Davis v. Nordstrom, Inc.

Under California law, a company’s revisions to an employee arbitration policy contained in its employee handbook precluding its employees from bringing class action lawsuits can be a valid agreement where the company: (1) satisfies minimal state law requirements for providing employees reasonable notice of the change; and (2) does not seek to enforce the arbitration provision during the notice period provided.

After the United States Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion rejected a California Supreme Court holding that a class waiver is unconscionable in a contract of adhesion, Nordstrom, Inc. (“Nordstrom”) revised the employee arbitration policy in its employee handbook. The arbitration provision had required Nordstrom’s employees to arbitrate individual disputes prior to July 2011, but Nordstrom revised it to largely preclude its employees from bringing class action lawsuits against the company. As notice of the change, Nordstrom sent letters to its employees allowing them 30-days to terminate employment before the change went into effect. The letters informed its employees of the changed arbitration policy and provided employees a copy of its entire Dispute Resolution Program. On August 11, 2011, Faine Davis (“Davis”), a Nordstrom employee, filed a class action lawsuit alleging that Nordstrom had violated various California and federal employment laws. Nordstrom, via its revised arbitration policy, sought to compel Davis to arbitrate her claims individually. Davis admitted to receiving the employee handbook upon taking her position at Nordstrom, and that the company had notified her of the various changes made since that time. The district court held that Davis and Nordstrom did not form valid arbitration agreement with the revision, and denied the motion to compel arbitration. On appeal, the Ninth Circuit held that, under California law, Nordstrom’s revisions constituted a valid agreement where Nordstrom: (1) satisfied minimal California law requirements for providing its employees reasonable notice of the change; and (2) did not seek to enforce the arbitration provision during the 30-day notice period provided. The panel held further that Nordstrom was not required to inform its employees that a continuation of employment after receipt of the letter constituted an acceptance of the new employment terms. REVERSED AND REMANDED.