Costco: Ninth Circuit remands gender discrimination class action

Posted on: October 10th, 2011 by Steve Larson
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The Ninth Circuit remanded to the district court the decision of whether the gender discrimination case against Costco could be certified as a class action after the landmark U.S. Supreme Court ruling in Dukes v. Wal-Mart.  The ruling by the Ninth Circuit Court of Appeals is the first major class case to be decided since the Supreme Court’s June decision in Wal-Mart Stores Inc. vs. Betty Dukes et al., where the high court ruled against a proposed class of some 1.5 million members.

Employers had hoped that in light of Wal-Mart, the Ninth Circuit would dismiss Shirley “Rae” Ellis et al. vs. Costco Wholesale Corp.  While it did reverse the lower court’s grant of class certification, the Appeals Court remanded the case for further consideration, thus keeping it alive.

The plaintiffs accused Issaquah, Washington-based Costco of promotional practices that discriminated against women.  The district court issued its decision in the case in 2007, before the Supreme Court ruled in Wal-Mart.

“This complicated case requires us to consider a number of issues relating to class verification, ” the three-judge Ninth Circuit panel said in its unanimous September 16 ruling.  “Several of these issues have recently been clarified by the Supreme Court’s decision” in Wal-Mart.

Under Rule 23(a) of the Federal Rules of Civil Procedure, standards that are required for cases to become certified as class actions include whether there are questions of law common to the class, and whether the claims of the representative parties are typical of the class as a whole.

The Ninth Circuit vacated the district court’s certification of the class under Rule 23(b)(2) of the Federal Rules of Civil Procedure, which primarily is limited to classes seeking injunctive relief.  It said the district court must consider certifying the class under Rule 23(b)(3), which is not limited to injunctive relief, but is a tougher standard, because plaintiffs must prove that class issues predominate in the case and that class action is the superior way of handling it.