Filed: Jul. 17, 2012
Latest Update: Feb. 12, 2020
Summary: 7, CSD elaborated this point in its reply brief because it, understood the argument in Gove's appellee brief as conflating the, two issues, that is, (1) whether there exists a valid agreement to, arbitrate and (2) whether the scope of any such agreement covers, the dispute at hand.
United States Court of Appeals
For the First Circuit
No. 11-2468
ANN GOVE,
Plaintiff, Appellee,
v.
CAREER SYSTEMS DEVELOPMENT CORPORATION,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Lynch, Chief Judge,
Torruella and Lipez, Circuit Judges.
David A. Strock, with whom Philip Moss and Fisher & Phillips
LLP were on brief, for appellant.
Arthur J. Greif, with whom Gilbert & Greif, P.A. was on brief,
for appellee.
July 17, 2012
LIPEZ, Circuit Judge. This case concerns a company's
effort to enforce an arbitration clause contained in a job
application against an unsuccessful applicant. Appellee Ann Gove
filed suit against Career Systems Development Corporation ("CSD")
alleging that she was denied a position because of her gender and
pregnancy at the time of her application. CSD moved to compel
arbitration pursuant to an arbitration clause in Gove's job
application, but was rebuffed by the district court. The court
concluded that the arbitration clause was ambiguous as to whether
disputes between CSD and applicants who were not hired were
covered, and that this ambiguity must be construed against CSD.
We affirm the judgment, albeit on somewhat different
reasoning.
I.
CSD's motion to compel arbitration was made in connection
with a motion to dismiss or stay. Accordingly, the following
recitation of the facts is drawn from Gove's complaint as well as
documents submitted to the district court in support of CSD's
motion to compel arbitration. The facts are undisputed.
In May 2008, Gove began working for the Training &
Development Corp. ("TDC"), a job training and placement
organization, which had a contract to provide services to the
Loring Job Corps ("Loring"), a technical career training program.
In early April 2009, TDC employees were informed that CSD had been
-2-
awarded the Loring contract and that, beginning May 1, 2009, it
would be providing the services previously furnished by TDC.
During the transition period, CSD offered all TDC employees
currently placed at Loring the opportunity to apply for jobs. Gove
chose to do so and, on April 8, 2009, she completed an online
application for a position with CSD similar to the one that she
held with TDC.
The final section of the application included the
following provision:
CSD 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.
-3-
Directly following this provision was the statement "I accept the
terms of the above agreement: G Accept." Gove placed a checkmark
in the "accept" box and submitted her job application to CSD.
On April 21, Gove was interviewed by representatives of
CSD. At the time, she was visibly pregnant and due to deliver on
May 30. During the interview, she was asked "How much longer do
you have?" She replied that she was due in about five weeks. When
Gove was also asked whether she had any other children, she
informed the interviewer that she had a seven-year-old son.
Gove was not hired by CSD, although CSD continued to have
a need for the position she had applied for and continued to
advertise for the position. Subsequently, Gove filed a complaint
with the Maine Human Rights Commission ("MHRC"), which found
reasonable grounds to conclude that she was denied the position
because of her pregnancy. After the MHRC was unable to persuade
the parties to reach a conciliation agreement, Gove filed suit in
the United States District Court for the District of Maine,
alleging that CSD discriminated against her on account of her
gender and her pregnancy in violation of Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e, and the Maine Human Rights
Act, Me. Rev. Stat. tit. 5, §§ 4551-4634. CSD moved to compel
arbitration, arguing that Gove was bound by the arbitration clause
in the job application. The district court, however, found that
the arbitration clause was not valid. It reasoned that the
-4-
provision was ambiguous as to whether it covered an applicant such
as Gove, who was never hired, and concluded that such an ambiguity
must be construed against CSD, the drafter of the agreement. CSD
now brings this interlocutory appeal challenging the district
court's decision.1
II.
We review both the interpretation of arbitration
agreements and orders compelling arbitration (or declining to do
so) de novo. Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638
F.3d 367, 373 (1st Cir. 2011) (citing South Bay Bos. Mgmt., Inc. v.
UNITE HERE, Local 26,
587 F.3d 35, 42 (1st Cir. 2009)). Therefore,
we may affirm the district court's order "on any independent ground
made manifest by the record." Soto-Fonalledas v. Ritz-Carlton San
Juan Hotel Spa & Casino,
640 F.3d 471, 474 (1st Cir. 2011)
(internal quotation mark omitted).
In deciding a motion to compel arbitration, a court must
ascertain whether: "(i) there exists a written agreement to
arbitrate, (ii) the dispute falls within the scope of that
arbitration agreement, and (iii) the party seeking an arbitral
forum has not waived its right to arbitration." Combined Energies
1
Typically, interlocutory orders are not immediately
appealable. See 28 U.S.C. § 1291; see also Campbell v. Gen.
Dynamics Gov't Sys. Corp., 407 F.3d 546, 550 (1st Cir. 2005)
(stating same). However, the Federal Arbitration Act creates an
exception for orders denying petitions to compel arbitration. 9
U.S.C. § 16(a)(1)(B); see also
Campbell, 407 F.3d at 550.
-5-
v. CCI, Inc., 514 F.3d 168, 171 (1st Cir. 2008). As the Supreme
Court has explained, it is a "fundamental principle that
arbitration is a matter of contract." Rent-A-Center, West, Inc.,
v. Jackson,
130 S. Ct. 2772, 2776 (2010). Accordingly, "principles
of state contract law control the determination of whether a valid
agreement to arbitrate exists."
Soto-Fonalledas, 640 F.3d at 475
(internal quotation marks omitted).
In this case, the parties agree that Maine law governs.
Under Maine law,
[a] contract exists if the parties mutually
assent to be bound by all its material terms,
the assent is either expressly or impliedly
manifested in the contract, and the contract
is sufficiently definite to enable the court
to ascertain its exact meaning and fix exactly
the legal liabilities of each party.
Sullivan v. Porter, 861 A.2d 625, 631 (Me. 2004). Additionally,
"[a] contract is to be interpreted to effect the parties'
intentions as reflected in the written instrument, construed with
regard for the subject matter, motive, and purpose of the
agreement, as well as the object to be accomplished." V.I.P., Inc.
v. First Tree Dev. Ltd. Liab. Co.,
770 A.2d 95, 96 (Me. 2001)
(internal quotation marks omitted).
The Maine Law Court has applied to arbitration clauses
the "bedrock rule of contract interpretation . . . that ambiguities
in a document are construed against its drafter." Barrett v.
McDonald Invs., Inc., 870 A.2d 146, 150-51 (Me. 2005). This rule
-6-
is intended to effectuate the intent of the parties, and is based
on the "presum[ption] that [the drafter] will not leave undeclared
that which he would claim as his right under the agreement." Id.
at 150 (quoting Monk v. Morton,
30 A.2d 17, 19 (Me. 1943)).
Language in a contract is ambiguous "if it is reasonably
susceptible to different interpretations." Champagne v. Victory
Homes, Inc.,
897 A.2d 803, 805 (Me. 2006).
The Law Court has explained that "[t]he rationale for
interpreting ambiguities against the drafter is particularly
compelling in contracts where one party had little or no bargaining
power." Barrett, 870 A.2d at 150. Thus, where the parties are in
unequal bargaining positions, such as "[w]here a standard-form,
printed contract is submitted to the other on a 'take it or leave
it' basis, upon equitable principles the provisions of the contract
are generally construed to meet the reasonable expectations of the
party in the inferior bargaining position."
Id. (internal
quotation marks omitted).
III.
The parties present dueling interpretations of the
arbitration clause at issue. As a preliminary matter, we must
determine whether this dispute goes to the existence of a valid
arbitration agreement between the parties or merely the scope of
any such agreement. The district court found that the validity of
the agreement itself was called into question. Gove v. Career Sys.
-7-
Dev. Corp., 824 F. Supp. 2d 205, 211 (D. Me. 2011). We take a
different view. Gove does not dispute that if she had been hired,
she would have been obligated to arbitrate disputes stemming from
events that occurred prior to her employment. Thus, she is arguing
that her employment by CSD is a condition precedent to her
obligation to arbitrate. However, the non-occurrence of a
condition precedent does not render an agreement invalid. It
simply means that the duty to perform does not arise. See Hope
Furnace Assocs., Inc. v. F.D.I.C.,
71 F.3d 39, 43 (1st Cir. 1995);
Restatement (Second) of Contracts § 224 cmt. c (1981).
Furthermore, although Gove ostensibly defends the court's
conclusion that there is no valid agreement, her briefing belies
this defense when she acknowledges that "[the arbitration clause]
does not reach a non-employee's application for employment, but
only disputes the hired employee has that arise out of her
application." Thus, she concedes that the agreement is enforceable
in certain circumstances. This concession was apt. This is a
dispute concerning the scope of the arbitration clause, not its
validity.
Normally, in evaluating the scope of an arbitration
agreement, we would give significant weight to the federal policy
favoring arbitration and the presumption of arbitrability.2 See
2
We have often observed that in evaluating an arbitration
clause, courts must give due regard to the federal policy favoring
arbitration. See Dialysis Access Ctr., 638 F.3d at 376. Pursuant
-8-
Dialysis Access Ctr., 638 F.3d at 376. However, on appeal, CSD has
not argued this federal policy, confining itself instead to
arguments of contract interpretation under Maine law. This
omission is especially telling because CSD emphasized the federal
policy favoring arbitration in its briefing to the district court.
See SEC v. Tambone,
597 F.3d 436, 441 (1st Cir. 2010) (noting that
arguments made before a district court, but not pursued on appeal,
are deemed abandoned); United States v. Capozzi,
486 F.3d 711, 719
n.2 (1st Cir. 2007) ("We have consistently held that arguments not
raised in the initial appellate legal brief are considered
waived."). CSD does mention the federal policy in a block quote in
its initial appellate brief, but it makes no argument based on this
policy. We have explained that it is a "'settled appellate rule
that issues adverted to in a perfunctory manner, unaccompanied by
some effort at developed argumentation, are deemed waived.'"
United States v. Hughes, 211 F.3d 676, 684 n.6 (1st Cir. 2000)
(quoting United States v. Zannino,
895 F.2d 1, 17 (1st Cir. 1990)).
The absence of any argument on the federal policy favoring
to this policy, "ambiguities as to the scope of the arbitration
clause itself [must be] resolved in favor of arbitration."
Id.
However, this presumption of arbitrability applies only to the
scope of an arbitration agreement, not its validity, and thus it is
utilized only where an arbitration agreement is "validly formed and
enforceable" under state law, but "ambiguous about whether it
covers the dispute at hand."
Id. (quoting Granite Rock Co. v.
Int'l Bhd. of Teamsters,
130 S. Ct. 2847, 2858 (2010)). Maine
courts have recognized a similar Maine policy favoring arbitration,
but, like federal courts, they apply it only if "the parties have
generally agreed to arbitrate disputes."
V.I.P., 770 A.2d at 96.
-9-
arbitration is consistent with CSD's explicit disavowal of any
reliance on rules of construction. After arguing exclusively that
the provision is not ambiguous, it concludes its argument
concerning the scope of the arbitration clause by asserting that
"there is no need to resort to the various rules of construction
when the plain language of the agreement is unambiguous." Because
CSD has not relied on federal law or explained the interaction of
the federal policy favoring arbitration with Maine contract law, we
will not consider arguments based on the federal policy that it
chose not to make.3
Turning to Maine law, we must determine whether the
arbitration clause is ambiguous in its coverage of applicants who
are not hired. CSD argues that the clause unambiguously covers all
disputes between it and applicants for employment. It asserts that
"the term 'pre-employment' is widely understood to refer to the
3
We do not dispute the dissent's reading of our precedents
concerning the federal policy favoring arbitration. But the
dissent attempts to bring these precedents to bear in support of an
argument that appellant does not make. To the extent that the
dissent suggests that the principle announced in Kristian v.
Comcast Corp., 446 F.3d 25 (1st Cir. 2006), is unwaivable by a
failure to argue it, we disagree. The dissent cites no authority
for this proposition and we are not aware of any. Additionally, it
is important to understand the interest in fairness underlying our
waiver doctrine. Because CSD never developed an argument
concerning the federal policy favoring arbitration, Gove,
understandably, did not consider the issue to be part of this
appeal. Following CSD's lead, Gove's responsive brief argues the
case exclusively on grounds of Maine law. Accepting the dissent's
invitation to decide the case on grounds not introduced by CSD
would be unfair to Gove, who was entitled to rely on CSD's
identification of the issues raised in its opening brief.
-10-
period of time between the submission of an application and hiring,
whether or not someone is hired," and that "employment process"
refers to every step of the potential employment relationship
between Gove and itself. It also argues that arbitration clauses
are subject to broad interpretation as a matter of Maine law.
In contrast, Gove argues that the clause's references to
the "employment process" and "pre-employment disputes" should be
read literally. Under her reading, if one is never employed by
CSD, then a dispute cannot be "pre-employment" or related to the
"employment process," and the arbitration clause is inapplicable.
Gove argues that this reading is particularly appealing to a lay
person to whom the phrase "employment process" "clearly meant the
process culminating in her hire, a process from which she never
benefitted." See Alt. Energy, Inc. v. St. Paul Fire & Marine Ins.
Co., 267 F.3d 30, 34 (1st Cir. 2001) (noting that under Maine law
"[a]mbiguity [of a contract] is to be determined from the
perspective of an ordinary or average person").
Importantly, nothing in the arbitration clause refers to
"applicants." Instead, every reference is to "your employment,"
"the employment process," or "pre-employment disputes."
Accordingly, there is a reasonable basis for Gove's belief that she
would only be bound by the arbitration clause if ultimately hired.
Then, if she had post-hire claims arising out of promises made or
actions taken during the hiring process (e.g., claims that she was
-11-
being paid less or given fewer hours than she had been led to
believe, or claims that similarly situated male employees were
hired to more favorable positions or awarded a higher pay rate),
she would be obligated to pursue those claims in an arbitral forum.
This reading is consistent with both the arbitration clause in
Gove's application and the incorporated Pre-Dispute Arbitration
Policy, which identifies covered disputes as including, inter alia,
"[a]ll disputes and claims which arise out of or relate in any
manner to the Employee's application for employment or employment
with the Company." (Emphasis added.) Thus, it can be fairly said
that the agreement is susceptible to different interpretations.
See Champagne, 897 A.2d at 805.
In Johnson v. Circuit City Stores, 148 F.3d 373 (4th Cir.
1998), the Fourth Circuit considered the enforceability of a
dispute resolution agreement compelling arbitration. That case
also involved an unsuccessful applicant who sought to avoid an
arbitration clause contained in a job application. Although the
central issue in Johnson was whether there was adequate
consideration supporting the agreement, and not the issue before us
now, the case features an agreement that unambiguously binds job
applicants. There, the agreement required that the applicant
accept the statement "I will be required to arbitrate any and all
employment-related claims I may have against Circuit City, whether
or not I become employed by Circuit City."
Id. at 374. Of course,
-12-
just because the agreement in this case could have been drafted
more clearly does not necessarily mean that it is ambiguous as to
the obligation to arbitrate in the circumstances of this case.
However, the agreement in Johnson offers a useful touchstone for
clarity, reinforcing our conclusion that CSD's provision is
ambiguous.
Given this ambiguity, we are bound by Maine law's
"bedrock rule of contract interpretation . . . that ambiguities in
a document are construed against its drafter." Barrett, 870 A.2d
at 150. In Barrett, the Law Court considered an arbitration
agreement entered into by retirees and their investment advisor.
A dispute arose as to whether the agreement's scope included tort
claims that had no nexus with the advisor's administration of the
retirees' investment account, and the court found the agreement to
be ambiguous. Not only did the court construe the ambiguity
against the advisor, who had drafted the agreement, but it noted
that the rationale for doing so was "particularly compelling" given
the unequal bargaining positions of the parties and the fact that
the contract was offered to the retirees on a "take it or leave it"
basis.
Id. at 150-51. This case is similar. Not only was Gove in
no position to bargain over the terms of the employment
application, but she was also required to accept the arbitration
-13-
clause as part of an online job application with no meaningful
opportunity to inquire as to its meaning.4
To be sure, the Law Court also acknowledged in Barrett
that Maine has "a broad presumption favoring arbitration." Id. at
149; see also Anderson v. Banks,
37 A.3d 915, 921 (Me. 2012)
(recognizing same). The court noted that this presumption was at
odds with the principle of construing ambiguities against the
drafter of a contract. However, it resolved this conflict in favor
of the latter principle, explaining that "[i]n this context, where
an individual with little leverage is entering into an agreement
with a larger entity that offers its services on a 'take it or
leave it' basis, we conclude that the balance tips in favor of
applying the equitable rule favoring the construction of the
contract against the
drafter." 870 A.2d at 151; cf.
Anderson, 37
A.3d at 921 n.9 (noting that, where parties are in approximately
equal bargaining positions, the equitable principle of construing
a contract against the drafter is less compelling).
Applying Maine contract law, we must follow the Law
Court's lead. Because of the obligation under Maine law to
construe ambiguities against the drafter of a contract, we conclude
4
The clause does state, "If you have any questions regarding
this statement and the Arbitration Agreement, please ask a CSD
representative before acknowledging." However, no contact
information is provided and, because the application is to be
completed online, an applicant may be required to agree to
arbitrate before having any contact with a CSD representative.
-14-
that Gove is not required to arbitrate her claims. Therefore, the
judgment of the district court is affirmed and the case is remanded
for further proceedings consistent with this opinion.
So ordered.
– Dissenting Opinion Follows –
-15-
TORRUELLA, Circuit Judge (Dissenting). The panel
majority acknowledges that Gove's application for employment at CSD
contained a valid agreement to arbitrate. Nonetheless, it
concludes that Gove is not required to take her claims to
arbitration because principles of Maine contract law --
specifically, the Maine Law Court's fealty to the tenet of contra
proferentem5 for adhesion contracts -- require us to interpret any
ambiguity in the scope of the agreement against the drafter
(here, CSD). This it reasons, despite the otherwise broad federal
principle that doubts about an arbitration clause's scope should be
resolved in favor of arbitrability. See Maj. Op. at 8 n.2 (citing
Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 376
(1st Cir. 2011)). My colleagues' conclusion is premised on their
understanding that CSD effectively waived any arguments based on
the federal policy favoring arbitration by limiting its discussion
on appeal to questions of contract interpretation under Maine law.
Because I do not agree that any such waiver occurred in this case,
and because I believe precedent requires us to decide the issue
before us in favor of arbitrability, I respectfully dissent.
To begin with, the majority's application of the contra
proferentem principle to resolve ambiguities regarding the scope of
5
The contract principle of contra proferentem is a Latin term
meaning "against the offeror" and stands for "[t]he doctrine that,
in interpreting documents, ambiguities are to be construed
unfavorably to the drafter." Black's Law Dictionary 377 (9th ed.
2009).
-16-
the arbitration clause against arbitrability is antithetical to a
previous holding of this court that is directly on point. In
Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006), we reversed
an analogous ruling by the U.S. District Court for the District of
Massachusetts denying a motion to compel arbitration because, in
doing so, the lower court had "incorrectly relied on the
[Massachusetts] contract principle requiring contracts of adhesion
to be construed strictly against the drafter,"
id. at 35. We
reasoned that, because the plaintiffs were "in fact raising a scope
question," i.e., the "[p]laintiffs argue[d] that their antitrust
claims d[id] not fall within the scope of the arbitration
agreements as a result of non-retroactivity," the general rule
applying a "presumption in favor of arbitration" governed.
Id.
Accordingly, we unequivocally held that "[w]here the federal policy
favoring arbitration is in tension with the tenet of contra
proferentem for adhesion contracts, and there is a scope question
at issue, the federal policy favoring arbitration trumps the state
contract law tenet."
Id. (second emphasis added). The Kristian
panel noted that "[t]his result makes sense because, once the
dispute is in arbitration, the tenet of contra proferentem can
still be applied by the arbitrator on non-scope issues."
Id. at 35 n.7.
Thus, while I fully agree with the majority's threshold
conclusion in this case, that we are considering here "a dispute
-17-
concerning the scope of the arbitration clause, not its validity,"
Maj. Op. at 8, given our holding in Kristian, I do not consider it
sufficient here to resort to the doctrine of waiver in order to
avoid taking into account "the interaction of the federal policy
favoring arbitration with Maine contract law," Maj. Op. at 10.
Indeed, Kristian appears to require the opposite outcome than my
colleagues in the majority reach in this case. See United States
v. Guzmán, 419 F.3d 27, 31 (1st Cir. 2005) ("In a multi-panel
circuit, . . . newly constituted panels ordinarily are constrained
by prior panel decisions directly (or even closely) on point.").
As to the issue of waiver, the record shows that CSD
presented its motion to compel arbitration pursuant to the Federal
Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, and neither party
contests that the arbitration clause at issue is subject to the
provisions of the FAA. See Preston v. Ferrer, 552 U.S. 346, 349
(2008) (noting that FAA "establishes a national policy favoring
arbitration when the parties [so] contract" and that "it calls for
the application, in state as well as federal courts, of federal
substantive law regarding arbitration"). Further, as the majority
acknowledges, CSD emphasized the federal policy favoring
arbitration to the court below, citing Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc.,
473 U.S. 614 (1985), for the
proposition that "any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration,"
id. at 626
-18-
(quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,
460
U.S. 1, 24-25 (1983)). It was upon Gove's opposition to CSD's
motion to compel that the emphasis below turned to the tenet of
contra proferentem for adhesion contracts, which under Maine law
must be applied in the context of arbitration agreements to resolve
ambiguities in contractual language against the drafter. See
Barrett v. McDonald Invs., Inc.,
870 A.2d 146, 150-51 (Me. 2005)
(acknowledging Maine Law Court's "retreat from [its] previously
broad presumption in favor of arbitration" and holding that
ambiguous arbitration clauses will be interpreted against
drafters). The district court then followed the Maine Law Court's
preference for the contractual doctrine in ruling against the
existence in this case of a valid agreement to arbitrate. See Gove
v. Career Sys. Dev. Corp.,
824 F. Supp. 2d 205, 210-11 (D. Me.
2011).
Given how this case evolved below, it was appropriate for
CSD to devote a considerable portion of its initial brief on appeal
to refuting the district court's premise that there was any
ambiguity in the arbitration clause to begin with,6 and to
6
I take issue with the majority's suggestion that because CSD
indicated at one point in its briefing that "there [was] no need to
resort to the various rules of construction when the plain language
of the agreement is unambiguous," it necessarily waived any
argument based on the federal policy. See Maj. Op. at 9. It is
acceptable for parties to make arguments in the alternative, see,
e.g., Fed. R. Civ. P. 8(d)(2) (indicating that pleadings containing
alternative statements of a claim or defense "[are] sufficient if
any one [of the alternative statements] is sufficient"), and it was
-19-
highlighting other Maine case law that might persuade this court to
follow a different route on appeal. Moreover, I acknowledge that
CSD did not specifically rely on Kristian to support its argument
in favor of arbitration in the scope analysis. However, it is
evident from reading the parties' briefs on appeal, including CSD's
reply to Gove's appellee brief, that CSD took steps sufficient to
bring the federal policy concern to this court's attention and,
hence, bring our controlling precedent to bear on the case.
To that end, in its initial briefing, CSD discussed our
circuit's case law regarding the appropriate legal standard for
analyzing a motion to compel arbitration. It cited to Combined
Energies v. CCI, Inc., 514 F.3d 168 (1st Cir. 2008), in which we
set forth our three-pronged approach for assessing motions to
compel arbitration, consisting of a determination whether (1) there
exists a valid agreement to arbitrate, (2) the dispute falls within
the scope of that agreement, and (3) the right to arbitration was
or was not waived by the movant.
Id. at 171. CSD posited that
only the first and second prongs of the analysis were at issue
here, and that the plain language of Gove's employment application
satisfied both prongs. Importantly, CSD argued that "the
determination of the existence of a valid agreement to arbitrate is
sensible in this case for CSD to make its initial line of attack an
argument against the ambiguity of the arbitration clause. I do not
interpret CSD's discussion in this regard as relinquishing the
position that any potential ambiguities found by this court should
be interpreted in favor of arbitration.
-20-
analytically distinct from the scope of such [an] agreement[]."
CSD then emphasized that in determining "the existence of a valid
agreement to arbitrate, the courts look to state contract law," and
quoted language from Soto-Fonalledas v. Ritz-Carlton San Juan Hotel
Spa & Casino, 640 F.3d 471 (1st Cir. 2011), to that effect.
Id. at
475 (indicating that "principles of state contract law control the
determination of whether a valid agreement to arbitrate exists")
(quoting Campbell v. Gen. Dyn. Gov't Sys. Corp.,
407 F.3d 546, 552
(1st Cir. 2005)). CSD then moved into its discussion of Maine
contract law to support its contention that the clear language of
the agreement required arbitration.
Notably, after concluding its discussion of why, under
the first prong of the analysis, there existed a valid agreement to
arbitrate, CSD made a separate case for why Gove's dispute with CSD
falls within the scope of that agreement. That discussion included
an excerpt from Dialysis Access Center, LLC v. RMS Lifeline, Inc.,
638 F.3d 367 (1st Cir. 2011), which indicated, in relevant part,
that "[w]hen deciding whether the parties agreed to arbitrate a
certain matter . . ., courts generally . . . should apply ordinary
state-law principles that govern the formation of contracts," but
"[i]n carrying out this endeavor, due regard must be given to the
federal policy favoring arbitration, and ambiguities as to the
scope of the arbitration clause itself resolved in favor of
-21-
arbitration." Id. at 376 (internal citations and quotation marks
omitted) (emphasis added).
Certainly, as the majority points out, the discussion
that followed this reference relied on Maine case law and focused
on why state contract principles required interpreting the
arbitration clause broadly. However, CSD subsequently used its
reply brief to flesh-out the idea that it had already introduced,
i.e., that under our case law arbitrability should be favored in
the scope analysis.7 Specifically, CSD quoted from Paul Revere
Variable Annuity Insurance Co. v. Kirschhofer, 226 F.3d 15 (1st
Cir. 2000), where we indicated that "generally speaking, the
presumption in favor of arbitration applies to the resolution of
scope questions."
Id. at 25.
It is significant that CSD relied on Paul Revere because
that case dealt with issues analogous to the ones currently sub
7
CSD elaborated this point in its reply brief because it
understood the argument in Gove's appellee brief as "conflating the
two issues," that is, (1) whether there exists a valid agreement to
arbitrate and (2) whether the scope of any such agreement covers
the dispute at hand. CSD indicated that this resulted in Gove's
"ignor[ing] (or perhaps attempt[ing] to avoid) the analytical
distinction between the two analys[es]." It was appropriate for
CSD to use its reply brief to clarify that distinction, the
relevance of which I will discuss infra. See United States
v. Bradstreet, 207 F.3d 76, 80 n.1 (1st Cir. 2000) ("While a reply
brief is not the proper place to raise new arguments, it is proper
for a court to look there for clarification.") (internal citations
omitted); see, e.g., Soto v. State Indus. Prods., Inc., 642 F.3d
67, 70 n.1 (1st Cir. 2011) (accepting arguments in the appellant's
reply brief for purpose of clarifying appellant's position);
Provencher v. CVS Pharmacy,
145 F.3d 5, 8 n.2 (1st Cir. 1998)
(same).
-22-
judice, and it also formed the basis for this court's holding in
Kristian. In Paul Revere, the district court had applied the same
contractual doctrine relied upon here (the tenet of contra
proferentem for adhesion contracts) to conclude that an asserted
ambiguity in the arbitration clause at issue should be interpreted
against the drafters. Id. The parties whose motion for
arbitration had been denied below argued on appeal that the court
was required to resolve any doubts in favor of arbitration.
Id.
The Paul Revere panel held that, because the alleged ambiguity went
to the arbitration agreement's existence, rather than its scope,
"[t]he federal preference for arbitration [did] not come into play
and, a fortiori, it [could not] undermine the lower court's
reliance on the contra proferentem tenet."
Id. An essential
component to our holding in that case was the finding that the
question of ambiguity presented went to the validity of the
agreement to arbitrate, not its scope. See
id. (determining
question whether a party has standing to compel arbitration
concerned "[the] right to arbitrate at all" and was, therefore,
"not a scope question"). Paul Revere clarified that, in contrast,
"[a] scope question arises 'when the parties have a contract that
provides for arbitration of some issues' and it is unclear whether
a specific dispute falls within that contract."
Id. (quoting First
Options v. Kaplan,
514 U.S. 938, 945 (1995)).
-23-
Although CSD did not discuss the Paul Revere holding in
detail in its brief, it did refer us to First Sealord Surety, Inc.
v. TLT Construction Corp., 765 F. Supp. 2d 66 (D. Mass. 2010).
There, the U.S. District Court for the District of Massachusetts
briefly discusses the case's holding. The summary provided in
First Sealord, which CSD quoted in its brief, noted the
"distinction" that our circuit has drawn in this area, describing
it as follows: "[c]ontra pr[o]ferentem applies to questions such as
whether a 'party has entered an arbitration agreement or whether an
arbitration agreement is enforceable vel non,' but the presumption
in favor of arbitration applies to the resolution-of-scope
questions."
Id. at 75 n.61 (quoting Paul
Revere, 226 F.3d at 25)
(third emphasis added).
On this basis, CSD adequately brought before this court
the issue of whether or not the federal policy favoring arbitration
should be applied in the scope analysis to favor arbitrability,
vis-à-vis the tenet of contra proferentem for adhesion contracts.
I find sufficient that CSD highlighted the distinction drawn in our
case law between the court's analysis of an arbitration agreement's
validity as opposed to its scope. Despite the majority's refusal
to engage with it, this distinction was key to the Kristian holding
that now binds us, and generally to our preceding case law on how
to interpret ambiguities in arbitration clauses. See Kristian, 446
F.3d at 35 (applying "the general rule cited in Paul Revere" that
-24-
"the presumption in favor of arbitration applies to the resolution
of scope questions") (quoting Paul Revere, 226 F.3d at 25). It is
therefore decisive to the question presented to us on appeal and
may be deemed "fairly included" therein. See, e.g., Jones v.
United States,
527 U.S. 373, 397 n.12 (1999) (refusing to consider
waived an argument not raised in opposition to a petition for writ
of certiorari, despite specific rule of the Court allowing finding
of waiver, where argument "was 'predicate to an intelligent
resolution of the question presented'" and indicating that "[i]n
those instances, [the Court has] treated the issue not raised in
opposition as fairly included within the question presented")
(quoting Ohio v. Robinette,
519 U.S. 33, 38 (1996)).
In sum, because all judges on this panel conclude that
Gove accepted and entered into a valid agreement to arbitrate some
of the disputes between herself and CSD, our precedent is clear
that Maine contract law cannot trump the federal policy favoring
arbitration in our assessment of CSD's motion to compel. See
Kristian, 446 F.3d at 35. Nor should we resort here to the
doctrine of waiver and avoid the obvious tension between our own
case law and the Maine Law Court's jurisprudence on the
applicability of the contra proferentem tenet in this context. For
these reasons, I dissent.
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