Costco 2010 Annual Report Download - page 77

The miscalculation claim from the Randall case was refiled as a separate action by stipulation, alleging
that the Company miscalculated the rates of pay for all department and ancillary managers in
California in violation of Labor Code Section 515(d). On October 2, 2009, the court granted the
Company’s motion for summary judgment, and that ruling has been appealed. Terry Head v. Costco
Wholesale Corp., Superior Court for the County of Los Angeles, Case No. BC-409805. In the Williams
action, the parties have achieved a settlement. The settlement is immaterial to the Company’s
consolidated financial statements.
On December 26, 2007, another putative class action was filed, also principally alleging denial of
overtime compensation. The complaint alleges misclassification of certain California managers. On
May 15, 2008, the court partially granted the Company’s motion to dismiss the complaint, dismissing
certain claims and refusing to expand the statute of limitations for the remaining claims. An answer to
the complaint was filed on May 27, 2008. Plaintiff’s class certification motion was denied, while a Fair
Labor Standards Act (FLSA) collective action was conditionally certified for notice purposes only. The
Company’s motion to decertify was granted on September 14, 2010. Jesse Drenckhahn v. Costco
Wholesale Corp., United States District Court (Los Angeles), Case No. CV08-1408 FMC (JMJ).
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
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. On February 1, 2010, the court
denied plaintiff’s motion for class certification, and that ruling was appealed. The court granted
summary judgment against the plaintiff on his individual claim on April 19, 2010. Plaintiff subsequently
agreed to dismiss the action. 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 procedures, when security measures allegedly cause
employees to be locked in the warehouses. Mary Pytelewski v. Costco Wholesale Corp., Superior
Court for the County of San Diego, Case No. 37-2009-00089654. A similar purported class action was
filed on November 20, 2009, in the State of Washington. Raven Hawk v. Costco Wholesale Corp., King
County Superior Court, Case No. 09-242196-0-SEA.
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 was
denied, while an FLSA collective action was conditionally certified for notice purposes only. Eighteen
individuals filed consents to join the FLSA collective actions. Carrie Ward v. Costco Wholesale Corp.,
United States District Court (Los Angeles), Case No. CV08-02013 FMC (FFM).
On July 14, 2010, a putative class action was filed alleging that the Company unlawfully failed to pay
overtime compensation, denied meal and rest breaks, failed to pay minimum wages, failed to provide
accurate wage-itemization statements, and willfully failed to pay termination wages alleged resulting
from misclassification of certain California department managers as exempt employees. On
September 3, 2010, the Company removed the case to federal court. Manuel Medrano v. Costco
Wholesale Corp., and Costco Wholesale Membership, Inc., United States District Court (Los Angeles),
Case No. CV-10-6626-VBF-JCGx.
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