Davis v. Nordstrom, Inc., No. 4:2011cv03956 - Document 65 (N.D. Cal. 2014)
Court Description: ORDER ADDRESSING THE NINTH CIRCUITS OPINION ON APPEAL AND SETTING DEADLINE FOR ACTION BY PLAINTIFF. Signed by Judge Claudia Wilken on 8/5/2014. (ndr, COURT STAFF) (Filed on 8/5/2014)
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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 FAINE DAVIS, 5 6 7 8 9 No. C 11-3956 CW Plaintiff, ORDER ADDRESSING THE NINTH CIRCUIT S OPINION ON APPEAL AND SETTING DEADLINE FOR ACTION BY PLAINTIFF v. NORDSTROM, INC., Defendants. ________________________________/ United States District Court For the Northern District of California 10 11 Plaintiff Faine Davis filed this case on behalf of herself 12 and a putative class of salaried Department Managers employed by 13 Defendant Nordstrom, Inc., alleging Nordstrom failed to provide 14 overtime compensation, meal and rest periods, accurate itemized 15 wage statements, and timely distribution of wages upon 16 termination. 17 provision of the employment contract; on September 27, 2012, this 18 Court denied that motion. 19 June 23, 2014, the Ninth Circuit reversed this Court s decision 20 and remanded for further proceedings. 21 Circuit issued its mandate on July 16, 2014. 22 Nordstrom moved to compel arbitration based on a Docket No. 52. Nordstrom appealed. Docket No. 63. On The Ninth Docket No. 64. A brief summary of the motion s factual background is 23 provided here. 24 Nordstrom changed its employee handbook to require arbitration of 25 disputes on an individual basis and bar employees from bringing 26 most class action lawsuits. 27 ruled that Nordstrom s purported policy change was not valid 28 because it did not comply with the requirement that the employer After Concepcion v. AT&T, 563 U.S. 321 (2011), Docket No. 63 at 3-5. This Court provide a thirty-day notice and grace period to its employees, 2 instead making the new policy immediately applicable. 3 The Ninth Circuit disagreed, holding that while Nordstrom s 4 communications with its employees were not the model of clarity, 5 it satisfied the minimum requirements under California law by 6 informing its employees of the modification and not seeking to 7 enforce the arbitration provision during the thirty-day notice 8 period. 9 to consider the issue of whether the arbitration agreement was 10 United States District Court For the Northern District of California 1 unconscionable under Gentry v. Superior Court, 42 Cal. 4th 443 11 (Cal. 2007). 12 the issue was briefed at the district court level, the district 13 court did not reach it. 14 Court concluded that employees had certain unwaiveable rights, 15 such as to overtime compensation, and that to preclude an employee 16 from seeking to vindicate those rights in court would be 17 equivalent to a waiver of those rights. 18 456-57. 19 earlier decision in Discover Bank v. Superior Court, 30 Cal. 4th 20 148 (2005), which was abrogated by the United States Supreme Court 21 in Concepcion. 22 Because at the time of the writing of the Ninth Circuit s opinion, 23 the California Supreme Court was currently considering in Iskanian 24 v. CLS Transp. of Los Angeles, LLC, No. S204032 (Cal. petition 25 granted Sept. 19, 2012) the issue of whether Gentry remains valid, 26 the Ninth Circuit declined to consider whether Nordstrom s 27 arbitration provision was unconscionable under the unsettled 28 California law. Id. at 9. Id. at 8. However, the Ninth Circuit explicitly refused Id. at 10. The Ninth Circuit noted that, although Id. In Gentry, the California Supreme Gentry, 42 Cal. 4th at Gentry was based on the California Supreme Court s See Concepcion, 131 S.Ct. at 1746-48, 1753. 2 1 On the same day as the Ninth Circuit s opinion in this case, 2 the California Supreme Court published its decision in Iskanian v. 3 CLS Transp. of Los Angeles, LLC, the California Supreme Court case 4 on unconsionability to which the Ninth Circuit wished to defer. 5 In its opinion, the California Supreme Court considered whether 6 Gentry s holding -- that a class action waiver and arbitration 7 agreement in an employment contract would be unenforceable when, 8 after considering several factors, the court determines that a 9 class arbitration is likely to be a significantly more effective United States District Court For the Northern District of California 10 practical means of vindicating the rights of employees than 11 individual dispute resolution -- remained viable after Concepcion. 12 Iskanian v. CLS Transp. of Los Angeles, LLC, 59 Cal. 4th 348, 2014 13 WL 2808963, at *3 (citing Gentry, 42 Cal. 4th at 450). 14 Concepcion, the United States Supreme Court overruled the 15 California Supreme Court s holding in Discover Bank that a class 16 arbitration waiver in a consumer contract of adhesion, where small 17 amounts of damages are involved, and where one party has superior 18 bargaining power and carries out a scheme to deliberately cheat 19 large numbers of consumers out of small sums, is unenforceable 20 under California law. 21 162-63). 22 because requiring the availability of classwide arbitration 23 interferes with the fundamental attributes of arbitration and thus 24 creates a scheme inconsistent with the Federal Arbitration Act 25 (FAA). 26 holding was not a categorical rule against class action waivers, 27 it rested upon the same premise as Discover Bank (a class action 28 waiver would undermine the vindication of employees unwaiveable In Id. (quoting Discover Bank, 36 Cal. 4th at The United States Supreme Court overruled Discover Bank Concepcion, 131 S.Ct. at 1751. 3 Even though Gentry s 1 statutory rights), and so it too was overruled by Concepcion. 2 Iskanian, 2014 WL 2808963, at *14. 3 interferes with the fundamental attributes of arbitration even if 4 it is undesirable for unrelated reasons. 5 California Supreme Court recognized that the FAA preempts 6 California law refusing to enforce waivers of certain individual 7 unwaiveable rights (such as meal and rest break periods) because 8 they are unconscionable. 9 The holding in Gentry also Id. In essence, the Id. On the issue of PAGA claims, however, the California Supreme United States District Court For the Northern District of California 10 Court reached a different conclusion. 11 individual rights and obligations, a PAGA representative action is 12 a qui tam action in which a citizen may seek to vindicate a 13 statutory violation, yielding a penalty on behalf of a government 14 entity, which is the real party in interest in the suit. 15 *19. 16 all employees afflicted by the violation. 17 involves public rights, it is outside of the reach of the FAA in 18 that it does not frustrate the FAA s objectives to provide an 19 efficient forum for the resolution of private disputes. 20 *21. 21 waiver of representative claims under the PAGA, it is contrary to 22 public policy and unenforceable as a matter of state law. 23 Unlike a dispute involving Id. at Under PAGA, a portion of the penalty may be distributed to Id. Because PAGA Id. at Accordingly, where an employment agreement compels the Id. In the present case, Davis claims were not brought under 24 PAGA. 25 members individual rights for overtime pay, missed meal and rest 26 periods, and other penalties. 27 the district court because they are subject to Nordstrom s 28 arbitration provision, which the Ninth Circuit found to be Her claims instead seek to vindicate her and other class These claims cannot be litigated in 4 1 properly noticed and adopted. 2 Court s holding in Iskanian, the Court cannot find the arbitration 3 provision unenforceable as unconscionable regarding these claims 4 because such a request would be preempted by the FAA. 5 Due to the California Supreme Davis could, however, amend her complaint to vindicate the 6 alleged violations by Nordstrom pursuant to PAGA. 7 Davis has twenty-eight days from the issuance of this order to 8 file an amended complaint to assert claims under PAGA, if she 9 wishes to do so. Accordingly, Otherwise, the Court will order arbitration and United States District Court For the Northern District of California 10 dismiss the case, retaining jurisdiction only to enforce the 11 award. 12 IT IS SO ORDERED. 13 14 15 Dated: 8/5/2014 CLAUDIA WILKEN United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 5
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