Bland v. Edward D. Jones & Co.
| Decision Date | 30 March 2020 |
| Docket Number | Case No. 18-cv-1832 |
| Parties | WAYNE BLAND, DANUTA DURKIEWICZ, DAVID BOWLES and ADAM REYES, individually and on behalf of all others similarly situated, Plaintiffs, v. EDWARD D. JONES & CO., L.P. and THE JONES FINANCIAL COMPANIES, L.L.L.P., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiffs Wayne Bland, Danuta Durkiewicz, David Bowles, and Adam Reyes ("Plaintiffs") filed this putative collective and class action against Defendants Edward D. Jones & Co., L.P. and The Jones Financial Companies, L.L.L.P.; alleging violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (Count I) and several Illinois and Missouri state laws. Currently before the Court is Defendants' motion to dismiss [83] Plaintiffs' Second Amended Class and Collective Action Complaint [79]. For the reasons stated below, Defendants' motion to dismiss [83] is granted in part and denied in part. The case is set for further status on May 13, 2020 at 9:00 a.m. Counsel are directed to file a joint status report, including a discovery plan and a statement of whether any settlement talks have occurred and whether the parties request an early settlement conference, no later than May 8, 2020.
The Court presumes familiarity with its prior opinion [38] granting Defendant's motion to dismiss Plaintiffs' First Amended Complaint. See generally Bland v. Edward D. Jones & Co., L.P., 375 F. Supp. 3d 962 (N.D. Ill. 2019) ("Bland I"); [68].
Plaintiffs are all former Financial Advisors who worked for Defendants and participated in Defendants' Financial Advisor training program.2 [79, ¶ 4.] Many of their claims concern one of the terms contained within the "Financial Advisor Employment Agreement" that Plaintiffs and members of the putative class were required to execute before beginning their training.3 [Id., ¶ 17.] The contract provision in question, which the Court will refer to as the "training cost reimbursement provision" ("the TCRP"), states:
[84-1, ¶ 21.] Each of the Plaintiffs also received a "Compensation Agreement," [79, ¶ 35], that provides a schedule of compensation for both their time as trainees and then as New Financial Advisors. See [84-2].
The training program in which Plaintiffs participated lasted 17 weeks. [79, ¶ 21.] During the training period, all Trainees were classified as non-exempt, and therefore entitled to overtime pay. [Id.] For the first eight weeks of the training program, Trainees "self-studied" for two financial advising licensing exams, the Series 7 and Series 66. [Id., ¶ 23.] Defendants instructed trainees to study on their own for six days a week to cram for these tests. [Id.] Trainees studied for the tests using online videos on computers provided by Defendants. Although the actual costs of providing these videos to Trainees were negligible, the Employment Agreement implicitly valued them at $10,000. [Id., ¶¶ 23-24.] Defendants did not provide in-person study space or meaningful instruction during this study period—in contrast to other financial advising training programs, which have more immersive programs. [Id., ¶¶ 25-26, 47.] Trainees were paid wages during self-study; the compensation agreement contemplated that Trainees would bill about 45 hours per week. [Id., ¶ 27.] Trainees were (at least theoretically) allowed to bill more (or less) time than that as needed. See [id., ¶ 37]. Plaintiffs allege, however, that they were simultaneously told to study ever harder, [Id., ¶ 27], but to tamp down on the number of hours they billed Defendants. [Id., ¶¶ 37, 65 (instructing a Plaintiff not to bill more than 50 hours per week), 96-97.]
The second stage of the training began with a four-and-a-half day long intensive seminar in either Tempe, AZ or St. Louis, MO. [Id., ¶ 29]. The seminar focused on sales techniques—how to knock on potential customers' doors, gain entry, close a sale, etc. [Id., ¶ 30.]
After the seminar, Trainees returned home to conduct several weeks of "door knocking," where they put the sales skills they learned at the seminar to use. [Id., ¶ 31.] Basically, Trainees were instructed to spend their days door-to-door soliciting in select neighborhoods. [Id.] Trainees were expected to generate 25 new leads a day, but had trouble meeting this quota because Defendants would double-book neighborhoods and customers were generally unresponsive to in-person solicitation of financial products [Id.] Despite these barriers, Trainees were provided no clerical support (or even office space), and had to spend additional time researching routes and neighborhoods, logging data, and following up with the few leads they registered. [Id., ¶ 32.] As before, Plaintiffs were paid an hourly rate and were overtime-eligible, though their compensation was calibrated for a 60-hour work week. [Id., ¶ 36.] Plaintiffs allege having worked longer hours in order to meet Defendants' demands. [Id., ¶¶ 72.] Moreover, Plaintiffs allege that Defendants made it difficult to record their hours during the door knocking period, causing them to further underreport. [Id., ¶¶ 37, 71.]
Following the "door knocking" period, Trainees attended another in-person seminar in Tempe or St. Louis. [Id., ¶ 33.] Trainees called all of the contacts they had accrued and were evaluated by Defendants on their ability to pitch various financial products using canned scripts. [Id., ¶ 34.] Those who passed this evaluation achieved "can-sell" status (in that Defendants allowed them to sell financial products) and became New Financial Advisors. [Id., ¶ 38.] Plaintiffs allege that throughout this supposed training, Defendants provided little to no actual training regarding financial advising or financial products. [Id., ¶ 30, 34.]
New Financial Advisors, in contrast to Trainees, were salaried and classified as exempt, and therefore were not overtime eligible.4 [Id., ¶ 41-42.] Plaintiffs allege having worked 80-hour weeks as New Financial Advisors. [Id., ¶ 40.] Even after achieving can-sell status, New Financial Advisors still spent their days soliciting door-to-door and fulfilling clerical duties, such as inputting client contact information. [Id., ¶¶ 38-39, 152.] New Financial Advisors did not have their own offices, and therefore worked out of their homes and public places. [Id., ¶ 39.]
Plaintiffs allege that they were extremely circumscribed in the financial advice they could provide to clients. They claim not to have received sufficient training regarding financial advising and Defendants' products to independently render advice. [Id., ¶ 43.] Instead, they used Defendants' wealth-balancing computer software, which spits out recommendations and investment options based on a client's preferences. [Id., ¶¶ 43, 84, 156] From there, New Financial Advisors are instructed to sell one of a few "preferred products," which generate large revenues for Defendants. [Id., ¶ 43] When Plaintiffs had questions about financial products, they were instructed to refer to the wholesalers' recommendations and descriptions. [Id.] For example, Bland was told to stick to recommending one of three products—one each for low, medium, and high-risk investors. [Id., ¶ 81.] Later, he was told to push a single financial product on all of his prospective clients. [Id., ¶ 83.] Reyes was instructed that certain classes of products are interchangeable, and he could more-or-less sell them willy-nilly. [Id., ¶ 153.] Defendants oversaw Plaintiffs' sales, and chided them when they sold "non-preferred products." [Id., ¶ 43]
The Plaintiffs all allege to have been forced out. After Plaintiffs left, each received a letter demanding repayment of the entire $75,000 training fee. Basically, Plaintiffs allege that these five-figure penalties are bogus, given that they received meagre training and acquired limited wealth management skills. [Id., ¶¶ 44-59.] Plaintiffs allege that Defendants fired off threatening letters before investigating whether they in fact are violating the TCRP by selling securities for another firm. [Id., ¶ 55]. Moreover, Plaintiffs have identified four instances in the past fifteen years in which Defendants arbitrated the TCRP with former brokers. [Id., ¶ 56.]
All of the Plaintiffs worked for Defendants at some point between 2014-16. [Id., ¶¶ 62, 92, 121, 135.] All of them signed the Employment Agreement with the TCRP. [Id., ¶¶ 62, 92, 121, 135.] All allege that they consistently worked overtime hours for which they were not...
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