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Gulley v. Nordstrom, Inc.

United States District Court, Seventh Circuit

January 27, 2014

NORDSTROM, INC., Defendant.


THOMAS M. DURKIN, District Judge.

Beverly Gulley and Dina Pappas, former employees of Nordstrom, Inc., bring a claim against Nordstrom for failure to pay wages in violation of the Illinois Wage Payment and Collection Act, 820 ILCS § 115/1, and Illinois Minimum Wage Law, 820 ILCS § 105/4. R. 1-1. Nordstrom has moved to compel arbitration and stay the proceedings. R. 11. For the following reasons, Nordstrom's motion is granted.


Plaintiffs formerly worked as retail sales staff for Nordstrom, a national department store chain. Plaintiffs allege that they worked on commission, but were required to spend about an hour of each shift attending to duties that prevented them from attempting to make sales, for which time they were paid an hourly wage. R. 1-1 ¶ 2. Plaintiffs allege that Nordstrom paid them and other similarly situated sales staff for 30 minutes of non-sales duties each day even though they had worked 90 minutes of non-sales time. Id. ¶ 24.

On April 5, 2011, Nordstrom was sued regarding these alleged wage practices for violation of California and federal law. See Balasanyan v. Nordstrom, Inc., 2012 WL 760566, at *1 (S.D. Cal. Mar. 8, 2012). In the midst of that lawsuit in June 2011, Nordstrom added a class action waiver to the Dispute Resolution Agreement ("DRA") Nordstrom requires its employees to sign. R. 13-1 ¶¶ 6-7, Ex. 4. Nordstrom again amended the DRA in August 2011. Id. ¶ 7, Ex. 4. The DRA has been a part of Nordstrom's conditions of employment and has required arbitration of individual employee claims since 2004. See id. ¶ 5, Ex. 1. Gulley and Pappas were Nordstrom employees at the time of the 2011 amendments to the DRA. Gulley remained a Nordstrom employee until December 2011, and Pappas remained a Nordstrom employee until May 2012. R. 13 at 2.

Nordstrom moved to compel arbitration in the 2011 lawsuit. See Balasanyan, 2012 WL 760566, at *1. The court denied that motion because the class action waiver was added to the Dispute Resolution Agreement after the lawsuit was filed. See id. at *4.

Legal Standard

The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, governs the enforceability of arbitration clauses in state and federal courts. See Jain v. de Mere, 51 F.3d 686, 688 (7th Cir. 1995). The FAA provides that an arbitration clause in "a contract evidencing a transaction involving commerce... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Under the FAA, a court may compel arbitration where there is (1) a written agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a refusal to arbitrate. Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005). "To determine whether a contract's arbitration clause applies to a given dispute, federal courts apply state-law principles of contract formation." Gore v. Alltel Commc'ns, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012).

Motions to compel arbitration are reviewed under a summary judgment standard. Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). The "opposing party must demonstrate that a genuine issue of material fact... exists." Id. "[T]he evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor." Id. The court may consider evidence outside the pleadings, because a motion to compel arbitration is treated as an assertion that the court lacks subject matter jurisdiction. See, e.g., Webb v. Midland Credit Mgmt., Inc., 2012 WL 2022013, at *2 (N.D. Ill. May 31, 2012); Reineke v. Circuit City Stores, Inc., 2004 WL 442639, at *1 (N.D. Ill. Mar. 8, 2004).


A. Collateral Estoppel

Plaintiffs contend that "[t]he exact issue raised by Nordstrom's motion to compel has already been decided and rejected by another district court, in Balasanyan. " R. 16 at 4. Plaintiffs argue that the common issue is "whether the August 2011 DRA allows the Court to compel the parties to litigate their claims on an individual basis in arbitration." R. 16 at 4. But as Nordstrom points out, the issue in Balasanyan was not simply whether an agreement like the August 2011 DRA is enforceable generally, but specifically whether that agreement was enforceable when it was "impose[d]... upon putative class members during the pendency of litigation.'" R. 18 at 3 (quoting Balasanyan, 2012 WL 760566, at *4). Here, by contrast, the August 2011 DRA became effective two years before this case was filed. Thus, the issue in Balasanyan is different from the issue in this case and Balasanyan has no preclusive effect here.

B. Improper Communication

Plaintiffs also argue that the Court should not enforce the August 2011 DRA because it is an improper communication with class members. R. 16 at 6-9. It is not clear whether Plaintiffs make this argument on the basis of the class allegations in this case, or their membership in the class in Balasanyan. If Plaintiffs mean to argue that the August 2011 DRA is an improper communication with them as members of a class in this case, that argument fails for the simple reason that the August 2011 DRA was communicated to them two years before this case was filed. Plaintiffs cite several cases like Balasanyan holding that arbitration agreements that take effect after a case is filed cannot be enforced to compel arbitration of the claims in that case. See R. 16 at 6-8. But Plaintiffs have not cited any authority or provided any reasoning to justify their contention that holdings like that in Balasanyan should preclude enforcement of an arbitration agreement that takes ...

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