Unreported / Non-Citable
Background
Latrice Nelson, a former Macy’s warehouse worker at the Concord Sunvalley facility, sued Macy’s in Contra Costa County Superior Court on behalf of a putative class of California “fulfillment associates” who handled, picked, packed, or processed packages or goods as part of international or interstate commerce. Macy’s removed the case to the Northern District of California under the Class Action Fairness Act and moved to compel arbitration based on language in its new-hire paperwork.
In a December 2025 order, the court signaled that it was inclined to deny the motion under Section 1 of the Federal Arbitration Act, which exempts contracts of employment of transportation workers engaged in interstate commerce. Recognizing that the exemption requires the worker to handle goods moving in interstate commerce, the court invited Macy’s to submit additional evidence about where the merchandise at issue originated. Nelson’s own declaration described the merchandise as including international brands such as Versace, Dolce & Gabbana, Ralph Lauren, Adidas, and Calvin Klein. Macy’s submitted a declaration from a Hayward Distribution Center operations leader stating that more than 55% of merchandise came from a Santa Fe Springs, California third-party facility, less than 40% came directly from locations outside California, and less than 5% came from another in-California distribution center.
The Court’s Holding
Magistrate Judge Jacqueline Scott Corley denied Macy’s motion to compel arbitration. The court held that, under controlling Ninth Circuit authority in Ortiz v. Randstad Inhouse Services, LLC, warehouse fulfillment associates who pick and package merchandise “with the direct purpose of facilitating their continued travel through an interstate supply chain” qualify as transportation workers exempt under FAA § 1.
Macy’s evidence did not create a triable dispute. The Hayward Distribution Center declaration was non-responsive to Nelson’s factual claim that she handled merchandise originating overseas: it described the immediate source from which the goods reached the distribution center, not where they originated. The fact that 55% of merchandise reached the distribution center via an in-California third-party warehouse does not establish that the merchandise originated within California, particularly when international brands typically associated with overseas manufacturing are involved. Roughly 40% of the merchandise reached the distribution center directly from outside California — itself enough to support the inference of interstate commerce.
Because Nelson, like the warehouse workers in Ortiz, was engaged in interstate commerce within the meaning of FAA § 1, the arbitration agreement was not enforceable under the FAA. The court denied the motion to compel and kept the case management conference on calendar, while flagging that under Coinbase, Inc. v. Bielski Macy’s could appeal and seek a stay if it chose.
Key Takeaways
- Northern District judges continue to apply Ortiz v. Randstad Inhouse Services broadly. Warehouse fulfillment workers who handle goods that move through an interstate supply chain qualify as transportation workers exempt from the FAA under § 1.
- Defendants seeking to defeat the FAA § 1 exemption must address the actual origin of the goods the plaintiff handled, not just the immediate proximate source from which they arrived at the warehouse. Evidence about an in-California third-party distribution facility does not refute the international origin of name-brand goods.
- The exemption is fact-driven, but courts will resolve the issue at the motion-to-compel-arbitration stage when the defendant fails to submit responsive evidence.
- Under Coinbase v. Bielski, an interlocutory appeal of a denial of a motion to compel arbitration triggers an automatic stay of the underlying litigation, but the defendant must affirmatively appeal and seek the stay.
Why It Matters
The FAA § 1 transportation-worker exemption has become one of the most important wage-and-hour battlegrounds in California. After the Supreme Court’s decisions in Southwest Airlines v. Saxon and Bissonnette v. LePage Bakeries and the Ninth Circuit’s decision in Ortiz v. Randstad Inhouse Services, warehouse and last-mile workers who handle interstate goods can frequently avoid arbitration even when their employers invest heavily in arbitration agreements at hire.
The Macy’s decision is a useful real-world illustration of what defendants need to do — and what they cannot get away with — to rebut the exemption. Generic declarations about distribution-center proximate sources will not do. To meaningfully contest the issue, defendants need declarations about where the actual merchandise the plaintiff handled was manufactured and where it began its journey. For plaintiffs’ counsel, the case confirms the value of detailed worker declarations describing the brands and types of merchandise handled, especially where well-known international brands are involved.