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 by the court?

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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 Peterson's wife as part of their divorce settlement. Peterson sued Herbalife, claiming that the company unlawfully withheld bonus and royalty checks from him, and claiming as damages all money due to him as a result of Herbalife's actions. Herbalife sought to discover Peterman's tax returns from the period before and after his divorce, claiming that the returns would demonstrate the extent of his damages. Peterman resisted production of the tax returns claiming that he had not filed returns after 1998, and that his ex-wife had control of the earlier documents. Peterman resisted disclosing the documents, which led to delaying the case for nearly 2 years. The Supreme Court ruled that Peterman's failure to turn over his tax returns had prejudiced Herbalife because the amount of money he made after Herbalife's alleged conduct was relevant in determining the amount of money owed to him. Peterman's resistance constituted a discovery abuse, and dismissing the case was within the court's discretion.

The full case and case summary are also available online at: http://www.mlmlegal.com/legal-cases/Peterman_v_HerbalifeInc.php

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

Reference Info:State, 9th Circuit, Montana | 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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