Costco 2010 Annual Report Download - page 78

On July 23, 2010, a putative class action was filed against several defendants, including the Company,
alleging that defendants unlawfully failed to pay overtime compensation, failed to provide accurate
wage-itemization statements, failed to pay wages, denied meal and rest breaks, and failed to
reimburse for uniforms and expenses. Plaintiffs are temporary promotion employees, known as
“product ambassadors,” hired by various marketing companies (also named defendants), which
contract with retailers such as the Company, to staff in-store demonstrations and promotional events.
The complaint alleges that the Company is a “joint employer” of the plaintiffs. Bright v. Dennis
Garberg & Assocs., Inc., et al., Los Angeles Superior Court, Case No. BC399563.
Claims in these actions (other than Hawk) 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.
Class actions stated to have been brought on behalf of certain present and former Costco members:
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 final 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-
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