Am. Inst. for Foreign Study v. Fernandez-Jimenez
6f4th120
| 1st Cir. | 2021Background
- The American Institute for Foreign Study (the Institute) places au pairs in U.S. host families and required arbitration in its au pair Agreement to be conducted substantially under AAA commercial arbitration rules.
- The Agreement also contained a waiver barring claims "either in an individual capacity or as a member of any class action" from being brought in any forum other than AAA arbitration.
- Laura Fernandez-Jimenez (an au pair) filed a class arbitration demand against the Institute and its CEO William Gertz. Gertz is not a signatory to the Agreement.
- The Institute and Gertz sued in federal district court seeking to enjoin class arbitration; the district court issued a preliminary injunction enjoining class arbitration as to the Institute but denied relief to Gertz.
- On appeal, the First Circuit considered whether the Agreement authorized class arbitration and whether Gertz’s claim remained justiciable.
Issues
| Issue | Plaintiff's Argument (Fernandez-Jimenez) | Defendant's Argument (Institute/Gertz) | Held |
|---|---|---|---|
| Whether the Agreement permits class arbitration | The Agreement’s silence plus the waiver of court-based class litigation implies the parties preserved a right to class arbitration (or the AAA rules supply class procedures). | No affirmative contractual basis exists to authorize class arbitration; silence/ambiguity is insufficient under Supreme Court precedent. | Agreement does not authorize class arbitration; class demand barred. |
| Whether Gertz’s claim is justiciable | Gertz sought injunction against class arbitration involving him. | After litigation began, Gertz agreed to arbitrate and conditioned relief so that Fernandez-Jimenez could only pursue class/collective claims against him if she prevailed on appeal against the Institute. | Gertz’s claim is moot because the post-filing agreement prevents the court from granting him effective relief. |
Key Cases Cited
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (parties must provide an affirmative contractual basis to permit class arbitration; silence is insufficient)
- Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., 559 U.S. 662 (2010) (presumption that parties did not agree to class arbitration absent clear contractual authorization)
- Comcast of Me./N.H., Inc. v. Mills, 988 F.3d 607 (1st Cir. 2021) (merits that defeat a party's claim can support a preliminary injunction in arbitration contexts)
- Town of Portsmouth v. Lewis, 813 F.3d 54 (1st Cir. 2016) (mootness doctrine; post-filing agreements can render claims non-justiciable)
- Bayley’s Campground, Inc. v. Mills, 985 F.3d 153 (1st Cir. 2021) (standard of review for preliminary injunctions: legal conclusions de novo, factual findings for clear error, overall injunction reviewed for abuse of discretion)