When the LLC Speaks: Fourth Circuit Holds That a Single-Member LLC—Not Its Owner—Is the Contracting Party for Arbitration Purposes

Introduction

In Randy Luna v. Tug Hill Operating, LLC, No. 24-1281 (4th Cir. July 1, 2025), the United States Court of Appeals for the Fourth Circuit addressed a deceptively simple but far-reaching question of contract law: who is the “party” to an agreement when a single-member limited liability company (LLC) signs a contract through its sole owner?

Plaintiff-Appellee Randy Luna sued Tug Hill Operating, LLC under the Fair Labor Standards Act (FLSA), alleging improper overtime pay. Tug Hill attempted to shut down the litigation by invoking an arbitration clause and a Texas forum-selection clause found in an Independent Contractor Agreement between staffing agency GryphonESP, LLC and “The Texan, LLC”—an entity wholly owned and managed by Luna. The district court rejected Tug Hill’s motion to transfer or compel arbitration, finding that Luna was not a party to the Agreement in his personal capacity. Tug Hill appealed, arguing that because Luna physically signed the contract, he bound himself to arbitrate.

The Fourth Circuit affirmed, holding that under Texas law the signature manifested agency, not personal assent: the contract belonged to the LLC, and thus its arbitration clause could not be enforced against Luna individually. The decision squarely clarifies the status of contracts executed by single-member LLCs, particularly in the context of mandatory arbitration and gig-economy staffing arrangements.

Summary of the Judgment

The Agreement unambiguously stated that “Contractor” meant The Texan, LLC.
The signature block showed Luna acting as a “duly authorized representative” of that Contractor.
Texas law provides that an agent signing on behalf of a disclosed principal is not personally bound unless the agent expressly agrees otherwise.
Because Luna was not individually a party, Tug Hill could neither compel arbitration nor rely on a forum-selection clause against him.
The Fourth Circuit declined to reach alternative theories (third-party beneficiary, alter-ego/veil piercing) that were inadequately preserved below.
Result: District court’s order denying transfer and arbitration AFFIRMED.

Analysis

1. Precedents Cited and Their Influence

Plan B Holdings, LLC v. RSLLP, 681 S.W.3d 443 (Tex. App. 2023)
– Central Texas case emphasizing that an agent of a disclosed principal is not personally liable absent express agreement. The Fourth Circuit relied heavily on its two-pronged test (examine both signature block and body of contract).
Restatement (Second) of Agency § 156
– Provides interpretive guidance on determining whether the principal or agent is bound. The opinion quotes Comment a to show that numerous drafting permutations can signal agency—including the preposition “by.”
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960), and Morgan v. Sundance, Inc., 596 U.S. 411 (2022)
– Classic maxims that arbitration is a matter of contract; courts may compel only those who actually agreed.
Hightower v. GMRI, Inc., 272 F.3d 239 (4th Cir. 2001)
– Confirms that state contract law determines who is bound by an arbitration clause.
Rogers v. Tug Hill Operating, LLC, 76 F.4th 279 (4th Cir. 2023)
– Earlier dispute involving Tug Hill; cited mainly for factual context and the corporate profile of Tug Hill.
Jurisdictional precedents (Vaden, Badgerow, Coinbase) were referenced to establish appellate competence but not outcome.

2. Legal Reasoning of the Court

Judge Quattlebaum, writing for a unanimous panel, followed a stepwise analysis:

Contract Formation & Interpretation
– Examined the front page and signature page. Both expressly identified “The Texan, LLC” as Contractor, and the signatories as “duly authorized representatives.” This created a strong prima facie inference of agency.
Texas Agency Principles
– Applied the rule that an agent for a disclosed principal is not personally bound unless they “expressly agree” to be so. The court found no express language imposing personal liability.
Rebuttal of Tug Hill’s Arguments
a) Signature format: The court deemed the phrase “DocuSigned by” sufficient to signal “by” the agent—even if auto-generated by software.
b) Body-text references to individuals: Generic pronouns (he, his) and boilerplate language relating to criminal history, personal conduct, or non-competes did not override the explicit designation of the LLC as contracting party.
c) Third-party beneficiary / alter-ego: Neither theory was preserved or adequately pled, so the panel declined to consider them.
Conclusion – Because Luna was not a party, compelling him to arbitrate would violate the foundational “consent” principle of arbitration jurisprudence.

3. Potential Impact of the Judgment

Drafting Vigilance for Staffing & Gig-Economy Contracts
– Businesses relying on independent contractors through single-member LLCs must ensure clarity if they intend personal as well as entity liability. Expect revised templates explicitly binding “the individual and the LLC.”
Arbitration Enforcement Strategy
– Companies may face greater hurdles to compel arbitration against individuals where agreements run through their LLCs. This may lead to more claims litigated in court, particularly wage-and-hour disputes.
Employment/Labor Classification
– Although unstated, the opinion foreshadows questions about whether individuals can sue under statutes like the FLSA when they contracted as LLCs. Future litigants may test whether statutory “employee” status trumps LLC formalities.
Corporate-Veil Litigation
– The panel signaled that alter-ego arguments must be timely and factually supported, especially under West Virginia’s demanding veil-piercing statute. Expect more diligent pre-pleading discovery into capitalization and insurance coverage.
Software-Generated Signatures
– The court’s acceptance of “DocuSigned by” as sufficient agency language implicitly legitimizes e-signature platforms where signature blocks may not follow traditional “By: ___, Title: ___” formatting.

Complex Concepts Simplified

Single-Member LLC: A limited liability company with only one owner. Legally distinct from its owner; shields personal assets from company liabilities.
Disclosed Principal: In agency law, the principal whose identity is revealed to the third party. The agent is generally not liable for contracts made on behalf of a disclosed principal.
Arbitration Clause: A contract provision requiring disputes to be resolved by a private arbitrator rather than in court.
Third-Party Beneficiary: A non-signatory who may enforce a contract if the contracting parties clearly intended to benefit that person.
Alter-Ego / Veil Piercing: Doctrine allowing courts to disregard the separate existence of a corporation/LLC and hold its owners personally liable when certain conditions (e.g., undercapitalization, fraud) are met.
Interlocutory Appeal: An appeal of a trial-court ruling made before the trial itself has concluded—allowed here under 9 U.S.C. § 16(a) because it involved denial of arbitration.
FLSA Day-Rate Claim: Allegation that a worker paid a flat daily fee is owed overtime for hours worked beyond 40 in a week.

Conclusion

The Fourth Circuit’s holding in Luna v. Tug Hill stands for a straightforward yet powerful principle: when a contract unmistakably names an LLC as the party and the individual signs in a representative capacity, the LLC—not the individual—is bound. Absent an express assumption of personal liability, arbitration or forum-selection clauses cannot be enforced against the individual owner.

Practitioners should treat the opinion as a drafting and litigation checklist:

Identify the true contracting parties in both body text and signature blocks.
If personal liability is desired, state it plainly—do not rely on inference.
Preserve all theories (third-party beneficiary, alter-ego) early and support them with facts, or risk waiver on appeal.
Recognize that e-signature tools still carry legal consequences; automated verbiage can influence judicial interpretation.

By affirming traditional agency doctrine in the modern context of single-member LLCs and electronic contracts, the court reinforces the autonomy and liability shield of the LLC form while also reminding businesses that the road to arbitration is paved with clear consent, not assumption.