Nerium seek to stop former Master Distributors from raiding for Jeunesse
One of the more disturbing allegations in Mark and Tammy Smith’s lawsuit against Nerium, was the calculated poaching of Prepaid Legal distributors.
When Nerium founder Jeff Olson first approached the Smiths, they claim they were in the midst of a “successful career” with PrePaid Legal.
Olson nonetheless eventually convinced the Smiths to jump ship to Nerium, on the promise of a secret backroom deal.
In their lawsuit, the Smiths claim Olson was well-aware of the legal repercussions that would likely manifest as a result of Nerium poaching two of Prepaid Legal’s then top earners.
After their fallout with Nerium, the Smiths allegedly have signed on with Jeunesse.
Top earners leaving a company… signing on with a competitor… downlines following…
I feel like I’ve seen this exact same scenario documented in a recently filed lawsuit somewhere, although I can’t quite put my finger on it.
In any event, with the shoe allegedly now on the other foot, Nerium has filed its own lawsuit against the Smiths.
Whereas the Smith’s allege Jeff Olson reneged on a secret backroom deal, Nerium’s lawsuit alleges the Smith’s lawsuit was filed out of “greed and ego”.
Nerium, a direct-sales company, went to great lengths to ensure the success of its highestranking salespeople, the Smiths.
The Smiths were placed in a highly visible position, given direct access to Nerium’s sales force, and earned millions during their tenure with Nerium.
The lawsuit fails to confirm or deny whether Olson made a secret backroom deal with the Smiths and, as alleged by the Smiths, whether he failed to uphold the terms of the deal.
According to Olson’s lawsuit, he met Mark Smith while both were working as distributors at Prepaid Legal (that Olson is also a former Prepaid Legal affiliate was news to me).
In contrast to the Smith’s allegations, Olson maintains it was Mark Smith who first approached him about Nerium.
When Olson departed Prepaid Legal, and later founded Nerium, Smith expressed interest in joining Nerium, but Olson encouraged them to consider staying at Prepaid Legal.
The Smiths ultimately decided to leave Prepaid Legal and join Nerium.
Although not explicitly confirmed by way of a backroom deal, Nerium does reveal preferential treatment given to the Smiths.
Olson placed Smith, and his wife Tammy, through their company Mark & Tammy Smith, LLC, in an extremely beneficial position with Nerium, above other experienced and successful Brand Partners who were already hard at work building their organizations, even though the Smiths did not recruit them, giving the Smiths a built-in organization and all of the financial benefits that would flow to them from being in the upline of these and other extremely successful distributors.
Nerium claims the Smiths’ success at Nerium was “handed to them on a silver platter”.
Skirting around the alleged “Master Distributor” backroom deal, Nerium claims it made the Smiths “top Brand Partners” and “Chief Field Officers”.
To help them build, mentor, and lead Nerium’s field of Brand Partners, they were given a staff, at a cost to Nerium of hundreds of thousands of dollars, company credit cards, and free rein to travel the world on Nerium’s dime.
The Smiths were prominently featured in Nerium’s promotional materials, including its marketing videos, training materials, and even a book.
They were given control of and hosted Nerium’s weekly calls with its sales force and with its leaders, as well as Nerium’s weekly video training system, Nerium U.
They were featured extensively at company conferences, frequently appearing on stage as the leaders of Nerium’s salesforce.
They were also given a “seat at the table” with Nerium’s executive team, essentially representing Nerium’s salesforce.
Nerium claims this preferential treatment provided the Smiths with an “upwards of $14 million” windfall during ‘their tenure with the company‘.
Again, in contrast to the Smiths’ representation that they were promised a secret backroom deal, Nerium claims the Smiths made increasing demands after they’d signed on
Master Distributors “”top” Brand Partners”.
[The Smiths] were not content with the extremely advantageous position they were given or the tremendous financial consideration they reaped.
They continued to demand more advantages, more perks, and more money from Nerium.
Among other things, the Smiths demanded equity in Nerium.
They also demanded an “override” over the entire field, meaning they would make a commission off of each and every Brand Partner’s sales.
And they demanded that each new Brand Partner would be placed in their downline and that they would be guaranteed top rank among the Brand Partners, regardless of their own actual performance.
If acceded to, the Smiths’ demands would have likely doubled or tripled their annual seven-figure income.
Jeff Olson did not dismiss the Smiths’ demands. And because of the prominent and powerful position the Smiths held, with access to all of Nerium’s tens of thousands of Brand Partners, it was important to the Nerium organization to maintain harmony with valued team members like the Smiths.
Olson therefore entered into negotiations with the Smiths.
Olson, and then Nerium’s president, Deb Heisz, attempted to negotiate with the Smiths for over two years.
Despite being offered generous benefits, the Smiths would not agree to reasonable terms that would protect Nerium in return.
The Smiths acknowledge these negotiations in their own lawsuit, but present them as attempts to rectify the terms of the original backroom deal Olson lured them with.
During the negotiations, stymied by the Smiths’ own unreasonable demands, the Smiths began to disengage, becoming nonresponsive to calls and requests from other Brand Partners and Nerium’s corporate office.
Seemingly in anticipation of what Nerium alleges came next, in mid-2017 the company updated its affiliate Policies and Procedures to include a non-solicitation clause.
Consequently, in consideration for all of the rights granted by this Agreement, including the protection this non-solicitation provision affords to Brand Partner, for the term of this Agreement and for two (2) years after termination hereof, for any reason, Brand Partner agrees not to, directly or indirectly, recruit or solicit any of Company’s other Brand Partners to join other direct sales, multi-level or network marketing companies.
Nerium claims Mark and Tammy Smith accepted the new agreement on July 7th, 2017.
As negotiations between Nerium, Olson and the Smiths continued to deteriorate, the company alleges the Smiths
began plotting to leave Nerium for a competing direct-sales company.
But the Smiths did not intend to leave in accordance with the agreement governing their relationship with Nerium.
Rather, the Smiths’ greed led them to launch an escalating attack against Nerium and Olson, with the hope that the attack would help them siphon Brand Partners to a competitor or that Nerium would finally agree to their unreasonable demands as a ransom.
Nerium allege that initially the Smiths were looking to join Isagenix. Isagenix however purportedly developed “cold feet” and backed out of the plan.
Through their firm Byrd Consulting, David Byrd and Jenni Byrd Grier are cited as “popular and well-respected coaches paid by Nerium to work with Nerium Brand Partners”.
Nerium claims to have paid Byrd Consulting ‘millions of dollars to serve as confidantes for numerous high-ranking Brand Partners.‘
Nerium allege the Smiths are now using the Byrds to ‘spread fear and uncertainty, and help encourage Brand Partners to leave Nerium‘.
This, Nerium claims, has been instrumental in the Smiths’ alleged raid on Nerium.
Byrd and Grier appear to be working closely with the Smiths, using their position of trust and confidence to employ underhanded techniques to help facilitate the Smiths’ raid on Nerium, sowing seeds of doubt among the leadership.
Evidence of this raid is provided via Thorsten Mueller, cited as a General Manager of one of Nerium’s European affiliated companies.
As alleged by Nerium;
On March 12, 2018, Mueller received a call from Mark Smith. Smith stated that he was at the corporate offices of Jeunesse, a direct-sales company that competes with Nerium, in Orlando, Florida.
Meanwhile, the Smiths continued to make demands, including demands that Nerium “buy them out” or even that Olson sell the entire company to him.
The implication of what the Smiths had planned as their “or else” was clear – litigation, and a raid.
Smith told Mueller that “changes” were close at hand and that he did not want Mueller to be negatively affected.
He wanted all of his “guys” to be with him when he moved, and that he wanted to move fast. Smith had decided to join Jeunesse.
Smith promised to place Mueller, and his entire European HQ team, high within Jeunesse’s organization and offered to pay Mueller’s airfare to Orlando for an interview with Jeunesse’s owners.
Smith went on to state that other top leaders in Nerium were already with him in Orlando and had decided to follow him to Jeunesse.
He said that many more Nerium leaders would be coming to Jeunesse.
According to Smith, Jeunesse had the ability to pay former Nerium personnel very well and had an enormous amount of cash set aside to orchestrate the move Smith was plotting.
Smith also told Mueller that leading European Brand Partners were being contacted to get them to fly to Orlando with the intent of having them join Jeunesse.
Mueller declined Smith’s invitation to join him at Jeunesse. When Mueller told Smith that, among other things, he would be unable to join him at Jeunesse because he has a non-compete with Nerium, Mueller responded that he would pay any contractual penalty, out of his own pocket, if necessary.
The call concluded with Smith demanding that Mueller immediately speak with Nerium’s senior sales manager in Europe, Juergen Pulvermueller, to get him to fly in to visit Jeunesse.
Nerium alleges the Smiths’ raiding of Nerium’s downline to build Jeunesse has continued, with particular objection to this occurring at “important Nerium team events”.
Nerium’s March 20th lawsuit names Mark Smith, Mark & Tammy Smith LLC, David Byrd and Jenni Byrd Grier as defendants.
The lawsuit seeks to hold the defendants liable for breach of contract (Mark Smith, Mark & Tammy Smith LLC) and tortuous interference with contract (all defendants).
There is no question Smith and MTS, LLC breached their obligation to refrain from soliciting Nerium’s Brand Partners, and that they, in active concert and participation with Byrd and Grier, solicited and facilitated solicitation of other Brand Partners.
If Smith and MTS, LLC are not immediately restrained from continuing to violate, and from assisting and encouraging other Nerium Brand Partners and employees in violating, contractual obligations to Nerium by recruiting Nerium’s Brand Partners and employees to become sales representatives and employees for a competing direct-sales company, Nerium will suffer immediate and irreparable injury as a result of Defendants’ continued wrongdoing.
Nerium have asked the court to issue an injunction to prohibit Mark and Tammy Smith from recruiting their affiliates into ‘any other direct-sales, multi-level marketing, or network-marketing company‘.
Damages against the Smiths at this stage are unknown, but Nerium has stated it “anticipates” seeking over $200,000 from David Byrd and Jenni Byrd Grier.
As at the time of publication, Mark and Tammy Smith have yet to address Nerium’s lawsuit publicly.
The couple’s business website still advertises their association with Nerium.
My take on all this is if you build an MLM company on poaching other leaders, sooner or later it’s going to happen to you.
Whether they approached Nerium or Nerium approached them, Mark and Tammy Smith were undeniably significant affiliates in Prepaid Legal at the time of their departure.
Just as Prepaid Legal was ultimately unable to stop the Smith’s downline from leaving Prepaid Legal to join Nerium, so will Nerium be unable to stop the same with Jeunesse.
At the end of the day an injunction granted against Mark and Tammy Smith cannot stop Nerium affiliates from leaving the company to join Jeunesse of their own free will.
It can stop Mark and Tammy Smith from actively targeting their Nerium downline (which as Master Distributors is the entire affiliate-base), however not their respective downlines.
Typically MLM Policies and Procedures non-solicitation clauses don’t play out too well in court, with most cases ending in confidential settlement as opposed to actually holding anyone financially liable.
That said, how Mark and Tammy Smith’s dispute against Nerium ultimately plays out remains to be seen.
As with the Smiths’ lawsuit, unfortunately I’m unable to track Nerium’s lawsuit through Pacer.
In part due to our diligent readers (thankyou to everyone who emailed in news of Nerium’s lawsuit), we’ll try to keep you updated on developments in both cases.