Bell v. Health-Mor, 549 F2d 342 (1977)

Bell v. Health-Mor


The Court of appeals held that a claim that is plainly frivolous or insubstantial should be dismissed for lack of subject matter jurisdiction. The Plaintiffs successfully made a colorable claim that the payment of a finder’s fee for potential door-to-door vacuum sales customers could be considered a security under federal law. The program could have been construed as a security if the referral fee was the product of the efforts of the company, or it could be a legitimate business opportunity if it was the product of the efforts of the vendor. Because the Court of Appeals was unable to determine the answer on the record of the District Court, they reversed.

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Published In: MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates, Securities Updates

Reference Info:Federal, 5th Circuit, Louisiana | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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