NON-PARTY TO ARBITRATION AGREEMENT COMPELLED TO ARBITRATE
A federal judge in Illinois compelled arbitration of a defamation suit brought by an ousted board member against other board members of an LLC formed as a joint venture. The LLC was formed by an operating agreement that included a procedure for the designation of governing board members. Plaintiff, the principal of one of the entities forming the joint venture, was designated to the board, but other board members successfully sought to have him removed for reasons they set forth in writing to other members. Plaintiff sued them for defamation. The defendants moved to compel arbitration, citing the operating agreement’s arbitration provision. While the Plaintiff was not a party to the operating agreement, the court still compelled him to arbitration, as it found him to be an agent of one of the signatory companies, citing agency as one of the “five doctrines through which a non-signatory can be bound by arbitration agreements entered into by others.” The court also found the defamation claims to be within the scope of the arbitration agreement, because it pertained to a disagreement “concerning the management or conduct of the affairs” of the joint venture created by the operating agreement. Denari v. Rist, Case No. 10-2704 (USDC N.D. Ill. Jan. 31, 2011).
This post written by John Pitblado.
