BrokerageReal Estate

Keller Williams named to yet another profit-sharing lawsuit

It is the eighth class-action lawsuit to be filed in recent weeks

Keller Williams was named to two additional class-action lawsuits this week that take issue with alterations made to the brokerage’s profit-sharing program. 

In the past few weeks, seven agents formerly affiliated with Keller Williams — Jerri Moulder, David Bueker, Robert Hill, Kevin Ortiz, Edward Fordyce, Paul Davis, and Penny Alper — took legal action against the real estate brokerage by filing seven separate class-action lawsuits.

On Tuesday, Jana Caudill and Dennis Caudill filed a complaint aiming for class-action status in the U.S. District Court for the Northern District of Indiana. Jana Caudill was a sales associate with Keller Williams from February 1, 2001 to December 14, 2011, and Dennis Caudill was a sales associate with Keller Williams from February 1, 2001, to December 14, 2011. Their complaint challenges adjustments made to Keller Williams’ profit-sharing program and includes charges of breach of contract, declaratory judgment and unjust enrichment.

On the same day, Eric Mendoza and Jack Levine filed a similar complaint in the U.S. District Court District of Nevada. Mendoza worked as a sales associate at the brokerage from 1998 to 2017. He now works with eXp Realty. Levine worked as a sales associate as well from 2000 to 2010. He is now affiliated with Very Vintage Vegas Realty.

In February 2020, KW introduced a more restrictive policy to its profit-sharing program. It stated that associates who joined the brokerage on or after April 1, 2020, and subsequently jumped to a competitor would lose their revenues from the company’s lifelong revenue program. But that policy did not impact agents who joined before April 1, 2020. 

The change introduced in 2020 also extended the wait period to become a vested member. But in August 2023, during KW’s Mega Agent Camp event in Austin, the company’s International Associate Leadership Council (IALC) voted to revise the profit-sharing distribution policy. Under the updated policy, vested agents who joined before April 1, 2020, and actively compete with KW brokerages would see their profit share reduced from 100% to 5%.

An incentive to go back to Keller Williams remained. Former agents who return to the company within six months of the effective reduction date will have their profit share restored to 100%, now-former KW President Marc King wrote in an email in August 2023. Also, former KW agents who have retired or left the industry altogether will retain their full profit-share distribution. The new policy is supposed to be implemented on or before July 1, 2024.

The plaintiffs argue that according to the Keller Williams policies and guidelines manual, the brokerage did not have the right to terminate the profit-share program. They also claim it didn’t have the right to amend any aspect of the program’s method of calculating a market center’s profit-sharing contribution or a recruiting sponsor’s profit-sharing distribution, except as specifically directed by the IALC. Lastly, they claim that any amendment made to the profit-sharing program was only allowed to be prospective and not retroactive. 

Editor’s note: This story was updated on Wednesday, April 10 at 3:15 p.m. est to include information about another suit filed by Mendoza and Levine.

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