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Tom Girardi Indicted for Embezzlement

Tom Girardi Indicted for Embezzlement

Tom Girardi Indicted for Embezzlement

Disgraced California lawyer Tom Girardi was indicted for embezzlement by a federal grand jury. The charges stem from allegations that Girardi engaged in highly unethical and illegal behavior, which included using private judges affiliated with the national arbitration company JAMS to steal millions of dollars from his clients. The U.S. Department of Justice (DOJ) announced the felony charges against Girardi after the grand jury formally indicted him. U.S. Attorney Martin Estrada observed that Girardi “preyed on the very people who trusted and relied upon him the most—his clients—and brought disrepute upon the entire legal profession.”

For more information about Tom Girardi’s indictment and his connection with JAMS, keep reading this blog.

Who Are Tom Girardi and Erika Jayne?

Tom Girardi used to be a well-respected attorney. For many years, the prominent Los Angeles lawyer was known for being a dogged defender of the powerless as they filed class action lawsuits against corporations. As the founder of California law firm Girardi & Keese, he represented plaintiffs in a number of high-profile cases, including Brian Stow’s civil suit against Major League Baseball. Stow was the San Francisco Giants fan who sustained severe injuries during an attack at a Los Angeles Dodgers game. Girardi also represented the plaintiffs in the case against Pacific Gas & Electric Co. dramatized in the Julia Roberts movie Erin Brockovich.

Outside of the courtroom, Girardi became known for being the husband of “Real Housewives of Beverly Hills” star Erika Jayne, who eventually filed for divorce from Girardi. They were married for 21 years. After the split, the couple listed their Pasadena home for sale at a price of $13 million. Jayne has also been accused of illegally using funds meant for Girardi’s clients to cover her own personal expenses, including the purchase of expensive diamond earrings.

Federal Grand Jury in California Indicts Tom Girardi on Wire Fraud Charges

As a plaintiff’s attorney in California, Tom Girardi was responsible for negotiating settlements in mass tort lawsuits. Instead of sending the settlement funds to his clients, however, Girardi allegedly deposited the money into law firm accounts that he later accessed for his own personal use. A federal grand jury in California has now indicted Girardi on charges that he embezzled $15 million from clients over a period of 10 years, resulting in the DOJ bringing formal charges against him for five counts of wire fraud. If Girardi is convicted of wire fraud, he could be sentenced to 20 years in federal prison.

Martin Estrada, the United States Attorney for the Central District of California, issued a statement about the case after the grand jury indictment was announced. Estrada said that Girardi is “accused of engaging in a widespread scheme to steal from clients and lie to them to cover up the fraud.”

FBI Acting Assistant Director in Charge Amir Ehsaei also weighed in on the charges against Girardi. Ehsaei said that the disgraced attorney “created a mirage over several years in order to disguise the fact that he was robbing clients of large sums of money…to fund his lavish lifestyle.” Ehsaei observed that Girardi’s alleged theft came at the expense of clients who were enduring significant hardships of their own as they desperately awaited settlement funds to cover medical bills and other expenses. The clients’ unfamiliarity with the legal process made it possible for Girardi to take advantage of them.

What’s Next in the Criminal Case Against Tom Girardi?

Last year, Tom Girardi was reportedly diagnosed with Alzheimer’s and dementia. At his initial appearance in federal criminal court, United States Magistrate Judge Karen L. Stevenson ordered a mental competency hearing to determine whether Girardi is fit to stand trial on the criminal charges. In the meantime, Girardi’s bond was set at $250,000 and he was released to the custody of his brother Robert Girardi. The next hearing will occur in the U.S. District Court for the Central District of California.

The Girardi Keese law firm is no longer operational, having declared bankruptcy with more than $100 million in total debt. Additionally, Girardi was disbarred as a result of the alleged embezzlement and cannot act as an attorney in California. He has been living at the Belmont Village Senior Living Facility in Burbank, CA.

Erika Jayne and Others Accused of Business Fraud with Tom Girardi

Also criminally charged along with Tom Girardi is Christopher Kamon, who served as the chief financial officer of Girardi’s law firm for more than a decade. According to law enforcement officials, Kamon was the person who handled financial accounting for the firm. Federal prosecutors believe that Kamon committed wire fraud offenses by embezzling client funds for personal expenses.

Additionally, Girardi’s son-in-law David Lira has been accused of fraud in connection with the Girardi & Keese firm. A federal grand jury in Chicago issued an indictment against both Girardi and Lira on charges filed by the U.S. Attorney’s Office. They have been accused of stealing more than $3 million in settlement funds from clients whose families were killed in the 2018 Boeing Lion Air Flight 610 crash in Indonesia.

Erika Jayne Sued for Fraud

A civil suit has also been filed that accuses Tom Girardi’s estranged wife, reality TV star Erika Jayne, of participating in the illegal fraud scheme. The trustee overseeing the bankruptcy of Girardi’s law firm filed the lawsuit against the Real Housewives star after reportedly discovering that Jayne received $25 million in transfers from the law firm to her company, EJ Global LLC. She then allegedly used the money to pay personal expenses, such as her credit card bill, personal assistant salaries, and a fashion and makeup team. Jayne has denied having any knowledge of Girardi’s alleged embezzlement of client funds.

JAMS Mediators Allegedly Helped Tom Girardi Embezzle Money from Clients

According to the Department of Justice, Tom Girardi was able to get away with embezzling client funds by placing onerous requirements on clients to access their settlement money. For example, Girardi often told clients that they needed to get authorizations from JAMS judges in order to receive the funds. The JAMS private judges were overseeing the lawsuit settlements and had control over how and when the funds were distributed. Many of these judges had personal relationships with Girardi, creating an obvious conflict of interest for the alternative dispute resolution company.

Over the years, there have been many other instances of JAMS judges being biased in favor of certain litigants and showing favoritism in their rulings. In fact, several JAMS mediators and arbitrators benefited financially from their involvement in Girardi’s fraud by charging as much as $1,500 per hour for their work on his cases. Beyond that, JAMS reportedly made millions of dollars by providing mediators to oversee Girardi’s settlements.

Contact the Los Angeles Arbitration Attorneys at Tauler Smith LLP

Tauler Smith LLP is a California law firm that helps individuals, small business owners, and others bring class action lawsuits against JAMS. If you were involved in an arbitration or mediation that was administered by JAMS, you may have a legal claim against the company for the way they handled your case. Call 310-590-3927 or email us today to discuss your options with one of our experienced Los Angeles arbitration attorneys.

Corrupt JAMS Judges

JAMS Private Judges Accused of Corruption

Corrupt JAMS Judges

JAMS is a private arbitration firm based out of Irvine, California. John Trotter helped to start the company, and today he remains one of the principals and a profit-earning shareholder. Trotter and other JAMS private judges have been accused of corruption for allegedly helping attorneys commit fraud and steal millions of dollars from clients. The absence of government regulation of the private arbitration industry has made it possible for unethical lawyers to take advantage of their clients and for big companies to abuse the arbitration system.

For more information about the corruption allegations against the JAMS private judges, keep reading this blog.

No Government Regulation of JAMS Private Judges

JAMS typically uses retired judges to serve as arbitrators and mediators in legal disputes, including business conflicts, contract disputes, intellectual property claims, personal injury claims, and civil rights actions. The former judges who administer cases are known as “JAMS Neutrals,” which is ironic because they are often anything but neutral.

A major problem with the JAMS private arbitration system is that the cases are decided behind closed doors and with little or no scrutiny. For instance, private judges are not subject to regulation by any government agency. The State Bar of California highlighted the issue by declaring in a statement that there is “no overarching regulatory framework for private judging or mediation.” California Supreme Court Chief Justice Tani Cantil Sakauye recently noted that there needs to be greater government oversight of the private judging industry so that litigants are protected.

JAMS Founder John Trotter Accused of Helping Disgraced Lawyer Swindle Clients

John K. Trotter was a retired California Appellate Justice with an unimpeachable record. Trotter began his legal career as a plaintiffs’ attorney in Orange County, and then moved on to the L.A. County Superior Court bench and later to the California Appellate Court bench. He eventually helped to start JAMS. At one point, the National Law Journal called Trotter “the most influential attorney” for Alternative Dispute Resolution (ADR) in the entire United States. Now, there are numerous questions being asked about Trotter’s role with JAMS, including whether he helped others use the private arbitration system to defraud participants.

John Trotter & Tom Girardi

John Trotter and JAMS have come under scrutiny in recent years for conflicts of interest in cases involving regular JAMS clients. In one extreme example, JAMS allegedly helped California attorney Tom Girardi steal millions from his clients. During his illustrious legal career, Girardi earned a reputation as a dogged defender of people who had been victimized by large corporations. In litigation involving aerospace company Lockheed Martin, he represented hundreds of workers who had contracted cancer and other illnesses on the job. After securing a massive settlement on behalf of his clients, Girardi enlisted multiple JAMS judges to fairly distribute the funds. The judges were tasked with determining exactly how much money each worker would get based on their specific injuries.

John Trotter served as the “special referee” who oversaw the distribution of settlement money to Girardi’s clients in another major case against a drug company that sold the diabetes medication Rezulin. The plaintiff alleged that the medication caused cancer, liver failure, and other maladies. After helping to secure a $66-million settlement, Girardi used JAMS mediator Trotter to oversee the distribution of funds. Instead of distributing the funds to the victims, however, Girardi diverted the money to his personal accounts. Moreover, while this fraud was happening, Trotter and JAMS did nothing to stop it.

In addition to having the final say on how funds were distributed in Girardi’s lawsuit settlements, Trotter also oversaw a $13-billion trust meant for the victims of Northern California wildfires. Any withdrawals from the settlement fund were supposed to reimburse the attorneys for legal costs related to the case, not for personal expenses. This is where it became apparent that Girardi’s relationship with JAMS judge Trotter was problematic. While Trotter approved millions of dollars in withdrawals for Girardi, he approved just $600,000 in withdrawals by another law firm that worked on the case. Moreover, this wasn’t the only time that a JAMS private judge has been accused of showing favoritism to one party over another.

JAMS Judge Jack Tenner Allegedly Signed False Documents to Defraud Litigants

One of the JAMS judges in the Lockheed Martin case was Jack Tenner, a respected jurist who spent a decade serving on the Los Angeles County Superior Court bench. As an attorney, Tenner had fought against racial discrimination in the city. While serving as a mediator in the Lockheed litigation, Tenner allegedly helped Tom Girardi cheat clients by signing false documents on L.A. County Superior Court letterhead. Those documents directed Comerica Bank to release millions of dollars to Girardi. Later, when Girardi came under fire from clients who questioned what he was doing with their money, Tenner explicitly supported the attorney. In a letter to the plaintiffs, Tenner said that he had personally approved all settlements and legal fees.

JAMS Judge Edward Panelli Accused of Corruption

Another JAMS judge accused of corruption is Edward A. Panelli, a retired California Supreme Court Justice. Panelli socialized with Tom Girardi even as he worked on JAMS cases for the dishonest lawyer. Panelli was chosen by Girardi to oversee the settlement distribution in a high-profile case involving a menopause drug called Prempro that allegedly caused cancer in elderly women. When many of the plaintiffs started asking questions about why they had yet to receive their portion of the $17 million settlement, Girardi said that he withheld the funds because of an order issued by Panelli. Girardi then refused to turn over financial records, as was required under California law.

Girardi’s claim that Panelli was forcing him to withhold funds from the cancer survivors turned out to be a lie. In fact, Panelli had no legal authority over the case because no court had ever appointed him to oversee the settlement. Moreover, Panelli had only spent around 20 hours working on the case. (For which JAMS billed the law firm $78,000, with another $50,000 payment being made directly to Panelli. This amounted to a $5,000 per hour pay rate.) To make matters worse, Panelli – even in his limited capacity – never instructed Girardi to hold back the money. A California magistrate judge later evaluated Panelli’s actions and concluded that the JAMS judge was culpable in the fraud because he had “rubber-stamped” all of the unlawful payouts to Girardi.

In the Prempro case, Girardi even tried to use Panelli to stop a lawsuit filed by the plaintiffs. When the clients sued Girardi, he argued that the case should be transferred from federal court to a private arbitration with Panelli making the final ruling. Not only did Girardi fight back against subpoenas and court orders, but so too did JAMS. After Girardi’s clients filed lawsuits to ensure transparency and so that they could finally get their settlement funds, JAMS spent months pushing back in court.

Other JAMS Judges, Arbitrators, and Mediators Allegedly Helped Tom Girardi Steal Settlement Funds

John Trotter, Jack Tenner, and Edward Panelli were not the only JAMS judges accused of helping Tom Girardi scam his clients. One former judge allegedly signed a fake court order that allowed Girardi to secure $3.5 million from a settlement fund meant for workers of Lockheed Martin who had been poisoned at the company’s Burbank facility. Another former state Supreme Court justice employed by JAMS allegedly assisted Girardi as he stole more than $1 million from cancer survivors.

Contact the California Arbitration Lawyers at Tauler Smith LLP

Tauler Smith LLP is a law firm with experience handling legal disputes that require mediation and arbitration in California, Texas, and New York. Our experienced arbitration lawyers also represent small business owners in class action lawsuits against JAMS. If your case is being administered by JAMS, it is very important that you contact one of our attorneys immediately. Call us or send an email.

Tom Girardi & JAMS Defraud Clients

How Tom Girardi Used JAMS to Defraud Clients

Tom Girardi & JAMS Defraud Clients

Tom Girardi has been accused of using JAMS to defraud clients. Girardi was a highly respected California attorney who spent decades representing plaintiffs in class action lawsuits against corporations. JAMS, previously known as Judicial Arbitration and Mediation Services, is the largest private mediation and arbitration company in the world with more than 400 former judges and legal professionals serving as arbitrators and mediators in California, Texas, New York, and other states. JAMS has come under intense scrutiny from arbitration lawyers and others in the legal community as several of the company’s judges were accused of unethical conduct and corruption.

To learn more about the fraud allegations against Tom Girardi and the JAMS private judges, keep reading this blog.

Tom Girardi Used to Be a Respected California Attorney

Tom Girardi’s abuse of the private judging system lasted decades and affected thousands of clients. Earlier in his legal career, Girardi was one of the lawyers responsible for the case that later inspired the acclaimed movie Erin Brockovich. As an attorney for residents of Hinkley who got cancer from local drinking water, Girardi helped to secure a $333-million settlement.

Girardi’s law firm eventually collapsed as more and more evidence came to light that he had swindled his clients out of millions of dollars. In 2022, Girardi lost his license to practice law in California and his law firm filed for bankruptcy.

Tom Girardi Stole Money from Clients

When a corporation gets sued in a contract dispute, employment claim, consumer action, or some other type of legal dispute, they often rely on JAMS to make sure that the case is handled behind closed doors with an arbitrator or mediator instead of a judge. Additionally, it is not uncommon for retired judges with JAMS to be asked to administer large settlements in mass tort cases. In Girardi’s cases, the JAMS judges failed to notice and/or take action when Girardi stole millions from the parties. This is just one of several instances of JAMS private judges with a huge conflict of interest in the cases they oversee.

A forensic accountant who examined law firm finances determined that Girardi was using his clients’ settlements “like a slush fund.” An audit of Girardi’s financial accounts reportedly showed that he had stolen money from his clients and given it to companies and individuals who had no connection to any of his cases. Even when Girardi claimed that the money was spent on “expert witnesses,” the withdrawals were suspicious. For example, one withdrawal of $450,000 for an expert witness in a case against Lockheed Martin was “confidentially” approved by a JAMS judge.

Erika Jayne

At the time of his deceit involving JAMS, Tom Girardi was married to Erika Jayne, who is best known as one of the stars of the reality show “The Real Housewives of Beverly Hills.” According to one federal judge, Girardi committed multiple crimes when he used his clients’ settlement funds to cover personal expenses for himself and his wife. For example, Bankruptcy Court records indicated that Girardi gave $750,000 to M.M. Jewelers for the purchase of a pair of diamond earrings for his reality TV star wife. He did this shortly after gaining access to the settlement funds, and he reportedly classified the purchase as a case expense. A federal bankruptcy judge, Barry Russell, later said that Girardi’s use of client money to buy expensive jewelry “clearly was a crime” along the lines of theft or embezzlement.

At other times, Girardi took from his clients’ settlement funds to pay himself. Records showed that he would often write several million-dollar checks to his firm in the same week. In one case, Girardi withdrew more than $15 million. Girardi claimed that this money was for his “costs” of representing the plaintiffs, but the amounts and pattern of the withdrawals from the settlement suggested that it was fraud.

JAMS Private Judges Accused of Helping Tom Girardi Cheat Clients

Tom Girardi was able to get away with his deceit because he used private judges affiliated with JAMS. The JAMS private judges have wide latitude and wield substantial power in legal disputes precisely because there is basically zero government oversight of the private arbitration industry. California Supreme Court Chief Justice Tani Cantil-Sakauye reacted to the revelations about Girardi’s conduct by calling it “shocking.” Cantil-Sakauye commented further on JAMS by observing that there are currently not enough safeguards  to ensure that private judges remain fair and impartial. For instance, the retired judges are not subject to supervision by the Commission on Judicial Performance (CJP), an independent California agency tasked with investigating complaints of judicial misconduct.

Many of the JAMS private judges had impeccable reputations prior to joining the arbitration company, which allowed Tom Girardi to establish credibility even as he misappropriated money from his clients. He later used the perceived reputations of the “JAMS Neutrals” to deflect questions about his misconduct. When Girardi’s clients began to suspect that something was amiss with their settlement funds, Girardi actually referenced the private judges’ impressive credentials to justify his unethical actions. According to a Los Angeles Times investigation of Girardi’s fraud, the JAMS arbitrators “occupy a secretive corner of the legal world.” The private arbitration industry is almost entirely unregulated, which exposes parties to significant risks.

JAMS Profited from Tom Girardi’s Lawsuits

Private arbitration is a lucrative industry, and there can be plenty of financial incentives for the JAMS judges, arbitrators, and mediators to rule a certain way. In the aftermath of the revelations about the massive scale of Tom Girardi’s fraud and theft, many questions have been raised about whether the legal system has enough safeguards to protect litigants against predatory attorneys and unethical arbitrators when the JAMS Alternative Dispute Resolution (ADR) service is used. That’s because there can be a conflict of interest for JAMS arbitrators and mediators. This was especially true in Girardi’s cases, which involved Girardi paying the JAMS private judges up to $1,500 an hour.

In one of Girardi’s biggest lawsuits, he represented patients who claimed that a large drug company’s diabetes medication, Rezulin, had caused serious health problems, including liver failure. That case resulted in a $66 million settlement on behalf of the plaintiffs, many of whom desperately needed the money to cover their medical expenses. Girardi convinced the victims to allow a JAMS mediator to oversee the settlement and to supposedly ensure that the funds were distributed in the right amounts and to the right individuals. For this service, JAMS received a $500,000 cut of the proceeds.

What Did JAMS Judges Do to Earn Their Fees?

JAMS also received a $500,000 fee for handling the Lockheed Martin settlement that Girardi secured, an enormous figure that was kept secret from clients. When a bankruptcy court requested a full accounting of exactly what John Trotter and the other JAMS judges had done to earn that fee, the arbitration company refused to provide invoices.

Girardi eventually filed for bankruptcy, which has made it even more difficult for those he had deceived and stolen from to get the money they were owed. Incredibly, one of the companies participating in the bankruptcy proceedings is JAMS, which requested a sum of nearly $10,000 for “an unpaid bill.”

Conflicts of Interest When JAMS Oversees Legal Disputes

In addition to the obvious conflict of interest that exists anytime a company pays a JAMS judge to arbitrate a dispute or oversee a settlement, there were other less obvious conflicts with Tom Girardi. For instance, Girardi reportedly arranged for several JAMS judges to go on a Mediterranean cruise after they ruled in his cases. Although Edward Panelli later claimed that his attendance at the event did not affect his “impartiality as a jurist or neutral,” his actions as a JAMS private judge suggested otherwise.

Carousel Lawsuit

In one high-profile case, Girardi represented 1,500 residents of Carousel, a housing development located just outside Los Angeles. The clients were suing an oil company and a real estate developer allegedly responsible for polluted soil that caused widespread cancer and other health issues. After reaching a settlement with the defendants, Girardi specifically requested that JAMS and John Trotter serve as special master to determine how the funds should be divided among the plaintiffs.

After more than two years, many of the clients still had not been paid. When one of the clients requested information about Girardi’s accounting practices, Girardi once again placed the blame on Trotter and JAMS. When that same client sued Girardi, the attorney insisted that the lawsuit be moved from a courtroom into private arbitration. As usual, Girardi wanted the arbitration handled by JAMS. The perception was likely that a JAMS private judge would show favoritism and rule in Girardi’s favor.

Contact the California Arbitration Lawyers at Tauler Smith LLP

Are you one of the parties in an arbitration being administered by JAMS? Is your case being overseen by a JAMS private judge? The California and Texas arbitration lawyers at Tauler Smith LLP can help you. Our legal team represents small business owners and individuals in arbitration, mediation, and other types of alternative dispute resolution. We also handle settlement negotiations. Call or email us to schedule a free consultation.

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.