Costco 2011 Annual Report Download - page 78

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 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. On August 13, 2010,
the court denied plaintiffs’ motion for final approval of the settlement. On February 3, 2011, a revised
settlement agreement was submitted for court approval. On September 22, 2011, the court
preliminarily approved the revised settlement.
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
Company, plaintiffs seek to certify four classes of people who purchased Costco organic milk. Aurora
has maintained that it has held and continues to hold valid organic certifications. The consolidated
complaint seeks, among other things, actual, compensatory, statutory, punitive and/or exemplary
damages in unspecified amounts, as well as costs and attorneys’ fees. On June 3, 2009, the district
court entered an order dismissing with prejudice, among others, all claims against the Company. As a
result of an appeal by the plaintiffs, on September 15, 2010, the court of appeals affirmed in part and
reversed in part the rulings of the district court and remanded the matter for further proceedings.
Plaintiffs have filed amended complaints.
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