Herbalife settles “Circle of Success” class-action for $12 mill
Herbalife has settled fraud allegations pertaining to its “Circle of Success” events for $12 million.
Herbalife has also agreed to stop misleading consumers by making changes to its corporate policies.
Plaintiffs Jeff and Patricia Rodgers, Michael and Jennifer Lavigne, Cody Pyle, Jennifer Ribalta and Izaar and Felix Valdez sued Herbalife in a proposed class-action back in 2018.
As stated in the original complaint, the purpose of the class-action was
recovery from a corrupt organization of individuals and entities who act together, using misrepresentation and deceit, to sell access to a series of emotionally manipulative live events.
Plaintiffs also took aim at Herbalife’s business model, alleging
none of Herbalife’s top distributors, past or present, including the Individual Defendants, has built a significant income by retailing Herbalife’s products according to Herbalife’s rules.
Defendants have actual knowledge that – despite their incessant misleading claims to the contrary – there is no viable retailing opportunity.
Rather than defend the allegations, Herbalife opted to settle.
As per a proposed settlement agreement filed on April 6th;
The Settlement Agreement provides for the establishment of a non-reversionary “Settlement Fund” in the amount of $12,500,000.
Attorney’s fees come to $4.1 million (33.3%), $78,000 to the Class Representatives for bringing the case and, after other administrative and litigation costs, $7.5 million is left for Class Members.
Class Members in the settlement are defined as
“all U.S. Herbalife distributors who purchased tickets to at least two Herbalife Events during the Class Period,” but excludes “past and present members of Herbalife’s Chairman’s Club and Founder’s Circle) to the extent those individuals were members of Herbalife’s President’s Team or above throughout the Class Period, including their spouses, heirs, predecessors, successors, representatives, alter egos, or assigns.
Also excluded are any U.S. Herbalife distributors who have previously executed a release of the claims that are the subject matter of this litigation.
How much Class Members get back will be “based on the number of Herbalife event tickets each purchased.”
First, “[e]ach Settlement Class Member shall be informed by the Claims Administrator as to the Herbalife Corporate Events for which that Settlement Class Member purchased tickets according to Herbalife’s records.”
Then, Settlement Class Members may “claim additional Herbalife Events for which the Settlement Class Member purchased tickets” if the Member certifies to certain information about the event.
As part of the proposed settlement, Herbalife will also “adopt changes to its corporate policies” for a minimum of three years.
Herbalife shall amend its U.S. Rules of Conduct and Distributor Policies to indicate that U.S. event attendance is not mandatory and does not guarantee financial success.
Herbalife shall amend its U.S. Rules of Conduct and Distributor Policies to indicate that representations made by distributors that U.S. event attendance is mandatory or that it guarantees financial success are prohibited.
U.S. Herbalife Corporate Event flyers, and the portion of Herbalife’s website promoting U.S. STS events, shall include a disclaimer that U.S. event attendance is not mandatory and does not guarantee financial success.
Herbalife shall amend its U.S. Rules of Conduct and Distributor Policies to provide that ticket purchases for U.S. Herbalife Corporate Events shall be refundable via the company’s existing buyback procedure pursuant to its Gold Standard Guarantee.
Additionally, Herbalife shall also allow distributors to cancel their U.S. Herbalife Corporate Event ticket purchases within 24 hours of purchase.
Herbalife distributors shall be precluded from purchasing more than two tickets per distributorship for any given U.S. Herbalife Corporate Event.
The specific “U.S.” changes suggests Herbalife will continue to mislead and defraud consumers outside of the US.
Pyramid scheme allegations against Herbalife made in the original complaint are not addressed in the proposed agreement.
The Californian court hearing the case approved the settlement on April 19th.
- Notice of Settlement must be disseminated by May 19th;
- objections and opt-outs must be completed by August 4th;
- class members must submit a claim by August 4th;
- final approval of the settlement must be sought by September 8th; and
- a final approval hearing is scheduled for October 16th
BehindMLM cannot offer affected Herbalife class members with legal advice. If you are in the US, have attended Herbalife events and have legal questions, you need to speak to a qualified legal representative.
This was a hard fought case. Given the ten years or so the Circle of Success operated, the settlement is disproportionate to the greater harm caused.
It’s very clear who in all these cases fill their pockets at the end. THE LAWYERS 4.1 Million.
Indeed they do but that is a result, not a cause. The cause date back to the decisions and actions of Herbalife and top distributors. The victims sought the recourse open to them and will make little relative to their loses. But who caused their losses, the lawyers who represented them or Herbalife?. Lawyers made plenty on both sides. I much prefer criminal cases.