The real estate industry’s litigation list is down by one as the courtroom squabbles between Keller Williams and former CEO John Davis are slated to reach an arguably anticlimactic resolution outside the courtroom.
Given a choice between a pair of motions filed by Keller Williams that would decide the fate of the acrimonious legal saga, a federal Judge in Texas opted to send the lawsuit to arbitration in an Aug. 12 ruling that garnered praise from the franchisor.
“Keller Williams is pleased with the Court’s decision to compel arbitration in this matter, which is precisely the outcome we sought and expected,” says Keller Williams spokesperson Darryl Frost.
The company had filed dual motions calling for Judge Reed O’Conner to either dismiss Davis’ claims altogether or send the suit to arbitration as in a previous lawsuit Davis had filed against his former employer two years ago.
O’Conner denied Keller Williams’ request for dismissal, but sending the case to arbitration has the residual impact of staying Davis’ claims against his former employer until the arbitration process is completed.
“While our motion to dismiss was a procedural alternative, the Court’s decision to, yet again, enforce a binding arbitration provision is supported by the law and reflects the strength of our position,” Frost says. “It is unfortunate that judicial resources, as well as our own time and resources, were wasted to enforce what should have been a straightforward legal process.”
According to the filing, Keller Williams and its fellow defendants can reassert their motion to dismiss the case if the lawsuit is reopened.
It may not come to that, however, as Davis’ attorney stated in an email to RISMedia that they agreed with the decision to send the case to arbitration.
“We are pleased that the Court agreed with us that these claims should move forward in a forum where Keller Williams, Gary Keller, John Keller, Marc King, Josh Team and their various entities have to answer for their wrongdoing, which has harmed many business owners within the Keller Williams ecosystem,” wrote attorneys Andrew Miltenberg and Kristen Mohr.
The legal turmoil between Davis and his former company goes back to 2022 after a former Keller Williams franchise owner sued Davis and other executives for alleged sexual misconduct and an unsafe work environment.
While Davis denied those accusations in the suit, he filed another lawsuit against the company, accusing co-founder Gary Keller and other executives of manufacturing the sexual harassment lawsuit to force him to sell his franchise at a lower price.
The claims were ultimately sent to arbitration in March 2023, but Davis filed another claim months later with similar accusations. This time, the lawsuit named Keller Williams, company Co-Founder Gary Keller, and former President Josh Team.
The second lawsuit focused heavily on alleged illegal and improper business practices that Keller and other executives implemented and accused them of self-dealing, retaliation and exploitation of franchises by manipulating fees and caps.
Keller Williams lambasted Davis’ second lawsuit and argued that it contained claims similar to those in his initial lawsuit.
The company stated then that the lawsuit was “yet another attempt by…Davis to end-run this Court’s order” and accused the former CEO of using the judicial system as a publicity stunt.
As such, Keller Williams called on the court to hold Davis in contempt for essentially defying the arbitration order, to no avail.
However, O’Conner acknowledged Keller Williams’ stance in his ruling, stating that he and the court were “acutely aware of what seem to be delay tactics and a waste of resources in two separate matters.”
“The most recent effort appears to be Plaintiffs’ request for an extension of time to amend pleadings and add parties after consenting to arbitrate all claims,” he wrote.
Defendants requested recovery of all attorneys’ fees incurred in connection with their motion to compel arbitration. O’Conner denied the request but indicated that if delays continued, Keller Williams could reassert their request for attorneys’ fees in connection with the first and/or second lawsuits.
