Maria Vitoria Oliveira Da Silva v. DSW Shoe Warehouse, Inc.

Background

DSW hired Maria Vitoria Oliveira Da Silva as an associate at a California retail location in April 2023. During onboarding, DSW provided her with documents that included an agreement to arbitrate employment-related claims. The agreement allowed her to opt out within 30 days by mailing or emailing a request. She completed the paperwork on April 21, 2023, and did not opt out.

The agreement also waived the parties’ ability to use class, collective, or representative-action procedures for covered claims. Oliveira Da Silva later filed this case as a proposed class action. She alleged that DSW failed to pay minimum wages, overtime wages, and sick-pay wages and failed to provide required meal and rest periods. The proposed class consisted of current and former DSW employees in California during the four years before the complaint.

DSW moved to compel arbitration, strike the class allegations, and stay the case while arbitration proceeded. The court had jurisdiction under 28 U.S.C. § 1332(d).

Arbitration Agreement

Under the Federal Arbitration Act, written arbitration agreements involving commerce generally must be enforced unless a generally applicable contract defense makes them invalid. The court explained that its task was to determine whether a valid arbitration agreement existed and whether it covered the dispute.

Oliveira Da Silva argued that the Federal Arbitration Act did not apply because her job did not affect interstate commerce. The court rejected that argument. DSW submitted evidence that it operated nationwide and that all shoes and products sold at its California retail locations were shipped from other states. The court found that Oliveira Da Silva and the proposed class members sold products moving through interstate commerce. It also noted that the agreement expressly stated that it was governed by and enforceable under the Federal Arbitration Act.

Oliveira Da Silva also argued that the agreement was unconscionable, meaning unfairly imposed or so one-sided that it should not be enforced. She contended that the agreement was a take-it-or-leave-it employment contract and that DSW pressured her to sign it promptly, made signing a condition of beginning work, and did not provide a meaningful opt-out opportunity.

The court held that the agreement was not procedurally unconscionable. It emphasized that the agreement allowed her to opt out within 30 days by mail or email. Because both procedural and substantive unconscionability had to be shown, the court did not reach the question whether the agreement was substantively unconscionable.

PAGA Waiver

The agreement included a waiver of representative claims under California’s Private Attorneys General Act, commonly called PAGA. The court stated that an agreement to arbitrate an individual PAGA claim must be enforced when the agreement is covered by the Federal Arbitration Act, but representative PAGA claims cannot be compelled to arbitration.

The court rejected DSW’s arguments that limiting language in the agreement preserved the waiver. It found that the waiver’s language covered Oliveira Da Silva’s PAGA claims. The court held that the waiver of her ability to bring a representative PAGA action was unenforceable as against public policy and exercised its authority to sever that provision from the agreement.

Class Allegations

The court held that class-action waivers in arbitration agreements are enforceable according to their terms. Oliveira Da Silva did not separately challenge the class-action waiver; instead, she argued that the entire agreement was unconscionable. Because the court found that the agreement was not unconscionable, it granted DSW’s motion to strike the class claims.

Stay and Disposition

Because the court compelled arbitration, it held that the Federal Arbitration Act required the case to be stayed while arbitration proceeded. The court granted DSW’s motion to compel arbitration, motion to strike class allegations, and motion to stay the proceedings. It invalidated and severed the waiver concerning Oliveira Da Silva’s representative PAGA claims. The parties were ordered to file a statement requesting a case-management conference within seven days after their arbitration was resolved.