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A 184-page demand for arbitration filed by John Davis is “redundant, immaterial, impertinent, and scandalous” and will be stricken from the record, a magistrate judge ruled Thursday in a long-running fraud case between the former Keller Williams CEO and the Texas-based residential brokerage.
Magistrate Judge Hal R. Ray, Jr. stopped short of holding Davis in contempt, as Keller Williams had requested, in a case that originated after sexual misconduct accusations were leveled against the former chief executive in 2022, several years after he’d left the brokerage.
Those allegations were settled a year ago, only to be followed with a second suit from Davis accusing Keller Williams Executive Chairman Gary Keller and others of inflating key profitability metrics, such as company sales and profits, to convince individuals to purchase Keller Williams Regions and Market Centers, according to legal filings.
“[The] plaintiffs’ Demand for Arbitration is not only redundant, since the Court appointed an arbitrator for this matter, but it also is impertinent and contains immaterial and scandalous allegations,” Ray wrote in his May 8 ruling. “Defendants have repeatedly requested that Plaintiffs withdraw this pleading, and after a failed agreement, the undersigned strikes the Demand sua sponte,” meaning “of one’s own accord.”
The May 8 order was a legal rebuke that struck some of Davis’s allegations from the court record in a case the former CEO filed targeting Keller, former KW President Josh Team and others over alleged fraud.
In his order, Ray ruled that Davis’s “Demand for Arbitration is not only redundant, since the Court appointed an arbitrator for this matter, but it also is impertinent and contains immaterial and scandalous allegations.”
Ray didn’t specify which claims he viewed as scandalous. But the filing that was stricken alleged that a Keller Mortgage employee was fired after reporting sexual misconduct by John Keller, KW’s executive vice chairman and Gary Keller’s son. According to that filing, the allegations were allegedly covered up by general counsel Stacie Herron and Gary Keller paid off the accuser with $1 million of his own money, while he gave Herron a $1 million bonus and a promotion to interim COO for her work in the alleged cover-up.
The updates are part of an ongoing and years-long legal tit-for-tat between Davis, other past Keller Williams executives and the franchisor.
At issue of late has been whether either side in the case has been wrongfully delaying a court-ordered arbitration process.
Andrew Miltenberg, Davis’s attorney, said the order was a win for Davis.
“Perhaps most important is what Judge Hal R. Ray, Jr. did not say — he did not say that the case was false or lacked merit, or was otherwise without basis,” Miltenberg said. “Indeed, the Court’s Order did not dismiss or alter Davis’ claims in any manner. As such, the arbitration will move forward on all of the issues upon which Mr. Davis has sought justice.”
Keller Williams declined to comment on the order.
Keller Williams asked the court to hold Davis in contempt, remove the filing containing the alleged attacks from the public docket and order Davis to pay their attorneys’ fees and expenses.
The request came in response to Davis’s allegations that his former employer was trying to “bully and intimidate” him through the courts.
After the filing was made public, Keller Williams characterized Davis’s allegations as “untrue personal attacks,” “baseless and false claims,” and a continuation of “his public smear campaign against Keller Williams and its leadership.”
