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 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.