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Contractor Employee Not Required to Arbitrate Tort Claims

Tort claims brought by an employee against a contractor did not fall within the scope of the parties' arbitration agreement, according to the Court of Appeals for the Fifth Circuit, because the employee's sexual-assault allegations did not relate to or concern matters associated with her employment. The contractor employee, a clerical worker stationed at a military base in Iraq, alleged her co-workers raped her in her bedroom in employer-provided housing. The employee's complaint included allegations of assault and battery; intentional infliction of emotional distress arising out of the alleged assault; negligent hiring, retention, and supervision of employees involved in the alleged assault; and false imprisonment. The contractor moved to compel arbitration of the employee's claims pursuant to the employment agreement's arbitration clause and the company's dispute resolution program, which required the employee to arbitrate all claims "related to" her employment, including "any personal injury allegedly incurred in or about [the contractor's] workplace." In determining whether to compel arbitration, the court examined whether a valid agreement to arbitrate claims existed between the parties and whether the dispute fell within the scope of the arbitration agreement. The court found the arbitration agreement valid and enforceable under the Federal Arbitration Act and not governed by public policy considerations in state law. The court noted the strong federal policy favoring arbitration but concluded the employee's claims fell outside the scope of the employment contract's arbitration clause.

Not Employment Related

Despite the contractor's argument the alleged incident was related to employment, which would have mandated binding arbitration, the court declined to adopt the contractor's expansive interpretation of the arbitration clause. Instead, the court found the employee was not acting in any way related to her employment by being the alleged victim of a sexual assault perpetrated by co-workers who were violating the contractor's policies. The court also rejected the liberal construction of "scope of employment" in workers compensation actions and concluded the arbitration provision's scope "certainly stopp[ed] at the [employee's] bedroom door." According to the court, it was not contradictory for the employee to receive workers' compensation under a standard that allows recovery solely because her employment created the "zone of special danger" which led to her injuries, yet claim, in the context of arbitration, that her allegations did not have a "significant relationship" to her employment contract. The employee was not on call at the time of the alleged incident, nor was the incident a "risk distinctly associated with the conditions" under which the employee lived. Accordingly, the fact the employee lived in employer-provided barracks did not support the contractor's contention the incident was "related to" her employment for arbitration purposes. Similarly, the contractor's reliance on the company's dispute resolution program, which was incorporated into the employment contract, also lacked merit. The court again noted the employee's bedroom "should [not] be considered the workplace, even though her housing was provided by her employer." Also, the court found persuasive that the contractor did not consider the barracks where the employee was housed to be a "workplace." Therefore, it was appropriate to deny the contractor's motion to compel arbitration.


Circuit Judge DeMoss dissented from the majority opinion on the basis the employee's tort claims were related to her work. According to the dissent, arbitration clauses purporting to cover all disputes "related to" an employee's employment are interpreted to cover "all disputes between the parties having a significant relationship to the contract regardless of the label attached to the dispute." The dissent also noted that when the scope of an arbitration clause "is fairly debatable or reasonably in doubt, the court should decide the question of construction in favor of arbitration." In the dissent's view, the issue before the court was debatable and therefore should have been resolved in favor of arbitration. (Jones, et al. v. Halliburton Co., et al., CA-5, 53 CCF 79,192)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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