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?

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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 distributors. Executives at the company were dissatisfied with the performance of the owner and sole shareholder, and sought to force him to sell the company to Wellness Acquisition Group, an entity formed to take control of Zrii. To force the sale of the company the executives took control of the company's distributor list, and threatened to dismantle the company if the owner did not comply with the executives’ demands. The court found that there was immanent harm to the company that could not be remedied by money damages after-the-fact, and granting a preliminary injunction was appropriate. However, the court limited the injunction to 3 months because under the terms of Zrii's distributor agreements it could restrain the executives activity for 6 months, and granting a longer injunction would effectively allow Zrii the maximum relief available without adjudicating the underlying contract.

Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Zrii_v_WellnessAcquisitionGroup.php

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

Reference Info:State, 3rd Circuit, Delaware | 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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