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Major points in the 9th U.S. Circuit Court of Appeal's ruling in Shirley “Rae” Ellis et al. vs. Costco Wholesale Corp., which overturned a lower court ruling granting class certification to plaintiffs, included:
• The district court “abused its discretion by applying the wrong legal standards” in determining whether there were questions of law common to the class and whether the representative parties' claims were typical of the class as a whole. The issues were remanded to the district court.
• The 9th 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.
• The 9th Circuit ruled that plaintiff Elaine Sasaki, a current employee, is an adequate class representative as a current employee who continues to be denied promotion. But it said two plaintiffs who have left the company—Ms. Ellis and Leah Horstman—were not, because they had no incentive to pursue injunctive relief. The issue in their case was remanded.
SAN FRANCISCO—A federal appeals court's rejection of class action status in a gender discrimination case against Costco Wholesale Corp., which is based on a landmark U.S. Supreme Court ruling, is a victory for employers, but only a partial one, legal experts say.