Lawyers for former Herbalife Ltd. (NYSE:HLF) Dana Bostick have filed a new motion in his case against the multi-level marketing company. He sued Herbalife on allegations that it is a pyramid scheme. During the mediation process, Herbalife expressed concerns about whether Bostick had skills that were adequate to allow him to succeed at being a distributor of its products.
Herbalife refuses to settle
Michelle Celarier of the New York Post reports that court papers show Bostick and Herbalife Ltd. (NYSE:HLF) spent 50 hours in mediation but failed to come to a settlement. Now Bostick wants to add four more plaintiffs with different backgrounds who all said they lost money by trying to distribute Herbalife products.
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Anita Vasko said she lost $12,000 last year after joining one of Herbalife Ltd. (NYSE:HLF)’s nutrition clubs. She said she worked six or seven days every week trying to be successful. Judy Trotter said she ended up $10,000 in debt before she gave up on it in 2012. Beverly Molnar said she was $11,000 in debt after buying leads to try to get her business off the ground. And Chester Cote said he tried to sell the company’s products online in 2009 but was unable to do so because so many other distributors were trying to get rid of their products at deep discounts.
A hearing on whether Bostick will be able to add these four people to his case is scheduled for June 30. If the plaintiffs want to seek class action status, the deadline is Aug. 25.
Ackman keeps chipping away at Herbalife
Meanwhile Bill Ackman continues to try to discredit Herbalife Ltd. (NYSE:HLF). Parallels between Herbalife and a company called BurnLounge have been drawn, leaving the shorts suggesting that Herbalife could face an FTC case just like BurnLounge.
However, the Herbalife Ltd. (NYSE:HLF) longs are also claiming victory in the recent ruling in the FTC’s case against BurnLounge as a victory—even though the court ruled that BurnLounge is indeed a pyramid scheme. They see it as a victory because so many of Herbalife’s distributors join for the sole purpose of getting discounts on the company’s products and using them themselves. This week’s court ruling says consumption by a company’s distributors counts toward the measure of demand for its product—something that goes against what Ackman has been saying all along.