Official Objection To Herbalife Class Action Settlement

Back in November I reported on a class action lawsuit against Herbalife. Herbalife has decided to settle the lawsuit.  The settlement covers around 1.55 million people who were Herbalife distributors from April 1, 2009 through Dec. 2, 2014. The class excludes members of Herbalife President’s Team, Founder’s Circle, Chairman’s Club, and Millionaire Team or GET Team.

Now an official objection has been made to this settlement.  The deal is so ridiculously good for Herbalife someone had to object.

Here are some key reasons why the objection has been made:

This is a settlement where the financial compensation is so small in relation to the potential damages that could be recovered at trial, and where the relief is so inadequate, that it should not be approved.

If you paid Herbalife under $750 for Qualified Products, you receive from the settlement a pathetic flat payment of up to $20.

The information which is available suggests that damages of the class for the core claim, violation of the California Endless Chain Scheme Law, range from $700 million to $1.12 billion or more, Objectors estimate that the class damages for the shipping and handling fee claim are approximately $260 million. In light of the potential recovery, and considering all of the risks of litigation, the Settlement Fund of $15 million and the Product Return Fund of $2.5 million are inadequate.

The thirteen “corporate policies” which Herbalife has agreed to continue for three years are utterly inadequate and fail to address the core allegations of the Complaint, that Herbalife promotes an endless chain scheme in which the vast majority of distributors lose their investments, falsely advertises its business opportunity, and grossly overcharges for shipping and handling. In reality, the relief benefits only Herbalife, by giving its corporate policies an official license by the Court, as it prepares to deal with the governmental regulators who are investigating its business practices.

The Release in the Settlement Agreement will release claims against high level Herbalife distributors who would otherwise be subject to “claw back” actions by government regulators, receivers or class members.

Herbalife has agreed to make or continue several changes to its corporate policies and procedures for no less than three years from the date the Court gives final approval of the settlement. Those corporate policies are listed below:

  1. Herbalife shall not simultaneously and separately charge its members a “Packaging & Handling” fee (or similar fee) and an “Order Shipping Charge” (or similar fee).
  2. Herbalife shall not define “Distributor” in its Glossary of Terms as “Everyone who purchases an Official Herbalife Member Pack (HMP) and submits to Herbalife a valid and complete Membership Application and whose Application has been accepted by Herbalife.”
  3. Herbalife shall continue to discourage members from incurring debt to pursue the Herbalife business opportunity.
  4. Herbalife shall continue to pay shipping charges for the return of products to Herbalife in connection with its inventory repurchase policies.
  5. Herbalife shall continue enforcement of its rules and maintain a member compliance department. Herbalife shall also continue to revise and supplement its policies, procedures and member rules as deemed necessary by Herbalife in the exercise of reasonable business judgment.
  6. Herbalife shall continue prohibiting members from selling leads to other members or purchasing leads from any source.
  7. Herbalife shall continue to prohibit members from requiring a person to buy product (other than a Mini or Full Member Pack) as a condition to becoming an Herbalife member or distributor.
  8. Herbalife shall continue to require that before opening a Nutrition Club in a non-residential location, the Herbalife member must have been a member for at least 90 days and receive mandatory Nutrition Club operator training.
  9. Herbalife shall include its Statement of Average Gross Compensation (“SAGC”) as part of its member application.
  10. Herbalife shall require that new members acknowledge reviewing the SAGC when signing a new Herbalife Membership Application and Agreement and shall continue to include and/or link to the SAGC with that Agreement.
  11. Herbalife shall continue disclosing in its SAGC the total number and percentage of all members who do not receive any compensation payment directly from Herbalife.
  12. Herbalife shall clarify in its Sales & Marketing Plan that upon qualifying as a Supervisor, a member shall have at least 12 months during which to requalify as a Supervisor.
  13. Herbalife shall amend the hardcopy Membership Agreement to define “Compensation Statement” as “Statement of Average Gross Compensation Paid by Herbalife,” and include the following statement: “I hereby represent, warrant and agree that I am not relying upon and that I will not rely upon any other written or oral information or representations about the financial results I might achieve.” Herbalife may modify the Membership Agreement provided that such modifications are not materially inconsistent with these amendments. – Source

If you were one of the victims of the Herbalife scam from April 1, 2009 through Dec. 2, 2014;  I recommend you contact Douglas M. Brooks:

60 Thoreau Street, No. 219 Concord, MA 01742

Telephone: (781) 424-6737