ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, July 30, 2012

First Circuit: Sex Bias Claim Does Not Need to Go to Arbitration

Ann Gove filed suit against Career Systems Development Corporation (CSD) alleging that she was denied a position with CSD because of her gender and her pregnancy at the time she applied.  CSD moved to compel arbitration, but the District Court found that the arbitration clause was ambiguous as to applicants whom CSD did not hire.  In a split decision, the First Circuit affirmed that denial of CSD's motion to compel.

Gove filled out an online application to work at CSD.  The last provision of that application read as follows:

1st CirCSD also believes that if there is any dispute between you and CSD with respect to any issue prior to your employment, which arises out of the employment process, that it should be resolved in accord with the standard Dispute Resolution Policy and Arbitration Agreement ("Arbitration Agreement") adopted by CSD for its employees. Therefore, your submission of this Employment Application constitutes your agreement that the procedure set forth in the Arbitration Agreement will also be used to resolve all pre-employment disputes. A copy of that procedure is on display in our employment office and a copy [of the] Arbitration Agreement setting forth that procedure will be provided to you.

If you have any questions regarding this statement and the Arbitration Agreement, please ask a CSD representative before acknowledging, because by acknowledging, you acknowledge that you have received a copy of the Arbitration Agreement and agree to its terms. Do not check the Accept box below until you have read this statement.

During her subsequent interview, Gove was asked about her pregnancy and whether she had other children.  When she was not hired and the position remained open, she brought a claim through the Maine Human Rights Commission (MHRC).  When the MHRC was unable to resolve her dispute with CSD, Gove brought suit.  The District Court found that it was unclear whether the provision quoted above applied to applicants like Gove who were never hired.

On appeal, the First Circuit Majority limited its analysis to questions of state contracts law to determine the narrow question of whether or not CSD's arbitration clause was binding against an applicant who had not been hired.  It did not address questions of federal policy favoring arbitration because CSD did not brief those issues on appeal.  In its analysis of state contracts law, the Majority relied on Maine's bedrock principle that ambiguous contracts are construed against the drafter.  While CSD made clear that the arbitration provision applied during "pre-employment," it makes no reference to the provisions applicability to applicants who are never employed.  The Majority found persuasive Gove's argument that someone who is never employed never engages in a pre-employment process and that there is no period "prior to [the] employment" of someone who is never employed.  The Majority observed that adherence to Maine's contra proferentem doctrine is especially appropriate in these circumstances given the inequality of bargaining power and the fact that Gove was presented with a "take it or leave it" proposition.  She could not bargain her way out of the arbitration provision or demand clarification before her interview.

In a dissenting opinion, Judge Torruella argued that CSD had not in fact waived its right to argue for arbitration based on federal policy considerations.  Applying the law relating to such considerations, Judger Torruella had no difficulty in concluding that the presumption in favor of arbitration trumped any considerations of state law.


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