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Former Keller Williams CEO John Davis took aim at Gary Keller in a press release Monday, alleging the Keller Williams co-founder runs the company “similar to a criminal enterprise.”
Davis’s announcement comes as a federal district court in Fort Worth, Texas, is deliberating whether to have Davis’s legal claims against Keller, Keller Williams, and former KW President Josh Team handled under arbitration.
In the fall, Davis filed a lawsuit in what Davis said is an effort to restore his reputation after sexual misconduct allegations against him surfaced earlier in 2022 and to recover $300 million in damages. The Oct. 27 complaint also names Inga Dow, the CEO of multiple Keller Williams offices who lodged the allegations against Davis, as a defendant. At the end of January, the court refused Keller’s request to merge the suits filed by Davis and Dow, ruling that they will continue as two separate cases.
In his suit, Davis alleges he resigned from KW because of a disagreement with Keller over a business strategy that he believed would bring in less income to Keller Williams offices, and that Keller and Team responded by smearing him and withholding Dow’s accusations from him when he was negotiating the sale of his KW market center regions after his resignation, resulting in tens of millions in financial losses.
“Mr. Davis seeks a trial by his peers to shine the light on how Gary Keller, Josh Team, and Keller Williams Realty leaders run their business and harm the very people that made Gary Keller, Josh Team and others wealthy,” said Paul Omodt, spokesman for John Davis, in the announcement Monday. The release was issued by the law firm representing Davis, Nesenoff & Miltenberg.
“Our most recent motion before the court seeks a public forum and argues against Keller Williams’ use of arbitration to shield its misdeeds publicly. Mr. Davis and his team believe in the strength of their case and believe Gary Keller and his scheme have similarly harmed others.”
Keller Williams spokesperson Darryl Frost sent Inman an emailed statement on behalf of Keller Williams, Keller, and Team.
“Unfortunately, Mr. Davis is using the court system, and now his paid publicist, as a vehicle to assert unsubstantiated, unwarranted, and disparaging claims against Keller Williams and Mr. Team,” Frost said.
“We look forward to the opportunity to reveal his claims for what they are — an attempt to misdirect attention and lay blame where it shouldn’t be.”
Keller, Keller Williams, and Team filed a motion to compel arbitration in Davis’s case on Feb. 8, arguing that Davis signed “numerous agreements” with the defendants that include arbitration clauses. On Feb. 13, Dow told the court she agreed with Keller Williams that Davis’s claims — including those against her — should be resolved under arbitration.
But on Feb. 16, Davis told the court that an agreement he signed with Keller Williams on Nov. 4, 2020 “expressly cancels all previous contracts and agreements.”
Moreover, Davis’s attorneys argued that the arbitration agreement the defendants seek to enforce is “unconscionable” because it is designed to prevent franchise owners from suing and therefore keeping Keller Williams’ alleged wrongdoings from coming to light.
“Defendants are improperly trying to silence Davis by broadening the terms of the arbitration agreement, because of the potential for more widespread litigation resulting from the harms committed by Keller Williams and Gary Keller through the devaluation of many franchise owners’ interests over the years,” the filing reads.
“The KW Defendants’ present motion before the Court — seeking to stay this case and compel arbitration — is part and parcel of the KW Defendants’ calculated efforts to avoid liability and deter others, including KW franchise owners, from asserting their legal rights. Such reasoning for secrecy is against public policy.”
Davis’s attorneys specifically slam Keller and the way he operates Keller Williams.
“The KW Defendants, and more particularly Gary Keller, run Keller Williams similar to a criminal enterprise, whereby investments and interests are taken or devalued through unlawful tactics, whether through improper reduction of market caps or other means, because of Gary Keller’s greed,” the filing reads.
‘Franchise owner victims who are targeted by Gary Keller have no choice but to accept significantly less than market value offers or face losing their investments through further devaluation. Several franchises are so significantly devalued by Gary Keller and Keller Williams that their owners have no choice but to give up their investments. Gary Keller and those close to him have largely profited through the devaluing of interests of franchise holders for many years, and they continue to do so to date.”
Davis’s announcement Monday emphasized that the court’s most recent ruling denied Keller Williams’s “legal maneuvers to keep the case secret and hidden … in favor of the public’s right to know.”
That ruling was on Feb. 17 when the court denied the Keller Williams defendants’ motions to seal both their motion to dismiss and all of the filings related to their motion to compel arbitration, which is why the filings are publicly available.
In that same order, Judge Reed O’Connor condemned “querulous behavior” and a “pattern of abrasive conduct” from all of the parties in the case and threatened the lawyers involved with sanctions for “[a]ny future deviations” from a “high standard of professional conduct.”
In a Feb. 20 reply to Davis’s filing, attorneys for Keller, Keller Williams and Team do not address Davis’s allegations regarding the operation of Keller Williams. Rather, they argue that Davis’s position that the subject arbitration agreement is unconscionable is “unsupported.”
“[T]here is nothing in the Agreement’s arbitration provisions that is ‘sufficiently shocking or gross to compel the court to intercede,’ which is the standard for substantive unconscionability,” the filing reads.
“Finally, arbitration is not against public policy,” the filing continues. “It is well established that arbitration of disputes between parties is strongly favored under federal and state law.”
Dow did not respond to a request for comment.
Editor’s note: Inman received an amended comment from Keller Williams noting the company was also responding on behalf of Team and Inman has updated the story with that comment.
