Quevedo v. MACY'S, INC.
798 F. Supp. 2d 1122
| C.D. Cal. | 2011Background
- Quevedo sued Macy's for not paying final wages timely upon termination, asserting waiting-time penalties and civil penalties under Labor Code §203 and §2699.
- Macy's offered a dispute-resolution program (Solutions In-STORE) with four steps, ending in binding arbitration (Step 4) unless employees opt out within 30 days.
- Quevedo electronically signed a New Hire Acknowledgment stating 30 days to opt out; he did not submit an opt-out form.
- Arbitration agreement barred class or collective arbitrations; other remedies available and arbitration governed by plan documents and brochures.
- After long procedural posture, Macy's moved to compel arbitration following AT&T Mobility LLC v. Concepcion (2011) which preempted Discover Bank rule.
- Court analyzes waiver, enforceability, and PAGA arbitratability; grants motion to compel arbitration and orders show-cause on dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of arbitration rights | Macy's delayed two years and incurred litigation steps. | Delay was reasonable given prior law and later Concepcion preemption. | Not waived; six-factor Cox test results in no waiver. |
| Arbitration enforceability: assent | Quevedo did not expressly assent to arbitration. | Silence after detailed opt-out information constitutes assent. | Assent found; failure to opt out equates to assent. |
| Arbitration enforceability: unconscionability | Program is procedurally and substantively unconscionable (one-sided, coercive). | Unconscionability minimal; severability applies; mutuality present. | Procedural and substantive unconscionability not sufficient to void; severance possible but not necessary. |
| PAGA arbitrability | PAGA claims cannot be arbitrated or barred from arbitration. | Individual PAGA claims arbitrable; representative PAGA barred by class/arbitration terms. | PAGA arbitrable on individual basis; representative PAGA barred in arbitration. |
Key Cases Cited
- Cox v. Ocean View Hotel Corp., 533 F.3d 1114 (9th Cir. 2008) (six-factor test for waiver of arbitration rights)
- St. Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal. 4th 1187 (Cal. 2003) (California policy favors arbitration; broad considerations in waiver)
- Letizia v. Prudential Bache Sec., Inc., 802 F.2d 1185 (9th Cir. 1986) (assent by silence where duty to act exists)
- Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691 (9th Cir. 1986) (heavy burden to prove waiver; interplay of arbitration rights)
- Gentry v. Superior Court, 165 P.3d 556 (Cal. 2008) (class arbitration issues; procedural unconscionability in disclosure)
- Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669 (Cal. 2000) (sliding-scale approach to unconscionability; factors for enforceability)
- Discover Bank v. Superior Court, 113 P.3d 110 (Cal. 2005) (California rule on class-action waivers; misalignment with FAA preemption)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (S. Ct. 2011) (FAA preempts Discover Bank rule; class-action waivers enforceable)
- Nyulassy v. Lockheed Martin Corp., 120 Cal. App. 4th 1267 (Cal. Ct. App. 2004) (preliminary steps may raise unconscionability concerns)
- Franco v. Athens Disposal Co., Inc., 171 Cal. App. 4th 1277 (Cal. Ct. App. 2009) (representative PAGA actions in arbitration context)