What if your client signed an agreement with a corporation requiring arbitration of any dispute and you also wanted to hold the corporation’s chief executive personally responsible for fraud, conversion and breach of fiduciary duty? Can you obtain jurisdiction over the chief executive officer in arbitration even though he did not personally sign the contract containing the arbitration clause in his individual capacity? The answer is “maybe.” In a recent case before the American Arbitration Association, the answer for our client was “yes” and the arbitrator ruled that the non-signing executive was bound to arbitrate our client’s claims.

For over 23 years, our client worked as a product management specialist for a large, fortune 500 company that purchased items (such as tools and supplies) from various manufacturers.  In 2019, a company that we will refer to here as Mack Corp. (for confidentiality) lured our client to work for Mack Corp., a company that served as a manufacturer’s sales representative to large corporate buyers, such as the Fortune 500 company where our client had worked.  In order to lure our client to join Mack Corp. the company and its Chief Executive Officer (Marc), promised to split all commissions that it received from all manufacturers and clients of Mack Corp. on a 60/40 basis, with 60% of the commissions to be paid to our client and 40% to be paid to Mack Corp.  However, Mack Corp.’s Chief Executive and sole shareholder, Marc, repeatedly concealed material information regarding the actual commissions received by Mack Corp. and falsely represented the split amounts earned by our client, allowing Mack Corp. to steal and convert over $900,000 in commissions earned by our client.

Background

The contract signed by our client with Mack Corp. contained an arbitration clause requiring all disputes arising out of the terms of the agreement to be submitted to arbitration before the American Arbitration Association in Cook County, Illinois. When disputes arose, our client asserted claims not only against Mack Corp. but also against its chief executive officer (we’ll call him CEO Marc), for fraud, breach of fiduciary duty, and conversion. CEO Marc had signed the contract solely in his capacity as President of Mack Corp., not in his individual capacity.

The Arbitration Clause

Mack Corp. and CEO Marc moved to dismiss the claims against CEO Marc from the arbitration, arguing that as a non-signatory to the arbitration agreement, CEO Marc could not be compelled to arbitrate. This raised a critical strategic question: Can a corporate executive who did not personally sign an arbitration agreement be bound to arbitrate claims against him individually?

The Legal Framework

In Illinois, a non-signatory to a contract, such as CEO Marc, typically cannot be compelled to arbitrate. However, there are recognized exceptions to that general rule, including third-party beneficiary, agency, and equitable estoppel theories. The Supreme Court has recognized that arbitration agreements may be enforced by non-signatories through “assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel.”

The Agency Theory

The arbitrator determined that CEO Marc could be compelled to arbitrate based on agency principles under Illinois law. The analysis focused on CEO Marc’s role and relationship with Respondent Corporation.

CEO Marc was the sole shareholder, officer, and director of Mack Corp. As corporations can only act through their agents and employees, the Arbitrator ruled that Mack Corp. could only act through CEO Marc and noted that under Illinois law, it is well established that employees and officers of a corporation are the corporation’s agents.

Critically, our client’s claims alleged that In CEO Marc had knowledge and control over the circumstances giving rise to the dispute and had orchestrated the conduct that formed the basis of the claims. This was not a situation involving a distant third party with no connection to the contractual relationship. Rather, CEO Marc was directly aware of and involved in the interactions between the parties on behalf of Mack Corp.

The arbitrator noted that the Seventh Circuit U.S. Court of Appeals has compelled arbitration where the plaintiff alleges that a non-signatory has some sort of agency relationship, regardless of whether those allegations are ultimately proven true or are disputed. Based on these principles, the arbitrator concluded that CEO Marc, acting as agent of Mack Corp., could properly be subjected to the jurisdiction of the arbitration.

Scope of the Arbitration Clause

Respondents also challenged whether claims beyond breach of contract—specifically fraud, breach of fiduciary duty, and conversion—could be arbitrated under the agreement’s arbitration clause. The arbitration provision stated: “Any controversies arising out of the terms of this Agreement or its interpretation shall be settled in Cook County, Illinois in accordance with the rules of the American Arbitration Association”.

The arbitrator applied the strong federal policy favoring arbitration under the Federal Arbitration Act, which governs this type of dispute. Under FAA precedent, due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself must be resolved in favor of arbitration.

The clause at issue did not limit arbitration solely to contractual claims. Instead, it encompassed “any controversies” arising out of the terms of the agreement or its interpretation. The arbitrator found that all of the asserted claims arose out of the relationship established by the contract.

Moreover, the arbitrator ruled that once it is clear that the parties have a contract providing for arbitration of some issues between them, any doubts concerning the scope of the arbitration clause are resolved in favor of arbitration. Generally speaking, an order to arbitrate a particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Because there was no dispute that the contractual claims were subject to arbitration, the federal policy favoring arbitration required that the remaining claims also be arbitrated.

Addressing the Merits vs. Arbitrability

Respondents attempted to argue that several of the claims were not arbitrable by asserting, for example, that no fiduciary relationship existed between the parties, that our client had no right to the commissions at issue in the conversion claim, and that Respondents did not conceal material facts. The arbitrator correctly rejected these arguments, finding that they went to the merits of the claims rather than to the threshold question of arbitrability.

In order to determine whether a claim is arbitrable, the analysis must determine: (1) whether there is an agreement to arbitrate; (2) whether the claims fall within the scope of the agreement; and (3) whether there has been a waiver. The question of arbitrability focuses on these threshold issues, not whether the facts support a particular cause of action, whether a legal duty existed, or whether conduct violated that duty. Those are questions for the arbitrator to decide on the merits—not grounds for refusing to arbitrate in the first place.

The Decision

Ultimately, the arbitrator denied Respondents’ motion to dismiss in its entirety. The ruling held that CEO Marc, as the sole shareholder, director, and officer of Mack Corp., acted as its agent in the course of dealings with our client and was therefore appropriately subject to the jurisdiction of the arbitration. The arbitrator further held that the arbitration clause was broad enough to allow arbitration of all four claims asserted by our client.

Settlement

The arbitrator’s ruling provided solid ground for our client to obtain a six figure settlement against the Respondents, all without going to a costly final arbitration hearing (i.e., trial).

Strategic Takeaways

This decision offers several important lessons for practitioners pursuing claims against both corporate entities and individual executives:

1. Agency relationships matter. When a corporate officer is the sole decision-maker and has direct involvement in the conduct giving rise to the dispute, agency principles may support compelling that individual to arbitrate even without a personal signature on the arbitration agreement.

2. Allege the individual’s role clearly. Our demand specifically alleged that Individual Executive was the sole shareholder, officer, and director of Respondent Corporation and that he had knowledge, control, and direct involvement in the disputed conduct. These factual allegations were critical to establishing the agency relationship.

3. Broadly worded arbitration clauses favor claimants. An arbitration clause covering “any controversies arising out of” the agreement is more likely to encompass tort and equitable claims in addition to breach of contract claims.

4. Distinguish arbitrability from merits. Respondents’ arguments about the substantive merits of the claims were properly rejected as premature. The arbitrability analysis focuses on whether there is an agreement to arbitrate and whether the claims fall within its scope—not whether the claims will ultimately succeed.

5. Multiple theories exist. While the arbitrator based jurisdiction on agency principles, the ruling noted that alter-ego and equitable estoppel theories might also have supported the result. Practitioners should plead alternative theories when seeking to bind non-signatories.

6. Federal policy favors arbitration. The FAA’s strong presumption in favor of arbitration played a significant role in resolving doubts about the scope of the arbitration clause in our client’s favor.

Conclusion

The answer to whether a non-signing corporate executive can be compelled to arbitrate is indeed “maybe”—but with careful pleading and the right factual circumstances, that “maybe” can become “yes.” When the executive is the sole or dominant actor within the corporation and has direct involvement in the underlying dispute, agency and related theories provide a viable path to obtaining arbitration jurisdiction over the individual, even without a personal signature on the arbitration agreement. This strategy allows claimants to pursue both the corporate entity and responsible individuals in a single, efficient arbitration proceeding.

Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2026.  No more than 5% of Illinois attorneys receive this distinction.  Mr. DeBlasio has over 30 years of experience as an Illinois attorney, representing businesses, individuals, employees, employers, estates and beneficiaries of estates in Illinois.  For information on scheduling a consultation, call DeBlasio Law Group at (630) 560.1123, or you may reach us through our firm’s website at www.DGLLC.net/contact

DeBlasio Law Group LLC reached a successful settlement with a South Suburban Village that illegally deducted over $2,200 from the pay of a former police officer.  The Village agreed to make the payment within nine (9) days after our law firm sent a demand letter. 

The firm agreed to help the police officer recover his earned pay from the Village for violating the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (the “Wage Act”), which provides powerful remedies against employers and other persons who knowingly fail to pay wages and final compensation to employees and former employees.

In this case, the Village hired the Police Officer as a lateral transfer, but the officer resigned within two months after witnessing and reporting several events that put the safety of the officers and the general public at risk and otherwise was inconsistent with sound police practice. 

When the officer received his final paycheck, the paystub reflected a “Misc. Deduction” of over $2,200.00. The Village claimed that the deduction was for a uniform and armor equipment provided to the officer, but the officer had returned his uniform and armor equipment after his resignation. 

Illinois Law on Illegal Deductions from Pay

Regardless, the deduction violated Illinois law.  Section 9 of the Wage Act expressly prohibits employers such as the Village from deducting any amount from an employee’s wages or final compensation unless such deductions are (1) required by law, (2) to the benefit of the employee, (3) in response to a valid wage assignment or wage deduction order, or (4) made with the express written consent of the employee, given freely at the time the deduction is made.  820 ILCS 115/9; 56 Ill. Admin. Code § 300.720.  None of these exceptions applied to the deduction made by the Village.

Moreover, Illinois law expressly provides that “[a]n employer shall not deduct the cost of purchasing . . . uniforms required by the employer from an employee’s wages or final compensation, unless the employee’s express written consent is given freely at the time the deduction is made.” 56 Ill. Admin. Code § 300.840. This was never done. The same rule applies to deductions for equipment:  “ An employer shall not deduct the cost of equipment required by the employer or by law from an employee’s wages or final compensation unless the employee’s express written consent is given freely at the time the deduction is made.” 56 Ill. Admin. Code § 300.850.  No express written consent was ever given by the police officer, much less “freely at the time the deduction” was made.

Liability Under the Wage Act

The Wage Act provides powerful remedies against employers (including units of local government) who fail to pay wages and final compensation to employees.

Any employee not timely paid wages, [or] final compensation . . . by his or her employer as required by this Act shall be entitled to recover through a . . . civil action . . . the amount of any such underpayments and damages of 5% of the amount of any such underpayments for each month following the date of payment during which such underpayments remain unpaid.  In a civil action, such employee shall also recover costs and all reasonable attorney’s fees.

820 ILCS 115/14 (emphasis supplied).

In this case, the officer could easily prove his claims under the Wage Act claim because (1) the Village was his “employer” as defined in the Wage Act, (2) the parties entered into an “employment contract or agreement” and (3) the officer earned “wages” or “final compensation” that he was not paid for because of the illegal deductions.  Schultze v. ABN AMRO, Inc., 2017 IL App (1st) 162140, ¶ 22; Landers-Scelfo v. Corporate Office Systems, Inc., 356 Ill. App. 3d 1060, 1068 (2^nd Dist. 2005); O’Malley v. Udo, 2022 IL App (1st) 200007, ¶ 46.

In addition, the Wage Act allows current and former employees such as the police officer to recover mandatory additional statutory damages of 5 percent per month above and beyond amount owed for earned wages.  820 ILCS 115/14(a). Furthermore, the Wage Act provides for mandatory payment of attorneys’ fees and costs.  Thomas v. Weatherguard Constr. Co., 2018 IL App (1st) 171238, ¶¶ 68-73 (Wage Act unambiguously states that an employee “shall” recover costs and “all reasonable attorney’s fees” and affirming trial court’s award of $178,449.97 in attorney’s fees and costs on top of unpaid commissions of $9,226.52); Curet v. C&H Exterior Restorations, Inc., 2023 IL App (2d) 230030, ¶¶ 19, 36-37 (“[a]n award of fees and costs under the [Wage] Act is mandatory”) (emphasis supplied) (internal citations omitted). 

The Wage Act affords broad coverage to employees, and does not require a formal employment contract.  Under the Wage Act, a plaintiff need only show the existence of an “agreement,” which is more expansive than a contract and merely requires a “manifestation of mutual assent by the parties without requiring the formalities and accompanying legal protections of a contract.”  Schultze v. ABN AMRO, Inc., 2017 IL App (1st) 162140, ¶ 23 (citingLanders-Scelfo v. Corporate Office Systems, Inc., 356 Ill. App. 3d 1060, 1068 (2005) (holding that an “agreement” under the Wage Act can be entirely implicit) (quoting Zabinsky v. Gelber Group, Inc., 347 Ill. App. 3d 243, 249 (1^st Dist. 2004)).  Indeed, the Wage Act regulations broadly define the term “agreement”:

‘Agreement’ means the manifestation of mutual assent on the part of two or more persons. An agreement is broader than a contract and an exchange of promises or any exchange is not required for an agreement to be in effect.  An agreement may be reached by the parties without the formalities and accompanying legal protections of a contract and may be manifested by words or by any other conduct, such as past practice[.]
56 Ill. Adm. Code 300.450.

Earning a living is challenging enough.  Having your employer illegally deduct money from your pay is even worse.  It should not happen.  The Wage Act affords workers protections when this happens.

Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2026.  No more than 5% of Illinois attorneys receive this distinction.  Mr. DeBlasio has over 31 years of experience as an Illinois attorney, representing businesses, individuals, employees, employers, estates and beneficiaries of estates in Illinois. 

DeBlasio Law Group LLC partner Antonio DeBlasio is pleased to announce the firm obtained a $450,000 settlement for an executive against his former employer who refused to pay an earned bonus. 

The executive hired DeBlasio Law Group after his former employer refused to pay him the earned bonus.  The firm sued under various theories, including the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (the “Wage Act”), which provides powerful remedies against employers and other persons (such as C-level executives) who knowingly fail to pay wages and final compensation to employees and former employees.

Section 14 of the Wage Act provides:   “Any employee not timely paid wages, [or] final compensation . . . by his or her employer as required by this Act shall be entitled to recover through a . . . civil action . . . the amount of any such underpayments and damages of 5% of the amount of any such underpayments for each month following the date of payment during which such underpayments remain unpaid.  In a civil action, such employee shall also recover costs and all reasonable attorney’s fees.”  820 ILCS 115/14 (emphasis supplied).

The statutory penalty and attorneys’ fee provision in the Wage Act should not be taken lightly by any employer. Under the Wage Act, attorneys’ fees and a 5% per month statutory damage provision are mandatory.  In other words, if you are owed a bonus of $100,000 and are not paid that bonus for 18 months, you would have a claim under the Wage Act to recover the $100,000 unpaid bonus plus 5% per month statutory damages, which after 18 months would equal $90,000.  Therefore, the employer is liable for $190,000, plus attorneys’ fees and costs.  See e.g., Thomas v. Weatherguard Constr. Co., 2018 IL App (1st) 171238, ¶¶ 68-73 Curet v. C&H Exterior Restorations, Inc., 2023 IL App (2d) 230030, ¶¶ 19, 36-37.

Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2026.  No more than 5% of Illinois attorneys receive this distinction.  Mr. DeBlasio has over 31 years of experience as an Illinois attorney, representing businesses, individuals, employees, employers, estates and beneficiaries of estates in Illinois. 

On May 29, 2026, the Illinois Appellate Court (Second District) ruled in favor of our
client, Scott Tollaksen, in a multi-million dollar shareholder dispute against his partners and former employers, Lionheart Critical Power Specialists, Inc. and Lionheart Power Systems, Inc. The Appellate Court reversed the trial court and agreed that Lionheart failed to exercise an option under the parties’ Buy-Sell Agreement when it conditioned acceptance of the option upon additional, material terms that were not required under the parties’ Buy-Sell Agreement, including the forfeiture of his interest in a separate real estate partnership for no consideration, a non-compete agreement and forced indemnification. A copy of the Appellate Court’s ruling (2026 IL App (2d) 240539-U) can be viewed by clicking here

The Appellate Court’s ruling means that our client has retained his status as a shareholder ever since 2016, and his claims for breach of fiduciary duty and shareholder oppression can proceed to trial. The firm has also sought to amend its complaint to assert additional claims against Lionheart and its other shareholders, including claims under the Illinois Wage Payment and Collection Act, which include a 5% per month penalty for all compensation that has not been paid as well as mandatory attorneys’ fees.

DeBlasio Law Group attorneys Antonio DeBlasio and Brian A. Bosch represented Mr. Tollaksen in the trial court and appeal, along with experienced appellate co-counsel, Robert Black.  Mr. DeBlasio and Brian Bosch have over 70 years of combined experience representing businesses, individuals and estates in contested litigation matters in Chicago and Cook County, as well as in surrounding Chicagoland counties, including, DuPage, Lake, Kane, Will and McHenry Counties.

DeBlasio Law Group is proud to announce that for 2026, attorney Antonio DeBlasio has again been selected for inclusion on the list of Illinois Super Lawyers®.  Super Lawyers is a ratings service that recognizes outstanding lawyers who have attained a high degree of peer recognition and professional achievement.  No more than 5% of Illinois attorneys receive this distinction.  This is the 14th year that Mr. DeBlasio has been designated a Super Lawyer, in 2008 and each year from 2014 to 2026.

Mr. DeBlasio has over 31 years of experience representing businesses, individuals and estates in Illinois in contested litigation matters in Chicago and Cook County, as well as in surrounding Chicagoland counties, including, DuPage, Lake, Will and McHenry Counties.  Mr. DeBlasio founded DeBlasio Law Group LLC in 2009, after practicing privately at a top 15 law firm for 12 years and a small boutique firm in DuPage County for three years.

DeBlasio Law Group LLC partner, Antonio DeBlasio is pleased to announce the firm obtained a $250,000 settlement for a property owner against his Condominium Association and several of its board members.

The firm filed a lawsuit against the association and its board members for illegally enacting condominium rules and regulations without providing proper notice to the homeowners in advance, as required by the association’s declarations and Illinois law. As part of the lawsuit, the firm obtained summary judgment in favor of our client against the Condominium Association for failing to produce records of the Condominium Association in violation of the Illinois Condominium Property Act.  The lawsuit also alleged that the Association enacted and attempted to enforce illegal and unreasonable leasing rules, fabricated evidence against our client and assessed multiple, grossly excessive fines of $500 per month for alleged continuing violations of the leasing rules.  The lawsuit filed in Cook County Circuit Court asserted claims for failure to examine records, breach of contract (e.g., the Association’s Declarations), and breach of fiduciary duties. 

Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2026.  No more than 5% of Illinois attorneys receive this distinction.  Mr. DeBlasio has over 31 years of experience as an Illinois attorney, representing businesses, individuals, and homeowners in contested litigation matters, including real estate and condominium disputes. For information on scheduling a consultation, call DeBlasio Law Group at (630) 560.1123, or you may reach us through our firm’s website at www.DGLLC.net/contact.

(December 2024)  The firm is pleased to announce that partner Antonio DeBlasio and the litigation team at DeBlasio Law Group recently  settled a corporate litigation lawsuit involving claims that a client was fraudulently induced to execute a promissory note and sell a substantial stake in a limited liability company franchise valued at $3 million.  Terms of the settlement are confidential.

One of the key issues in the DuPage County lawsuit was the execution of a promissory note to repay a specific sum of money despite the fact that the “lender” had never subsequently loaned the full amount to the maker of the note.  Under Illinois law, this failure presented a significant obstacle to enforcement of the promissory note, especially when the “lender” (plaintiff) filed a verified complaint stating under oath that it had in fact loaned the money.  See e.g., Brown v. Grimes, 192 Cal. App. 4th 265, 277 (2011)  (“When a party’s failure to perform a contractual obligation constitutes a material breach of the contract, the other party may be discharged from its duty to perform under the contract.”); see also Bisla v. Parvaiz, 379 Ill.App.3d 567, 572-573 (1^st Dist. 2008) (court held a material “breach of contract can operate to discharge the duties of a non-breaching party” where “the breach worked to defeat the bargained-for objective of the parties or caused disproportionate prejudice to the non-breaching party”).

Another significant issue in the case was the lender’s fraudulent actions to induce execution of the promissory note and to induce the purchase of a significant equity stake in the LLC.  During a discovery deposition, the lender admitted that it was a “shell” company and that it did not have the capital needed to fund the loan or to meet any capital calls as a new member of the LLC.  These facts and others formed the basis for a fraudulent inducement claim against the member / lender under Illinois law. See Shanahan v. Schindler, 63 Ill. App. 3d 82 (1st Dist. 1978) (where promisor was fraudulently induced to sign the promissory note, contract was voidable at promisor’s option and court upheld the established principle that a party committing fraud should be precluded from benefiting therefrom); see also Tower Investors, LLC v. 111 E. Chestnut Consultants, Inc., 371 Ill. App. 3d 1019, 1030-1031 (1^st Dist. 2007) (“Fraud in the inducement of a contract is a defect which renders the contract voidable at the election of the innocent obligor).

Claims of material breach of contract and fraud require a meticulous analysis of the underlying facts and a close working relationship with counsel to further develop those facts. Attorney Antonio DeBlasio has been selected by Super Lawyers® in 2008 and in each year from 2014 through 2025.  No more than 5% of Illinois attorneys receive this distinction.  Mr. DeBlasio has over 30 years of experience as an Illinois attorney, representing businesses, individuals, employees, employers, estates and beneficiaries of estates in Illinois.  For information on scheduling a consultation, call DeBlasio Law Group at (630) 560.1123, or you may reach us through our firm’s website at www.DGLLC.net/contact.