Jay Bennett sues Isagenix over “The False MLM Promise”
Top-earner Jay Bennett has sued Isagenix over what he refers to as “The False MLM Promise”.
Bennett is a long-time Isagenix distributor, having joined the company back in 2002.
Over the next twenty years, the Bennetts’ business was amongst the highest ranked independent Associate at Isagenix, with 25 stars.
For the past two decades, Isagenix was the Bennetts’ sole career focus, and only source of income.
As of May 2023, Bennett and his family own five income positions within Isagenix’s MLM opportunity.
As described by Bennett in a June 9th lawsuit filed in Arizona, “The False MLM Promise”
is a representation that if an Associate works hard to build his or her downline, then after a few years, the Associate can sit back and enjoy a care-free lifestyle by living off the “residual income” generated by his or her downline organization.
Bennett claims Isagenix incorporates “The False MLM Promise” into its “corporate events, on conference calls, and is seen throughout Isagenix’s marketing and recruitment materials”.
The crux of Bennett’s “The False MLM Promise” claim against Isagenix, is
once an Associate works hard to achieve a high rank with the corresponding residual income, Isagenix will confiscate that income for its own pecuniary benefit.
Worse, since Isagenix cuts off the Associates income,the Associate is left without any funds to assert his or her rights, and this is what Isagenix counts on.
As noted by Bennett, in March 2023 Isagenix included a “we can terminate you whenever we want” clause into its Policies and Procedures (IIAA).
The Amended IIAA contained a new provision which stated the following at Section 3.4 of the Policies & Procedures:
“Isagenix may, at its reasonable discretion, elect not to renew your Associate Contract. Isagenix will notify you of its intent not to renew on or before the anniversary of your enrollment.”
In other words … Isagenix has the sole right to terminate an Associate’s business as long as such a decision is reasonable.
This coincides with Isagenix being sold off to undisclosed investors on February 27th, 2023.
Bennett claims the then newly implemented clause is
contrary to the MLM Promise because it essentially allows Isagenix to take an Associate’s business with impunity after they spent years building that business.
Crucially, Bennett claims he was never made aware of the Policies and Procedures change, and also never agreed to it.
Nonetheless, on May 25th, Bennett claims
absent any prior notice, the Bennetts received a letter from Kevin Heaphy, General Counsel for Isagenix … (stating) Isagenix intended not to renew the Bennett’s contract.
Isagenix provided no reason for the termination other than relying on Section 3.4 of the Policies and Procedures in the Amended IIAA.
Bennett claims that immediately upon receiving the letter, he was locked out of his distributorship and cut off from his Isagenix downline.
Since May 25, 2023, Isagenix has withheld all recurring payments of the Bennetts’ residual income.
As of the date of filing, the Bennetts are still locked out of their Backoffice, and cannot place orders, renew their IIAA, nor can they supervise their downline.
As a result of Isagenix’s actions, the Bennetts claim they are unable to meet private school tuition fees, or pay off “substantial mortgages” on three houses.
Absent of their expected residual income, the Bennetts have no way of paying for their monthly expenses, food, medical bills, or other costs.
Through their lawsuit, the Bennetts first and foremost are demanding Isagenix reinstate access to their distributor position.
Bennett also seeks declaratory judgment with regard to the Amended Agreement, which he again claims he was provided no notice of or agreed to.
Additionally, Bennett alleges
- breach of written contract;
- breach of oral contract;
- promissory estoppel;
- fraud – intentional misrepresentation;
- negligent misrepresentation; and
- tortious interference with business expectancy
Accompanying Bennett’s Complaint is a an Application for a Temporary Restraining Order (TRO).
The TRO filing reasserts allegations made in Bennett’s Complaint. The requested TRO would see Bennett immediately regain access and be paid owed commissions.
Bennett argues that if a TRO is not granted against Isagenix,
they can demonstrate their business faces a “threat of extinction” unless their residual commissions are released, and access to their Backoffice is restored, so they can resume managing and operating their business.
Second, the Bennetts can demonstrate irreparable harm because they will be unable to cover their daily living expenses, including the medical care necessary for their family.
For over forty years, the MLM industry has been the Bennetts sole career focus. As such,the Bennetts would be prohibited from using the resources and friends that grew their Isagenix business.
Essentially, they would be forced to start from scratch. Ibid. With no stream of income, the Bennetts will be unable to pay their mortgage, their homes will go into foreclosure, and the Bennetts will face eviction.
Put simply, allowing Isagenix to proceed will destroy the Bennetts’ livelihood and their business to the point of extinction.
To enjoin Isagenix will allow the Bennetts’ to maintain the status quo pending this litigation.
On June 16th, Isagenix filed a response in opposition to Bennett’s requested TRO.
The facts are considerably more complicated—and in material instances, just plain different—than Plaintiffs’ blithe presentation.
The complications Isagenix refer to pertain to Bennett orchestrating an Amazon retail racket in 2020.
The racket would have seen Bennett secretly granted exclusive permission to sell Isagenix products on Amazon and eBay. Obviously this would have provided Bennett a competitive advantage over the rest of Isagenix’s distributors.
Bennett represented Isagenix founder and CEO Jim Coover backed the failed scheme.
Coover (right) would later deny any knowledge or involvement.
Bennett filed in state-court so BehindMLM was unable to fully track the case. The last update we had was from March 2021, at which time Bennett was granted arbitration in an attempt to resolve the case.
It appears the case was quietly resolved sometime after that.
Getting back to Isagenix’s opposition to Bennett’s requested TRO, the company claims Bennett’s Amazon retail racket “caused the company substantial embarrassment and harm”.
The Bennetts were disciplined in 2020 for substantial breaches of Isagenix’s policies and procedures.
This is an ordinary breach of contract case.
Plaintiffs earned a total of more than $22 million dollars from Isagenix during their tenure with the company. There is no irreparable harm at issue here.
Isagenix goes on to argue they routinely make changes to their distributor agreement, which in the past the Bennetts have agreed to without notice.
Mr. Bennett similarly reaffirmed his agreement when he applied for and received his third Position in 2016, promising to comply with “all Isagenix Policies and Produces and Compensation Plan as currently published or as amended in the future.”
There’s also this redacted section, which I believe pertains to whatever settlement was reached in the Amazon retail racket.
With respect to commissions, Isagenix claims it intends to pay out on all of Bennetts positions “until at least August 10, 2023” – but is behind because of “processing delays”.
A hearing on Bennett’s requested TRO was held on June 20th. The court denied the application, stating it
does not find sufficient evidence of irreparable harm to enter a temporary restraining order.
Bennett has been given until July 5th to file a preliminary injunction brief. Isagenix then has till July 12th to file their own brief, after which a decision will be made.
Unless Bennett brings up something he left out in his request for the TRO, it’s probably unlikely he’ll succeed in securing a preliminary injunction.
Bit of a shame Isagenix redacted sections pertaining to the Amazon retail racket in their filings, as it was obviously important with respect to deciding the TRO.
In any event, I’ve added Bennett’s “The False MLM Promise” lawsuit to BehindMLM calendar. Stay tuned for updates as we continue to track the case.
Update 18th July 2023 – Jay Bennett has secured a preliminary injunction against Isagenix.