Faine Davis v. Nordstrom, Inc.
755 F.3d 1089
9th Cir.2014Background
- Plaintiff Faine Davis, a Nordstrom employee, filed a putative class action alleging various wage-and-hour and related state and federal claims after Nordstrom revised its employee handbook arbitration policy to require individual arbitration and bar most class actions.
- Nordstrom had an existing handbook arbitration provision and a clause requiring 30 days’ written notice before substantive changes; it sent employees a June 2011 letter with the revised Dispute Resolution Program attached.
- Davis had received prior handbook versions, was repeatedly notified of handbook changes during employment, and did not quit or object within 30 days after receiving the June 2011 mailing.
- Nordstrom moved to compel individual arbitration; the district court denied the motion, finding no valid agreement to the revised arbitration terms (faulting Nordstrom’s notice and its failure to inform employees that continued employment would constitute acceptance).
- The Ninth Circuit reversed, holding the revised arbitration agreement was formed: Nordstrom provided reasonable notice under California law and had no duty to expressly tell employees that continued employment would be acceptance; the court declined to resolve unconscionability and NLRA issues on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement (revising handbook terms) was formed | Davis: Nordstrom failed to give the required 30 days’ notice and thus no new agreement was formed | Nordstrom: Sent the June letter with the revised program and did not enforce the changes during 30 days; continued employment constitutes acceptance | Held: Valid agreement formed; Nordstrom’s notice was sufficient and Nordstrom did not enforce the policy within 30 days |
| Whether employer must expressly notify that continued employment equals acceptance of new terms | Davis: Employer must explicitly state that continued work will be treated as acceptance | Nordstrom: No such California-law requirement; reasonable notice suffices | Held: No duty to expressly inform employees that continued employment constitutes acceptance under California law |
| Whether the class-waiver arbitration provision is unconscionable under California law (Gentry/Discover Bank) | Davis: Gentry renders class waivers unconscionable in employment context | Nordstrom: Concepcion undermines Discover Bank/Gentry; FAA preempts such state rules | Held: Court declined to decide unconscionability on appeal (not addressed below; issue not clearly resolvable here) |
| Whether the arbitration policy violates the NLRA | Davis: Policy conflicts with NLRA rights (argued below) | Nordstrom: Program lawful; voluntary programs permissible | Held: Not decided; Ninth Circuit did not reach NLRA argument in this case |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (U.S. 2011) (FAA preempts California rule invalidating class-waiver arbitration clauses)
- Asmus v. Pac. Bell, 23 Cal. 4th 1 (Cal. 2000) (employer may unilaterally modify handbook terms given reasonable notice and no interference with vested rights)
- Pinnacle Museum Tower Ass'n v. Pinnacle Mktg. Dev., 55 Cal. 4th 223 (Cal. 2012) (arbitration arises from a clear agreement; application of ordinary contract principles)
- Gentry v. Superior Court, 42 Cal. 4th 443 (Cal. 2007) (held class waivers could effectively waive statutory overtime rights under certain conditions)
- Kilgore v. KeyBank Nat'l Ass'n, 718 F.3d 1052 (9th Cir. 2013) (standard of review and FAA principles for motions to compel arbitration)