Costco 2014 Annual Report Download - page 67

Note 10—Commitments and Contingencies
Legal Proceedings
The Company is involved in a number of claims, proceedings and litigation arising from its business and
property ownership. In accordance with applicable accounting guidance, the Company establishes an
accrual for legal proceedings if and when those matters reach a stage where they present loss
contingencies that are both probable and reasonably estimable. In such cases, there may be a possible
exposure to loss in excess of any amounts accrued. The Company monitors those matters for
developments that would affect the likelihood of a loss and the accrued amount, if any, thereof, and
adjusts the amount as appropriate. As of the date of this report, the Company has recorded an accrual
with respect to one matter described below, which is not material to the Company's financial statements. If
the loss contingency at issue is not both probable and reasonably estimable, the Company does not
establish an accrual, but will continue to monitor the matter for developments that will make the loss
contingency both probable and reasonably estimable. In each case, there is a reasonable possibility that
a loss may be incurred, including a loss in excess of the applicable accrual. For matters where no accrual
has been recorded, the possible loss or range of loss (including any loss in excess of the accrual) cannot
in our view be reasonably estimated because, among other things, (i) the remedies or penalties sought
are indeterminate or unspecified, (ii) the legal and/or factual theories are not well developed, and/or
(iii) the matters involve complex or novel legal theories or a large number of parties.
The Company is a defendant in the following matters, among others:
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 September 16, 2011, the United States Court of Appeals for the Ninth Circuit
reversed the order of class certification and remanded to the district court for further proceedings. On
September 25, 2012, the district court certified a class of women in the United States denied promotion to
warehouse general manager or assistant general manager since January 3, 2002. This class is less than
1,300 people. In February 2014 the court granted preliminary approval of a proposed settlement. Any
payments to class members under the proposed settlement would be contingent upon proof of liability in
individual adjudications. The court granted final approval on May 27, 2014. Payments made and expected
to be made under the settlement would be immaterial to the Company’s operations or financial position.
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,
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