Court Finds Au Pair Contracts Partially Unconscionable
We’ve blogged before about the importance of providing employment contracts in the native languages of foreign employees. In Beltran v. Aupaircare, two au pairs filed a class action lawsuit against a number of au pair sponsoring companies for violations of the Fair Labor Standards Act (FLSA), the Racketeer Influenced and Corrupt Organizations Act (RICO), federal and state wage laws, and other laws. One of the plaintiffs’ arguments was that they did not understand the agreements, even though they were provided with agreements in their native languages, German and Spanish.
Background on Au Pair Program
Au pairs are foreign nationals who provide child care services for host families in the United States. Au pairs are allowed entry into the United States pursuant to a J-1 Visa under the Mutual Education and Cultural Exchange Act of 1961, 22 U.S.C. §§ 2451-2464. Pursuant to the au pair program, au pairs are allowed to reside in the U.S. for one year or less and are required to be “proficient in spoken English” as evidenced through a personal interview conducted in English. The program allows foreigners “the opportunity to live with an American host family and participate directly in the home life of the host family.”
One of the plaintiffs, who was from Germany, signed an agreement to work as an au pair in Michigan when she was 19 years old. She subsequently signed agreements to work in Virginia when she was in her mid-twenties. She was provided with copies of the au pair contracts in her native language, German. The other plaintiff was originally from Columbia. She worked as an au pair in Pennsylvania when she was 22 years old. Her native language was Spanish, and, like the plaintiff from Germany, received a copy of the au pair agreement in Spanish before she signed it. Both plaintiffs signed agreement that contained arbitration provisions along with choice of law provisions that selected the State of California as the forum state. Both au pair agreements required the plaintiffs to affirm that they were capable of understanding the agreement in English, had the opportunity to ask questions and obtain advice, and accepted the agreement in their entirety.
District Court Denies Motion to Compel Arbitration, Citing Unconscionability.
After the plaintiffs filed suit, defendant Aupaircare filed a motion to compel arbitration. The district court denied the motion to compel on the grounds that the arbitration agreement was procedurally unconscionable. Specifically, the district court declined to enforce the arbitration agreement because the plaintiffs were relatively young when they signed the agreements, spoke English as a second language, and did not have any experience with contracts. The district court also rejected the defendant’s motion because it found that the arbitration clause was “buried” in the agreement and did not plainly explain that the plaintiffs would be relinquishing their rights to access the U.S. court system. As to the forum selection clause, the district court held that it was also unconscionable because it negated the “reasonable expectations” of the non-drafting party.
Following the denial of their motion to compel arbitration, the defendants appealed to the 10th Circuit Court of Appeals.
Defendant Appeals to 10th Circuit Court of Appeals.
On appeal, the parties agreed that California law governed the enforcement of the arbitration agreement. However, the plaintiffs argued that the district court’s decision was correct because the arbitration provision in the au pair agreements was unconscionable. Specifically, the plaintiffs argued that the agreement was unconscionable due to factors such as their age, status, inexperience with contract law, and their lack of understanding of the term “arbitration.”
The 10th Circuit Court of Appeals considered whether the agreements were procedurally or substantively unconscionable. First, the court rejected the plaintiffs’ argument that the agreement was procedurally unconscionable. The Court of Appeals reasoned that neither plaintiff was a minor when she entered into the agreement and neither demonstrated any degree of vulnerability. The court also found that any concern about the plaintiffs being foreigners was diminished by the fact that each of the plaintiffs was provided with a copy of the au pair agreement in their native language. The court also rejected the plaintiffs’ argument that the agreement was unconscionable because they were not familiar with contract laws. The court found that their inexperience was self-imposed in that being an au pair was “not one of life’s necessities.” In addition, the court noted that both of the plaintiffs had specifically affirmed that they had read and understood the agreement completely in addition to the fact that they had received the agreement in their native languages. Accordingly, the court held that although the agreements were procedurally unconscionable, they were only unconscionable to a moderate degree.
The court next evaluated whether the agreements were substantively unconscionable. The plaintiffs argued that it was substantively unconscionable because the agreement allowed the defendant to select the arbitration provider, the forum selection clause, and the fee shifting clause. The court agreed that only the clause allowing the defendant to select the arbitration provider was unconscionable.
As a result of finding that the arbitration selection provision was unconscionable and that the agreement was moderately procedurally unconscionable, the Court of Appeals held that the au pair agreement was unconscionable and unenforceable as written. However, the court held that because the arbitration agreement had only one substantively unconscionable clause, the district court abused its discretion in failing to sever this clause and enforce the overall agreement to arbitrate. Accordingly, the Court of Appeals reversed and remanded the case for further proceedings.
The case is Beltran v. Aupaircare, Inc., court No. 17-1359, decided on October 30, 2018 by the United States Court of Appeals for the Tenth Circuit.
Contact legal translation service All Language Alliance, Inc. to obtain certified translation of contracts and agreements from English to Spanish, German, Dutch, Swedish, French, Simplified Chinese, Italian, Portuguese, Korean, Traditional Chinese, and other languages.
***This legal translation article should not be construed as legal advice. You should always consult an attorney regarding your specific legal needs.***