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Two Important Arbitration Clause Related Rulings Handed Down (Ninth Circuit)


Johnmohammadi v. Bloomingdale's, Inc. - Ninth Circuit Court of Appeals

Facts:  Fatemeh Johnmohammadi brought a class action against Bloomingdale's to recover unpaid overtime wages.  Once the case got moved to federal court, Bloomingdale's sought to compel arbitration.  At issue was an arbitration agreement in Bloomingdale's employment documents which  provided that employees who failed to opt out waived their right to pursue employment related claims on a collective basis in any forum, judicial or arbitral.  As a result, the court held that Johnmohammadi entered into a valid arbitration agreement and that all her claims fell within the scope of that agreement. 

Holding:  The Ninth Circuit affirmed the district court and held that arbitration agreements which become effective if the employee fails to "opt out" of the agreement within thirty days are enforceable.  The Ninth Circuit rejected the plaintiff's argument that the "opt out" provision violated the National Labor Relations Act.  As a result, the Court held that there was no interference with concerted activity, the agreement was not a mandatory condition of employment, and the plaintiff previously could have opted out of the arbitration provision and thus preserved her right to proceed in court.

Majority Opinion Judge:  Judge Watford

Date:  June 23, 2014



Davis v. Nordstrom, Inc. - Ninth Circuit Court of Appeals

Facts:  After a Supreme Court decision in 2011, Nordstrom made revisions to the employee arbitration policy in its employee handbook, which precluded employees from bringing most class action lawsuits.  Faine Davis then filed a class action lawsuit and alleged that Nordstrom violated various state and federal employment laws.  Nordstrom, relying upon the revised arbitration policy, sought to compel Davis to submit to individual arbitration of her claims.  The district court held that Davis and Nordstrom did not enter into a valid arbitration agreement and denied Nordstrom's motion to compel arbitration. 

Holding:  The Ninth Circuit reversed the district court and held that Nordstrom's arbitration agreement could unilaterally be modified to include a class action waiver as long as thirty days notice was given to employees.  In this instance, the Court found that the change and the notice were sufficient to create a binding arbitration agreement, even without the employee's signature. 

Majority Opinion Judge:  Judge Smith

Date:  June 23, 2014

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