Dow v. Keller Williams Realty, Inc.

• Docket Number: 4:21-cv-1209-P
• Decision Date: 02 September 2022
• Citation: 625 F.Supp.3d 556
• Parties: Inga DOW, Plaintiff, v. KELLER WILLIAMS REALTY, INC. et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

625 F.Supp.3d 556

Inga DOW, Plaintiff, v. KELLER WILLIAMS REALTY, INC. et al., Defendants.

No. 4:21-cv-1209-P

United States District Court, N.D. Texas, Fort Worth Division

Signed September 2, 2022

Michael Y. Kim, Eduardo R. Garza, Ericha Ramsey Brown, The Michael Kim Law Firm, PLLC, Dallas, TX, Monica Lynn Narvaez, MKim Legal, Dallas, TX, for Plaintiff.

Kristin L. Bauer, Claire Lenore Cook, Jackson Lewis PC, Dallas, TX, for Defendants Keller Williams Realty Inc., Gary Keller.

A. Boone Almanza, Tanya Melamed Robinson, Pro Hac Vice, Almanza Blackburn Dickie & Mitchell LLP, Austin, TX, Jay Marshall Wallace, Parker A. Burns, Bell Nunnally & Martin LLP, Dallas, TX, for Defendants GO Management LLC, David Osborn, Smokey Garrett.

James T. Drakeley, Laurie N. Patton, Spencer Fane LLP, Piano, TX, for Defendant John Davis.

OPINION & ORDER

Mark T. Pittman, UNITED STATES DISTRICT JUDGE

Before the Court is the Motion to Compel Arbitration ("Arbitration Motion") of Defendants Keller Williams Realty, Inc. ("KWRI") and Gary Keller (collectively, "the KWRI Defendants") based on the First Amended Complaint ("Complaint") of Plaintiff Inga Dow ("Dow"). ECF No. 75. Having considered the Arbitration Motion, Responses, and Reply, the Court GRANTS the Arbitration Motion as to Dow's claims alleged against the KWRI Defendants and REFERS those claims to arbitration. The Court DENIES the Arbitration Motion as to the remaining claims. It is ORDERED that this case is STAYED pending the results of arbitration. The Court directs the Clerk of Court to ADMINISTRATIVELY CLOSE this case until the Court orders it to be reopened.

BACKGROUND

Dow alleges that she has worked under the KWRI umbrella since 1992. ECF No. 63 at 8. Dow now "owns and/or operates" three KWRI real estate brokerage franchises ("Market Centers"): (1) Fort Worth RE, Ltd. ("Fort Worth Market Center"); (2) Johnson County RE, Ltd. ("Johnson County Market Center"); and (3) Dow WFW RE, Inc. ("Dow Market Center"). ECF Nos. 63 at 27; 84 at 1; 86 at 5, 107, 207; 110 at 8. On behalf of KWRI, its chief executive officer signed the License Agreements ("Agreements") for the Fort Worth and Johnson County Market Centers ("Fort Worth Agreement" and "Johnson County Agreement"), and its chief operating officer signed the Dow Market Center Agreement. ECF No. 86 at 67, 180, 278. Dow signed each Agreement as the Operating Principal of her franchisee ("Licensee"). Id. at 67, 180, 276. No one else signed the Agreements. Id.

Each Agreement provides that the Operating Principal is "individually bound by all obligations of the Licensee" and that the Operating Principal is a Controlling Principal. ECF No. 86 at 17, 132, 229. Each Agreement also contains a broad arbitration clause ("Arbitration Clause"). Id. at 57, 176, 274.

The Fort Worth Agreement's Arbitration Clause provides, "If the parties (including the Controlling Principals) cannot fully resolve and settle a Dispute through mediation . . . , all unresolved issues involved in the Dispute, except those excluded under Section 19.05, shall be submitted to binding arbitration." Id. at 57. The Agreement defines a "Dispute" as "any claim, controversy or dispute (a 'Dispute') that arises under or in relation to this Agreement or that concerns the relationship created by this Agreement." Id. Section 19.05 of the Fort Worth Agreement allows KWRI to sue rather than arbitrate "(i) to enjoin any infringement or misappropriation of its rights in the Trademarks, the System or its other intellectual property, or (ii) to collect any Production Royalty, Profit Sharing Contribution or other monetary obligation payable by Licensee." Id. at 59; see also id. at 6 (defining "Company" as KWRI).

The Johnson County Agreement's Arbitration Clause provides that "[i]f the parties (together with the Controlling Principals and Licensee's Principals) cannot fully resolve and settle a Dispute through mediation . . . , all unresolved issues involved in the Dispute, except those excluded under Section 20.05, shall be submitted to binding arbitration." Id. at 176. Like the Fort Worth Agreement, the Johnson County Agreement defines a "Dispute" as "any claim, controversy or dispute (a 'Dispute') that arises under or in relation to this Agreement or that concerns the relationship created by this Agreement." Id. at 175. The arbitration exclusion is also much like the exclusion in the Fort Worth Agreement. Section 20.05 of the Johnson County Agreement allows KWRI, its divisions, and "controlled affiliates" to choose to sue (rather than arbitrate) "(i) to enjoin any infringement or misappropriation of its rights in the Trademarks, the Copyrighted Material, the System or its other intellectual property, or (ii) to collect any Production Royalty, Profit Sharing Contribution or other monetary obligation payable by Licensee." Id. at 177; see also id. at 111, 113 (defining "Company" as KWRI, "including its divisions and controlled affiliates," and defining "Affiliate" as "a Person that controls, is controlled by or is under common control with another Person").

The Dow Market Center Agreement's Arbitration Clause is the broadest of the three. It provides, "If the parties (together with the Controlling Principals and Licensee's Principals or any member of Licensee's Group) cannot fully resolve and settle a Dispute through mediation . . . , all unresolved issues involved in the Dispute, except those excluded under Section 20.05, shall be submitted to binding arbitration." Id. at 274. The Agreement defines a "Dispute" as

any claim, controversy or dispute (a 'Dispute') that arises under or in relation to this Agreement or arises between or among any member of Licensee's Group and Company, its Affiliates, Regional Representatives, Successors and Assigns and their Respective Directors, officers, shareholders, members, managers, partners, attorneys, servants, employees, associates, independent contractors, agents, Regional Representatives, and representatives.

Id. at 273. Section 20.05, the arbitration exclusion provision, allows KWRI, its divisions, and departments to sue "(i) to enjoin any infringement or misappropriation of its rights in the Trademarks, the Copyrighted Material, the System or its other intellectual property, or (ii) to collect any Production Royalty, Profit Sharing Contribution or other monetary obligation payable by Licensee." Id. at 275; see also id. at 211, 213 (defining "Company" as KWRI, "including its divisions and departments").

In her First Amended Complaint, Dow alleges various causes of action—sexual harassment, sex-based harassment, a hostile work environment, retaliation, failure to provide a reasonable accommodation, tortious interference, breach of implied contract, and breach of fiduciary duties—allegedly committed by one or more of the six Defendants. Along with KWRI and Keller, its founder and former CEO, Dow sued Go Management, LLC ("Go Mgmt."), which owns, manages, and operates KWRI's DFW regional office, and John Davis, David Osborn, and Smokey Garrett. Keller, Davis, Osborn, and Garrett are or were associated with KWRI during Dow's tenure. ECF No. 63 at 2, 36-52. Dow alleges that the conduct she complains of began in 1998, years before she signed her first Agreement, and that the conduct continues until the present. Id. at 35, 36.

The KWRI Defendants contend in their Arbitration Motion that (1) the Arbitration Clauses in the Agreements encompass all of Dow's claims against them and (2) her claims against the remaining Defendants ("the Other Defendants"), who did not sign the Agreements, are so intertwined with her claims against the KWRI Defendants that those claims are also subject to arbitration. ECF No. 75 at 1. Dow responds that (1) the Arbitration Clauses are invalid or unenforceable, (2) her claims are outside the scope of the Arbitration Clauses, and (3) the Other Defendants are not subject to arbitration. ECF No. 110 at 13-23. The Other Defendants contend that they are not subject to arbitration because (1) they are not parties to the agreement, (2) no exception can compel the arbitration of the claims against them, and (3) Dow's claims against them are outside the scope of the Arbitration Clauses. ECF Nos. 89 at 1-2; 91 at 2.

LEGAL STANDARD

In determining whether to compel arbitration, a court must decide (1) whether a valid arbitration agreement between the parties exists and, if so, (2) whether the dispute falls within the arbitration agreement's scope. Edwards v. Doordash, Inc., 888 F.3d 738, 743 (5th Cir. 2018) (citing Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013)). Deciding whether the arbitration agreement is valid is an "analysis of contract formation[.]" Id. (citations omitted). After the movant produces "competent evidence showing the formation of an agreement to arbitrate . . . , [the] party resisting arbitration [must] produce some contrary evidence to put the matter 'in issue.' " Gallagher v. Vokey, 860 F. App'x 354, 357-58 (5th Cir. 2021).

In this first step of the analysis, courts use state law to evaluate the agreement. Edwards, 888 F.3d at 745 (citation omitted). If the agreement at issue contains a choice-of-law provision, the law of the state named in that provision guides the inquiry. See id. The party moving for arbitration has the burden to show that the arbitration agreement is valid. Trujillo v. Volt Mgmt. Corp., 846 F. App'x 233, 236 (5th Cir. 2021); J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 228 (Tex. 2003).

"When a court decides whether an arbitration agreement exists, it necessarily decides its enforceability between parties." Newman v. Plains All Am. Pipeline, L.P., 23 F.4th 393, 398 (5th Cir. 2022). Thus, when a signatory movant seeks to bind nonsignatories to the arbitration agreement, as in this case, this first step is more involved. Id. at 401. The Court must then ask whether "a written arbitration provision exists that is made enforceable against (or for the benefit of) a third party under...