“Well, They Gave Me the Agreement in My Own Language, but I Still Didn’t Understand the English Version” doesn’t work.
The Federal Arbitration Act will turn 100 in the next few years, but despite more than nine decades of litigation, some opinions can be explained only by the “judicial hostility” to arbitration that caused the statute to be enacted in the first place.
Case in point. In Beltran v. AupaireCare, Inc., Case No. 17-1359 (10th Cir. Oct. 30, 2018), a group of au pairs brought suit against several au pair agencies, asserting claims for antitrust and under the Racketeer Influenced and Corrupt Organization Act (RICO), among others. The crux of the claim was that the agencies allegedly used the United States’ J-1 Visa program to tap foreign nationals as a source of cheap child care labor, with resulting low pay rates. Among other rulings, the district court certified a class of more than 90,000 au pairs, a questionable decision that likely deserves its own blog, but the key issue for this posting is the court’s refusal to enforce certain of the au pairs’ arbitration agreements. The district court concluded that the agreements were both procedurally and substantively unconscionable. In a nutshell, it relied on the fact that the plaintiffs were foreigners, English was not their first language and they did not understand the word “arbitration.” As to substantive unconscionability, the court found several clauses offensive, including a forum selection clause and one giving the defendants control over the selection of the arbitrator. While the number of offending clauses was small, the court then refused to sever them on the grounds that the provisions were “permeated” by unconscionable terms and “buried” toward the end of the contract.
On Oct. 30, 2018, the Tenth Circuit reversed. In doing so, it reviewed both aspects of the district court’s ruling and found both wanting.
As to procedural unconscionability, the plaintiffs argued that they were young foreigners who were not native speakers. The Tenth Circuit noted, however, that by virtue of the J-1 Visa program, the plaintiffs had been required to be “proficient in spoken English.” Of even greater importance, both plaintiffs had been given, and apparently had read, a translation of the agreement in their own native language. Similarly, while the plaintiffs claimed their relative youth to demonstrate procedural unconscionability, both were actually in their early 20s, and there was no evidence that the defendants had targeted them for some inability to decide for themselves. That left the plaintiffs with nothing more than that they were given a form agreement.
The court similarly found the substantive unconscionability arguments deficient. To find substantive unconscionability, the court noted, it had to be more than simply a “bad deal” but rather one that was “overly” or “unduly” harsh. One curious aspect of this case was that the forum selection clause was for a state that is typically associated with being pro-plaintiff – California. In any event, the court found that California was a valid forum given that it was the defendant’s home state. Although the court did not say it explicitly, it also was far from clear how San Francisco, a major air hub, was appreciably less convenient than Denver (ironically, also a United Airlines hub), where the plaintiffs had brought the case. The court did have difficulty with the provision giving the defendant control over the arbitrator, but it was just that, one provision. The provision could easily be severed and the remainder of the agreement enforced.
At least as the Tenth Circuit described the facts, it is difficult to explain the district court’s decision, other than because of lingering dislike of arbitration. One might question why the defendant had a forum selection clause directing the matter to California if any other state could have sufficed, and the arbitrator selection clause could have been more tightly written (such as by allowing the employer to choose between the America Arbitration Association, Judicial Arbitration and Mediation Services or some other reputable, neutral organization), but vitiating the arbitration clauses as it did seemed far outside the facts.
The bottom line:
Judicial hostility to arbitration continues in many quarters, but where the defendant provides the arbitration agreement in the plaintiffs’ native language, it’s tougher to argue procedural unfairness.