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Keller Williams co-founder Gary Keller is getting his want: claims in opposition to him and the corporate introduced by former KW CEO John Davis will likely be dealt with by arbitration moderately than by a public trial.

After a listening to Monday, Decide Reed O’Connor of a federal district court docket in Fort Value, Texas, granted a movement to compel arbitration in Davis’s case filed by Keller Williams, Keller, and former KW President Josh Workforce final month. Arbitration is a non-public course of during which the events agree {that a} impartial third social gathering could make a binding choice a couple of dispute after contemplating proof and listening to arguments.

The ruling suspends the case pending the outcomes of arbitration. How lengthy the method will final is an open query. O’Connor ordered the events to file a joint standing report and both a movement to reopen the case or a movement to dismiss the case two weeks after arbitration concludes.

Within the fall, Davis filed a fraud lawsuit in what Davis mentioned is an effort to revive his popularity after sexual misconduct allegations in opposition to him surfaced earlier in 2022 and to recuperate $300 million in damages. The Oct. 27 grievance additionally names Inga Dow, the CEO of a number of Keller Williams workplaces who lodged the allegations in opposition to Davis, as a defendant. On the finish of January, the court docket refused Keller’s request to merge the fits filed by Davis and Dow, ruling that they are going to proceed as two separate circumstances.

In his go well with, Davis alleges he resigned from KW due to a disagreement with Keller over a enterprise technique that he believed would usher in much less earnings to Keller Williams workplaces, and that Keller and Workforce responded by smearing him and withholding Dow’s accusations from him when he was negotiating the sale of his KW market heart areas after his resignation, leading to tens of thousands and thousands in monetary losses.

In a telephone interview, John Davis spokesperson Paul Omodt instructed Inman that whether or not the case is heard by arbitration or a public trial, the reality will finally come out.

“Keller Williams can’t cover from the reality,” Omodt mentioned. “The reality will nonetheless come out.”

He added that different Keller Williams market heart house owners had been making related allegations in opposition to Keller and Keller Williams, together with in a lawsuit filed final week.

“It’s not solely John’s fact, but additionally different individuals,” Omodt mentioned. “It simply exhibits the way it’s not the best approach to do enterprise.”

The court docket’s order didn’t elaborate on O’Connor’s causes for granting the movement to compel arbitration.

“We’re more than happy with right now’s court docket ruling that enforced the events’ settlement to arbitrate, and we sit up for an arbitrator dismissing this meritless dispute,” KW spokesperson Darryl Frost instructed Inman in an emailed assertion, talking on behalf of KW, Keller, and Workforce.

Keller, Keller Williams, and Workforce filed their movement to compel arbitration in Davis’s case on Feb. 8, arguing that Davis signed “quite a few agreements” with the defendants that embrace arbitration clauses. On Feb. 13, Dow instructed the court docket she agreed with Keller Williams that Davis’s claims — together with these in opposition to her — must be resolved underneath arbitration.

However on Feb. 16, Davis instructed the court docket that an settlement he signed with Keller Williams on Nov. 4, 2020 “expressly cancels all earlier contracts and agreements.”

Furthermore, Davis’s attorneys argued that the arbitration settlement the defendants search to implement is “unconscionable” as a result of it’s designed to forestall franchise house owners from suing and due to this fact holding Keller Williams’ alleged wrongdoings from coming to gentle. The submitting alleged that Keller runs Keller Williams “just like a prison enterprise, whereby investments and pursuits are taken or devalued by illegal ways, whether or not by improper discount of market caps or different means, due to Gary Keller’s greed.”

In a Feb. 20 reply to Davis’s submitting, attorneys for Keller, Keller Williams and Workforce didn’t tackle Davis’s allegations concerning the operation of Keller Williams. Fairly, they argued that Davis’s place that the topic arbitration settlement is unconscionable is “unsupported.”

“[T]right here is nothing within the Settlement’s arbitration provisions that’s ‘sufficiently stunning or gross to compel the court docket to intercede,’ which is the usual for substantive unconscionability,” the submitting reads.

“Lastly, arbitration will not be in opposition to public coverage,” the submitting continued. “It’s effectively established that arbitration of disputes between events is strongly favored underneath federal and state legislation.”

E-mail Andrea V. Brambila.

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