In a case that could have broader implications for nearly every large real estate company, a federal judge ruled earlier this week that Keller Williams as a franchisor can be held responsible for the actions of individual agents who made sales calls to individuals on “Do Not Call” registries.
The ruling stems from a long-running class-action lawsuit, which Keller Williams settled for $40 million back in 2022, in which the company was accused of calling and texting 2 million people who had opted out of sales calls through a federal database. Admitting no wrongdoing, the company agreed to enhance compliance and training for agents along with the payment.
One plaintiff involved in that lawsuit, however, opted out of the settlement and chose to push forward with his lawsuit. James Havassy of Pennsylvania is asking a federal court to hold Keller Williams liable for a slew of marketing calls he received from local agents back in 2018.
Though the case is still at an early stage, Judge Timothy J. Savage agreed that the mega-brokerage exerts enough control over franchises and agents that Havassy can move forward with his claims against the company.
“That (Keller Williams) employees did not make the phone calls does not mean (Keller Williams) had no connection to them,” Savage wrote. “(Keller Williams) controls all advertising and marketing that the Keller Williams Bethlehem office and its agents, Houston and Hewitt, perform using (Keller Williams). Using the Keller Williams logo and the Keller Williams domain in their email addresses enhances (the company’s) brand and consequently its profits.”
Whether other franchisors could be swept up by the ruling remains unclear. The judge’s opinion is also limited to jurisdiction, and it is also unclear if the same reasoning will apply later in the case or on other legal issues.
In a statement, Keller Williams spokesperson Darryl Frost continued to argue the company should not be a party to the lawsuit, based on the underlying facts.
“Keller Williams had no involvement in the alleged calls at the heart of this lawsuit, and as such, we don’t believe the plaintiff has grounds to bring a lawsuit against Keller Williams,” he told RISMedia. “This is still an early stage of the legal process, and we are confident in our defense once we have the opportunity to present it.”
The case itself is nothing like the larger class-action telemarketing lawsuit, either in scope or profile. Havassy previously settled state-level claims against some of the agents involved in making sales calls for $679.75 (with $678.75 for attorneys’ fees, and $1 in damages).
But Savage’s ruling potentially opens the door for individuals or large classes to hold large real estate companies responsible for these types of violations. Keller Williams has specifically sought to distance itself from the actions of agents who violate “Do Not Call” laws, emphasizing that independent contractors make their own choices on marketing and sales.
Despite the 2022 settlement, people have continued to claim that Keller Williams agents have made unsolicited calls or sent them messages, with another lawsuit filed just two weeks ago in Texas by a man who is seeking class-action status.
Frost reiterated that the company requires franchises to comply with all applicable laws, including respecting the “Do Not Call” list.
Frost also emphasized this point, pointing out that the case is in the early stages and the ruling had nothing to do with the merits of Havassy’s claims.
Additionally, Havassy’s arguments rely heavily on the specific methods Keller Williams uses and how it operates, with Savage pointing out that Keller Williams’ franchises are obligated to use “the System” for all operations—policies that certainly differ from other companies.
“The System controls how a Market Center provides real estate brokerage services, including advertising and promotional programs,” he wrote. It also governs training on telemarketing methods…(t)he individual realtors are trained by the franchisee “in accordance with the procedures” set out by (Keller Williams), including (Keller Williams’) methods and techniques for real estate sales. Hence, we conclude that (Keller Williams’) conduct is related to Havassy’s claims.”
If Savage’s ruling does set a precedent, though, it could easily spread across the real estate landscape. Eric Troutman, a lawyer focused on these types of cases, wrote yesterday in a story published in National Law Review that “real estate brokers need to abandon the fantasy that the independent contractor relationship will protect them in (telemarketing) suits.”
While Savage admits that Keller Williams’ franchises and agents are independent, and that trainings for agents are not mandatory, he points to a huge volume of other evidence that connects agents and “Market Centers” to the company, including branding, contracts, websites and databases—including the database containing Havassy’s restricted phone number.
“(W)e conclude that (Keller Williams’) conduct is related to Havassy’s claims,” Savage wrote.
