MLM / Direct Sales Civil Procedure

Read MLM/Direct Sales Law updates, articles, and legal commentary from leading lawyers and law firms:
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Chapman v. Rudd Paint and Varnish , 409 F.2d 635 (1969)

Chapman v. Rudd Paint and Varnish

The Ninth Circuit held that the promotional brochure was not part of the agreement, and contained fundamental elements that did not create a security as defined by federal law. The distributor agreement specified that the...more

Braddock v. Family Finance Corp. , 95 Idaho 256, 506 P2d 824 (1973)

Braddock v. Family Finance Corp.

The Court held that referral sales programs of the type in question do not constitute illegal lotteries under Idaho Law. An illegal lottery must give a return based solely on chance in Idaho. Cen-States Marketing sold stereos...more

Bounds v. Figurettes , 135 Cal. App. 3d 1 (1982)

Bounds v. Figurettes

The Appellate Court held that Figurettes was an illegal pyramid program in violation of state law. Figurettes' marketing program emphasized recruitment of downline distributors and inventory loading over actual retail sales....more

Bond v. Koscot , 276 So.2d 198 (1973)

Bond v. Koscot

The Court of Appeals ruled that the District Court erred when it did not consider the distributor agreement between Koscot and Bond to be a security. Bond signed a distributor agreement, authorizing her to purchase cosmetics...more

Blackmon v. Mary Kay , No. 05-08-00192-CV. (2009)

Blackmon v. Mary Kay

The Court held that the terms of the Distribution agreement between Blackmon and Mary Kay were unambiguous. The agreement specified that all rights of a distributor terminate when the agreement is terminated, including the...more

Amendment of Rule 7.3 of the Michigan Rules of Professional Conduct

Michigan Supreme Court Adds Restrictions to Lawyer Marketing

Increasing burdens on small law firms, the state supreme court added restrictions on contacting potential clients, and required that "Advertising Material" appear on marketing materials....more

Walker v. Amerireach.com

Is a claim under a state's business practices act barred by a default of a previous contract claim?

The Georgia Court of Appeals held that a claim under the Business Practices Act was a claim independent of a contract claim, and was not subject to the contract's forum selection clause or barred res judicata. Walker had...more

Wilder Chiropractic v. Pizza Hut of Southern Wisconsin, Inc.

Motion to Dismiss for Lack of Subject Matter Jurisdiction as a result of Offer of Judgment

Brief detailing the origin of many class actions brought under the Telephone Consumer Protection Act, and in support of motion to dismiss case for lack of subject matter jurisdiction based on tender of Offer of Judgment to...more

Global Verge v. Rodgers , Case No.: 2:10-cv-01360-RLH-RJJ (2011)

Global Verge v. Rodgers

Global Verge hired Rodgers as a consultant and sued him and PHP after he stopped working at Global and joined PHP as their new CEO, alleging that he violated his confidentiality agreement at PHP. Global sued in Nevada, its...more

In Re Anonymous Online Speakers , 611 F.3d 653 (2010)

When is it appropriate to compel the disclosure of anonymous speakers?

The Ninth Circuit held that the District court did not err in ordering the disclosure of the identities of the online speakers, denying the writ of mandamus. TEAM was a distributor of sales support material to Amway, then...more

Quixtar, Inc. v. Signature Management Team

May a lawsuit proceed in a state in which downline distributors reside when the dispute is actually between two non-resident...

No. The Supreme Court of Texas found that the trial court did not abuse its discretion in allowing the forum non conveniens dismissal. Although ordinarily a resident plaintiff's choice of forum deserves deference, a...more

Peterman v. Herbalife Inc., 234 P.3d 898 (2010)

Is it abuse of discretion to dismiss a lawsuit against an MLM company when the Plaintiff fails to produce tax returns as ordered...

The Montana Supreme Court held that dismissing Peterman's lawsuit was not an abuse of the trial court's discretion. Peterman was an Herbalife distributor for a number of years. His share of the distributorship was awarded to...more

FreeLife International v. American Educational Music , No. CV07-2210-PHX-DGC. (2010)

FreeLife International v. American Educational Music

The Court held that each party's experts could present opinions only to the extent that they were relevant to the underlying claims of the case and were reasonably founded in fact or experience. Expert testimony was to be...more

Powderham v. Synergy Worldwide, Inc., Case No. 2:08-cv-548 CW (2010)

Does the contract allow the company to discharge the contractee without reason?

Powderham, a British citizen, signed a 3-year contract to develop a European market for Synergy. The contract allowed Synergy to terminate Powderham "at any time by giving thirty (30) days' written notice if Company is...more

Guzzardo v. Quixtar , Civil Nos. 2:08-CV-0204 BSJ, 2:08-MC-0762 BSJ, 2:09-CV-0259 BSJ, 2:09-CV-0209 BSJ (2009)

Guzzardo v. Quixtar

The District Court held that the wording of the arbitration clause applied only to current Amway distributors and did not apply to post-termination disputes between the company and distributors. Amway's arbitration agreement...more

Pokorny v. Quixtar, No. 08-15880 (2010)

Is Quixtar's mandatory arbitration program unconscionable?

The Court of Appeals upheld the District Court's finding that Quixtar's mandatory arbitration program was unconscionable and against public policy. The program was procedurally unconscionable because it was thrust upon...more

Zrii v. Wellness Acquisition Group , Civil Action No. 4374-VCP (2009)

Is a preliminary injunction appropriate to restrain the use of MLM company's distributor lists?

The court held that a preliminary injunction, lasting 3 months, was appropriate to prevent foreseeable harm to the MLM company. Zrii manufactured and distributed a natural health drink through an MLM network of over 70,000...more

Herbalife v. Ford , CV 07-02529 GAF (2009)

Herbalife v. Ford

The District Court held that triable issues of fact exist on Ford's allegations that Herbalife was a pyramid scheme, but that the company's distribution agreement contained a non-solicitation clause that could not be enforced...more

Morrison v. YTB International , 641 F.Supp.2d 768 (2009)

Can non-residents assert Illinois consumer fraud statutes against an MLM company based in Illinois?

Morrison was part of a class action lawsuit against YTB and its related entities, claiming that the company was an unlawful pyramid scheme and seeking $100 million in damages. They claimed damages under the Illinois Consumer...more

YTB Travel v. McLaughlin (2009) , Case No. 09-cv-369-JPG

Can a federal court judge vacate a TRO issued by a state court judge under its inherent contempt powers?

The Federal Court held that it could not vacate the order issued under the state court's inherent contempt powers. At the state court hearing on the matter, the court found that one of the defendants had actually increased...more

Nitro Distributing v. Alticor , 565 F.3d 417

Was Amway's involvement in the breakup of a business support materials company a horizontal restraint of trade?

The Court held that Amway’s actions did not involve a horizontal restraint of trade in violation of the anti-trust statutes. Nitro operated a "tool" business, selling support and motivational materials to Amway distributors....more

Mary Kay v. Weber , 601 F.Supp.2d 839 (2009)

Does the sale of Mary Kay products by a terminated distributer infringe on the company's trademark?

The Court held that, because the products were expired, they were not subject to the first sale doctrine, and consequently infringed on the company's trademark. Weber was unsuccessful as a Mary Kay distributor and stopped...more

TAHITIAN NONI INTERNATIONAL v. DEAN

Is a distributorship agreement that prohibits the distributor from engaging in any network marketing enforceable?

Dean was a distributor of Tahitian Noni products who, in violation of his distributor agreement, solicited members of his downline to drop Tahitian Noni and promote a competitor’s products. Tahitian Noni moved for an...more

Quixtar, Inc. v. Signature Management NV, 566 F.Supp.2d 1205 (2008)

Does the Plaintiff's need to destroy the anonymity of the speaker have precedence over the anonymous speaker's right to remain...

Quixtar sued Signature Management Team (Team) claiming that agents of Team had tortiously interfering with Quixtar's existing business relationships and contracts by waging an internet campaign against Quixtar. During a...more

Sharif v. Wellness Intern. Network, Ltd.

Will a second request for an appeal be granted after the first request was dismissed for failure to conform with the court imposed...

A second request for an appeal was dismissed because the Appellant was engaging in tactics that made it appear that the purpose of the litigation was harassment. The Appellants were warned that additional such behavior may...more

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