Nerium claims the lawsuit, which also sought a Temporary Restraining Order, was an attempt to stop two of its high-ranking salespeople and a paid Nerium consultant from raiding Nerium’s salesforce and customers, in direct violation of their non-competition and non-solicitation agreements, for a competing company Modere.
Modere (and individuals respectfully) requests that Nerium’s Emergency motion to Compel be denied, that it be ordered to reserve written discovery in accordance with the typical non-emergency guidelines with the Texas Rules of Civil Procedure, that such discovery be narrowly tailored in accordance with the jurisdictional claims it has made, and for all such other relief to which they may be entitled.
The following exchange comes from the Deposition of Dennis Windsor, the President of Nerium from its inception until January 2014, and its Chief Networking Officer until March 30, 2016:
He (Jeff Olson) told me that I need to be prepared and that I need to realize that we may end up losing 60 percent of our sales force in the United States over this issue, that don’t worry about it, we’ll weather the storm. I know what I’m doing. I’ve done this before. You’ve just got to trust me.”
From the law suit documents:
DEFENDANTS’ RESPONSE TO PLAINTIFF’S EMERGENCY MOTION TO COMPEL.
Subject to Certain Pending Special Appearances, Defendants Don Creek, Marilyn Creek, MD Enterprise, LLC, Global Skin Solutions, LLC, Anna Woodward, Julie Waldie, and Lisa Cox, file this Response to Plaintiff’s Emergency Motion to Compel, and respectfully shows the Court as follows:
The entry of an Agreed Injunction clearly obviates the need for an Emergency Motion to
Compel (the “Motion”). As such, the Motion should be denied in its entirety. There are additional complicating factors, including pending special appearance motions and the enforceability of the asserted restrictive covenants, which are contained within a contractual agreement the Dallas Court of Appeals has already upheld as illusory. In reality, the Motion is just the latest act in Nerium International, LLC’s shock and awe campaign to try and beat its former independent contractors into submission, and should be denied.
II. ARGUMENT AND AUTHORITIES.
A. Expedited Discovery Was Based On The Need to Prepare For A Temporary Injunction Hearing That Is Now Moot.
1. On January 25, 2017, the parties entered into a Rule 11 Agreement (with an attached Temporary Injunction) which negated the need for the previously scheduled temporary injunction hearing.
2. On January 26, 2017, the Court entered the Temporary Injunction, negating the basis for expedited discovery.1 Discovery should be allowed to proceed in the normal course with regard to the Contractor Defendants.
B. Expedited Discovery Is Really Only A Continuation Of Nerium’s Shock And Awe Campaign.
3. Upon information and belief, on January 27, 2017, Nerium issued the following “update” ostensibly to its more than 100,000 “Brand Partners,” in an obvious effort to continue its “shock and awe” campaign.
We want to provide you with this important update on the actions Nerium International is taking to protect your Nerium business. As you may recall, Nerium brought suit against Anna Woodward, Lisa Cox, Don and Marilyn Creek, Julie Waldie, and Doug Burdick (the “Individual Defendants”) for soliciting and recruiting Nerium Brand Partners in violation of their contractual and legal duties. At a hearing on January 6th – over the objections of the Individual Defendants – the Court found that Nerium “would likely succeed on the merits of its claims against the Defendants” and entered a temporary restraining order (“TRO”), prohibiting any of the Individual Defendants from “soliciting or recruiting” and Nerium Brand Partners, “directly or indirectly.”
On January 26, 2017, the Court entered an Agreed Temporary Injunction (“Injunction”) against Defendants that clarifies the prohibited activities and extends the enforcement period of the previously entered TRO for 1 year. During the next year, with certain very limited exceptions, the Defendants are strictly prohibited from recruiting anyone they know to be a Nerium Brand Partner. The Injunction specifically prohibits
the Defendants from “any actual or attempted solicitation, enrollment, encouragement, or effort to influence in any otherway, either directly, through a third party, or indirectly (includingbut not limited to, the use of a website), a person who the recruiting party knows to be a Nerium Brand Partner to enrol or participate in another network marketing opportunity.” Recruiting on websites such as Facebook, Pinterest, and Twitter would violate the Injunction. Further, the Injunction specifically prohibits this type of recruiting even if the Defendants’ “actions are in response to an inquiry made by a Nerium Brand Partner.”
Significantly, the Individual Defendants and Modere stipulated to the enforceability of the Injunction, and forever waived and relinquished any and all rights to challenge or appeal it and any subsequent order of contempt on the basis that the Order is void, invalid, or unenforceable or that it lacks sufficient findings.
The entry of the Injunction is not the end of this lawsuit. In fact, this is just the beginning. The evidence we’ve obtained to date against the defendants, including Modere, is overwhelming. In fact, using information that we obtained through our own investigation and discovery obtained in this lawsuit, on January 27, 2017, Nerium International filed its Third Amended Petition and added the following new defendants: Erik and Josalyn Dean, Aaron and Jessica Mathis, Paddy McCracken, Lisa Corcoran, Sue Clemens, Sheena Brooks, Michelle Langhi, Dena Peacock, and Modere executive Justin Serra.
As we continue to obtain discovery in this lawsuit, and as we continue to learn the names of more Brand Partners who have violated their agreements with Nerium International, we will continue to sue former Brand partners when appropriate. We will do everything we can do to protect your Nerium business.
The Third Amended Petition also seeks monetary damages against all defendants in an amount in excess of $100,000,000. Given that the Court has already found, and defendants have agreed, Nerium is likely to prevail at trial, Nerium International is confident that it will obtain a significant financial recovery from the defendants at trial. And our case is only going to get stronger as defendants will be compelled in the coming days to produce all emails, text messages, and other documents evidencing their misconduct, and they will soon have to sit for their depositions.
Each defendant will be held personally liable for the harm they have done to your Nerium business. If you have any information about any of the Defendants recruiting Brand Partners (which would violate the Injunction), please forward that information to Compliance@Nerium.com immediately. If the Defendants violate the Injunction in any way, they will be held in contempt of court, and contempt sanctions can include monetary fines and imprisonment.
Finally, we understand that competitors continue to spread false rumors about our ongoing lawsuit with Nerium Skincare and Nerium Biotechnology. While our detractors continue to talk about a lawsuit they know nothing about, we encourage you to remember that the Court, in its order denying Nerium Skincare/Biotechnology’s motion for preliminary injunction, specifically stated that “[Nerium Skincare/Biotechnology have not established a substantial likelihood of success on the merits…”
4. Undoubtedly, Nerium wanted its Brand Partners to believe (a) it is seeking over $100,000,000 against the Contractor Defendants, and (b) the Contractor Defendants somehow agreed that Nerium is likely to prevail at trial.
5. Nerium’s self-serving reference to the Nerium SkinCare lawsuit underscores the concerns about Nerium’s viability, as it appears Nerium is anticipating it might lose up to sixty percent (60%) of its US salesforce.
The following exchange comes from the Deposition of Dennis Windsor, the President of Nerium from its inception until January 2014, and its Chief Networking Officer until March 30, 2016.
Q. And so with respect to your conversations with Mr. [Jeff] Olson [Nerium’s CEO] relating to his insistence that he get a product manufactured by someone other than Nerium Biotechnology or Nerium International, how did that affect your relationship with him?
A. I had a — a really great relationship with Jeff up through May of 2013, and everything changed after I had my stroke. The pursuit of money and the pursuit of power in that company became something I had never seen before, and I think that’s primarily what has separated us.
Q. (By Mr. Levine) Is Mr. Olson’s pursuit of power and money?
Q. And is it fair to say that you saw his creation of this product from a third party as a way he could pursue both power and money?
Q. Tell me what — how did the discussion go? That’s what I’m asking you. What did he say and what did you say?
A. He basically told me he’s got another partner called CosMax that’s going to become a manufacturer for us and that I need to get on board and get in line with the future of the company; that the vast future of the sales of the company is going to be in Asia and I need to get in tune with that.
Q. And he was talking about the sale of Optimera through CosMax?
Q. And so he was going to distance himself on the NeriumAD and head towards Optimera and CoxMax?
Q. (By Mr. Levine) Is that what he told you?
A. He specifically told me that. He told me that I need to be prepared and that I need to realize that we may end up losing 60 percent of our sales force in theUnited States over this issue, that don’t worry about it, we’ll weather the storm. I know what I’m doing. I’ve done this before. You’ve just got to trust me.”
6. Undoubtedly, Nerium’s alleged $100,000,000 damages campaign against the Contractor Defendants is designed as misdirection play to pacify its independent distributors.
C. The Court Should Require Nerium To Tailor Its Discovery Given The Pending Special Appearances.
7. Concurrently herewith, Don Creek, Lisa Cox, Anna Woodward, and Global Skin Solutions, LLC have filed special appearances and requested a stay of discovery (the “SpeciallyAppearing Defendants”). A stay is appropriate to require Nerium to focus its discovery on jurisdictional issues now that the Temporary Injunction is resolved. 5
8. Nerium’s sole basis for jurisdiction is the alleged consent to jurisdiction (ostensibly based on some contract). The Court has jurisdiction because the damages sought are within the Court’s jurisdictional limits, and further because the Brand Partner Individual Defendants and their respective entities (Paradise Life, Inc., MD Enterprise, LLC, Global Skin Solutions, LLC, and Cultur LLC) consented to jurisdiction in Texas.
9. Even a cursory review of the discovery sought by Plaintiff reveals it is not narrowly tailored to a consent to jurisdiction.
10. Additionally, a stay is appropriate in this case as Nerium does not have an enforceable agreement, ancillary or otherwise concerning most of the Contractor Defendants given the illusory nature of its Policies and Procedures Manual (the “P&P”).
11. In 2012, when most of the Contractor Defendants enrolled in Nerium,8 not only were the restrictive covenants that Nerium now relies on not present, Nerium reserved the right to unilaterally change any provision it saw fit.
12. In a true bait and switch scheme, it is apparent that Nerium simply added in whatever provisions it wanted based on its unilateral ability to make amendments, amendments which it now attempts to use to obtain $100,000,000 against the Contractor Defendants.
13. Nerium is fully cognizant of this defect as the Dallas Court of Appeals has already weighed in on the illusory nature of the P&P when evaluating Nerium’s attempt to enforce a forum selection clause against a former Brand Partner (presumably the same provision Nerium will rely on in this case).
Further, in their reply brief, Nerium has failed to show the trial court erred in concluding the forum selection clause was unenforceable. The introduction to the
Policies Manual provided, “[T]he Company reserves the right to amend this Policy Manual by publishing or transmitting amendments as it deems appropriate.” Section 11.07 of the Policy Manual, the specific provision concerning amendments, provided Nerium could amend the Manual “at any time without prior notice” and that such amendments were to be effective and binding on the Brand Partner as of the date of issuance. Generally, if a party can unilaterally modify or terminate a purported agreement, without prior notice, the agreement is based upon an illusory promise and is unenforceable. According to Nerium, the forum selection clause is not illusory because any amendments were not effective “retroactively,” but only as of the date of issuance. We disagree. Section 11.07, which allows all amendments to be effective immediately, does not limit any amendments to future conduct or future disputes.
14. The bedrock of Nerium’s $100,000,000 claim rests entirely upon the shifting sands of its ability to slip changes into the P&P, which it apparently has done no less than fourteen times in the past four (4) years.10 The enforceability of the P&P is relevant, not only to the Specially Appearing Defendants, but also to the other Contractor Defendants, and should be resolved prior to expensive and aggressive discovery maneuvers by Nerium.
15. Nerium’s discovery complaints are not targeted at the issues of consent to jurisdiction, the only plead basis for jurisdiction in this matter. Nerium complains about (a) communications between Woodward and Sheena Nap-Brooks; (b) incomplete text messages, Facebook messages, and emails; (c) WhatsApp messages and Zoom materials; and (d) attachments to certain produced strings. There is no predicate that such information is relevant to the Specially Appearing Defendants alleged consent to jurisdiction. As such, Nerium should be required to reserve its discovery specifically tailoring such discovery to jurisdictional issues.
16. With regard to the redaction issue, Nerium incorrectly assumes that Texas privileges apply, without laying any factual predicate for the same. Mrs. Woodward is a resident and citizen of the State of Texas and received the communications in the State of Washington. Under Texas state law, the privilege should be evaluated under Washington law as it has the most substantial relationship to the communications.
Accordingly, the Contractor Defendants respectfully requests that Nerium’s Emergency motion to Compel be denied, that it be ordered to reserve written discovery in accordance with the typical non-emergency guidelines with the Texas Rules of Civil Procedure, that such discovery be narrowly tailored in accordance with the jurisdictional claims it has made, and for all such other relief to which they may be entitled.
Youngevity International, Inc. (OTCQX: YGYI ), the only omni-direct lifestyle company, today announced the beta launch of its anticipated revolutionary and all-inclusive new online destination — temporarily housed at www.youngevitybeta.com .
When the site is formally launched as expected at the end of March, it will be fully transactional. Ultimately, at the conclusion of the transactional beta, the site will be located at its permanent web home — www.youngevity.com .
Youngevity has coined the term “omni-direct” to describe its innovative cross channel business model that adds flexibility and convenience into the direct selling customer and independent associate experience. As an “omni-direct” lifestyle company, Youngevity represents a unique hybrid of direct selling, e-commerce and social selling business models.
Steve Wallach, Youngevity CEO, stated,
“This technology platform has been a significant investment for our company and we are pleased that it should soon begin to drive revenue. Given the unique nature of our sales and marketing business platform we had to develop from the ground up technology and supporting architecture that was capable of scaling around the globe.”
“In our 20th anniversary year, we are moving to what we call a ‘virtual Main Street’ of products and services,” stated Dave Briskie, President and CFO of Youngevity. “The new Youngevity site is our virtual street address designed to provide a rich, immersive web experience that extends to all of our trusted brand families.”
“This will be a lifestyle web platform and will offer a fully interactive way to engage with Youngevity and its broad line-up of diverse brands. The site also reflects our mission to empower individuals as they pursue their own betterment and best lives.
We believe living better can be relatively easy and within reach when you have the right combination of groundbreaking products and services.”
Specific features of the new Youngevity web destination will include:
During the beta version, brands within the Youngevity portfolio can be purchased by contacting a Youngevity Distributor or by calling toll-free, 800.982.3189 or through our current legacy system Youngevity.com.
About Youngevity International, Inc.
Youngevity International, Inc. (OTCQX: YGYI ) is the only omni-direct lifestyle company offering a hybrid of the direct selling business model, that also offers e-commerce and the power of social selling. Assembling a virtual Main Street of products and services under one corporate entity, Youngevity offers proven products from the six top selling retail categories: health/nutrition, home/family, food/beverage (including coffee), spa/beauty, apparel/jewelry, as well as innovative services.
The Company was formed in the course of the summer 2011 merger of Youngevity Essential Life Sciences with Javalution Coffee Company (now part of the company’s food and beverage division). The resulting company became Youngevity International, Inc. in July 2013. For investor information, please visit YGYI.com . For general information on products and services please visit us at youngevity.com . Be sure to like us on Facebook and follow us on Twitter .
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