Piambino v. Bailey, 610F.2d 1306 (1980)

Under what circumstances is summary judgment proper securities case involving an MLM Company?

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The Court of Appeals held that given the facts in the record of the District Court, the granting of summary judgment on the claim of a securities law violation was improvident because a judge or jury could reasonably view the sales program as a single program whose profits were derived from the efforts of its distributor. Bestline Products Inc. sold products through a distributor system that rewarded the recruitment of new distributors by current distributors. Distributors could earn profits through different channels: sales to the general public, sales to other downline distributors, or through a recruitment credit earned from bringing in additional distributors at certain levels. The company literature downplayed the last component as "theoretical". Because there were realistic methods of earning profits from non-recruitment activities, the District court should not have ruled that the program was an investment contract for securities laws purposes.

Full case and case summary is also available online at: http://www.mlmlegal.com/legal-cases/Piambino_v_Bailey610F2d1306-1980.php

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

Reference Info:Federal, 11th Circuit, Florida | 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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