JAMS Arbitration

Tauler Smith Investigating Claims Against JAMS

JAMS Arbitration

The California business fraud lawyers at Tauler Smith LLP are investigating claims against JAMS after concerns were raised about the arbitration company’s relationship with WeWork. In WeWork arbitrations administered by JAMS, prior case results were known only by JAMS and WeWork. These case results were never shared with WeWork’s opponents, who are mostly small businesses. Neither WeWork nor JAMS would seem to have an interest in sharing information with WeWork’s opponents because doing so could lead to less fees for JAMS. It is wrong for JAMS to operate so obliquely. As an administrator of justice, they need to be held to a higher standard.

To learn more about the claims against JAMS, keep reading this blog.

WeWork Uses JAMS Arbitration Services

JAMS is the world’s largest private provider of Alternative Dispute Resolution (ADR) services. As the name suggests, Alternative Dispute Resolution is an alternative to traditional litigation that allows parties to resolve their legal dispute without needing to go to court for a trial. Sometimes, a contract will require two parties to use ADR services, which is what happens in the standard WeWork contract: the small business owners who sign a lease with WeWork have no choice but to use mandatory arbitration if a dispute arises, and the parties are bound by the decision of the JAMS arbitrator. JAMS also sets the rules and procedures for these arbitrations.

JAMS arbitrates cases in several practice areas, including civil rights, class actions, intellectual property, personal injury, product liability, and real estate. One of JAMS’ biggest clients appears to be WeWork, which uses JAMS to administer arbitrations anytime a dispute arises with one of WeWork’s tenants. When a small business owner signs a lease agreement with WeWork, it typically includes a pre-dispute contract that requires the parties to use arbitration if a dispute arises. The effect of these forced arbitration clauses in WeWork contracts is to have the parties waive their right to a jury trial. A WeWork contract typically stipulates that the arbitration will be administered by JAMS, and the decisions rendered by JAMS arbitrators are final and legally binding on the parties.

JAMS Won’t Disclose Data About Arbitrations Involving WeWork

Does JAMS have a conflict of interest in WeWork arbitrations? JAMS touts its ability to resolve legal and business disputes with “impartial” dispute resolution services administered by “neutral” arbitrators and mediators. The former legal professionals who administer JAMS arbitrations are known as “JAMS Neutrals.” As their title indicates, these individuals are supposed to provide fair, unbiased decisions. But there are questions about JAMS’ relationship with its biggest client – WeWork – and this has raised concerns about the fairness and impartiality of the JAMS arbitrators in these cases.

Significantly, JAMS refuses to disclose information that might show they are colluding with WeWork in arbitration. Law firm Tauler Smith LLP recently requested disclosures from JAMS about WeWork and WeWork affiliates. JAMS responded by refusing to provide the requested information because it supposedly “goes beyond legal and ethical disclosure requirements for arbitrators and would violate JAMS confidentiality obligations to other litigants.”

Thus far, JAMS has only provided data about the number of arbitrations with respect to one WeWork company: the one with a listed address of 500 7th Avenue in New Yok. JAMS did not provide any disclosures about the other 36 WeWork entities. Moreover, even the information in the JAMS disclosure about the single WeWork address is limited becuase it simply states that the 500 7th Ave. tenant has 35 pending arbitrations with JAMS and 17 pending mediations. As such, JAMS failed to address the problem identified by the business fraud lawyers at Tauler Smith LLP: that WeWork could have an unfair advantage in any JAMS-administered dispute. If JAMS administers 1,000 cases in which WeWork is one of the parties, and WeWork has won all 1,000 of these cases, why wouldn’t JAMS tell the parties about this?

Why Is JAMS Sharing Relevant Case Information Only with WeWork?

JAMS has refused to share relevant case information with WeWork’s opponents in arbitration due to what JAMS claims is a confidentiality requirement. But JAMS is allowing this information to be shared with WeWork affiliates. This has created an information imbalance that severely disadvantages the small business owners being sued by WeWork. While JAMS declines to provide specific case information to the other parties in these claims, the fact is that WeWork already has access to this information and can share with its affiliates that are involved in other disputes administered by JAMS. This means that only one side of the dispute – and not the other side – can share information with itself, know the outcomes of other cases, and share information with its affiliates. This results in an unfair advantage for WeWork in any arbitration overseen by JAMS.

If WeWork and its affiliates (i.e., WeWork shell entities) account for a significant number of JAMS cases administered in the New York market, it could be evidence of many incentives that are created by JAMS’ administration of WeWork disputes. For example, JAMS would have an incentive to litigate all WeWork cases separately so that only WeWork (and JAMS) has relevant information about outcomes. If WeWork knows that arbitrators are ruling in WeWork’s favor 100% of the time and awarding attorney’s fees every single time based on an identical contract, WeWork’s legal counsel could overbill, constantly brief unnecessary issues, file pre-trial briefs, and file post-trial briefs knowing that these requests will be granted. Further, the small business owner respondents in these cases will not have access to this information because they are not allowed to see it.

Antitrust Concerns Over JAMS’ Relationship with WeWork

JAMS has an effective monopoly over these types of cases. And they may use that privilege unfairly. This could raise concerns about JAMS violating federal antitrust laws like the Sherman Act because WeWork appears to be getting preferential treatment from JAMS. The fact is that WeWork and its affiliates are repeat customers of JAMS, not the small businesses that are typically on the other side of a dispute with WeWork.

The actions taken by JAMS with respect to its relationship with WeWork do not appear to be a fair or reasonable way to administer justice. Any system of justice should treat litigants equally. In the complaint being prepared against JAMS, the California business fraud attorneys at Tauler Smith LLP allege that their clients’ due process rights have been violated because it would be manifestly unjust to collect arbitration fees from thousands of small businesses and force them to go to a hearing to defend themselves when the end result is already known to the other party in advance.

Contact the California Business Fraud Lawyers at Tauler Smith LLP

If you are a small business owner who has been forced to go into an arbitration administered by JAMS, you should speak with an experienced California business fraud lawyer immediately. The Tauler Smith LLP legal team includes attorneys who have extensive experience with professional negotiation, mediation, and alternative dispute resolution. Call or email us to schedule a free consultation about your case.

WeWork Arbitration

Tauler Smith Investigating Claims Against WeWork

WeWork Arbitration

Law firm Tauler Smith LLP is investigating claims against WeWork and JAMS over misconduct in hundreds of arbitrations initiated by WeWork against small businesses. The unprecedented number of arbitrations (enforcing identical “membership agreements” for “services” despite business closures stemming from COVID-19) generates massive revenue and incentives for JAMS, creating a conflict of interest that is not disclosed to small businesses being pursued by WeWork through JAMS. Neither JAMS nor WeWork discloses to any of these small businesses the nature of the parties’ pecuniary relationship, such as the amount WeWork pays to JAMS every year. Beyond that, neither JAMS nor WeWork discloses prior case outcomes to the small businesses pursued by WeWork, even though WeWork uses identical contracts and identical legal theories in these cases.

Only WeWork and JAMS know case outcomes, but small business opponents defending claims brought by WeWork do not. This places WeWork at a massive advantage since only they have access to certain information, including how JAMS has interpreted the identical contract on multiple occasions. The result is a process that is unfair to small business defendants. It is a process that benefits only WeWork and JAMS by perpetuating WeWork’s ability to pursue its members and by giving JAMS the continued ability to collect fees from hundreds of disputes.

To learn more about the possible legal claims against WeWork and JAMS, keep reading this blog.

WeWork Sued Small Business Owners for Rent During COVID Pandemic

WeWork is a company that provides coworking spaces to businesses. WeWork uses an identical “Membership Agreement,” but not as a lease of space; rather, it is for the provision of services. This allows WeWork to argue that legal protections ordinarily afforded to tenants do not apply to WeWork members. WeWork then argues that landlord-tenant law is applicable to obtain favorable rulings from JAMS.

The attorneys at Tauler Smith LLP are also investigating whether WeWork is reporting the revenue in Membership Agreements accurately to the U.S. Securities and Exchange Commission (SEC). WeWork’s accounting procedures have come under public scrutiny over the last several years. The COVID-19 pandemic and the arbitrations WeWork initiated with JAMS potentially provide a means for WeWork to double-book revenue if they apply deceptive accounting methods.

Tauler Smith LLP is also investigating whether WeWork uses private arbitration to protect itself from revealing misconduct that is of concern to the public. Since WeWork structures all of its contracts to be private, only WeWork and JAMS know how and why JAMS has been ruling favorably for WeWork. Moreover, since the cases go through arbitration instead of going through the courts, the small businesses do not know the prior results. This puts the small businesses at an even greater disadvantage in the proceedings. Arbitration is often used for business conflicts that involve contract disputes. WeWork requires anyone who signs a lease with the company to agree in advance to use arbitration for any legal disputes. Even being a part of an arbitration can cost a small businesses significant money. WeWork arbitrations are administered by JAMS, an arbitration company that also provides mediation and Alternative Dispute Resolution (ADR) services.

Tauler Smith LLP Investigates Relationship Between WeWork and Arbitration Company JAMS

Tauler Smith LLP is now investigating a possible legal claim against JAMS stemming from the arbitration company’s lucrative and ongoing relationship with WeWork. It has been reported that WeWork may be the largest tenant/landlord in all of New York City, and it is believed that WeWork has pursued hundreds (if not thousands) of claims against its members using only one arbitration company: JAMS. This would mean that JAMS has received millions of dollars from WeWork. JAMS is therefore incentivized to side with WeWork in every case, creating a conflict of interest that is not disclosed. Based on our preliminary investigation, no WeWork member has ever won a JAMS-arbitrated dispute against WeWork. Since WeWork members are never informed of case results – but JAMS and WeWork are privy to this information – WeWork cases submitted to JAMS are inherently unfair.

WeWork uses discrete companies for each of their workplaces to further obfuscate the claims it pursues against its members, as well as the work it gives to JAMS. Tauler Smith LLP has obtained a list of 36 company names and/or addresses for WeWork affiliates that have been involved in arbitrations administered by JAMS:

  • 18691 Jamboree Rd., Irvine, CA 92612
  • 1601 Vine St., Los Angeles, CA 90028
  • 8305 Sunset Blvd., Los Angeles, CA 90069
  • 8687 Melrose Ave., Los Angeles, CA 90069
  • 4041 MacArthur Blvd., Newport Beach, CA 92660
  • 600 B St., San Diego, CA 92101
  • 71 Stevenson St., San Francisco, CA 94105
  • 535 Mission St. 14th Floor, San Francisco, CA 94105
  • 3001 Bishop Dr., San Ramon, CA 94583
  • 255 Giralda Ave. Floor 5, Coral Gables, FL 33134
  • 78 SW 7th St., Miami, FL 33130
  • 765 W. Peachtree St. NW #4, Atlanta, GA 30308
  • 31 St. James Ave. 6th Floor, Boston, MA 02116
  • 200 Portland St., Boston, MA 02114
  • 625 Massachusetts Ave., Cambridge, MA 02139
  • 1330 Lagoon Ave., Minneapolis, MN 55408
  • 10845 Griffith Peak Dr. #2, Las Vegas, NV 89135
  • 12 E. 49th St., New York, NY 10017
  • 115 Broadway, New York, NY 10006
  • 185 Madison Ave., New York, NY 10016
  • 199 Water St., New York, NY 10038
  • 222 Broadway 19th Floor, New York, NY 10038
  • 300 Park Ave. 12th Floor, New York, NY 10022
  • 401 Park Ave. S. 10th Floor, New York, NY 10016
  • 500 7th Ave., New York, NY 10018
  • 524 Broadway, New York, NY 10012
  • 880 3rd Ave., New York, NY 10022
  • 1115 Broadway, New York, NY 10010
  • 1881 Broadway, New York, NY 10023
  • 1201 3rd Ave., Seattle, WA 98101
  • Bastion Collective LLC
  • We Company
  • WeWork
  • WeWork Companies, Inc.
  • WeWork Companies LLC
  • WeWork Management LLC

How Much Money Does JAMS Make from Its Relationship with WeWork?

JAMS has thus far dismissed any concerns about impartiality or failure to disclose in WeWork cases without providing the data requested. A representative for JAMS stated that the company “administers approximately 15,000 cases per year” and “no single party or law firm significantly impacts JAMS’ total revenue.” The millions of dollars flowing to JAMS from WeWork provides a natural incentive for JAMS to continue ruling favorably for WeWork – which is easy because it is the same “Membership Agreement” being interpreted in each arbitration. Moreover, since JAMS and WeWork refuse to share with small business defendants any relevant information about past rulings, the small businesses remain unaware of the full nature of the WeWork-JAMS relationship. The small businesses will then fight the arbitration and pay JAMS even more fees, only to inevitably lose in front of a JAMS-provided arbitrator. There is no reason for JAMS to be fair because it is not in their financial interests.

JAMS would appear to have an incentive to rule in WeWork’s favor not just because of the many disputes they are currently arbitrating, but also because of all the future business that WeWork will continue to send their way. In other words, JAMS may want to keep WeWork happy because JAMS collects fees on every arbitration, and WeWork sends them a lot of business that generates fees.

Contact the California Business Fraud Lawyers at Tauler Smith LLP

Are you a small business owner who is being pursued by WeWork through JAMS? If so, you may have a possible legal claim against both WeWork and JAMS. WeWork uses JAMS to arbitrate legal disputes, and it is believed that WeWork has never lost a JAMS-administered dispute. You can schedule a free consultation with the California business fraud lawyers at Tauler Smith LLP by calling or sending an email.

Chase Bank PPP Loan Fraud

Tauler Smith LLP Sues Chase Bank & SBA for PPP Loan Fraud

Chase Bank PPP Loan Fraud

The business fraud attorneys at Tauler Smith LLP recently filed a lawsuit against Chase Bank for PPP loan fraud. The civil suit alleges that JPMorgan Chase committed fraud by helping its rich clients at the expense of small business owner clients. Paycheck Protection Program (PPP) loan funds made available in response to the coronavirus pandemic were supposed to be distributed on a “first come, first served” basis. But that’s not what happened. Instead, Chase Bank gave preferential treatment to their larger clients, while making misrepresentations to small businesses that ultimately resulted in loans being delayed and denied when the funds ran out. Tauler Smith LLP is representing the plaintiff in this case, as well as other small businesses who were denied PPP loans.

To learn more about the PPP fraud lawsuit filed against Chase Bank, keep reading.

Tauler Smith LLP Files Lawsuit Against Chase Bank for PPP Loan Fraud

The plaintiff in the civil suit is Outlet Tile Center, a California business with six (6) employees. Outlet Tile Center provides flooring for homes and businesses, and they do their banking with Chase. The business fraud lawyers at Tauler Smith LLP filed this lawsuit on behalf of the plaintiff, who was denied an opportunity to receive much-needed financial help because of the defendants’ fraud.

Click here to view the lawsuit.

Chase Bank Accused of Unfair Business Practices

In response to the coronavirus pandemic, the United States Congress passed several laws that affected businesses. For example, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and appropriated $340 billion in funds to be distributed to small businesses who needed help covering payroll. According to the lawsuit, by the time Chase Bank’s online portal opened to small businesses, the bank had already personally solicited and submitted all of the loans for its rich clients.

JPMorgan Chase & Co. received significant fees for all PPP loans they processed, so they had an incentive to push through loan applications of their rich clients. In just two (2) weeks, Chase made over $700 million in fees. Moreover, Chase had no incentive to review any of the applications and verify if the information was accurate. According to a government report, the average approved loan for Chase through this program was over $500,000. These were not the kinds of small businesses that were supposed to be receiving help through the CARES Act.

U.S. Small Business Administration Accused of PPP Loan Fraud

The other named defendant in the case is the U.S. Small Business Administration (SBA), a federal agency that exists for the purpose of supporting small businesses throughout the country. One of the ways in which the SBA provided financial assistance to small businesses during the COVID-19 pandemic was through the Paycheck Protection Program (PPP), which received additional funds through the CARES Act. The SBA allowed companies to apply for emergency PPP loans so that they could maintain their workforces even as coronavirus was causing many offices to shut down for an extended period of time. The idea was that the companies would use a certain percentage of the funds to pay their employees, and then the federal government would relieve them of the need to repay the loans.

Billions of dollars were allocated for the loans, and they were meant to help small businesses. Unfortunately, a lot of larger companies found ways around the restrictions and ended up taking a lot of that money – at the expense of the smaller businesses for which the loans were originally intended. In fact, just two (2) weeks after the PPP loans were made available, the funds had already been exhausted. This meant that many small business owners never had an opportunity to get the financial assistance they desperately needed during COVID. A lot of those small businesses were forced to close permanently, and their workforces were laid off.

Contact the California Business Fraud Lawyers at Tauler Smith LLP

If you are a small business owner who was defrauded by Chase Bank or any other entity committing unfair business practices, the attorneys at Tauler Smith LLP can help you. Call 310-590-3927, or send an email to schedule a free consultation.

PPP Loan Lawsuit

Payment Protection Program (PPP) Lawsuit

PPP Loan Lawsuit

California law firm Tauler Smith LLP is representing small businesses that did not obtain funding through the Payment Protection Program (PPP). These PPP loans were intended to benefit small businesses impacted by COVID-19, but many small business owners did not receive the funds they were promised. If you were denied a PPP loan, our experienced business fraud attorneys can help you file a lawsuit.

Small Businesses Denied PPP Loans May Be Able to Sue

The U.S. Small Business Administration (SBA) was supposed to distribute PPP loans to small businesses who needed the funds to cover payroll and avoid layoffs during the coronavirus pandemic. These loans had favorable terms, and they were administered by the government and banking institutions under the CARES Act. On April 16, 2020, the government announced that the program ran out of funding. In some cases, this was due to fraud by the financial institutions that were processing the loans.

Contact the California Business Fraud Attorneys at Tauler Smith LLP

If you are a small business owner who applied for PPP funding through a lender and have been denied funding, you may have standing to file a lawsuit to obtain the funding that was promised. To learn more about potentially being a plaintiff in class action litigation, fill out the questionnaire below. A member of our team will then contact you. (The information you provide below is confidential and will not be shared with anyone outside Tauler Smith LLP without your prior consent.)

Weddings Canceled by Coronavirus

Wedding Cancelled by Coronavirus? Here Are Your Legal Options

Weddings Canceled by Coronavirus

As wedding season approaches, couples across the nation are faced with the grim reality that their weddings have been involuntarily canceled due to the global coronavirus (COVID-19) pandemic. This problem can be compounded when the chosen wedding venue refuses to refund the deposit or allow the couple to get out of the original contract. Consequently, we are likely to see an onslaught of lawsuits against wedding venues and vendors in the year to come, particularly breach of contract claims by brides-to-be against wedding venues and vendors for refusal to refund advanced payments for a wedding that never occurs.

If your wedding was canceled by coronavirus, you do have legal options. Your first step should be to speak with an experienced California business dispute lawyer who understands the relevant statutes and who can help you get out of the contract.

Legal Claims for Couples Whose Weddings Were Canceled Because of COVID-19

Finding out that you can no longer have your wedding at the venue you chose is already devastating enough without the possibility that you may be forced to pay for the wedding anyway. Fortunately, there is some hope for couples who need to get out of written contracts. For example, some wedding contracts may contain force majeure provisions, which means that you may be able to rescind your wedding contract if it is impossible to execute. Along those same lines, your wedding contract may be considered an unenforceable contract because it is against public policy.

What Is the Law on Wedding Contracts in California?

Wedding contracts create special circumstances around would-be newlyweds. The United States government has declared a national emergency. Certain states, such as California, have issued orders implementing “shelter in place” of all residents, ordering closure of all nonessential businesses, and prohibiting gatherings of more than 10 people. These rules have arguably created a public policy that weddings cannot go forward during the crisis.

Generally, a legal claim fails if it is based on an agreement that violates law and is contrary to public policy. In Kashani v. Tsann Kuen China Enter. Co., a California Appellate Court ruled that the law “has a long history of recognizing the general rule that certain contracts, though properly entered into in all other respects, will not be enforced if found to be contrary to public policy.” Given the public prohibition in California regarding gatherings of 10 or more people during the COVID-19 pandemic, anyone attending, hosting, or working a wedding would be acting contrary to public policy by threatening public health. Consider the legal implications for a bride who hires a wedding photographer, only to later find out that the wedding was canceled because of coronavirus. Legally speaking, that bride might not be obligated to pay the photographer.

Contact the Los Angeles Business Dispute Lawyers at Tauler Smith LLP

The challenge with wedding vendor contracts is the prevailing industry standard, whereby all services are typically pre-paid in full. Given the unprecedented circumstances created by the COVID-19 pandemic, the best move you can make right now is to speak with an attorney who understands California contract law, particularly as it relates to businesses.

The Los Angeles business dispute lawyers at Tauler Smith LLP can advise you regarding your rights and obligations. We can also help you navigate the complex legal process. Call us at 310-590-3927 or send an email.

COVID-19 & Broken Contracts

Coronavirus and Broken Contracts

COVID-19 & Broken ContractsThe COVID-19 pandemic has left a trail of thousands of broken contracts in its wake, and this has come in a wide range of industries. From event cancelations to broken supply chains, coronavirus has caused millions of dollars in commercial losses and business interruption. Moreover, coronavirus and broken contracts could be a familiar theme in the coming months, as travel restrictions, event postponements, school and business closures, quarantines, supply-chain disruptions, cash flow problems, and worker shortages are expected to increase. This has left many California business owners to wonder: who is liable for the disruption caused by COVID-19? The answer could lie in what is known as the “force majeure” provision found in many contracts.

To learn more about the legal consequences for businesses that are forced to break contracts because of the coronavirus, keep reading.

What Is the Force Majeure Provision in Contract Law?

One provision often contained in comprehensive contracts is that of “force majeure.” Typically, force majeure provisions are included in contracts to excuse a breach if unforeseen circumstances prevent a party’s performance of the contract. This often means an act of God, such as hurricanes, war, earthquakes, etc. The force majeure doctrine is also commonly referenced as “impossibility of performance.”

Force majeure is literally French for “superior force,” and the concept originated in the Napoleonic Code of 1804. The breaching party to an agreement was condemned unless their non-performance or delay in performance resulted from a cause that could not be imputed to them, such as a superior force or a fortuitous occurrence.

What Could Force Majeure Mean for Broken Contracts Caused by COVID-19?

For most businesses, coronavirus is an unforeseen circumstance out of their control. But these cases can still result in litigation because the application of force majeure to any particular contract must be done by applying the law of the relevant jurisdiction. In California, the law recognizes that parties may not be held liable when unforeseen circumstances prevent them from fulfilling their contractual obligations, regardless of whether or not the contract has a force majeure clause. The leading California Supreme Court case defines force majeure as an “insuperable interference” occurring without the party’s intervention that “could not have been prevented by the exercise of prudence, diligence and care.” Insuperable in this context means “impossible to overcome.” Although the case dates back to World War II, it has been cited as recently as 2015 as proper guidance for the interpretation of contracts in California.

Support for this court decision comes from the State of California definition of “force majeure.” In its standard Judicial Council contracts, California defines force majeure as “a delay which impacts the timely performance of work for which neither Contractor nor the State are liable because such delay or failure to perform was unforeseeable and beyond the control of the party.” The standard contract goes on to specifically list “quarantine or epidemic” as such a circumstance. Thus, quarantines resulting from the coronavirus pandemic would render this provision operable and could excuse any California businesses that are forced to break a contract because of COVID-19.

Contact the Los Angeles Business Dispute Lawyers at Tauler Smith LLP

Many contracts do not contain specific language in force majeure provisions. Thus, each contract must be carefully analyzed with the law of the jurisdiction in order for businesses to understand their options. Force majeure is one of many tools that business owners and individuals can use to mitigate the fallout from the current crisis. If you are a business owner who was forced to break a contract due to coronavirus, you have options to escape ruinous consequences.

The Los Angeles business dispute attorneys at Tauler Smith LLP can help you. Call 310-590-3927 or send us an email.