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This is a fundamental issue with SQL, not really a bug per se, you just have to know how to work around it. in SQL a null (which is being displayed as "None" in the GUI in your screenshot) is not able to be compared to any actual values. So in DB terms, if you said NULL != 'reynolds' it would always report false, thats common to all SQL that I've ever used. You just need to set the logic to be something like this with a nested condition block
node is down
(district is blank
district not equal to reynolds)
That is indeed true, we did resolve it by populating that custom field (which is not a required field).
Nope, it was working for awhile and now it's broke again.
The custom field is populated for all nodes and we're no longer getting down notifications again.