FTC & Neora settlement efforts “unable to bridge the gap”
Despite negotiations taking place for over a year, at present a settlement between the FTC and Neora looks unlikely.
As per a settlement report filed on December 9th, the parties advise;
Despite their efforts, the parties were unable to bridge the gap between their respective positions.
At this time, the parties are not engaged in settlement discussions but they remain open to further such discussions should circumstances change or as this case progresses.
In light of the extensive previous settlement discussions referenced above, the parties do not believe that pursuing alternative dispute resolution would be fruitful at this time.
The FTC does anticipate Neora will return to the negotiation table, but only after fact discovery concluded or expert reports have been exchanged.
Presumably the FTC expects to use discovery to obtain evidence to strengthen their case; that being Neora/Nerium operates as a pyramid scheme.
Neora on the other hand is banking on the AMG Capital Management, LLC v. FTC Supreme Court case.
They put forth the outcome of that case will determine whether the FTC will be able to pursue monetary relief. At least for now, Neora doesn’t appear interested in defending whether it is in fact a pyramid scheme.
As this Court is well aware, the parties here disagree on this very issue.
The FTC maintains that Section 13(b) of the FTC Act authorizes the FTC to seek such relief, whereas Defendants maintain that the FTC has failed to state a claim for such relief because Section 13(b) of the FTC Act authorizes the FTC to file suit in District Court only for injunctive relief to halt ongoing violations.
Defendants believe that mediation within thirty (30) days after the U.S. Supreme Court’s decision in AMG Capital Management would be the most opportune for the parties.
Reading between the lines;
- if the Supreme Court rules in favor of the FTC, Neora will move to settle the case rather then defend it isn’t a pyramid scheme;
- if the Supreme Court rules against the FTC, Neora thinks it’ll be able to wrangle a favorable settlement from the FTC.
The AMG Capital Management case has come up in a few MLM lawsuits to date. For some reason alleged scammers seem to think a ruling against the FTC will mean the end of MLM regulatory enforcement in the US.
I maintain that even if the FTC is prohibited from seeking monetary relief under section 13(b), they have the rest of the FTC Act to fall back on.
Things might not be as straight forward as suing for monetary relief under section 13(b), but it’s a misstep to think regulation of pyramid schemes will simply come to an end.
The AMG Capital Management case is scheduled for oral arguments on January 13, 2021.
Looking forward and pending court approval, the FTC and Neora will next enter mediation through a private provider.