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Two former Keller Williams brokers have filed separate class-action lawsuits against the franchisor over changes to the franchisor’s profit-sharing plan, including one that asks the court to prevent the brokerage from paying out additional funds until the case is resolved.
Former Keller Williams agent Jerry MolderKeller Williams Realty, who worked at the brokerage from 2002 to 2011, filed a lawsuit on March 22 in the U.S. District Court for the Western District of Texas in San Antonio, seeking a class action lawsuit against Keller Williams Realty. The lawsuit seeks $250 million in damages, alleging breach of contract and unjust enrichment, and a court order reversing changes to the profit-sharing plan announced last summer.
One day later, on March 23, David L. BookerA KW agent who served from 2003 to 2011, he filed a nearly identical complaint against KW in the U.S. District Court for the Eastern District of St. Louis, Missouri, but did not provide an amount for damages and made similar allegations but also requested “special damages.” A preliminary injunction is issued against KW.” Prohibits the redistribution of disputed payments under a profit-sharing plan. “
“If the profit-sharing plan funds at issue are distributed to other profit-sharing plan participants during the pendency of this litigation, Plaintiffs, class members, and subclass members will be at risk of irreparable harm absent an injunction. Because profit-sharing plan funds will be distributed without an injunction, there is no method or ability to wrest those funds from the recipients,” Booker’s complaint states.
In February 2020, KW announced that employees who joined a real estate franchise on or after April 1, 2020 and subsequently moved to a competitor would no longer receive a profit share from the company’s lifetime income plan. This policy is not retroactive and therefore does not apply to agents who joined before this date.
That changed in August. At the KW SuperAgent Bootcamp event in Austin, Texas, the firm’s International Associate Leadership Council (IALC) voted to change its profit sharing policy to allow those who join KW and “actively engage with KW Brokerage” by April 1, 2020. Competition” for vested brokers saw their profit share reduced from 100% to 5%.
The company noted at the time that it would send letters to vested agents affected by the policy (or those who had stayed with KW for seven consecutive years), giving them six months to return and that their share of profits would not be cut. The letters began going out in December.
KW spokesman Darryl Frost said: “On August 16, 2023, the IALC (the spokesperson for Keller Williams Real Estate franchisees and agents) voted to update the profit share distribution policy, which will be effective July 1, 2024. Effective.” Inman issued a statement on Monday.
“Under the revised policy, former KW agents who actively compete with our brokerages will receive a smaller share of profits and more profits will be redistributed to agents who continue to partner with our growth. This change will not Influence agents who retire or leave the real estate brokerage business.
“Importantly, this change does not enrich Keller Williams Realty, Inc. – these funds will only continue to enrich affiliated real estate agents, investors, brokers and employees.”
Both lawsuits were filed by the law firm Humphrey Farrington & McLean in Independence, Mo., whose home page states, “We specialize in big cases that other law firms don’t. ”. Inman has reached out for comment and will update this story when we hear back.
The complaint alleges that Keller Williams anticipated changes to its profit-sharing plan to violate its contract, so when the IALC changed the plan in August, the commission also added a clause to the terms of the plan to ensure that funds from the plan could be used Defend changes in court.
This provision reads as follows: “Administration and Maintenance of the Profit Sharing Plan. KWRI may use any and all funds in the Profit Sharing Plan for the administration or defense of the Profit Sharing Plan, including payment of all costs, attorneys’ fees, expenses, money, debts , interest, losses, damages, settlements, fines, penalties, assessments and judgments arising, levied or incurred in connection with any claim or dispute related to the Profit Sharing Plan.”
According to the complaint, an August 2019 report to the IALC told the commission that “last year, approximately $25 million to $40 million in profit sharing was distributed to non-Keller Williams participants that compete directly with Keller Williams.”
The complaint alleges that according to KW’s Policy and Guidelines Manual, any termination or change to the profit-sharing program would be “future-only” — meaning it would only apply to future recruits. They claim the August changes “are retroactive and violate the terms of the contractual agreements between Plaintiffs, class members and subclass members and Defendant Keller Williams.”
The lawsuits are filed on behalf of persons whose “Keller Williams anniversary is before April 1, 2020, and who have been or will be designated by Keller Williams as vested competing partners and who have or will have their payments under the profit-sharing plan reduced.” ” mentioned by someone. In Missouri and nationwide, “it dropped from 100% to 5%.” The lawsuits did not say how large they believe the nationwide class will be, only that it will include more than 100 people.
“Defendant Keller Williams obtained and accepted benefits at the expense of Plaintiffs and class members or subclass members because they expended time, energy and effort recruiting top salespeople to join Keller Williams,” the complaint states.
“It would be unjust to allow Defendant Keller Williams to retain profits generated by sales personnel recruited by Plaintiffs and class members or subclass members when Keller Williams encourages and induces Plaintiffs and class members or subclass members to make such demands. s hard work.”
Moulder is currently a broker associate with Platinum Realty in Kansas City, Missouri, and Bueker is a broker with Red Key Realty Leaders in Chesterfield, Missouri.
Send an email to Andrea V. Brambila.
