Wyndham’s Arbitration “Shell Game” Bedgood v Wyndham Oral Arguments

Oral Arguments in Bedgood v. Wyndham Vacation Resorts and Worldmark took place at the U.S. Court of Appeals for the 11^th Circuit on April 20, 2023, in Atlanta, Georgia. Wyndham’s contract states that an arbitrator will be assigned by the American Arbitration Association (AAA), but the AAA refuses to arbitrate Wyndham cases, stating that Wyndham did not abide by their rules and policies, and has not paid arbitration fees. Wyndham argued that the court should therefore appoint a special arbitrator.

Three lower courts, in three separate lawsuits filed in Florida, New Jersey and South Carolina, denied Wyndham’s motion to compel arbitration. One of the lower court judges called Wyndham’s actions a “Shell Game” and a “runaround” or stall tactic. In Reynolds v. Wyndham, Case #4:22-cv-00892-JD, filed in South Carolina, Reynold’s arbitration claim was submitted on December 7, 2018. They were not notified by the AAA until December 30, 2020, that their arbitration claim was not allowed to proceed.

We are reviewing a total of 11 lawsuits filed against Wyndham beginning in 2019. From one of the court filings: THE RICH GET RICHER

39. While opining that Wyndham may be subject to over $60 million in litigation risk in 2020, Wyndham’s filings with the Securities and Exchange Commission reveals that it issued more than 75 stock grants to officers and directors during the period January 1, 2020 to June 17, 2020 for nearly 1.5 million shares, which at the June 17th stock price of $30.92 equals approximately $45 million of stock grants in less than six (6) months.

Bedgood et al v. Wyndham Vacation Resorts and Worldmark, Case Number: 6:21-cv-00418, filed March 3, 2021, in the Middle District of Florida at Orlando.

Plaintiffs: CHARLES HAROLD BEDGOOD, JOEL WILSON BRANDON, HANNAH LYN HEIL-BRANDON, EDDIE MATHEWS JR., REENA T. SMITH, JUSTIN FLOYD DIAZ, CANDICE CLARK, and ROSLIND CHRISTINE HARPER

Defendants:  WYNDHAM VACATION RESORTS, INC., and WORLDMARK, THE CLUB, WYNDHAM RESORT DEVELOPMENT CORPORATION

CLASS ACTION COMPLAINT

This case is about one identical arbitration clause in Wyndham and WorldMark contracts, and a single, common fraudulent omission by Wyndham and WorldMark.

The single alleged “fraudulent omission” concerns poor availability, but also mentioned in the lawsuit complaint are timeshare practices that are widely reported by members and owners throughout the industry, including:

• The promised 90-minute presentation was three to six hours or more,
• High-pressure sales employing a tag-team format,
• Agents falsely promising to be the members personal representative, but never answers phone calls,
• The demand to buy today,
• Volumes of documents with little time to review before signing,
• They told me what to say (or not say) during the closing session,
• Problems, especially poor availability, can only be fixed by buying more points,
• Little to no resale value.

Florida District Judge Paul G. Byron denied Wyndham’s motion to compel arbitration.

Wyndham appealed.

Wyndham’s arbitration clause

(b) Neutral Arbitrator/No Jury. Any Dispute will be submitted to a neutral arbitrator, for a final and binding determination, known as an award. The arbitrator is an independent decision maker, appointed by the American Arbitration Association (“AAA”), who reviews and weighs evidence provided by both Parties and issues an award enforceable in court.

It will be a landmark ruling if the Appeals Court upholds the lower court’s rulings. Timeshare Developers go to great lengths to force pre-dispute arbitration, arguably biased towards the industry. Arbitration is private and binding.

Why has Wyndham not amended their contract to remove the requirement to have the AAA appoint an arbitrator?

We reached out to Wyndham to ask this question, or to let us know if the AAA has been removed from their contract. No response.

It is beneficial for timeshare members to learn what goes on behind closed courtroom doors.

Excerpts from Florida US District Judge Paul G. Byron’s Order, that led to Wyndham’s Appeal  

Defendants Wyndham Vacation Resorts, Inc., Worldmark, The Club, and Wyndham Resorts Development Corporation’s Motion to Compel Arbitration

Using allegedly coercive tactics, Defendants induced Plaintiffs to purchase timeshare points based on representations that “purchasers will have a dizzying array of choices and will be able to stay at their desired property wherever it might be.” (Id. ¶¶ 32–43).

However, when the Plaintiffs went to use their timeshare points to book the accommodations, the Plaintiffs discovered that there was little to no availability at their desired affiliated resorts, leaving the Plaintiffs with no way to utilize their purchased timeshare points. (Id. ¶¶ 45–49).

In the Motion to Compel, (Wyndham) Defendants argued that: (1) the AAA was unavailable because it would not arbitrate the Agreement; (2) however, the AAA was not integral to the Agreement; (3) thus, the Court must compel arbitration before a substitute arbitrator.

According to R-1 (d) of the Consumer Rules, should the AAA decline to administer an arbitration, either party may choose to submit its dispute to the appropriate court for resolution.

Finally, Defendants do not appear of one mind whether the AAA is an available forum. Defendants originally argue in the Motion to Compel that the Court should appoint a substitute arbitrator as the AAA is unavailable based on Plaintiffs’ allegation that the AAA declined to administer the arbitrations for CB, JB, and HB. (Doc. 11, pp. 7–16). However, confusingly, in their later reply, Defendants then switch positions, saying that the Court need not appoint a substitute arbitrator as the AAA is available regardless of whether Plaintiffs had attempted to arbitrate, making it unclear as to what remedy Defendants are even requesting.

CONCLUSION

For the reasons set forth herein, it is ORDERED AND ADJUDGED as follows:

The Motion to Compel Arbitration is DENIED.

DONE AND ORDERED in Orlando, Florida on March 30, 2022

https://timesharelawlibrary.com/lawsuit/bedgood-et-al-v-wyndham/

Snippets from the Bedgood v Wyndham Oral Arguments (There may be errors in my transcription)

In the event the audio cannot be found on Page 2, the link to all oral arguments: https://www.ca11.uscourts.gov/oral-argument-recordings 

The Bedgood oral arguments: https://www.ca11.uscourts.gov/oral-argument-recordings?page=2

• 9:00 am
• Wyndham’s attorney, David S. Sager: This is a somewhat unusual setting for arbitration in that both parties agreed to arbitration. The AAA rejected arbitration. The AAA never elaborated the reasons why it rejected arbitration.
• Judge: It did say because your client is in violation of AAA Rules
• Sager: Never elaborated reasons. We don’t know as we sit here today.
• Judge: Other cases say failure to pay fees can be basis for rejecting arbitrating. How do we set aside the District Court’s Order without knowing your client’s alleged reasons?
• Sager: There was no finding as to what the reason were.
• Judge: You have not asked the Triple A (the reasons)? It strains commons sense … to think an entity like Wyndham doesn’t engage in communication with AAA to see if the alleged problem can be solved.   
  
• Sager: There is no evidence it has anything to do with administrative matters like fees. There is a reference to the forum selection clause. AAA findings were incorrect. Reference to a limitation of  liability issue. No reference to fees.
• Judge: How are fees any different? …. Your client refused to comply with policies. Under the rules you bargained for, and demanded, frankly.
• Sager: If conflict, the parties’ contract controls.
• Judge: Arbitration initially is a matter of contract. One rule, I think Rule 12, if refusal to arbitrate, if non-compliance, parties can submit dispute to the appropriate court. Why isn’t that the end of the case?
• Sager: Section 5 AAA allows and provides for the appointment of a substitute arbitrator
• Judge: Only if the arbitration forum is unavailable.
• Sager: The AAA is unavailable.
• Judge: By your unilateral action.
• Sager: Absolutely not. We’ve taken no action.
• Judge: AAA says you are out of compliance.
• Sager: If policies were fees, we would be talking about one very long line of cases. I would have no quarrel. That is not the fact.
• Judge: Why are fees special?
• Sager: The courts have interpreted fees as a gatekeeper function.
• Judge: I do not understand the bright line between fees and policies/rules.
• Sager referenced “rouge polices” Limit of liability or forum, we will be in this circle going on and  on…
• Sager referenced Casper case.
• Judge: Unpublished opinion, binds no one.
• 9:17 am
• Sager: It is absolutely not for the AAA to rewrite law as we (the AAA) want it.
• Judge: What if the District Court appoints a substitute arbitrator and the arbitrator refused to arbitrate because you violated Consumer Rules?
• Sager: I would have a right to appeal
• Me (Irene) to my computer: Shell game stall – gotcha!
• Sager: AAA rules do not apply if they are inconsistent. Our agreement is subject to law, not up to the AAA administratively to disagree with the law.
• Judge: What’s inconsistent with the finding that you violated policy and AAA won’t arbitrate?
• Sager: The AAA is making judgment without finding.
• Judge: You are sabotaging the process?
• Sager: Why are we here? The AAA decided we would be here.
• Judge: AAA said we are not going to do it because of policies violated.
• Sager: AAA simply said we don’t like it.
• Judge: You insist on Orange County venue. Does that exercise legal judgment?
• Sager: The agreement said it will be held in Orange County unless parties agree to a different location.
• Judge: You concede fees are a different animal. Arbitration rules say, each party will suggest an arbitrator, then the body will choose. The business refuses to suggest. You are not playing by the rules. Is that fees or not?
• Sager: Arbitrator could say you are not participating. More like fees.
• Attorney for Plaintiffs, Howard Prossnitz: Administrative decision. Freeman was not just a fees case. Failure to follow rules is a default.
• Judge: If AAA decided not to take the case because they are swamped. Where are you?
• Prossnitz: Wyndham picked AAA.
• Judge: In that case, it is hard to argue inconsistent.
• Prossnitz: Hypothetical of my own, Let’s suppose, like Casper, we shall agree on a substitute arbitrator if AAA decides not to hear.
• Judge: In my hypothetical Section 5 kicks in, Court shall designate an arbitrator
• Prossnitz for Bedgoods: Then okay, a substitute is okay, but in this case the AAA was available.
• Judge: A few plaintiffs did not try to arbitrate:
• Me to my computer: Why should they if the prior cases could not arbitrate and Wyndham and Worldmark are not on AAA’s list?!
• Judge: We don’t know which policy or rule was violated. They may be able to be correct. Why are we to assume the violation can’t be corrected.
• Prossnitz: That would be fine with me.
• Judge: Why won’t other plaintiffs file? Did AAA ever deny an arbitration request against Worldmark?
• Prossnitz: Worldmark is not on the approved list, so plaintiffs shouldn’t have to sue in court. Mr Bedgood is in court. These are real people (my emphasis added).
• Prossnitz: This is an administrative rule – there was no “policy” decision. They are asking you to rewrite AAA rules.
• 9:48 am Wyndham Rebuttal: There are five of eight Plaintiffs who did not pursue arbitration.

The Tangled Legal Web  

One lawsuit led to another.

The Bradley Heisman v Wyndham lawsuit Case 2:20-cv-11480-KM-JBC, filed on August 26, 2020, in New Jersey District Court, in which presiding Judge, Hon. Kevin McNulty denied Wyndham’s motion to compel arbitration, settled. Therefore, no appeal. 

It is an unconscionable commercial practice and a material misrepresentation of the Agreement to include an arbitration clause in the agreement that Defendants knew was inoperative at the time the agreement was signed because of Defendant’s failure to adhere to the requirements of the American Arbitration Association.

James M. Reynold and Judith A Reynolds v. Wyndham Vacation Resorts and PTVO Owners Case #4:22-cv-00892-JD filed 3/17/22 in South Carolina was dismissed after a settlement. Therefore, no appeal.

Presiding Judge of the Fifteenth Judicial Circuit, Kristie F Curtis April 5, 2021 Order denying the defendant’s motion to dismiss and compel arbitration and denying the defendant’s motion to dismiss certain claims:

The provisions of the contract between Wyndham and the Plaintiffs are unconscionable in that the contract denies basic consumer remedies to the Plaintiffs.

Eleven lawsuits filed against Wyndham we have segregated by:

• Orders in which a court denied a motion to compel arbitration,
• Orders in which a court denied a motion to dismiss fraud claims, and
• Whistleblower lawsuits that support Wyndham owners.

There is that old adage, “Where there’s smoke there’s fire.” The eleven lawsuits have been filed in six states: Tennessee, Illinois, Delaware, Florida, New Jersey and South Carolina. One of the lawsuits has 59 Plaintiffs. Their attorney was instructed to break them down into groups of five. In another of the lawsuits, over 200 Wyndham members have reached out since the lawsuit was filed.

Related Case

Another case in Europe with timeshare lenders arguing that the law has been misinterpreted

https://afterinsidetimeshare.com/banks-lose-appeal-against-financial-ombudsman-service-news-breaks-in-the-us-first/

Thank you, Irene, it seems that recently we have been covering quite a few court cases which appear to be going against the developers or financial institutions where they themselves have instigated the appeals. A tactic used by developers in Spain during the flurry of cases following the first Supreme Court ruling, it is also used to delay court-ordered payments, with several of the defendants now in liquidation. A further attempt to avoid paying out.

These appeals all seem to be centred around the “interpretation” of the law, claiming it has been “misinterpreted”, an argument about “semantics”. In many of the cases, the claim is the “judge or judges” have “misinterpreted” the law, in the case of the banks in the UK, their claim was that the Ombudsman, who was adjudicating a claim, had “misinterpreted” the law, only because his decision was in favour of the consumer.

If this isn’t an abuse of the legal system, what is?

It is also a serious affront to the thousands of consumers who have valid complaints, it is they who are paying for it all, in the case of the timeshare developers, whose money are they using to pay for these legal challenges, it is yours, the “owner/member” paid with your annual fees, incessant upgrades and anything else they can rinse from you.

Timeshare was intended to be something we would enjoy with wonderful memories, so forget the wonderful resorts for a moment, they are part of the original “dream” you were sold, and it didn’t include all the nightmares which timeshare has now become.

That’s it for this week, we hope you all have a wonderful relaxing weekend and join us again next week. While getting things ready for publishing, I felt I was being watched, luckily I had a camera ready on the desk and managed to get this shot.