WESLEY, Circuit Judge:
Plaintiffs-Appellees Timothy Pratt and William Burrell are two of the named plaintiffs in this putative class action lawsuit against Defendants-Appellants Cellular Sales of New York, LLC ("Cellular Sales") and its parent company Cellular Sales of Knoxville, Inc. ("Cellular Sales of Knoxville"). In their suit brought under state and federal labor laws, Plaintiffs allege that, during 2010 and 2011, they were unlawfully denied various forms of compensation
For the reasons stated below, the judgment of the district court is AFFIRMED.
Cellular Sales is in the business of selling Verizon Wireless cellular service plans and merchandise. Plaintiffs-Appellees Timothy Pratt and William Burrell both began their relationship with Cellular Sales in 2010. At that time, Cellular Sales required Plaintiffs to form a corporate entity (such as a limited liability company) and sign a "Non-Exclusive Independent Sales Agreement" ("Sales Agreement") in order to be sales representatives. Joint App. 231, 241.
The Sales Agreements went on to state that Cellular Sales would not withhold taxes on the commissions Plaintiffs earned and that Plaintiffs were not entitled to "any compensation, benefits, vacation or vacation pay, sick leave, participation in a retirement program, health insurance, disability insurance, unemployment benefits or other benefits from [Cellular Sales]." Joint App. 234. Each Sales Agreement included a dispute resolution mechanism that required the parties to submit "a dispute aris[ing] under th[e] Agreement . . . to mediation." Joint App. 235. Should mediation fail to resolve the dispute, the parties retained "the right to pursue any appropriate legal actions against the other Party in a court of competent jurisdiction." Joint App. 235-36.
In 2011, Cellular Sales offered Plaintiffs-Appellees full-time employment. On or about January 1, 2012, both Pratt and Burrell signed Compensation Agreements with Cellular Sales that, in contrast with the prior Sales Agreements, contained an arbitration clause. This provision states, in relevant part: "All claims, disputes, or controversies arising out of, or in relation to this document or Employee's employment with [Cellular Sales] shall be decided by arbitration. . . ." Joint App. 219. The first paragraph of the Compensation Agreement provides for an at-will employment
Plaintiffs-Appellees have temporally confined their claims to events that transpired prior to January 1, 2012. They allege that before the execution of the Compensation Agreements, Cellular Sales misclassified them as independent contractors when they were actually employees (within the meaning of various labor laws) because Cellular Sales controlled their work performance. As a result, Plaintiffs-Appellees were allegedly deprived of, among other things, overtime compensation and minimum wage. Plaintiffs-Appellees seek compensation owed under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq., New York common law, and various provisions of New York's Labor Law, N.Y. Lab. Law §§ 190 et seq., 650 et seq. McKinney).
Defendants-Appellants Cellular Sales and Cellular Sales of Knoxville, Inc. argue that the denial of their motion to compel arbitration "conflicts with long-standing federal precedent under which all doubts as to the intent of the parties and the scope of an arbitration clause must be resolved generously in favor of arbitration."
"In deciding whether a dispute is arbitrable, we must answer two questions: (1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement encompasses the claims at issue." Bank Julius Baer & Co. v. Waxfield Ltd., 424 F.3d 278, 281 (2d Cir.2005) (alteration and internal quotation marks omitted), abrogated on other grounds by Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 130 S.Ct. 2847, 177 L.Ed.2d 567 2010). In this case, the parties agreed in the Compensation Agreement to arbitrate. Thus, our discussion focuses on the scope of that agreement. The district court correctly determined that the arbitration clause at issue here is broad because it applies to "[a]ll claims, disputes, or controversies arising out of, or in relation to this document or Employee's employment with [Cellular Sales]," Joint App. 219. See JLM Indus. v. Stolt-Nielsen SA, 387 F.3d 163, 172 (2d Cir.2004). Further, since the arbitration clause has no explicit temporal limitation, our task is to analyze whether the claims "aris[e] out of, or [relate] to . . . Employee's employment with [Cellular Sales]," Joint App.219.
When considering whether claims fall within the scope of an arbitration clause, therefore, we analyze the factual allegations made in the plaintiff's complaint. Smith/Enron, 198 F.3d at 99. "If the allegations underlying the claims touch matters covered by the parties' . . . agreements, then those claims must be arbitrated, whatever the legal labels attached to them." Id. (internal quotation marks omitted).
Based on the contract's plain language, the Newbanks court determined that "th[e] arbitration requirement only applies to causes of action accruing from the execution of the [c]ompensation [a]greements and onward." Id. at 855. The Fourth Circuit grounded its analysis in the compensation agreements' first paragraph, which "informed the signer that he or she had become an at-will employee of Cellular Sales." Id. The court went on to support its conclusion by noting that the plaintiffs had limited their claims to the time period prior to when they signed the compensation agreements and that, during that period, the plaintiffs "did not have any formal or contractual relationship with Cellular Sales at all." Id. Although acknowledging that the compensation agreements did not reference the prior sales agreement, the court nevertheless deemed the sales agreement the "only relevant document" that existed during the time period to which the plaintiffs had confined their claims. Id.
Unlike the Fourth Circuit, we are not persuaded that this case begins and ends with the plain language of the Compensation Agreements. The first paragraph of the Compensation Agreement states in full:
Joint App. 218 (emphases omitted). Neither this paragraph nor any other provision of the contract states that the employer-employee relationship commenced with the execution of the Compensation Agreement or otherwise uses language stating that the employment relationship replaced a prior contractual arrangement. The use of the phrase "has employed you" does not indicate specifically when the employment relationship commenced. Although contractual language referring to the payment of commissions "beginning on the third month after commencement of employment" and an example concerning January sales commissions might suggest an understanding that the contractual employment relationship began in January 2012, Joint App. 219, they are not determinative of the start date for Plaintiffs-Appellees' employment. Instead, it is only through parol evidence that we know that the employer-employee
Defendants-Appellants contend that the arbitration clause here is susceptible of an interpretation that covers the dispute at issue here because Pratt and Burrell allege that they were Cellular Sales employees prior to signing the Compensation Agreements.
Defendants-Appellants are correct that this Court has held that broad arbitration provisions that contain no express temporal limitation can apply to claims that arose prior to the execution of the arbitration agreement. For example, in Coenen v. R.W. Pressprich & Co., 453 F.2d 1209 (2d Cir.1972), the plaintiff had signed an arbitration agreement as part of his application for membership in the New York Stock Exchange ("NYSE"); it provided that the parties agreed to arbitrate "[a]ny controversy between . . . members. . . ." Id. at 1211-12 (alteration in original). The plaintiff subsequently brought claims against another NYSE member named Pressprich. See id. The plaintiff argued that he should not be required to arbitrate because the claim predated the arbitration agreement; this Court disagreed. See id. We reasoned that, even though the claim predated the arbitration agreement, the plaintiff had signed it "with full knowledge that he had a claim against Pressprich and that Pressprich was a Stock Exchange member." Id. at 1212.
Based on the parties' conduct prior to executing the Compensation Agreements, the presumption of arbitrability is overcome because we find positive assurance that the arbitration clause's scope — at least insofar as it concerns the promise to arbitrate matters arising out of, or in relation to Employee's employment — is temporally limited. We reach this conclusion, in large part, based on the fact that when the Compensation Agreements were signed, the parties' contractual positions changed in a way that impacted arbitrability. In the Sales Agreements, Defendants-Appellants agreed with the Sales Companies that Pratt and Burrell were not employees of Cellular Sales. However, about a year and a half later, Defendants-Appellants agreed to employ Pratt and Burrell.
Our conclusion is confirmed by our examination of the allegations in the complaint. To assess whether these allegations touch matters covered by the arbitration agreement, Defendants-Appellants would have us look at the complaint's allegation that Pratt and Burrell were in fact Defendants-Appellants' statutory employees prior to executing the Compensation Agreements. That argument, although superficially appealing, is wrong. The complaint's factual allegations include the manner in which Pratt and Burrell worked for Defendants-Appellants and how Defendants-Appellants exercised control over that work. These factual allegations do not touch matters covered by the arbitration clause because they do not evince the parties' intent to enter into an employment relationship. Instead, the more salient factual allegation for assessing the arbitration agreement's scope is how Defendants-Appellants labeled Pratt and Burrell as non-employees.
For the foregoing reasons, the judgment of the district court is AFFIRMED.