Herbalife looking to settle Bostick class-action
We last checked in with the Dana Bostick class-action lawsuit against Herbalife almost a year ago.
Bostick had accused Herbalife of ‘being an inherently fraudulent pyramid scheme’ in April, and had gone on to file a 68 page complaint under Federal corruption and racketeering laws.
Herbalife moved to dismiss the lawsuit but were knocked back. U.S. District Judge Beverly Reid O’Connell felt that ‘Bostick’s allegations were significant enough to proceed toward trial‘.
Shortly after the failed attempt at dismissing the case, Herbalife issued the following statement:
“While the court concluded that Bostick had adequately alleged a claim against Herbalife, it expressed no view of the merits of that claim,” a Herbalife spokeswoman said.
Fifty hours of mediation later, settlement negotiations remained deadlocked with both parties unable to reach an agreement.
After these first failed attempts at a settlement, Bostick then sought to add four new plaintiffs to his case.
In June of this year Bostick added four fellow Herbalife affiliates to the case, which then became a proposed class-action suit.
Anita Vasko said she lost $12,000 last year after joining one of Herbalife Ltd. (NYSE:HLF)’s nutrition clubs. She said she worked six or seven days every week trying to be successful.
Judy Trotter said she ended up $10,000 in debt before she gave up on it in 2012. Beverly Molnar said she was $11,000 in debt after buying leads to try to get her business off the ground.
And Chester Cote said he tried to sell the company’s products online in 2009 but was unable to do so because so many other distributors were trying to get rid of their products at deep discounts.
After this development, Herbalife and the plaintiffs returned to the settlement table… and it appears this time around Herbalife might be looking to avoid going to trial.
Both sides declined to comment on the talks or the amount of the potential settlement under discussion.
Herbalife, which is under investigation by the Federal Trade Commission and other regulators, has denied the allegations and earlier said the suit had no merit.
But it now appears willing to accept a class-wide settlement to put a cap on its liability, sources told The Post.
The class would cover about 1.5 million people — those who joined in the US after 2009 to the present, excluding those who signed up last year after Herbalife instituted an arbitration clause in its distributor contracts.
With negotiations ongoing and confidential, how Bostick’s case went from having “no merit” to worthy of a settlement is a mystery.
The settlement “needs to be large enough to cover the full amount of losses of the potential class members,” said Brent Wilkes, executive director of the League of United Latin American Citizens.
Three of the former distributors suing Herbalife said they each lost more than $10,000.
For each member of the class to get even $1,000, the settlement would have to be $1.5 billion.
I don’t think Herbalife are going to cough up $1.5 billion or more anytime soon… so it’ll be interesting to see how this ultimately plays out.
Personally I’d like to see the case go to trial, but I can understand (from the plaintiff’s perspective), what going up against a multi-billion dollar company means logistically.
As for Herbalife, still no word on those retail figures. Guess they’ve got their hands full hiring PR shills and quietly negotiating paying off those who lost tens of thousands of dollars as Herbalife affiliates.