Ellis v. Costco Wholesale Corporation

Filing 767

ORDER Re Supplemental Briefing. Signed by Judge Edward M. Chen on 1/22/2014. (emcsec, COURT STAFF) (Filed on 1/22/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SHIRLEY “RAE” ELLIS, et al.,

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Plaintiffs,

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ORDER RE SUPPLEMENTAL
BRIEFING

v.

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For the Northern District of California

United States District Court

No. C-04-3341 EMC

COSTCO WHOLESALE CORPORATION,

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Defendant.
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Currently pending before the Court is Plaintiffs’ motion for preliminary approval of a class

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action settlement. Having reviewed the papers submitted, the Court hereby orders that the parties to

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submit supplemental briefing that addresses the following concerns of the Court:

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A.

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Programmatic Terms
(1)

Under Section 4.2.9, Costco commits itself (absent “good-faith concern”) to

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implementing the Selection Criteria and Assessment Tools proposed by DCI Consulting Group as to

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the Assistant General Manager (“AGM”) position. Class Settlement § 4.2.9. By contrast, Costco

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need only “consider for implementation any proposed Selection Criteria and Assessment Tools” for

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the General Manager (“GM”) position. Id. § 4.2.10. The rationale for this different treatment is

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unclear from the papers. Additionally, it is unclear why the dispute resolution procedure provided

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for in Section 13.9 would be insufficient to resolve any concerns the Parties may have regarding the

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GM position proposals.

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(2)

In Section 4.10.1, the Parties provide that the programmatic terms (the Posting of

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openings/Registration of Interest, the Job Analyses and Selection Criteria, and the Promotion

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Processes) “will take effect on the Effective Date and will remain in effect for two years after the

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Implementation Date.” Class Settlement § 4.10.1. It appears that under this provision, Costco will

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be entirely free to return to the status quo ante (i.e., stopping the posting of AGM positions; ending

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the registration of interest programs; abandoning the job analyses, selection criteria, and assessment

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tools proposed by the Independent Consultant; etc.) after only two years.

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B.

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Monetary Claims Process
(1)

The proposed class settlement provides that to be valid, a Class Member’s claim must

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identify “for each promotion challenged, the warehouse, the position (AGM or GM), the

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approximate date of the promotion, and the name of the man promoted.” Class Settlement § 5.2.5.2.

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However, the Fourth Amended Complaint in this action contains a number of allegations which
assert that openings for GM and AGM positions are not posted and there has not been a procedure

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For the Northern District of California

United States District Court

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for applying for GM and AGM positions. Fourth Amended Complaint ¶¶ 46-66. Similarly, Ms.

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Sasaki alleges that she “has been prevented from applying for specific openings in these warehouses

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because Costco does not post or otherwise notify employees of these openings.” Id. ¶ 109. Ms.

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Sasaki also expressed a willingness to relocate for a promotion. Id. ¶ 102. Based on these

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allegations, it is unclear whether, and if so, how, a Class Member will know (1) when there was an

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AGM or GM position open for which she was not considered; (2) the warehouse where that position

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was located; or (3) the identity of the man who was hired for that position.

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(2)

It is unclear why a Class Member who chooses to pursue her claims through the

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confidential Written Submission procedure should be limited to a maximum recovery that is 1/6 that

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of a Class Member who chooses to pursue her claims through the non-confidential Written

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Submission procedure. See Class Settlement §§ 5.10.4; 5.10.5.5; 5.10.5.6.

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(3)

Under the proposed class settlement, Class Members have the option of retaining

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their own counsel. Class Settlement § 5.6.2. The proposed settlement is unclear regarding the

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extent to which retained counsel would have access to the information and documents obtained by

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Class Counsel through the discovery process in this action.

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(4)

The Court is unable to determine the reasonableness of the $8 million settlement fund

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amount. Part of this is due to the failure of the parties to provide an estimate of a Class Member’s

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potential jury verdict recovery (for denial of promotions to AGM and GM positions). In addition,

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the Parties have failed to provide a detailed and specific discussion of the relative strengths and

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weaknesses of the Class Members’ claims and Costco’s defenses to permit the Court to analyze the

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litigation risk.

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C.

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Other Provisions
(1)

The Parties have not provided sufficient discussion as to the nature and scope of the

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named Plaintiffs’ involvement for this Court to determine whether they are entitled to an incentive

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payment, let alone $10,000 per Plaintiff.

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(2)

Section 7.6.9 provides that the “entire period for objecting to the Settlement and

Administrator first mails the Notice Packet to the Class.” Class Settlement § 7.6.9 (emphasis

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For the Northern District of California

timely submitting Opt-Out forms shall not exceed sixty (60) days from the date that the Class

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United States District Court

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added). This provision would apparently give those Class Members whose notice packets were sent

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out at the end less time to consider their options. Starting the 60 day clock from the date that the

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Class Administrator finishes sending out the Notice Packet to the Class appears to be more equitable

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to all Class Members.

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D.

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Class Notice
(1)

The class notice fails to notify Class Members that by opting into the Class, they are

limiting themselves to three challenges to a promotional decision.
(2)

The “How Does the Claims Process Work?” section of the class notice fails to notify

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Class Members that the arbitration process provided for under the proposed settlement limits the

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time, use of evidence, available discovery tools, and potential recovery when compared to a federal

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court action.

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(3)

The following statement is ambiguous: “If you choose, Class Counsel will represent

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you. If you win your claim, then Class Counsel will be entitled to ask that certain fees and costs be

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paid by Costco.” This statement fails to notify Class Members that they have the option of retaining

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their own attorneys. It further fails to note that if a Class Member retains their own counsel and is

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successful at arbitration, their retained counsel will also have the option of asking for certain fees

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and costs from Costco. See Class Settlement §§ 5.10.6; 5.11.12.

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(4)

On Page 4, the Class Notice states that “[T]here is no charge to you for consulting

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with [Class Counsel] to decide whether to file a claim, or for preparing your claim.” This statement

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is ambiguous as it does not clearly convey that, for Class Members who choose to retain Class

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Counsel, there will be no charge to have the Class Counsel actually prosecute the claim.

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(5)

The Class Notice fails to state, in bold typeface on the first page of the Noticed (just

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before the bullet points) that if the Class Member takes no action, their legal rights will be impacted

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and they will be bound to the settlement.

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(6)

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provisions.

The Class Notice contains no description of the proposed settlement’s release

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For the Northern District of California

United States District Court

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The Parties’ response to the above is due no later than 5:00 p.m. on January 30, 2014.

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IT IS SO ORDERED.

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Dated: January 22, 2014

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_________________________
EDWARD M. CHEN
United States District Judge

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