Costco 2009 Annual Report Download - page 85

their individual circumstances, class members can be eligible for up to a three-month extension of their
current membership or, if they are no longer Costco members, a temporary membership of up to three
months. Other than payments to two class representatives, the settlement does not provide for cash
payments to class members. The Company has agreed not to oppose a request for an award of
attorneys’ fees to class counsel in an amount up to $5. A hearing is set for October 16, 2009, for the
court to consider whether the settlement should receive final approval. In the third quarter of 2009, the
Company recorded an adjustment to deferred membership fees of $27 and a reserve was established
in the amount of $7 to cover the expected costs of the certificates, payment of attorneys’ fees to class
counsel, and certain expenses of settlement administration. Further details of the proposed settlement
can be obtained from the notice to class members, which can be viewed at http://www.costco.com/
renewalsettlement.pdf.
Numerous putative class actions have been brought around the United States against motor fuel
retailers, including the Company, alleging that they have been overcharging consumers by selling
gasoline or diesel that is warmer than 60 degrees without adjusting the volume sold to compensate for
heat-related expansion or disclosing the effect of such expansion on the energy equivalent received by
the consumer. The Company is named in the following actions: Raphael Sagalyn, et al., v. Chevron
USA, Inc., et al., Case No. 07-430 (D. Md.); Phyllis Lerner, et al., v. Costco Wholesale Corporation, et
al., Case No. 07-1216 (C.D. Cal.); Linda A. Williams, et al., v. BP Corporation North America, Inc., et
al., Case No. 07-179 (M.D. Ala.); James Graham, et al. v. Chevron USA, Inc., et al., Civil Action
No. 07-193 (E.D. Va.); Betty A. Delgado, et al., v. Allsups, Convenience Stores, Inc., et al., Case
No. 07-202 (D.N.M.); Gary Kohut, et al. v. Chevron USA, Inc., et al., Case No. 07-285 (D. Nev.); Mark
Rushing, et al., v. Alon USA, Inc., et al., Case No. 06-7621 (N.D. Cal.); James Vanderbilt, et al., v. BP
Corporation North America, Inc., et al., Case No. 06-1052 (W.D. Mo.); Zachary Wilson, et al., v.
Ampride, Inc., et al., Case No. 06-2582 (D. Kan.); Diane Foster, et al., v. BP North America Petroleum,
Inc., et al., Case No. 07-02059 (W.D. Tenn.); Mara Redstone, et al., v. Chevron USA, Inc., et al., Case
No. 07-20751 (S.D. Fla.); Fred Aguirre, et al. v. BP West Coast Products LLC, et al., Case No. 07-1534
(N.D. Cal.); J.C. Wash, et al., v. Chevron USA, Inc., et al.; Case No. 4:07cv37 (E.D. Mo.); Jonathan
Charles Conlin, et al., v. Chevron USA, Inc., et al.; Case No. 07 0317 (M.D. Tenn.); William Barker, et
al. v. Chevron USA, Inc., et al.; Case No. 07-cv-00293 (D.N.M.); Melissa J. Couch, et al. v. BP
Products North America, Inc., et al., Case No. 07cv291 (E.D. Tex.); S. Garrett Cook, Jr., et al., v. Hess
Corporation, et al., Case No. 07cv750 (M.D. Ala.); Jeff Jenkins, et al. v. Amoco Oil Company, et al.,
Case No. 07-cv-00661 (D. Utah); and Mark Wyatt, et al., v. B. P. America Corp., et al., Case No. 07-
1754 (S.D. Cal.). On June 18, 2007, the Judicial Panel on Multidistrict Litigation assigned the action,
entitled In re Motor Fuel Temperature Sales Practices Litigation, MDL Docket No 1840, to Judge
Kathryn Vratil in the United States District Court for the District of Kansas. On February 21, 2008, the
court denied a motion to dismiss the consolidated amended complaint. On April 12, 2009, the
Company agreed to a settlement involving the actions in which it is named as a defendant. Under the
settlement, which is subject to approval by the court, the Company has agreed, to the extent allowed
by law, to install over five years from the effective date of the settlement temperature-correcting
dispensers in the States of Alabama, Arizona, California, Florida, Georgia, Kentucky, Nevada, New
Mexico, North Carolina, South Carolina, Tennessee, Texas, Utah, and Virginia. Other than payments
to class representatives, the settlement does not provide for cash payments to class members. On
August 18, 2009, the court preliminarily approved the settlement and set a hearing for April 1, 2010, to
consider final approval of the settlement. Further details of the proposed settlement can be obtained
from the notice to class members, which can be viewed at http://www.costco.com/fuelsettlement.pdf.
The Company has been named as a defendant in two purported class actions relating to sales of
organic milk. Hesse v. Costco Wholesale Corp., No. C07-1975 (W.D. Wash.); Snell v. Aurora Dairy
Corp., et al., No. 07-CV-2449 (D. Col.). Both actions claim violations of the laws of various states,
essentially alleging that milk provided to Costco by its supplier Aurora Dairy Corp. was improperly
labeled “organic.” Plaintiffs filed a consolidated complaint on July 18, 2008. With respect to the
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