Okmyansky v. Herbalife , 415 F.3d 154 (2005)

Was Herbalife entitled to interpret the distribution contract to only allow future commissions to the Plaintiff?

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The Court of Appeals held that Herbalife was entitled to interpret the contract at its sole discretion. Okmyansky was an Herbalife distributor with a significant downline network. He discovered that multiple people in his downline had signed additional sponsorship agreements with another sponsor, a violation of the distribution agreement. Okmyansky wanted Herbalife to pay him back commissions that were wrongfully paid to the pirate sponsor. The company decided, after 4 years, to only pay future commissions to him and not any past commissions. The Court of Appeals upheld the District Court's decision that Herbalife was entitled to decide the dispute in that manner. The distribution contract gave Herbalife the "sole and absolute" discretion to decide issues that arose in a dual distribution situation.

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

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Reference Info:Federal, 1st Circuit, Massachusetts | 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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