties await
a decision from the Ninth Circuit.
Class actions stated to have been brought on behalf of certain present and former Costco members:
In Evans, et ano, v. Costco Wholesale Corp., No. BC351869 (Superior Court for the County of Los
Angeles), and Dupler v. Costco Wholesale Corp., Index No. 06-007555 (commenced in the Supreme
Court of Nassau County, New York and removed to the United States District Court for the Eastern
District of New York), it is asserted that the Company violated various provisions of California and
New York common law and statutes in connection with a membership renewal practice. Under that
practice, members who paid their renewal fees late generally had their twelve-month membership
renewal periods commence at the time of the prior year’s expiration rather than the time of the late
payment. Plaintiffs in these two actions seek compensatory damages, restitution, disgorgement,
preliminary and permanent injunctive and declaratory relief, attorneys’ fees and costs, prejudgment
interest and, in Evans, punitive damages. On April 2, 2009, the district court preliminarily approved a
settlement that, if finally approved, will resolve both of these actions. The settlement entails a
provisional certification of a nationwide class of present and former Costco members who from
March 1, 2001, to March 31, 2009, paid their membership renewal fees late and had their renewal
periods commence at the prior year’s expiration date rather than the date of payment. Depending upon
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