Walmart Ruling May Not Spell Doom for Costco Discrimination Case, Insists Plaintiffs' Lawyer

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Last year, when the U.S. 9th Circuit Court of Appeals gave the green light to class-action litigation against Walmart, the law firm handling the case hailed the decision as good news not only for that lawsuit but for one the firm is pursuing against Issaquah-based Costco. Brad Seligman, lead counsel for the plaintiffs, told SW that the two gender discrimination cases were oh-so-similar. Yesterday, however, the U.S. Supreme Court came down on Walmart's side. Now Seligman is saying that the cases aren't so similar after all.

"There are some very important differences," says Seligman, senior counsel at a California public-interest firm called the Impact Fund. He says the Walmart case concerned a variety of promotions that were made in a "decentralized" way throughout the chain's many stores. "In Costco, we're only dealing with promotions to the top two positions--[store] manager and assistant manager, and those decisions were made . . . at the headquarters." In fact, he says Costco CEO Jim Sinegal admitted in a deposition that he personally signed off on all such promotions.

Seligman says this is a crucial point because the Supreme Court noted in its Walmart decision that the company did not have a policy, at the top levels, that promoted gender discrimination. (See pdf of decision.)

The California lawyer also argues that the Costco case is different because the potential "class" is much smaller--only about 1,000 women as opposed to the million and a half in the Walmart case. The latter was far too big for a single case, the Supreme Court ruled.

But Costco senior vice-president Joel Benoliel portrays Seligman and his colleagues as grasping at straws. "They've just suffered a horrendous loss. They've got to regroup and they're going to make all kind of claims.

The notion that top Issaquah executives made all promotion decisions is "patently false," Beoliel says. Such decisions are decentralized, he says, just as at Walmart. And even if the Costco case has fewer plaintiffs, their lawyers still have to show they all belong in the same class. And that bar is especially high for plaintiffs seeking financial damages, as are the women in the Costco case.

The Costco plaintiffs are also demanding changes in policy to prevent further gender discrimination. Benoliel, however, observes that yesterday's Supreme Court ruling said that plaintiffs can't seek both money and policy changes in a single case.

Ultimately, it's up to the 9th Circuit to decide how similar the Walmart and Costco cases are. Obviously, the appellate judges already see the cases as linked. When Walmart appealed the circuit's ruling in its case to the Supreme Court, the 9th Circuit judges said they would hold off on Costco until the Supremes weighed in. Now that they have, Seligman says he expects to hear shortly from the 9th Circuit requesting additional briefs in light of the decision.

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