DISTRIBUTOR WINS DAMAGES AGAINST HERBALIFE

According to The Arizona Republic, a distributor for Herbalife International Inc. has been awarded $620,000 in damages and the right to future income from her business by a Maricopa County Superior Court jury, after a month-long trial that gained nation-wide attention.

Mary Fallow, formerly of Mesa, Arizona, her husband Dan and stepson filed suit in 1996 against network marketing giant Herbalife---charging fraud, racketeering, and breach of contract among other misconduct. Herbalife, which sells herbal weight loss, nutritional and personal care products, countersued, alleging that the Fallows breached their contract.

The Fallows claimed in their lawsuit that Herbalife suspended their distributorships on false information, cut off their checks and refused to compensate Dan Fallow for risking his life to fight a counterfeiting organization in Europe. They sought compensation for the income they say was due them since 1990, including bonuses for being top producers as well as a percentage of the millions their organization sold. (According to the Fallows’ attorney, with the distributors in their "down line", the Fallows had built a business that had sold $37 million worth of Herbalife products in 1996 alone).

During the trial Herbalife contended that the Fallows reneged on their promises, and that there was never a deal to employ Dan Fallow in Europe to combat a counterfeiter. They also maintained that, upon application for a distributorship, the Fallows agreed that husbands and wives could not operate as separate distributors. Herbalife said that agreement was broken when the Fallows became separated briefly and Dan Fallow helped his son operate his distributorship.

The company also claimed that Dan Fallow was involved in setting up a competing organization in Europe that used Herbalife’s name and copied its labels. Herbalife attorney Matt Hodel argued that the company believes that "people who work hard for their money and are entitled to money should get money. But people who try to cheat good distributors cannot be allowed to stay in the organization."

 The bulk of the damages the jury awarded was $470,000 in bonuses and royalties that Mary Fallow had not been paid since 1992. The jury rejected the future damages she sought, but granted her the right to her old distributorship.

Dan Fallow was awarded $22,500 in damages in answer to his claim that Herbalife failed to pay him for a "sting" operation he said he ran in Europe against counterfeiters of Herbalife products.

But the jury also found on behalf of Herbalife on a number of its counterclaims including Dan Fallow’s breach of rules against dual distributorships. Fallow was ordered to pay Herbalife $61,000.