Vemma’s FTC case defense will not be insured by Hanover
Following the denial of a preliminary injunction motion a few weeks back, it appears Vemma didn’t have much left to bargain with.
Over the past few weeks they’ve been negotiating with Hanover Insurance, with a settlement reached on or around August 17th.
According to the settlement agreement final judgement on counts one and two of Hanover’s lawsuit are awarded to Hanover.
In counts one and two in their initial lawsuit, Hanover had asked the court to declare
- Vemma’s insurance policy provisions preclude coverage foe Vemma in the FTC lawsuit and
- Hanover has no duty to defend and no duty to indemnify Vemma for any loss related to the FTC lawsuit.
The remaining counts in the lawsuit were dismissed with prejudice, as was Vemma’s counterclaim in its entirety.
Judge Tuchi approved the proposed settlement agreement two days later on August 19th.
Going forward, the court has previously ordered Hanover to insure BK Boreyko’s defense in the FTC case.
What this ultimately means for Vemma is unclear. So far the company has racked up legal bills in excess of $1.3 million dollars.
In their counterclaim Vemma represented that if Hanover didn’t insure their defense, it would cause
imminent and irreparable harm … because it leaves (Vemma) without insurance coverage and the ability to defend (itself) at a critical juncture of the FTC Action.
Stay tuned…
My read of this is that they didn’t settle but rather the court awarded Hanover the win. Am i missing something?
The settlement agreement proposed Hanover win on the first 2 counts and the rest be dismissed.
And “with prejudice” means Vemma will not be able to refile the lawsuit later.
vemma wont be needing a defense fund any longer because it is reaching a settlement with the FTC.
on the 6th of sept the FTC and vemma filed a joint motion before the court to stay all matters for 60 days to give the FTC commissioners time to study the settlement and sign off on it.
so i guess in 60 days or so we shall hear of the terms of the settlement.
i guess – the new comp plan which was demanded by the FTC [50% retail] will stay, a monitor may be appointed and some fine will be paid.
another one bites the dust!
questions about autoship, self consumption on autoship, retail percentages etc, can go hang themselves because they wont be answered by the court.
it’s too expensive to seek justice from the court system, so let’s just settle settle settle! we wont get no answers cause we settle settle settle! the courts are just a stamping authority cause everyone just settles settles settles!
i’m all for regulation and strong regulation at that, but regulation has to be tempered with the courts acting as buffer between regulators and citizens. matters get constantly settled with regulators, and then we hear people complaining about how regulators are ‘overstepping’ or ‘going beyond their brief’ or outside ‘caselaw’.
well, as you sow so shall you reap.
truthinadvertising.org/wp-content/uploads/2016/09/FTC-v-Vemma-Joint-Motion-to-Stay.pdf
But… but… but… Vemma totally wasn’t a pyramid scheme and is profitable now.
Proving that was going to be so easy in court, so why is Boreyko settling?
Ohnoes!
At the end of the day nobody wants to go into court batting for pyramid schemes. It’s a lost cause and behind the bravado and “we’re not a pyramids scheme” chants, deep down the owners of these companies know it.
so why is the FTC settling?
the FTC had moved the court to shut down vemma and install a receiver to take over all assets, but did not have a full victory. the court allowed vemma to continue with a new comp plan and a monitor till the end of the trial.
the FTC should have refused to settle and gotten a court verdict that vemma was a pyramid scheme with it’s focus on recruitment and autoship. by settling, the FTC has raised doubt about whether vemma was a pyramid scheme or not.
you could say vemma settled because it knew it was a pyramid scheme, and vemma loyalists can say the FTC settled because it was not sure of its pyramid allegation.
the FTC is a regulator and not a law maker. since there is no separate law for pyramid schemes the FTC should try to develop as much caselaw in it’s favor as it can, by getting court verdicts in their favor. in this^^ process many questions about autoship, retail,self consumption etc will get answered For The Whole MLM Industry.
the FTC cannot regulate the industry by ‘settling’ with companies one at a time. such settlements can cause a temporary hue and cry, but they do not create Precedent which applies to the whole industry.
the amway safeguards which were ratified by the court in the 1970’s have survived as a guidance for the MLM industry for Decades. the many settlements the FTC may have had requiring changes in a particular company are not even a part of the current dialogue in MLM.
five years down the line new entrants in the industry may not know what happened to vemma, but they may know what caselaw developed via amway or koscot or burnlounge.
Well they haven’t, yet. Only Vemma has proposed a settlement no?
My guess if they do settle is they’ll get what they wanted, that primarily being Vemma not operating as it was.
The FTC know full-well Vemma won’t last without recruitment commissions.