By Vega
WeWork’s tenants are lawyering up.
Attorneys for cash-strapped clients of the office-subleasing startup are demanding that the company stop billing them for office space they can’t use because of coronavirus lockdowns and that it return the cash it has already collected for April and May.
“As long as this pandemic prohibits our clients from using their WeWork office spaces, the purpose of their membership agreements is frustrated, thus excusing their obligation to pay membership fees,” the letter from the law firm of Walden, Macht & Haran reads.
We previously reported that WeWork was keeping all of its Big Apple office-sharing spaces open and refusing to give subtenants a break on rent — despite numerous coronavirus outbreaks at its locations and Gov. Andrew Cuomo’s March 20 order which shut down all non-essential businesses statewide under penalty of civil fines.
Jim Walden, managing partner of Walden Macht & Haran, told in an interview that the “20 plus” LLCs the firm is representing turned to legal action only after being stonewalled and otherwise denied in their attempts to get deferrals or refunds from WeWork.
Walden added that several of his clients — who work at offices in New York, Los Angeles and Washington — witnessed police showing up to WeWork offices to make sure that no non-essential workers were in them, but that WeWork still refused to give them refunds.
“It’s funny how a crisis can reveal the true character of either a person or a company,” Walden said. “I think from my clients’ perspective the fault lines in WeWork’s business model have come to light and its commitment to its community has come under question.”
The lawyers argue that as long as the pandemic is ongoing, they have no obligation to pay rent, calling WeWork’s decision to collect both “unlawful and hypocritical, since, as we understand it, WeWork has not been paying full rent to its own landlords.”
“It is hard to think of an event that more destroys the purpose of a WeWork membership agreement … than a deadly, highly communicable disease and resulting government order that prohibit use of the member’s office space,” the letter adds.
The tenants are demanding that their rent — which ranges from $450 to $5,000 per month, according to Walden — be frozen until they are legally allowed to return to their offices and that all rent paid since lockdowns began be returned. If WeWork doesn’t return the funds, the lawyers say they will pursue arbitration.
The membership agreement WeWork makes subtenants sign includes a condition that bars them from joining any class action lawsuit, as well as a waiver that says they won’t file a lawsuit to receive money damages. Walden, however, said that his firm will explore every option if WeWork is unwilling to cooperate.
“We’re hoping to give WeWork some opportunity to show its culture is not one that it seeking to profit from a pandemic,” Walden said. “If it doesn’t come to the table, we’ll file a complaint with the Attorney General’s office, we’ll file arbitration and we are still researching the merits of a federal action.”
