Tuesday, July 15, 2014
This is just a bad time to be an employee of a major department store on the West Coast. In Davis v. Nordstrom, Inc. the same panel that decided Johnmohammadi v. Bloomingdale's, Inc., about which we blogged yesterday, granted Nordstrom's motion to compel individual arbitration, overturning the District Court's denial for that motion.
In August 2011, Faine Davis filed a purported class action against Nordstrom, alleging nonpayment of wages, failure to provide meal periods and rest breaks, and unfair competition. Nordstrom, in reliance on its employee handbook, moved to compel individual arbitration of Davis's claims. Nordstrom had revised that handbook earlier in 2011 in response to the Supreme Court's decision in AT&T Mobility LLC v. Concepcion to prohibit employees from bringing most class action lawsuits.
Davis had received a copy of the employee handbook when she was first employed by Nordstrom, and she acknowledged that she received notice each time that handbook was subsequently amended. In June 2011, ahe was notified that Nordstrom would henceforth preclude most class action lawsuits. Under California law, Nordstrom is permitted to amend the terms of its agreement with its employees upon due notice. Since Davis received notice and continued to work for Nordstrom, she accepted the modified terms. California law requires only reasonable notice, but Nordstrom's handbook specified that 30-days' advance notice is required.
The District Court found Nordstrom's notice insufficient because the notice described the policy as the "current version," leading employees to believe that it was immediately effective. The Ninth Circuit rejected this finding. While noting that Nordstrom's notice was not a "model of clarity," it was sufficient to meet California's standards because Nordstrom did not seek to enforce the policy against any employees until at least 30 days after notice was given.
The District Court also found the notice insufficient because it did not inform Davis that her continued employment constituted acceptance of the new terms. The Ninth Circuit found that California law imposes no requirement that employers notify employees that continued employment constitutes acceptance. This seems a bit odd, since one would think that an offeree ought to be informed when conduct would be construed as acceptance.
But all is not lost for Ms. Davis. The District Court did not rule on her claim that the class action waiver is unconscionable, and the Ninth Circuit refused to rule on the issue. That part of the case was remanded for a determination by the District Court.