Root Wellness claims not responsible for illegal medical claims
After receiving notification of medical claims made by associates posted to its website, Root Wellness took the unusual position of denying responsibility.
Fortunately, that’s not how MLM regulation works.
The DSSRC is an attempt to self-regulate the MLM industry. Essentially it’s a joint venture between the Direct Selling Association and Better Business Bureau.
The DSSRC has no regulatory powers but issues “rulings” which it claims, if not acted upon, are forwarded to US regulators.
Last September the DSRCC issued a recommendation that Root Wellness take action on medical claims being posted to its website.
Four cited medical claims on the “reviews” section of Root Wellness’ website referenced fatty liver, psoriasis, ADHD, chronic fatigue, autism, rheuma arthritis, eczema, fibromyalgia, nail fungus, dementia and unspecified “autoimmune symptoms”.
Root Wellness responded by stating “they were not responsible for the posts.”
Given US regulators routinely go after MLM companies for illegal health claims made by distributors on social media, it’s an odd position to take.
Even more so considering Root Wellness agreed to take the claims down.
As part of a routine compliance inquiry this month, the DSSRC found that not only had Root Wellness not taken the original four claims down – they found an additional 29 new claims, “among other issues”.
In identifying these claims, which appeared in social media posts and are still publicly accessible, DSSRC also reviewed new health-related claims similar to those made in the 2021 inquiry, including claims that Root Wellness’ products can treat several serious health-related conditions such as shingles, Alzheimer’s, Parkinson’s, certain cancers, gout, fibromyalgia, arthritis, and others.
Root Wellness appears to have responded to the DSRCC’s second communication by disabling the review section of their website.
Though Root Wellness has again claimed that the social media posts from the 2021 inquiry as well as the 29 new posts have been or will be taken down, they have not provided any evidence of their efforts to have the salesforce members responsible for the claims remove them from circulation, such as copies of correspondence asking them to remove the posts from social media.
Be it on Root Wellness’ website or on social media, unsubstantiated medical claims are illegal as per the FTC Act and the Food, Drug, and Cosmetic Act, regulated by the FTC and FDA respectively.
The DSRCC states that if
Root Wellness does not remove the claims from circulation or provide evidence of a good faith effort to remove the claims within a reasonable period of time, DSSRC will refer this matter to the appropriate government agency.
One possible reason Root Wellness is dragging its feet on regulatory compliance, is that the company’s priorities lie elsewhere.
Over the past few months Root Wellness has hired G3 Development to spam press-release sites with SEO nonsense:
G3 Development is owned by Adam Paul Green. SEO spam has been part of his marketing strategy since his MXI Corp days:
G3 Development’s spam campaign extends to Root Wellness’ own social media channels:
BusinessForHome has also been targeted, following a May 30th report detailing alleged fraud by founder Clayton Thomas:
A counterclaim filed by Christina Rahm Cook against Rain International, and the DSSRC’s regulatory compliance reports are also targeted:
Whether the DSA is aware Root Wellness is using its logo as part of their spammy suppression campaign is unclear.
Christina Rahm Cook is a long-term business partner of Clayton Thomas. She’s heavily involved in Root Wellness’ marketing efforts:
The lawsuit Root Wellness is trying to bury was initiated by Rain International in 2021. Both Cook and Thomas are named defendants.
As alleged by Rain International;
Sometime before September 2016, Cook met with Ryan Fry (“Fry”), at the time a vice president of Rain, and agreed to act as a consultant regarding a skin-care product Rain was developing.
Rain and Cook entered into a contract specifying as much in September 2016. In the negotiations leading up to the contract, Cook represented that she held a PhD in a scientific field and that “she had extensive scientific knowledge and work experience.”
Cook also presented Rain with documents, including a resume, that outlined her achievements and credentials.
Rain alleges that it relied on this information in deciding to contract with Cook and did not learn until years later that these representations were false.
Rain and Cook entered into additional agreements in February 2017, November 2017, and December 2019. Rain alleges that Cook does not have a PhD, that she does not have extensive scientific knowledge, and that she otherwise misrepresented her credentials.
Rain alleges that Cook’s misrepresentations have harmed its reputation and goodwill among its customers.
Rain further alleges that rather than performing her duties under the contracts, Cook used Rain’s resources to “gain Rain’s highly confidential and competitive product information” to develop “products competitive with Rain.”
Rain alleges that Cook established International Seed and Predicted Health to aid the development and marketing of the competing products.
All of this was done in violation of the non-compete and non-solicitation clauses contained in the February 2017, November 2017, and December 2019 agreements.
As a result of Cook’s alleged misconduct, Rain brings this action and asserts five causes of action, four against Cook and one against all Defendants:
- (1) breach of contract and the covenant of good faith and fair dealing;
- (2) fraudulent misrepresentation;
- (3) negligent misrepresentation;
- (4) conspiracy (against all Defendants) and
- (5) unjust enrichment (in the alternative)
Cook’s motion to dismiss Rain International’s case was denied. She went on to file a counterclaim against the company in September 2021.
Both Rain International’s case and Cook’s counterclaim are still active. I’ve added both cases to BehindMLM’s calendar.
Hopefully Root Wellness focuses more on regulatory compliance over suppressing information going forward.
Update 16th August 2022 – Personalized Healthcare Solutions, LLC and Simply Wholeistic Inc. have been dismissed as defendants in Rain International’s case.
Rain initially opposed the motion as to Simply and PHS in their briefing.
However, at oral argument, Rain conceded that the current pleadings fail to include specific allegations that would entitle this court to exercise personal jurisdiction over Simply and PHS.
The dismissal order was made on August 1st. The companies have been dismissed without prejudice, meaning they could be re-added as defendants post-discovery.
Rain International’s case against Thomas as an individual was dropped after the company earlier withdrew their claims against him.
On August 4th Christina Rahm Cook filed a redacted amended complaint in her countersuit.
On August 12th, Rahm also filed a motion seeking to consolidate her countersuit and Rain International’s lawsuit. A decision on that motion remains pending.
Update 1st March 2023 – As as the time of this update, Rain International’s lawsuit and Christina Rahm Cook’s countersuit remain separate cases.
On February 10th the court granted Rahm’s previously filed Motion for Judgment.
The order preserved Rain International’s first cause of action, but ruled in favor of Rahm on the remaining causes.
- First cause of action (breach of services agreement) – upheld
- Second and third causes of action (fraud and misrepresentation) – ruled in favor of Cook because the claims “overlap completely
with its breach of contract claim”
- Fourth cause of action (conspiracy) – ruled in favor of Cook due to there being no “underlying tort”
- Fifth cause of action (unjust enrichment) – ruled in favor of Cook because the cause requires there to be “no equitable remedy” available to Rain, which the court found there clearly was
This is a pretty big blow to Rain International’s suit. I’ll keep track of how the case develops going forward.
With respect to Clayton Thomas; I’d noted he’d been dropped as a Defendant in the August 2022 update above.
That said, on February 10th Thomas was directed to file
either file a motion to dismiss or file a memorandum stating that he still desires for the court to decide his motion to compel arbitration and will not waive his jurisdictional challenge.
Thomas filed a motion to dismiss on February 22nd, which remains pending before the court.
Update 18th April 2023 – Thomas’ motion to dismiss was granted on March 23rd. This removes him as a defendant in Rain International’s case.
As of April 10th, both Rain International’s lawsuit and Cook’s countersuit have been stayed.
A settlement agreement has been reached in both cases. Presently the court has given the parties until April 21st to execute the agreement and dismiss the cases.
I’ll check the docket for an update early next week.