Wal-Mart Decision Applied to Costco Workers

Posted on Fri, Oct 14, 2011

Earlier this year, the U.S. Supreme Court issued its landmark decision in Wal-Mart Stores, Inc. v. Dukes. The decision blocked one of the largest class action lawsuits ever, involving 1.5 million female Wal-Mart employees. The nation’s high court ruled that that the large class of employees from stores nationwide did not share common questions that could be resolved in a single class action suit.

Now, a federal appeals court in San Francisco has applied the Dukes ruling to block a class action lawsuit filed by female Costco employees. The case is Ellis v. Costco Wholesale Corp.

The facts are similar to Dukes. Three female employees alleged Costco discriminated against women by refusing to promote them to high-level management positions, general manager and assistant general manager, in Costco stores. These employees sought to expand their discrimination lawsuit by bringing a class action on behalf of a group of female Costco employees nationwide.

The lower court allowed the class action lawsuit to proceed. Costco challenged that ruling, arguing that the employees were unable to show common questions of law and fact that applied to the large nationwide class and that the lower court was wrong in light of the U.S. Supreme Court’s decision in Dukes.

The Ninth Circuit agreed with Costco, and overruled the lower court. The Ninth Circuit said that the lower court needed to engage in the “rigorous analysis” required under Dukes to determine if there were common questions of law and fact among the large class of employees. The Ninth Circuit sent the case back to the lower court to apply the correct standard articulated by the high court in Dukes.

To proceed as a class, the plaintiffs must show that they can somehow connect the many individual promotional decisions that were made: Was there a common pattern or practice that could affect the class as a whole? Was the entire class subject to the same allegedly discriminatory practice?

This case shows the impact of the Dukes decision on employers, especially those with multi-state locations. Employees who want to bring large class action discrimination lawsuit may not be able to withstand the required rigorous analysis to proceed as a class.

Employees bringing smaller class action claims based on a local or regional practice may find it easier to proceed. Again, the issue will be whether there is any “glue” to hold together the claims. Companies may see a shift back to individual discrimination lawsuits, instead of the class action.

Copyright: HRC/CalChamber

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