ATP is listed in the law suit for one reason - deep pockets. The lawyers hope to make their millions and need someone who can write a check for that amount.
Not sure it was quite clear, but it seems the CFI in question was not at that time employed by ATP, a student of ATP, nor have their blessing to continue his career as a CFI. It seems like the complaint is that he passed the course and they shouldn’t have let him. But, in that case, the lawyers needed to name the FAA, who set the standards for pass or fail. Oh wait - they’ll never get a dime from the FAA!
This is all about money for the lawyers. The family agrees because they want their son vindicated. Sorry, but it sounds like he was an irresponsible 22 year old (surprise!) looking more for recognition (via social media) than to serve his student pilot, employer, or anyone but himself.
The school the student pilot joined probably carries responsibility - but don’t have enough money to make it worth the lawyers’ time. So, ATP gets tagged. I hope that part of the suit is thrown out. Ambulance chasing lawyers shouldn’t be rewarded just because they know how to chase the money.