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In mid-August, California nonprofit The Impact Fund filed a second lawsuit against a major corporate chain store, this time a class action accusing Costco Wholesale Corporation of gender discrimination. The suit, which was filed in San Francisco federal court by a Costco assistant manager, claims that the company consistently denied women promotions to higher-paying managerial positions. The suit comes on the heels of a similar sex discrimination case against Wal-Mart Stores Inc. � also filed by The Impact Fund � that was certified as a class action in June. Employment law experts say the latest case is part of a growing reaction to corporate sex discrimination, similar to the scores of race-based discrimination suits filed in the 1970s. The cases also reflect a strategy shift: Instead of pursuing individual wrongful termination claims, plaintiffs attorneys are now favoring class actions, which are considered more likely to succeed � and much more lucrative. “We’re at the threshold of a new ten-year wave of gender-based class action suits,” says workplace law specialist John Fox of Mountain View, California, firm Fenwick & West. “These cases are easy to certify because the numbers are so large and the statistics are so powerful.” In addition to the Costco and Wal-Mart suits, Morgan Stanley Dean Witter & Co. recently agreed to a $54 million sex discrimination settlement. The latest suit seeks class action status and could include as many as 650 female former Costco workers across America allegedly subjected to gender discrimination. Fewer than one in six of Costco’s senior store managers are women, yet the company’s workforce is roughly 50 percent female, according to the suit. Monetary damages were not specified, but attorneys say damages could reach into the millions. “There is no clearer example of a glass ceiling than how Costco promotes workers into assistant manager and general manager positions,” says Brad Seligman, executive director of The Impact Fund and the lead attorney on the case. Seligman was lead counsel on the mother of all sex discrimination class actions against retail stores. The $107 million settlement he won from Lucky Stores Inc. in 1993 helped lay the foundation for The Impact Fund. (Northern District of California chief judge Marilyn Hall Patel, who was the trial judge in the Lucky Stores litigation, has been assigned to the Costco case.) Seligman says attorneys vigorously pursued class actions in the 1970s. In 1976, 1,174 employment class actions were filed, as opposed to 32 cases in 1991, he says. There were 82 cases filed last year. “We want to show that there’s a way to litigate these cases that makes sense in the twenty-first century,” Seligman says, adding that the country’s two largest wholesale operations were ideal targets. “They are the industry leaders in size and revenue, but the laggards in promotion of women. . . . It’s not an accident that we sued them.” The complaint � which is also being litigated by San Francisco firms Lieff Cabraser Heimann & Bernstein and Davis, Cowell & Bowe � alleges that Costco has no job-posting or application procedures for assistant manager and general manager positions, nor any written promotion standards and criteria for these jobs. It does have written standards for lower-paying jobs. “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,” says Bill Lann Lee, a Lieff Cabraser partner and former federal assistant attorney general for civil rights, in a statement. Workplace law specialist John Winer, who runs offices in Oakland and San Francisco, says he has definitely noticed an increase in employment class actions. His firm is part of a race-based class action involving 12 plaintiffs. Winer notes that class actions are often simpler to prove. “With one client you can say the person is especially sensitive. . . . When a large group of people join together, they really can’t take that defense,” he says. “Class action cases can level the playing field.” Executives at Washington State � based Costco declined to comment. The company issued a short statement in August saying it had reviewed the complaint and “strongly disagree[s] with any claim that Costco has discriminated against any individual or group of employees.” Donald Polden, dean of Santa Clara University School of Law, says private law firms might be filing more class actions because the government can’t keep pace with complaints. “This is simply a reflection of stretched government enforcement,” says Polden, a workplace law expert. “The EEOC’s workload is so big that they can’t get to as many of the suits.” But that doesn’t mean private firms aren’t looking for the best deal for their clients. Fenwick’s Fox predicted that both the Wal-Mart case, currently being reviewed by the U.S. Court of Appeals for the Ninth Circuit, and the Costco case will settle, especially if plaintiff lawyers can unearth damning statistics about the companies. A version of this story originally appeared in The Recorder , a sibling publication of Corporate Counsel.

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