Insights & Events

Hollingsworth LLP partners Grant Hollingsworth and Brett Covington authored an article for Bloomberg Law that discusses paths to arbitration when senior managers instead of companies are named as defendants in litigation. When facing this scenario, despite those senior managers having minimal — if any — connection to the alleged wrongful conduct, defense counsel should consider whether the managers have standing to move the claims against them into arbitration.

Moving claims against employees into arbitration is important because doing so

• Provides a greater likelihood of confidentiality in discovery;
• Largely avoids the potential for punitive damages if the agreement prohibits recovery of such damages; and
• Prevents legal fights in parallel court and arbitration proceedings, which come with their own inefficiencies.

One potential barrier to moving claims against senior managers to arbitration is that the parties to the contract containing the mandatory arbitration clause are often only the plaintiff and the company. Senior managers would be considered “nonsignatories” in that situation, which presents additional hurdles to enforcing the arbitration clause. However, recent court decisions, including one involving Tesla CEO Elon Musk, reaffirm two ways that a nonsignatory employee may seek to move claims into arbitration: (1) to argue that the employee is a third-party beneficiary of the arbitration clause or (2) to argue that the employee acted as an agent of the company and thus has standing as if the employee were the company. Defense counsel should consider moving to compel all claims against all defendants to arbitration wherever possible.

Visit Bloomberg Law to access the article online.

Reproduced with permission. Published November 17, 2025. Copyright 2025 Bloomberg Industry Group 800-372-1033.