Tag: Herbalife

Week Adjourned: 9.29.17 – Herbalife, Snap-On Logistics, Medical Malpractice

Top Class Action Lawsuits

Not the Great Pyramid? Now here’s something with huge potential: Herbalife is facing a potential consumer fraud class action lawsuit alleging it operates as a pyramid scheme to bait consumers with the “promise of riches.” The Herbalife lawsuit, filed in Miami by eight former Herbalife distributors, also names 44 top Herbalife distributors as defendants.

The allegations center on Herbalife’s “Circle of Success” event cycle. These events allegedly consist of a series of expensive seminars held across the US. The seminars are allegedly a sales tool used by Herbalife representatives and inner circle top distributors, to create enthusiasm among the network’s hundreds of thousands of members and to convince them that success depends on attending as many of the “Circle of Success” events as possible.

According to the complaint, these events are systematic and scripted in nature, divided into separate tiers of semi-local Success Training Seminars, semi-annual Leadership Development Weekends, and “Extravaganza” and “January Spectacular” events run by Herbalife itself.

It’s quite the story. Allegedly, attendees are frequently required to travel in order to attend the events, for which ticket prices range between $30 and $200 per person. Further, once at the events, attendees are incentivized to make thousands of dollars in product purchases to achieve VIP status and other perks.

“With these acts, defendants have collectively persuaded hundreds of thousands of victims to invest substantial sums into attending events which are held out as the secret to becoming financially successful in a fraudulent scheme to which defendants know financial success is not possible,” the lawsuit states.

The lawsuit alleges violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act for conducting a racketeering enterprise, for deceptive and unfair trade practices under the Florida Deceptive and Unfair Trade Practices Act and for unjust enrichment and negligent misrepresentation.

The lawsuit also claims separate violations of wire fraud, stating that the defendants’ acts of wire fraud are related because they share the same or similar purpose and target the same victims and have the same result: “hundreds of millions of dollars flowing from the plaintiff class into the coffers of Herbalife and its top few President’s Team distributors.”

The lawsuit is seeking certification of a class consisting of all people who purchased tickets and attended at least two “Circle of Success” events from 2009 to the present “in pursuit of Herbalife’s business opportunity.” The lawsuit states that this could involve hundreds of thousands plaintiffs.

Named plaintiffs Jeff and Patricia Rodgers, Michael and Jennifer Lavigne, Cody Pyle, Jennifer Ribalta, and Izaar and Felix Valdez, describe their losses as ranging from a few thousand dollars to over $100,000.

The defendants include Los Angeles-based Herbalife Ltd. and its wholly owned subsidiaries Herbalife International Inc. and Herbalife International of America Inc. Individual named defendants include top distributors, current and former members of the company’s board of directors, and members of its so-called President’s Team.

The case is Rodgers et al. v. Herbalife Ltd. et al., case number 1:17-cv-23429, in the U.S. District Court for the Southern District of Florida. 

Top Settlements

Snap Judgment? Here’s a good news story –well – a happy ending at least. A $15 million settlement has been awarded to a manufacturing plant supervisor injured while at work and later demoted, then fired.

The plaintiff, 50-year old Cesar Astorga, alleged defamation, discrimination, and violations of California labor law against the defendant, Snap-On Logistics, a power tool manufacturer.

The trial took three weeks and the jury just a day and a half to reach its verdict. According to court documents, the plaintiff had worked for 15 years with the defendant as a supervisory employee.

The back story is that during the course of Astorga’s employment he suffered work-related injuries which required multiple surgeries and leaves of absence. The injuries were to both knees caused by falling off a scissor lift, and which were later aggravated when a 100-pound motor fell on top of him. He has had seven total knee surgeries (4 right-knee surgeries, 3 left-knee surgeries) to treat ongoing pain. From the beginning of 2002 through mid-2003, plaintiff was absent from work a total of nine and a half months. His next period of leaves of absence occurred from the beginning of April 2009 through February 2011, totaling 13 and a half months, according to court reports.

At one point, Snap-On provided Astorga with a golf cart so he could get around the 100,000 plus square foot facility. However, the defendant changed its policy in the 2009-2011 timeframe and told the plaintiff it no longer allowed employees to return to work with doctor-imposed work restrictions.

Astorga was demoted from his supervisor position during his most recent leave of absence, and fired on April 21, 2011. His medical bills, which were paid by Snap-On, exceeded $275,000. 

Malpractice Win. Victory for the family who filed a medical malpractice lawsuit. They’ve been awarded a $3.2 million verdict by the jury hearing their case – the circumstances surrounding the death of a husband and father who died after receiving a vein implant designed to stop blood clots. The lawsuit claimed medical malpractice against three doctors at Mercy Suburban Hospital in Montgomery County, PA.

The Montgomery County jury reached their verdict after finding the doctors and Mercy Suburban Hospital negligent in their care of Ernest Lucchesi, who collapsed while refereeing a lacrosse game, was rushed to hospital and received the implant but later died.

The jury took seven hours to reach their verdict, after hearing evidence over the course of the nine day trial, which included, according to the Lucchesi family’s lawyer, two of the doctors admitting negligence: one before trial and one during trial. The third doctor took the stand to defend himself however, the jury didn’t like his excuses and assigned the majority of the negligence to him, the family attorney said.

According to the Lucchesi family’s pretrial memorandum, the doctors at Mercy implanted the vein filter in Lucchesi six months before he died. When Lucchesi was admitted to the emergency room, Bolden failed to note that the filter had migrated to his atrial valve, court papers said. He died three days after his discharge from Mercy.

The jury found Dr. John J. Flanagan 44 percent negligent, Dr. Hugh Lipshutz 31 percent negligent and Dr. David Bolden 25 percent negligent. The award was broken down into $1.5 million for wrongful death and just over $1.7 million under the Survival Act. 

Ok – That’s a wrap for this week. See you at the bar!

Week Adjourned: 7.22.16 – Apple, Blue Shield, Herbalife

.appleTop Class Action Lawsuits

Bad Apple, Again? Yet another lawsuit against Apple, this one set to take a bite over allegations of consumer fraud surrounding devices that are replaced via AppleCare+ warranty with refurbished replacements that don’t meet a specific clause in the contract.

Filed in California, on behalf of plaintiff Vicky Maldonado and others similarly situated, the proposed class action alleges the clause claiming refurbished devices are “equivalent to new in performance and reliability” is false.

According to the Apple lawsuit allegations, a refurbished device is a “secondhand unit that has been modified to appear to be new” and therefore can’t be equivalent in durability and functionality as a new unit. Maldonado filed the suit after she purchased a third generation iPad and then cracked the screen after owning it for six months.

As the damage to Maldonado’s iPad was accidental in nature, she was forced to replace her tablet at an out of pocket cost of $250, according to the suit. However, she was told that for another $100 the AppleCare+ program would replace the tablet if similarly damaged in the future. Allegedly, the replacement iPad Maldonado was given under the warranty did not function properly and since it had impaired functionality, the tablet wasn’t equivalent to new, the suit asserts.

Following this, in 2013 Maldonado bought another iPad, a fourth generation model. She claims that she wasn’t informed that she would get a refurbished device if she damaged the tablet. When she tried to get a repair for the device in May 2015, she was given a refurbished device instead. According to court filings, she claims the device she received wasn’t equivalent to that of a new device either in performance or reliability.

Policy Policing Needed? Blue Shield got slapped with a consumer fraud class action lawsuit this week, filed by enrollees who allege the insurer owes its members another $35 million in rebates due to errors in its medical-loss ratio calculation of 2014. That’s some accounting error, if true…

Brought by plaintiffs Becky Ebenkamp and Rebecca Morris, the Blue Shield class action lawsuit seeks to represent more than 446,000 individual policy holders from that year.

According to federal law, insurers are required to issue refunds if they don’t spend at least 80 percent of premium dollars on medical care or on improving the quality of care. The complaint alleges Blue Shield improperly counted certain payments as medical expenses it had made erroneously in 2014 to providers who were not in its network and patients whose coverage had lapsed. By counting those mistaken payments as legitimate medical expenses, Blue Shield pushed itself closer to the 80 percent threshold, thus reducing the size of the refunds it owed, according to the complaint.

The lawsuit states that under the consumer refund rule, those payments should have been logged as administrative expenses, and Blue Shield customers are therefore entitled to a bigger refund.

The rebate rule, part of the Affordable Care Act, is intended to contain the cost of health coverage by limiting the share of premiums insurers can spend on administrative functions, executive salaries, overhead and profits. If an insurer spends only 75 percent of premium dollars on care, for example, it must send refund checks to enrollees equal to 5 percent of the premiums they paid.

Who knew? Ah, precisely.

Top Settlements

Herbalife to Pay Up…Remember that old adage, if it sounds too good to be true? Well, Herbalife International of America, Inc., Herbalife International, Inc., and Herbalife, Ltd. have agreed to fully restructure their US business operations and pay $200 million to compensate consumers to settle Federal Trade Commission (FTC) consumer fraud charges that the companies deceived consumers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.

In its complaint against Herbalife, the FTC also charged that the multi-level marketing company’s compensation structure was unfair because it rewards distributors for recruiting others to join and purchase products in order to advance in the marketing program, rather than in response to actual retail demand for the product, causing substantial economic injury to many of its distributors.

According to the FTC’s complaint, Herbalife claims that people who participate can expect to quit their jobs, earn thousands of dollars a month, make a career-level income, or even get rich. But the truth, as alleged in the FTC complaint, is that the overwhelming majority of distributors who pursue the business opportunity earn little or no money.

For example, as stated in the complaint, the average amount that more than half the distributors known as “sales leaders” received as reward payments from Herbalife was under $300 for 2014. According to a survey Herbalife itself conducted, which is described in the complaint, Nutrition Club owners spent an average of about $8,500 to open a club, and 57 percent of club owners reported making no profit or losing money.

The small minority of distributors who do make a lot of money, according to the complaint, are compensated for recruiting new distributors, regardless of whether those recruits can sell the products they are encouraged to buy from Herbalife.

Finding themselves unable to make money, the FTC’s complaint alleges, Herbalife distributors abandon Herbalife in large numbers. The majority of them stop ordering products within their first year, and nearly half of the entire Herbalife distributor base quits in any given year.

The Herbalife settlement requires Herbalife to revamp its compensation system so that it rewards retail sales to customers and eliminates the incentives in its current system that reward distributors primarily for recruiting. It mandates a new compensation structure in which success depends on whether participants sell Herbalife products, not on whether they buy products.

The settlement also prohibits Herbalife from misrepresenting distributors’ potential or likely earnings. The order specifically prohibits Herbalife from claiming that members can “quit their job” or otherwise enjoy a lavish lifestyle.

In addition, the order imposes a $200 million judgment against Herbalife to provide consumer redress, including money for consumers who purchased large quantities of Herbalife products (such as many Nutrition Club owners, among others) and lost money. Information on the FTC’s redress program will be announced at a later date.

Ok, that’s a wrap folks… See you at the Bar!