A is for Arbitration: Can A Non-Signatory To A Contract Enforce An Arbitration Provision In That Contract?

A is for...Arbitration: Can A Non-Signatory To A Contract Enforce An Arbitration Provision In That Contract?

A corporate client is engaged in arbitration with a third party pursuant to an arbitration provision in the contract between the parties. An executive signed the contract "on behalf of" the company, but did not sign the contract individually. During the course of the matter, the third party brings claims in court against the executive in his individual capacity, and the executive wants to force those claims to arbitration. Can he?

The strongest argument to be made in favor of arbitration is that, at the time the activities at issue occurred, the executive was acting on behalf of, and as an agent for, the company. It is well-settled that agents are afforded "the benefits of arbitration agreements made by their principal." Arnold v. Arnold Corp. - Printed Commc'ns For Business, 920 F.2d 1269, 1282 (6th Cir. 1990). Therefore, as an agent of the company, the executive could be entitled to the protections of the arbitration provision in the contract at issue if the claims against the company and the executive are based upon the same facts. Id.; accord Prograph Int'l Inc. v. Barhydt, 928 F. Supp. 983, 990 (N.D. Cal. 1996) ("[A] non-signatory officer, agent, or representative of one of the parties to an arbitration agreement may compel the other party to arbitrate claims against him or her arising from or in connection with that agreement."); see also Patteson v. McAdams Tax Advisory Group, LLC, 2010 U.S. Dist. LEXIS 16992, *13 (W.D. Tenn. Feb. 14, 2010) (citing Creech v. Addington, 281 S.W.3d 363, 373 (Tenn. 2009)).

The fact that the executive did not sign the contract containing the arbitration provision in his individual capacity is not fatal to enforcement of the provision. In fact, non-signatories to an arbitration agreement may be bound by or enforce an arbitration agreement executed by other parties under theories arising out of common law principles of contract and agency law. Broaddus v. Rivergate Acquisitions, Inc., 2008 U.S. Dist. LEXIS 86737, at *2 (M.D. Tenn. Oct. 1, 2008) (citations omitted). "Where there is an agency relationship between a signatory and a non-signatory, the nonsignatory may compel arbitration." Bowie v. Clear Your Debt, LLC, 523 Fed. Appx. 315, 317 (6th Cir. 2013); see also Crossville Medical Oncology, P.C. v. Glenwood Sys., LLC, 310 Fed. Appx. 858, 860 (6th Cir. Feb. 17, 2009) ("Nonsignatories may...