In the face of multiple lawsuits, Gary Keller, the co-founder of Keller Williams, has finally notched a win. On Wednesday, a three-judge panel of U.S. Court of Appeals for the Fifth Circuit granted a motion to dismiss former KW CEO John Davis’ appeal.
The motion was filed earlier this month by Keller, Keller Williams and former KW president Josh Team.
In March, a lower court ruled to send the case into arbitration. Davis appealed to overturn this ruling. However, on Wednesday, the judges felt that the appeals court lacked the authority to grant the appeal because the lower court’s March ruling that sent the case into arbitration was not final.
“Here, in addition to compelling arbitration, the district court stayed the rest of the case and ordered it administratively closed,” the appeals court judges wrote the order. “It expressly stated that the parties file a joint status report at the close of arbitration and file a motion to reopen or dismiss the case as appropriate. By entering a stay and allowing for reactivation of the case, the district court demonstrated that it was postponing, not terminating, the proceedings. Thus, the order compelling arbitration is not a final appealable order over which this court has jurisdiction.”
Davis sued Keller, Keller Williams and Team for $300 million in the fall of 2022, prompted by Davis’ desire to “restore his reputation and clear his good name” after sexual misconduct allegations against him surfaced in the spring of 2022.
According to the initial complaint, Davis resigned from his position at Keller Williams in January 2019 due to a disagreement with Keller over a business strategy that he felt would hurt the income generated by Keller Williams offices.
In response to his resignation, Davis alleged that Keller and Team smeared him and withheld Inga Dow’s accusations of sexual misconduct from him as he was negotiating the sale of his KW market center regions following his resignation. This resulted in tens of millions in financial losses, according to Davis.
Despite Keller’s motion to dismiss being granted, Davis’ team is not discouraged.
“This decision of the Fifth Circuit was not on the metrics of the case. It didn’t actually analyze the merits of the case,” Paul Omodt, a spokesperson for Davis, said. “It simply highlighted that the order for arbitration was non-final decision in this case and because it is not final, the matter is not ripe for appeal so the appeal is preserved. Really this is more a timing issue, but our case still moves forward and the truth is still going to come out eventually for Gary Keller. Our case is actually gets stronger everyday as more people come to confirm the detail of our suit. They can try to push it off and try to hide it and the truth will come out eventually.”
In March, Colleen and Bart Basinski, former Keller Williams market center owners in Illinois and Indiana, and partial owners of a third market center in Southern California, filed their own lawsuit against KW, Keller and other top brokerage executives, alleging that they faced constant pressure from Keller, Marc King, and co-defendants Dan Holt, who is the regional director of Keller William’s Mid America Region, and Colette Ching, the regional director of Southern California, to alter their business operations, despite parameters set up in their franchise agreement, and adhere to Keller’s plans to lower market center caps in 2020.
“The ruling was the right one. We’re pleased the court upheld the ruling requiring Mr. Davis to honor his agreements,” Darryl Frost, a spokesperson for Keller Williams, wrote in an email. “Unlike Mr. Davis, we are not interested in litigating our disputes in the press nor are we interested in wasting judicial resources on a dispute that is rightly required to be arbitrated. We intend to continue to conduct our business in a professional and lawful manner and look forward to the arbitration.”
This story was updated to include quotes from Paul Omodt and Darryl Frost.