Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.
Major real estate franchisor Keller Williams and several former KW agents have come to terms on a deal to resolve separate class-action lawsuits against the franchisor over changes to its profit-share program.
Keller Williams and plaintiffs Eric Mendoza and Jack LeVine informed the U.S. District Court for the District of Nevada on Friday that, on Oct. 2, all parties “finalized the terms of the settlement agreement for this and the other pending claims against Defendant in cases involving plaintiffs represented by the Humphrey, Farrington & McClain firm.”
Those plaintiffs include:
- Jerri Moulder
- Michael Devlin
- Eric Mendoza and Jack LeVine
- Jana and Dennis Caudill
- Penny Alper
- Paul Davis
- Edward Fordyce
- Kevin Ortiz
- Robert Hill
“Counsel for Plaintiffs is now gathering the signed releases from clients in those various cases,” the Oct. 11 filing reads.
“The parties expect to file a joint stipulation of dismissal by November 5, 2024.”
In mid-September, one of the plaintiffs in a separate case filed by the same firm, James McFarlane, told the U.S. District Court for the District of Maine they had reached an agreement to settle the case with Keller Williams, along with other plaintiffs of that firm, and that the settlement would be completed within the next 30 days.
The deal appears to resolve all of the suits challenging KW’s scrapped profit-share changes. A case filed by David Bueker, also a client of Humphrey, Farrington & McClain, was voluntarily dismissed without prejudice on Aug. 26. Another similar case brought by Louis and Deborah Ronayne by the David M. Kramer law firm was also voluntarily dismissed without prejudice on Sept. 4. Yet another case brought by John Exnicios, another client of Humphrey, Farrington & McClain, was voluntarily dismissed without prejudice on Sept. 13.
“Without prejudice” means the claims can be filed again, but this would likely only apply to the Ronayne case since the other suits were filed by clients of Humphrey, Farrington & McClain.
In February 2020, KW announced that associates who joined the real estate franchisor on or after April 1, 2020 and subsequently jumped ship to a competitor would no longer be able to receive profit shares from the company’s lifelong revenue program. That policy was not retroactive and so did not apply to agents who joined before that date.
That changed in August. At KW’s Mega Agent Camp event in Austin, Texas, the company’s International Associate Leadership Council (IALC) voted to change its profit share distribution policy so that vested agents who joined KW before April 1, 2020 and who “actively compete” with KW brokerages have their profit share amount cut from 100 percent to 5 percent.
The company noted at the time that it would send a letter to vested agents — or those who remain at KW for seven-consecutive years — affected by the policy, giving them six months to return and not have their profit share cut. Those letters started going out in December 2023. The lawsuits began in March.
The suits, which sought class-action status, alleged Keller Williams anticipated that the changes in its profit-share program were a breach of contract and so when the IALC changed the program in August, the council also added a provision to the terms of the program that would ensure the program’s funds could be used to defend the change in court.
Less than two months after the first suit was filed, Keller Williams backtracked and abandoned its plans to make the changes retroactive. The franchisor’s current policy lets agents who joined the company before April 1, 2020, collect 100 percent of their profit share amount even if they leave the firm to work for a competing brokerage.
Inman has asked KW for comment and will update this story if and when a response is received.
Read the filing (re-load the page if document is not visible):
Like me on Facebook | Follow me on Twitter
