Vidal v. Advanced Care Staffing
If a party writes unfair and unenforceable terms into a contract on purpose, should the rest of the contract be enforced at all?
In March 2024, the U.S. Court of Appeals for the Second Circuit affirmed a preliminary injunction that paused the arbitration initiated by Advanced Care Staffing (ACS), against Mr. Benzor Shem Vidal. Public Justice submitted an amicus brief in support of Mr. Vidal.
ACS recruits and employs foreign-born nurses such Mr. Vidal. ACS sponsored Mr. Vidal’s visa to work in the United States on the condition that he work with ACS for three years. He was placed in a nursing home in New York. He alleges that conditions at that facility—including staffing ratios—were so dangerous he feared he could lose his nursing license. Mr. Vidal was promised he would be responsible for 20–30 patients, but he regularly cared for more than 40. On two occasions, he was the only nurse on a floor with 80 patients. In addition to his concerns about patient safety, Mr. Vidal began getting headaches and felt sick all the time, further impacting his ability to do his job. He ultimately decided to leave rather than jeopardize his license and the career he had worked so hard for.
But Mr. Vidal’s contract contained a “stay-or-pay” clause, which meant he would be responsible for “at least $20,000” in alleged damages to ACS if he left or was fired before the three years. After he left his job, ACS filed a case with an arbitrator seeking the fees and damages. pursuant to the arbitration clause in its employment contract with Mr. Vidal. His contract also had a “loser pays” provision, which meant that Mr. Vidal would also have to pay ACS’s costs and fees (including the cost of the arbitration itself) if it prevailed. Mr. Vidal couldn’t afford to pay for the cost of arbitration, let alone ACS’s costs and fees too. He tried to convince the arbitrator to pause the arbitration so that he could challenge the arbitration clause in court. But the arbitrator refused.
Without other options, Mr. Vidal then sought the help of the court system, challenging the arbitration clause in federal district court and asking the court to put a stop to the arbitration. He argued that, among other things, ACS had violated his rights under federal trafficking laws. Concluding that Mr. Vidal was likely to succeed on the merits of his challenges to the arbitration clause, the court temporarily paused arbitration. ACS appealed to the Second Circuit, arguing that its contract terms were enforceable and that, even if they weren’t, the court should have simply severed—or removed—the problematic terms, enforced the rest of the contract, and sent the case back to arbitration.
Core Legal Issues
We wrote an amicus brief in support of Mr. Vidal, defending the district court’s decision not to simply sever the offending clauses. Building on Public Justice’s victory before the U.S. Supreme Court in Morgan v. Sundance, we explained why the rule of severance ACS advanced was an arbitration-specific rule that cannot be squared with New York’s longstanding and generally applicable rules of severance. We also explained that, under the correct rule of severance, ACS’s offending contract provisions should not be removed from the arbitration clause for two reasons: first, they were “essential” to ACS’s agreement; and second, the company had not acted in “good faith” when it created its entire contractual scheme to intimidate foreign workers into accepting lower pay, tolerating unsafe working conditions, and staying in untenable jobs. For this reason, we explained, once the district court ultimately concludes that the loser-pays provision is not enforceable, it should also conclude that ACS’s entire arbitration clause cannot be enforced.
