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California’s Impact Fund on Tuesday filed a second lawsuit against a major corporate chain store, this time a class action accusing Costco Wholesale Corp. of gender discrimination. Filed in San Francisco federal court by a Costco assistant manager who claims women are consistently denied 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 recently certified as a class action. Employment law experts say the latest case is part of a growing backlash against sex discrimination at corporations similar to 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 10-year wave of gender-based class action suits,” said workplace law specialist John Fox of Fenwick & West. “I’ve predicted that since the Wal-Mart case was filed. 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 former female Costco workers across America 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 said 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,” said Brad Seligman, executive director of The Impact Fund and the lead attorney on the case. “There is no promotion system at Costco. Women must rely on the subjective and arbitrary decisions of Costco’s all-male senior management.” 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 Chief Judge Marilyn Hall Patel, who was the trial judge in the Lucky Stores litigation, was assigned Tuesday to the Costco case. Lucky had tried to get Patel removed from its case for alleged bias, but the 9th U.S. Circuit Court of Appeals refused. Seligman said 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 said. Those numbers have increased slightly. There were 82 cases filed last year, Seligman said. “We want to show that there’s a way to litigate these cases that makes sense in the 21st century,” Seligman said, adding that the country’s two largest wholesale operations were ideal targets because of what he characterized as their backward business practices. “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,” he said. 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. Such standards do exist in 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,” said 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, Calif. and San Francisco, said he has “definitely” noticed an increase in employment class actions. His firm is part of a race-based class action involving 12 plaintiffs. Winer said class actions aren’t just more lucrative — they are also often easier to prove. “It’s always easier to show that a number of people have been discriminated against rather than one client,” he said. “With one client you can say the person is especially sensitive or misperceiving what happened. When a large group of people join together, they really can’t take that defense.” “Class action cases can level the playing field,” Winer said. “If you win, you win so much more money, so it’s worth expending the resources to keep up [with big companies].” Executives at Washington state-based Costco declined to comment. The company issued a short statement Tuesday afternoon saying it had reviewed the complaint and that “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.” Donald Polden, dean of Santa Clara University School of Law, said private law firms might be filing more class actions because the government can’t keep up with the complaints. “This is simply a reflection of stretched government enforcement,” said Polden, a workplace law expert. “The EEOC’s workload is so big that they can’t get to as many of the suits. It may be class suits can also aggregate damages [as opposed] to an individual lawsuit.” 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 9th Circuit, and the Costco case will settle, especially if plaintiff lawyers can unearth damning statistics about the companies. “The question is not whether they will settle … it is when,” he said.

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