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Costco Class Action Alleges Gender Bias

SAN FRANCISCO - Shirley "Rae" Ellis, a Costco assistant warehouse manager in Douglas County, Colo., filed a national sex discrimination class action yesterday in federal court here, claiming that the Issaquah, Wash.-based warehouse club chain doesn't give female employees promotions to high-paying assistant and general store manager positions. The proposed class consists of current and former female Costco workers across the United States who allege that they've experienced gender discrimination. The suit seeks lost pay and benefits, damages, and injunctive relief for the class.

According to the suit, Ellis v. Costco Wholesale Corp., Ellis, who has worked for Costco since 1998, was repeatedly denied promotion to managerial positions, despite assurances from her superiors and a record of excellent performance reviews. The complaint further alleges that after Ellis filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission in October 2002, Costco retaliated against her by transferring her to a warehouse far from her home, necessitating a long commute.

The complaint charges that the company has no job posting or application procedure for assistant manager and general manager positions, nor any written promotion standards or criteria for these jobs, as opposed to lower-level jobs. Instead, the suit says, store managers are selected by a "tap on the shoulder" that unfairly favors male employees.

In a statement, Costco said: "We strongly disagree with any claim that Costco has discriminated against any individual or group of employees, and we will respond to this particular claim in the proper forum."

Representing the complainant, Berkeley, Calif.-based lead counsel Brad Seligman said in a statement: "There is no promotion system at Costco -- women must rely on the subjective and arbitrary decisions of Costco's all-male senior management. Not surprisingly, the men at Costco get a better deal when it comes to promotions." Seligman is also lead counsel in the Wal-Mart sex discrimination suit, which has recently been certified as a national class action and is the largest-ever such case, with up to 1.6 million plaintiffs. Law firms Lieff Cabraser Heimann & Bernstein, LLP and Davis, Cowell & Bowe, LLP are also representing the plaintiffs.

When contacted by Progressive Grocer, Seligman estimated that "at least 650 women" were eligible to be plaintiffs in the Costco class action, but that figure didn't take turnover into account. Citing the alleged events that led to Ellis' suit, he said, "You won't find these kinds of practices at the big [supermarket] chains," adding that it was "newcomers" to the grocery business, like Wal-Mart and Costco, that were most vulnerable to such workplace abuses, while their rivals had already learned through experience to avoid those pitfalls. Additionally, both Wal-Mart and Costco "lag very substantially behind their competitors" in terms of placing women in management positions, observed Seligman, who maintained that clear job posting requirements were key to avoiding similar lawsuits.

"The best-paying jobs at Costco are for general managers, who are typically paid $100,000 or more in salary and bonuses and are eligible for stock options worth many times this amount," explained Lieff Cabraser, partner Bill Lann Lee, former assistant attorney general for civil rights at the U.S. Department of Justice, in a statement. "Even though women hold nearly half of the lower-level jobs at Costco, women hold less than one in six of the senior store manager positions."

Newport Beach, Calif.-based labor attorney Roger Schnapp told Progressive Grocer that the retail industry should expect more such suits to be filed in the near future. "They are very lucrative for the attorneys who file them -- a review of favorable verdicts in this type of class action indicates that the attorneys make large fees and each individual member of the class receives relatively little compensation. This makes them attractive to contingency fee attorneys, and there are no lack of potential class members, as few people cheerfully accept adverse personnel actions of any sort and most conclude there must have been some reason other than that it was their own fault."

When asked his opinion on the prevalence of discriminatory practices in the supermarket industry, Schnapp said, "From what I know and/or have seen, the retail/grocery industry is pretty typical of industry in general."

In other Costco news, the company started offering $800 caskets this week. "We are testing the caskets in two units in Chicago," Bob Nelson, v.p. finance and investor relations, told Progressive Grocer. "There’s no specific time period as to how long this test will last."

Costco sells six models of steel coffins from Cassopolis, Mich.-based Universal Casket Co. They're not displayed on the sales floor, but rather are ordered directly from a kiosk that has a catalog detailing the different models. "You simply order it, pay for it, and we'll have it delivered to where you want it, usually a funeral home, or maybe your house," noted Nelson. Deliveries are made within 48 hours, the company said.

Costco has already sold several caskets, according to Nelson. He said he was "unsure" if any of the buyers were vampires.

--Bridget Goldschmidt and Richard Turcsik
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