RIPPLE, Circuit Judge.
Grand Wireless, Inc. ("Grand") brought this action in Massachusetts state court against Verizon Wireless, Inc. ("Verizon") and Verizon employee Erin McCahill. It alleged a violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO") against Ms. McCahill, as well as several state law claims against both Ms. McCahill and Verizon. The defendants removed
The defendants timely appealed. They submit that Grand's claims were within the scope of the parties' arbitration agreement and that arbitration of the claims against Ms. McCahill is not barred despite her status as a non-signatory of the arbitration agreement. We agree and therefore reverse the judgment of the district court and remand the case for further proceedings.
In September 2002, Grand and Verizon entered into an Exclusive Authorized Agency Agreement for Commercial Mobile Radio Service ("Agreement"). The Agreement authorized Grand to act as a Verizon sales agent within a defined geographic area. The Agreement governed the business relationship between Grand and Verizon. It required Grand to provide services exclusively for Verizon by offering customers Verizon services, such as sales, installation, warranty service and equipment maintenance. The Agreement also addressed the relationship between Grand, Verizon and subscribers who purchased products and services through Grand. On this point, the Agreement provided that subscriber lists were "the exclusive confidential property of Verizon Wireless."
The Agreement contained a provision entitled, "DISPUTE RESOLUTION AND ARBITRATION." It stated, in pertinent part:
The subsequent paragraphs explicitly stated that the disputes not covered included several intellectual property issues, as well as "[s]eeking to compel arbitration";
There is no dispute that, under the Agreement, Grand operated retail locations for Verizon products and services beginning in 2002 until the five-year term expired in September 2007. The parties then continued their relationship on a month-to-month basis until July 19, 2011, when Verizon notified Grand of its intent to terminate the relationship. Verizon submits that at Grand's request, Verizon extended the termination date to October 31, 2011, in order to "g[i]ve Grand additional time to attempt to sell certain of its stores to another Verizon Wireless agent."
In October 2011, according to Grand's complaint:
Grand further alleged that Ms. McCahill had "authorized the mailing and knew when the mailing went out that it was false."
Grand initially filed the present action in Massachusetts state court. Its complaint alleged that Ms. McCahill had violated RICO, 18 U.S.C. §§ 1961 et seq., by "engag[ing] in a fraudulent scheme that used the United States mails to transmit false representations that `GRAND WIRELESS... HAS CLOSED,' in violation of the federal mail fraud statute, 18 U.S.C. § 1341."
The defendants removed the case to the district court, where Verizon and Ms. McCahill moved to compel Grand to arbitrate its claims. Grand opposed the motion for arbitration. It submitted that the motion to compel arbitration should be denied for two reasons: (1) that its claims fell outside of the scope of the arbitration clause; and (2) that Ms. McCahill could not enforce the arbitration clause because she was not a party to the Agreement.
Before the deadline had passed for the defendants to file their reply brief, the district court denied the motion to compel. In ruling, the district court did not issue a written opinion; instead, it simply issued an order stating, "Motion is denied. The court adopts Plaintiff's Memorandum. So
We have jurisdiction to review an order denying a motion under the Federal Arbitration Act to compel arbitration. See 9 U.S.C. § 16(a)(1)(C). Our review of such a denial is de novo because whether a matter is arbitrable is a matter of contract interpretation, and contract interpretation is a matter of law. Combined Energies v. CCI, Inc., 514 F.3d 168, 171 (1st Cir.2008). To compel arbitration, the defendants "must demonstrate that a valid agreement to arbitrate exists, that the[y are] entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope." Soto-Fonalledas v. Ritz-Carlton San Juan Hotel Spa & Casino, 640 F.3d 471, 474 (1st Cir.2011) (internal quotation marks omitted). Furthermore, as we also noted in Soto-Fonalledas:
Id. (quoting AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 1749, 179 L.Ed.2d 742 (2011); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)).
Here, the parties do not dispute the validity of the Agreement's arbitration clause. Instead, they dispute: (1) whether Grand's claims are within the scope of the arbitration clause; and (2) whether Ms. McCahill is entitled to invoke the arbitration clause. We address each contention in turn.
We first address whether Grand's claims are within the scope of the arbitration clause. Grand and Verizon agreed to arbitrate "any controversy or claim arising out of or relating to" their Agreement.
As we have noted earlier, the district court simply adopted Grand's memorandum. Therefore, the district court necessarily took that document's view that the Agreement's arbitration clause was narrow. Such a construction, according to that memorandum, would limit application of the arbitration clause to "battles over the Agency Agreement," i.e., to claims that require interpretation of the Agreement's terms.
In this appeal, Grand takes the same position that it did in the district court. The defendants contend, however, that Grand's claims "relate to" the Agreement because they involve matters that occurred during the course of the agency relationship. Specifically, Grand's claims concern Verizon's right to contact freely its customers and Verizon's termination of its relationship with Grand. The defendants also submit that the language of the arbitration clause is broad, and therefore the dispute is entitled to a presumption of arbitrability.
"Unless the parties clearly and unmistakably provide otherwise," AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), the court must resolve a disagreement among the parties as to whether an arbitration clause applies to a particular dispute, Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 130 S.Ct. 2847, 2857-58, 177 L.Ed.2d 567 (2010). "[A] court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute." Id. at 2856. "When deciding whether the parties agreed to arbitrate a certain matter ... courts generally ... should apply ordinary state-law principles that govern the formation of contracts." First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). We conduct our analysis with the federal policy in favor of arbitration in mind, such that, "as with any other contract, the parties' intentions control, but those intentions are generously construed as to issues of arbitrability." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). "At a minimum, this policy requires that `ambiguities as to the scope of the arbitration clause itself [must be] resolved in favor of arbitration.'" PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10, 15 (1st Cir.2010) (alteration in original) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)). This presumption in favor of arbitration applies unless the party opposing arbitration rebuts it. Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 379 (1st Cir. 2011); Paul Revere Variable Annuity Ins. Co. v. Kirschhofer, 226 F.3d 15, 25 (1st Cir.2000) ("It is true that, generally speaking, the presumption in favor of arbitration applies to the resolution of scope questions.").
To determine whether Grand's claims fall within the scope of the arbitration clause, "we focus on the factual allegations underlying [the] claims in the [c]omplaint." Dialysis Access Ctr., LLC, 638 F.3d at 378. Grand alleged that Verizon's "false and deliberate misrepresentation to Grand Wireless customers that Grand Wireless had ceased to do business" harmed Grand.
Based on the allegations in Grand's complaint, resolution of this dispute will entail determining, at least, the status of Grand and Verizon's relationship as of October
Even were we less sure of the arbitration clause's applicability to Grand's claims, we would apply the presumption of arbitrability here. See Kirschhofer, 226 F.3d at 25 (holding that the presumption of arbitrability is applied to scope questions that arise "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" (internal quotation marks omitted)). This presumption is particularly appropriate where, as here, the arbitration clause is broadly worded. AT & T Techs., 475 U.S. at 650, 106 S.Ct. 1415; see also Granite Rock, 130 S.Ct. at 2858 (characterizing an arbitration clause that covered "[a]ny claim, dispute, or controversy ... arising from or relating to ... the validity, enforceability, or scope of ... the entire Agreement" as broad (emphasis added) (internal quotation marks omitted)). "An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Thus, where the language of an arbitration clause is broad and "`[i]n the absence of any express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.'" AT & T Techs., 475 U.S. at 650, 106 S.Ct. 1415 (quoting Warrior & Gulf, 363 U.S. at 584-85, 80 S.Ct. 1347).
Grand presents us with no such "forceful evidence" to rebut the presumption of arbitration. Instead, it asks us to apply "conventional contract interpretation."
We cannot accept Grand's view. As we discussed previously, resolution of some of the issues raised by Grand's claims may well require resort to the Agreement. Moreover, Grand's attempt at rebutting
In sum, in adopting Grand's memorandum in opposition to the defendants' motion to compel arbitration, the district court approved Grand's statement that "Verizon unambiguously restricted the arbitration clause to battles over the Agency Agreement," and, therefore, the presumption of arbitrability would not enter into play.
The allegations against Ms. McCahill arise out of actions that she allegedly took as part of her employment by Verizon. She therefore wants to avail herself of the arbitration clause in the Agreement signed by her employer, Verizon. The district court, by adopting Grand's memorandum, must be understood to have ruled that the claims against Ms. McCahill are not covered by the arbitration clause because she was not a party to the Agreement and because the arbitration clause does not call specifically for arbitrating disputes with individual employees. Verizon and Ms. McCahill now challenge this determination. They take the view that, because Ms. McCahill was acting as an agent of Verizon and the claims against her "relate solely to her performance as an employee," she is entitled to invoke the arbitration clause.
In order to compel arbitration of the claims against her, Ms. McCahill must establish that she is "entitled to invoke the arbitration clause." Soto-Fonalledas, 640 F.3d at 474 (internal quotation marks omitted). "[T]he FAA does not require parties to arbitrate when they have not agreed to do so...." Volt Info. Scis., 489 U.S. at 478, 109 S.Ct. 1248. "[N]or does it prevent parties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement." Id. We recognize that, of course, as a general proposition, a contract cannot bind a non-party. We also recognize, however, that "there are exceptions allowing non-signatories to compel arbitration"
Grand's complaint makes clear that Ms. McCahill's alleged actions were taken in her capacity as Verizon's agent or employee. She allegedly mailed (or directed to have mailed) postcards to the company's customers while she was employed for the company and in furtherance of company business. These allegations form the sole basis of liability against Verizon and against Ms. McCahill. Grand, in naming Ms. McCahill in its complaint, identified her as "Director of Indirect Communication, Erin McCahill."
Grand puts forward but one argument as to why Ms. McCahill cannot invoke the arbitration clause: that the mention of employees in certain parts of the Agreement, combined with the lack of mention of employees in the arbitration clause, makes clear that the parties never agreed that claims against employees — even those sued for actions taken within the scope of their employment — could avail themselves of the arbitration agreement. Evaluating Grand's contentions requires us to apply New York State law, which governs the interpretation of the contract. New York State requires that the contract be construed according to its plain meaning. MHR Capital Partners LP v. Presstek, Inc., 12 N.Y.3d 640, 884 N.Y.S.2d 211, 912 N.E.2d 43, 47 (2009). It permits the court to regard the plain wording of the instrument as well as its structure to ascertain that plain meaning. Niagara Frontier Transp. Auth. v. Euro-United Corp., 303 A.D.2d 920, 757 N.Y.S.2d 174, 176 (2003).
We have examined the Agreement from stem to stern, both with respect to its wording and with respect to its structure. We see no basis for Grand's assertion. In the contract, the parties do refer to employees in other contexts, such as ensuring that employees of Grand are not considered the employees of Verizon. Given the nature of the relationship established by the contract between the two companies, it is not at all surprising that this consideration would be the focus of special attention in the text of the agreement. The remaining references are likewise in areas where specific reference to employees would be expected. We fail to see how such references and the absence of an
Verizon and Grand certainly wished to have their disputes settled by arbitration. Since Verizon could operate only through the actions of its employees, it would have made little sense to have agreed to arbitrate if the employees could be sued separately without regard to the arbitration clause. Notably, contrary to Grand's assertion, the arbitration clause is written in broad language to encompass "any controversy or claim arising out of or relating to" the Agreement. Moreover, the parties entered into this agreement knowing that the legal landscape recognized the right of employees to seek the protection of their employers' arbitration clauses.
Indeed, a number of our sister circuits have addressed this issue, and all have held that an agent is entitled to the protection of her principal's arbitration clause when the claims against her are based on her conduct as an agent.
The Supreme Court's decision in Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009),
Id. at 631, 129 S.Ct. 1896 (emphasis added) (quoting 21 Richard A. Lord, Williston on Contracts § 57:19, at 183 (4th ed.2001)).
Carlisle holds that, at least as a general principle, state law governs the inquiry as to whether a non-party to an arbitration agreement can assert the protection of the agreement.
556 U.S. at 630 n. 5, 129 S.Ct. 1896 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Moreover, as we have just noted, in Carlisle, the Court specifically noted that the state law in that case permitted arbitration and was therefore compatible with and, indeed, supportive of the federal policy embodied in the FAA. See id.
We need not decide definitively whether Carlisle has abrogated this specific line of federal cases. Even if the Supreme Court's decision in Carlisle does signal the abrogation of the principle that, as a matter of federal law, the employees of a signatory of an arbitration agreement are protected by the agreement, Grand has not suggested any principle of New York law that impedes the interpretation of the agreement to protect the employee under the contract.
The district court incorrectly denied the motion by Verizon and Ms. McCahill to compel Grand to arbitrate its claims against them. Accordingly, we reverse and remand to the district court for further proceedings consistent with this opinion.