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CONTRACTS: "Plain Language" Versus "Legalese"

Posted by Gale Burns on Tue, Oct 16, 2012 @ 15:10 PM

The Lawletter Vol 37 No 7

Charlene Hicks, Senior Attorney, National Legal Research Group

Precision is essential in drafting effective legal contracts of any type.  If the contract language is not sufficiently expansive to include a particular party or situation, contractual obligations that were intended to be binding may be set aside as inapplicable.  At the same time, however, there has been a great movement toward "plain language" contracts as opposed to agreements comprised of "legalese."  The interplay between these potentially conflicting themes was recently highlighted by the First Circuit's opinion in Gove v. Career Systems Development Corp., 689 F.3d 1 (1st Cir. 2012), a case involving the applicability of an employer's mandatory arbitration clause to an unsuccessful job applicant.

In that case, Ann Gove applied for a job with Career Systems Development Corporation ("CSD").  The final section of the electronic job application contained the following arbitration clause:

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 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.

Id. at 3.  Gove duly checked the "accept" box next to the statement, indicating that she accepted the terms of the agreement, including the arbitration clause.

Gove was pregnant throughout the period in which her job application was processed.  After she was not hired by CSD, Gove filed an employment discrimination lawsuit in federal district court against CSD.  CSD moved to compel arbitration on the basis of the arbitration clause contained in the electronic job application.  The district court denied CSD's motion on the grounds that the arbitration clause was ambiguous as to whether it applied to Gove, a job applicant who was never hired, and the ambiguity had to be construed against CSD as the drafter of the clause.

On appeal, the First Circuit affirmed.  In reaching this decision, the court began by emphasizing that the dispute concerned "the scope of the arbitration clause, not its validity."  Id. at 5.  In other words, the arbitration clause was clearly valid and effective in at least some circumstances.

In analyzing the scope of CSD's arbitration provision, the court noted that the arbitration clause was devoid of any reference to job "applicants."  Id. at 6.  "Instead, every reference is to 'your employment,' 'the employment process,' or 'pre-employment disputes.'"  Id.  Based on this language, the court determined that a reasonable basis existed for Gove's conclusion that she would be bound by the arbitration clause only in the event that she was ultimately hired.

Because the contract language was susceptible to different interpretations and, therefore, was ambiguous, the court concluded that the contract had to be construed against the drafter, CSD.  Although Maine has a broad presumption favoring arbitration as a method of dispute resolution, this broad presumption does not take precedence over the equitable rule favoring the construction of contracts against the drafter, particularly where such contracts are presented to the nondrafting party on a take-it-or-leave-it basis.  As a result, Gove was not required to arbitrate her claims against CSD.

As Gove indicates, any ambiguities in the scope of "plain language" contracts will likely be construed against the drafting party.  As a result, it is critical that counsel retained to draft a contract take steps to ensure that foreseeable contingencies are clearly and unreservedly accounted for in the express terms of the contract.  The desire for plain contract terms does not negate the need to expressly document the expansive reach of a party's contractual obligations.

Topics: legal research, Charlene Hicks, contracts, Gove v. Career Systems Development Corp., 1st Circuit, ambiguity of arbitration clause re scope, ambiguity construed against drafting party, The Lawletter Vol 37 No 7

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