## Facts

- Grand Wireless, Inc. entered a 2002 “Exclusive Authorized Agency Agreement” making it a Verizon Wireless sales agent within a defined territory and requiring exclusivity.
- The agreement treated subscriber lists as Verizon’s confidential property and allowed termination after the initial term on 30 days’ written notice.
- The agreement contained a broad arbitration clause requiring arbitration of disputes “arising out of or relating to” the agreement.
- In 2011, Verizon gave notice it would terminate the relationship.
- After the notice, Verizon sent a marketing postcard to customers of several Grand store locations stating the stores had “CLOSED.”
- Grand alleged the postcard was false, harmed its business and customer relationships, and was authorized by Verizon employee Erin McCahill with knowledge of its falsity and in furtherance of Verizon’s business.
- Grand sued Verizon and McCahill asserting a civil RICO claim against McCahill and related state-law business tort claims against both.

## Issues

1. Whether the agreement’s broad arbitration clause encompassed Grand’s civil RICO and related state-law claims arising from termination-related communications to customers.
2. Whether a non-signatory employee (McCahill) could invoke the arbitration clause to compel arbitration of claims based on actions allegedly taken within the scope of employment.

## Decision

- The First Circuit reversed the district court’s denial of the motion to compel arbitration.
- The court held the arbitration clause covered all asserted claims, including the civil RICO claim and related state-law claims.
- The court held McCahill could compel arbitration despite being a non-signatory because the claims against her were intertwined with the contractual relationship and alleged conduct within her employment role.
- The case was remanded with instructions to compel arbitration.

## Legal Principles

- Under the Federal Arbitration Act, a broad clause covering disputes “arising out of or relating to” an agreement is presumptively construed to reach statutory and tort claims that bear a significant relationship to the contract.
- Doubts about the scope of arbitrable issues are resolved in favor of arbitration, particularly where the clause is broad.
- Federal statutory claims, including civil RICO, are arbitrable when covered by a valid arbitration agreement absent a contrary congressional command.
- Non-signatory employees or agents may enforce an arbitration clause when the claims against them are closely connected to the contract and arise from alleged actions within the scope of their agency or employment.

## Conclusion

The First Circuit required arbitration of all claims because the alleged termination-related customer communications were sufficiently connected to the agency agreement, and the Verizon employee sued for those communications could invoke the agreement’s arbitration clause despite not signing it.


Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1 (1st Cir. 2014)