Latrice Nelson v. Macy’s Retail Holdings, LLC

Background

Latrice Nelson, a former Macy’s employee, filed a wage-and-hour class action on behalf of California “fulfillment associates” who handled, picked, packed, or processed packages or goods as part of international or interstate commerce. The case was initially filed in Contra Costa Superior Court, and Macy’s removed it to federal court under the Class Action Fairness Act.

Macy’s moved to compel arbitration under an arbitration provision incorporated into its new-hire paperwork and to dismiss Nelson’s proposed class claims based on the agreement’s class-action waiver.

Arbitration Analysis

The court explained that the Federal Arbitration Act generally requires courts to enforce valid arbitration agreements covering the dispute. The parties did not dispute the existence or scope of the arbitration agreement. Instead, they disputed whether Nelson was part of a class of transportation workers exempt from the Act under Section 1.

The court applied a two-step test. First, it defined the relevant class of workers by examining the work fulfillment associates typically perform. The evidence showed that fulfillment associates select merchandise, pack it for delivery, process returns, retrieve items from storage, and prepare online orders for shipment, customer pickup, or local delivery.

Second, the court considered whether those workers were directly involved in transporting goods across state or international borders. Nelson stated that she picked merchandise, packed online orders, printed shipping labels, and placed packages at the store’s pickup location for carriers such as FedEx and UPS. She also stated that many packages were sent outside California. Macy’s evidence showed that 50 percent of the labels Nelson prepared during the period covered by its data were for addresses outside California.

The court concluded that fulfillment associates played a “tangible and meaningful role” in moving goods through interstate commerce. Although they did not personally transport merchandise or load and unload vehicles, they prepared goods for the next part of their journey. Relying on Ninth Circuit precedent involving warehouse workers, the court found that Macy’s use of a retail store as a place to process online orders did not materially change the analysis. The court also concluded that the fact that some orders were for in-state delivery or pickup did not defeat the exemption.

The court therefore stated that the Section 1 exemption applied and that Macy’s motion to compel arbitration under the Federal Arbitration Act must be denied. In the conclusion, however, the court said it was “inclined to deny” the motion and allowed additional discovery if Macy’s disputed that the merchandise delivered to the Hayward facility originated outside California. The court required Macy’s to advise it by December 17, 2025, whether it maintained that position and stated that Nelson must be allowed to take a deposition of a Macy’s corporate representative on that issue if necessary.

Class-Action Waiver

The arbitration agreement prohibited class, collective, and representative arbitration. Because the court concluded that the Federal Arbitration Act did not apply, and Macy’s had not asked to enforce the waiver under the California Arbitration Act, the court found the waiver issue moot. Macy’s did not argue that the waiver barred Nelson from pursuing proposed class claims in federal court. The court denied Macy’s motion to dismiss the proposed class claims.

Disposition and Further Proceedings

The court was inclined to deny Macy’s motion to compel arbitration under the Federal Arbitration Act, subject to the limited discovery described in the order. It denied Macy’s motion to dismiss Nelson’s proposed class claims. The court set an initial case-management conference for February 4, 2026, by videoconference.