Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 1 of 64 Page ID #:3391
1 COHEN MCKEON LLP 2 MICHAL L. COHEN (SBN 206253)
3 [email protected] HEATHER M. MCKEON (SBN 186414) 4 [email protected] 5 1910 W. Sunset Boulevard, Suite 440 Los Angeles, California 90026 6 213-413-6400 (phone) 7 213-403-6405 (fax)
8 Douglas M. Brooks (pending pro hac vice) 9 [email protected] 10 60 Thoreau Street, No. 219 Concord, MA 01742 11 Telephone: (781) 424-6737 12
13 Attorney for Objectors
14 15 IN THE UNITED STATES DISTRICT COURT 16 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 17 18 Case No. 2:13-CV-02488-BRO-RZ 19 DANA BOSTICK, et al.,
20 Plaintiffs, 21 OBJECTIONS TO CLASS ACTION vs. SETTLEMENT AND NOTICE OF 22 INTENT TO APPEAR AT FINAL HERBALIFE INTERNATIONAL OF APPROVAL HEARING 23 AMERICA, INC., et al., Hon. Beverly Reid O’Connell 24 Defendants.
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The following class members object to the proposed class action settlement 1
2 in this action for the reasons set forth in their Declarations attached hereto and for
3 the reasons set forth in the memorandum below: Elvia Acosta (Exhibit A), Sabas 4
5 Avila (Exhibit B), Miguel Calderon (Exhibit C), Felipe Colon (Exhibit D),
6 Elizabeth Correa (Exhibit E), Maria Cutzal (Exhibit F), Juana Estala (Exhibit G), 7
8 Jose G. Garcia (Exhibit H), Valentina Leon (Exhibit I), Rossina Martinez (Exhibit
9 J), Gilberto Melchor Sanchez (Exhibit K), Martil Palma Vallecillo (Exhibit L), 10 Yader A. Pastran (Exhibit M), Susana Perez (Exhibit N), Eric Rodensky (Exhibit 11
12 O), Jose Tafoya (Exhibit P), Olivia Torres (Exhibit Q) and Julia Ulloa (Exhibit R).
13 The foregoing class members will be collectively referred to herein as “Objectors.” 14
15 I. Summary of Objections
16 A. The Financial Compensation for the Endless Chain Scheme Claim is 17 Inadequate
18 The financial compensation for the Rule 23(b)(3) damages class is grossly 19
20 inadequate, by at least an order of magnitude. The parties failed to provide the
21 Court with any information from which the Court could determine the range of 22 possible recovery on any of the claims in the Complaint. The parties have 23
24 provided no data concerning the composition of the class or the range of damages
25 suffered by class members. While Objectors do not have access to the data which 26
27 Herbalife provided to Plaintiffs’ counsel during confirmatory discovery, the
28 information which is available suggests that aggregate damages of the class for the
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core claim in the Amended Complaint, violation of the California Endless Chain 1
2 Scheme Law, range from $700 million to $1.12 billion or more,
3 B. The Financial Compensation for the Shipping and Handling Claim is 4 Inadequate 5 Objectors estimate that the aggregate class damages for the shipping and 6
7 handling fee claim are approximately $260 million. In light of the potential
8 recovery, and considering all of the risks of litigation, the Settlement Fund of $15 9
10 million and the Product Return Fund of $2.5 million are patently inadequate.
11 C. Some Settlement Class Members Were Wrongfully Excluded from the 12 Rule 23(b)(3) Damages Class.
13 The Settlement calls for certification of both a damages class under Rule 14
15 23(b)(3) and a broader injunctive relief class under Rule 23(b)(2). Herbalife
16 distributors who are subject to the arbitration clause (including a class action 17 waiver) which Herbalife began using in distributor agreements during and after 18
19 September of 2013 are included in the broader injunctive relief class but not the
20 damages class. However, Herbalife has waived its rights under its unilateral 21
22 arbitration clause by including distributors who were supposedly subject to the
23 clause in the injunctive relief class, and by reserving the right to make unilateral 24
25 modifications to the distributor agreement and arbitration clause. Distributors who
26 were supposedly subject to the arbitration clause should not have been excluded 27 from the Rule 23(b)(3) damages class. 28
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D. The Failure to Permit Class Members to Recover Consequential 1 Damages is Unfair and Unreasonable. 2
3 Herbalife is well aware of the fact that its distributors incur substantial expenses
4 in the operation of their Herbalife distributorships and Nutrition Clubs. In light of 5 the clear legal authority permitting the recovery of consequential damages for 6
7 violation of the Endless Chain Scheme law, the failure to permit class members to
8 recover their consequential damages is unfair and unreasonable. 9
10 E. There is No Adequate Representation of the Injunctive Relief Class
11 The Rule 23(b)(2) injunctive relief class was improperly defined to include 12
13 former distributors who have no interest or stake in whatever injunctive relief is 14 imposed against Herbalife. None of the named Plaintiffs are current Herbalife 15 distributors. Representation of the injunctive relief class is therefore not only 16
17 inadequate, but non-existent.
18 F. The Injunctive Relief Provides No Benefit to the Class But Does Provide 19 a Substantial, Improper Benefit to Herbalife
20 The thirteen “corporate policies” which Herbalife has agreed to continue for 21
22 three years are utterly inadequate and fail to address the core allegations of the
23 Complaint, that Herbalife promotes an endless chain scheme in which the vast 24
25 majority of distributors lose their investments, falsely advertises its business
26 opportunity, and grossly overcharges for shipping and handling. In reality the 27 injunctive relief benefits only Herbalife, by giving its corporate policies the 28
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judicial imprimatur of this Court, as it prepares to deal with the governmental 1
2 regulators who are investigating its business practices.
3 G. The Settlement Release is Too Broad 4
5 The Release in the Settlement Agreement will release claims against high level
6 Herbalife distributors who would otherwise be subject to “claw back” actions by 7
8 government regulators, receivers or class members.
9 H. The Class Notice and Claims Process is Inadequate 10 The Class Notice was inadequate because it fails to provide class members 11
12 with any means for estimating how much of their losses they will recover if the
13 Settlement is approved. It is confusing because it does not make clear that class 14
15 members who wish to object can, and should, also file a claim. The on-line claims
16 process is confusing and deceptive because the page on which claimants are 17 advised of the amount of their “Business Opportunity Claim Award” does not 18
19 disclose that the award may be subject to pro rata reduction.
20 I. The Class Notice Program is Inadequate 21
22 The Class Notice program is inadequate because it fails to address the special
23 problems created by Herbalife’s aggressive marketing to the Latino community, 24
25 including undocumented residents who became Herbalife distributors or Herbalife
26 Nutrition Club operators. 27
28
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II. ARGUMENT 1
2 Objectors are mindful of the risks of litigation and the benefits of settlement.
3 Their counsel has litigated class actions against large multilevel marketing firms, 4
5 including Herbalife, and is well aware of all of the things that can go wrong with a
6 case like this. But this is a settlement where the financial compensation is so small 7
8 in relation to the potential damages that could be recovered at trial, and where the
9 injunctive relief is so patently inadequate, that it should not be approved. In 10 addition, this case is highly visible, and is being closely followed by government 11
12 regulators and both partisans and critics of the multilevel marketing industry. This
13 settlement will undoubtedly impact the practices of other multilevel marketers and 14
15 the ongoing investigations of Herbalife by the Federal Trade Commission and
16 several state Attorneys General. Objectors respectfully request that the Court 17 undertake the searching inquiry that is called for here, and reject the settlement. In 18
19 re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 946-47 (9th Cir. 2011)
20 (more searching inquiry is required when a settlement comes before a class is 21
22 certified); Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781, 785 (7th Cir. 2004)
23 (“because class actions are rife with potential conflicts of interest between class 24
25 counsel and class members, district judges presiding over such actions are
26 expected to give careful scrutiny to the terms of proposed settlements in order to 27
28
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make sure that class counsel are behaving as honest fiduciaries for the class as a 1
2 whole.”).
3 A. The Settlement Fund Represents About 1% to 2% of the Aggregate 4 Damages of the Class for the Endless Chain Scheme Claim – There is 5 No Justification to Settle for Such a Small Fraction of the Potential Recovery 6
7 Fifteen million dollars sure sounds like a lot of money. But in order to
8 determine whether the settlement is fair, reasonable and adequate, the Court needs 9
10 to be able to assess whether the settlement amount is reasonable in relation to the
11 expected recovery. See Martin v. Cargill, Inc., 295 F.R.D. 380, 384 (D. Minn. 12
13 2013) (“The primary problem with the parties' submissions is that they provide 14 almost no information enabling the Court to gauge the value of the proposed class's 15 claims and, hence, the fairness and adequacy of the settlement.”); Custom LED, 16
17 LLC v. eBay, Inc., 2013 U.S. Dist. LEXIS 122022, at *25 (N.D. Cal. 2013)
18 (denying a motion to preliminarily approve settlement where, inter alia, the parties 19
20 "provided the Court with no information as to the class members' potential range of
21 recovery"); Galloway v. Kansas City Landsmen, LLC, 2013 U.S. Dist. LEXIS 22 92650, *12-*17 (W.D. Mo. 2013) (denying a motion for preliminary approval 23
24 where the court remained concerned that the amended settlement offered
25 insufficient value for class members' claims and the record was insufficient to 26
27 determine the approximate value of the class members' claims and the amended
28 settlement); Sobel v. Hertz Corp., 2011 U.S. Dist. LEXIS 68984, *33 (D. Nev.
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2011) (finding the court could not "even begin th[e] inquiry" where "the parties 1
2 ha[d] failed to provide . . . evidence of . . . the total amount of . . . fees that were
3 charged to the class members, let alone potential ranges of recovery and the 4
5 chances of obtaining it"); Eubank v. Pella Corp. 753 F.3d 718, 727 (7th Cir. 2014)
6 (“But the district judge did not find that the trial would yield zero damages. He 7
8 didn’t estimate the likely outcome of a trial, as he should have done in order to
9 evaluate the adequacy of the settlement.”). 10 Certainly a reasonable settlement will normally be less than the potential 11
12 recovery, but how much less? The proponents of this settlement offer no evidence
13 by which this Court can undertake this crucial calculus. They do not disclose or 14
15 provide any estimate of the range of expected recovery at trial, or even provide the
16 data from which the Court could try to estimate the range of recovery. 17 This failure is inexplicable because Plaintiffs’ counsel had access to what 18
19 was apparently a substantial database of computer records produced by Herbalife.
20 Plaintiffs’ counsel state that Herbalife “produced approximately 4GB of database 21
22 materials, including approximately 3.5GB of raw data files.” Joint Decl., ¶ 17.
23 Moreover, Herbalife “provided Plaintiffs’ counsel with the means to create their 24
25 own queries and reports using Defendants’ confidential internal database.” Joint
26 Declaration of Thomas G. Foley, Jr. and Scott M. Peterson in Support of Joint 27 Motion for Preliminary Approval of Class Action Settlement and Certification of 28
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the Class (“Joint Decl.”), ¶18. This provided Plaintiffs’ counsel with “the ability to 1
2 generate reports and cull the database for corroborating data relating to distributor
3 identifications, distributor retention, distributor purchases, distributor volume 4
5 points, and royalty rewards paid by distributors.” Declaration of Thomas G. Foley
6 in Support of Plaintiffs’ Motion for an Award of Attorneys’ Fees and Expenses 7
8 (“Foley Decl.”), ¶ 19.
9 In addition, Plaintiffs’ counsel consulted with a forensic economist, who 10 presumably assisted them in reviewing the information in Herbalife’s database.1 11
12 Plaintiffs’ counsel do not provide any report by this economist concerning the
13 possible range of damages. They provide no information of any kind from which 14
15 this Court could make any finding as to whether the amount of the settlement is
16 reasonable. No estimate, no range of estimates, nothing.2 17
18
19
20 1 At preliminary approval Plaintiffs counsel stated that they had consulted with “a 21 well-respected economist for class certification issues”. Joint Decl., ¶ 22. In a 22 recent filing they state that they consulted with an “expert witness economist in
23 federal trade commission matters, Hal J. Singer, Ph.D., to develop damages theories for use in both litigation and in mediation.” Foley Decl., ¶ 8 24 2 With all of the information that Plaintiffs’ counsel had at their disposal, it should 25 have been possible to provide at least a rough estimate of projected class damages, such as was done in Minton v. Herbalife International, Inc., et al, No. BC338305 26 (Cal.Super., Los Angeles Cty.), a class action on behalf of Herbalife distributors 27 who were involved in two lead generation systems. See Declaration of Robert L.
28 Fitzpatrick in Support of Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, Brooks Decl., Exhibit I.
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Here is the only thing we know: The Settlement Class is comprised of about 1
2 1.5 million Herbalife distributors.3 This may include about 12,750 Herbalife
3 distributors who are excluded from the Class because they reached the “Global 4 4 5 Expansion Team” (GET) level or higher.
6 Here is what we don’t know: 7
8 How many class members are subject to the arbitration clause that Herbalife
9 began using in September of 2013, and are thereby excluded from the damages 10 class? 11
12 How many class members are “Business Opportunity Claimants” entitled to
13 claim a cash award under the Settlement? 14
15 How many Business Opportunity Claimants purchased less than $750 worth
16 of Herbalife products, limiting them to a $20 “Flat Rate Award,” subject to pro rata 17
18 diminution?
19
20 3 At preliminary approval Plaintiffs’ counsel estimated that there are approximately 21 1.3 million class members. Joint Decl., ¶23. The class notice program prepared 22 by the Settlement Claims Administrator states that there are approximately 1.55
23 million class members. Stipulation of Settlement, Exhibit 6 (Settlement Notice Program). Recently Plaintiffs counsel stated that the Class Notice was mailed to 24 1,533,399 potential class members. Foley Decl., ¶ 31. 4 25 Herbalife’s “Statement of Average Gross Compensation of U.S. Supervisors” for 2011, 2010 and 2009 are attached to the Amended Complaint as Exhibit A. These 26 indicate that 25% of Herbalife distributors reach the rank of Supervisor, and 27 approximately 3.4% of Supervisors reach the GET level or higher, which means
28 that approximately .85% of Herbalife distributors reach the GET level or higher. .85% of 1.5 million = 12,750.
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1 How many Business Opportunity Claimants purchased $750 or more worth
2 of Herbalife products, entitled them to a “Pro Rata Award,” subject to pro rata 3 diminution? 4
5 How many Business Opportunity Claimants reached the “Supervisor” level
6 in the Herbalife compensation plan? 7
8 What are the average losses suffered by Business Opportunity Claimants?
9 What is the range of aggregate losses that might be recovered if Plaintiffs 10
11 were successful at trial?
12 Some of this information could be ascertained by Herbalife by reviewing its 13 records of distributor purchases, attrition and bonus payments. Some of it can be 14
15 estimated using reasonable, conservative assumptions, as described below. None
16 of this information was provided to this Court by the parties, which makes it 17
18 impossible for this Court to determine whether the settlement is fair, reasonable or
19 adequate. 20 The parties were guided through the settlement process by an extremely well 21
22 qualified and experienced mediator, the Honorable Daniel H. Weinstein (Ret.).
23 The parties have submitted Judge Weinstein’s declaration, in which he describes 24
25 the mediation sessions over which he presided. Declaration of the Mediator, Hon.
26 Daniel H. Weinstein (Ret.) (“Mediator Decl.”), ¶¶7-18. Judge Weinstein opines 27
28 that the $15 settlement fund and $2.5 million in product refunds “is in a range that
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I believe reasonably reflects the parties’ factual, legal, and damages positions.” 1
2 Mediator Decl., ¶12. He does not, however, state what that range is, nor does he
3 state what information he relied on to derive “the range of potential damages.” 4
5 Mediator Decl., ¶7.
6 Plaintiffs’ counsel also sought the opinion of the Honorable James Larson 7
8 (Ret.) on “the range of reasonable value of the Plaintiffs’ case.” Declaration of the
9 Honorable James Larson (Ret.) in Support of Motion for Preliminary Approval of 10 Settlement (“Larson Decl.”), ¶4. Judge Larson states that he “suggested a 11
12 settlement range which turned out to be consistent with the proposed settlement
13 agreement.” Larson Decl., ¶11. Like Judge Weinstein, he does not state what he 14
15 believes the range to be, or what information he had on which to base his opinion.
16 Plaintiffs’ counsel themselves do not provide any detail concerning the 17 range of damages that could be anticipated at trial. They merely quote the 18
19 opinions of both Judge Weinstein and Judge Larson as to the settlement being
20 within the range of reasonable settlement value. Joint Decl., ¶28 and ¶32. This is 21
22 not enough. In In re NFL Players' Concussion Injury Litigation, 961 F. Supp. 2d
23 708 (E.D.Pa. 2014), Plaintiffs’ counsel and the mediator submitted declarations 24
25 referring to analyses by economists and actuaries, but did not submit these
26 analyses. The Court stated, “[u]nfortunately, no such analyses were provided to 27 me in support of the Plaintiffs' Motion. In the absence of additional supporting 28
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evidence, I have concerns about the fairness, reasonableness, and adequacy of the 1
2 Settlement.” 961 F.Supp. at 716.
3 We do not know whether $15 million reflects a settlement discount of 50%, 4
5 or 90% or 99%. In order to determine what the parties intended as a settlement
6 discount, Objectors attempt below to arrive at a rough estimate of aggregate 7
8 damages. In order to do that we must go through the following steps:
9 Step 1: Estimate the number of Settlement Class Members who are 10 excluded from the damages class because they are subject to the arbitration clause 11
12 which Herbalife began using in September of 2013 (but see Section II.C. below,
13 where Objectors argue that this exclusion is unfair) 14
15 Step 2: Estimate the number of damages class members who attempted to
16 participate in Herbalife’s business opportunity. Under the Settlement, these class 17
18 members would qualify as “Business Opportunity Claimants.” Settlement
19 Stipulation, ¶4.4.2. 20 Step 3: Estimate the number of Business Opportunity Claimants who 21
22 qualify for “Pro Rata Awards” because they purchased at least $750 worth of
23 Herbalife products 24
25 Step 4: Estimate the average losses of Business Opportunity Claimants who
26 qualify for Pro Rata Awards 27
28
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Step 1. Calculating the Number of Distributors Subject to Herbalife’s 1
2 Arbitration Clause. In Section II.C. below Objectors estimate the number of
3 Settlement Class Members who are subject to the arbitration clause to be 330,000. 4
5 Deducting this from 1.5 million leaves 1,170,000 members of the damages class.
6 Step 2. Calculating the Number of Business Opportunity Claimants. 7
8 The parties did not explicitly estimate the number of settlement class members
9 who would qualify as “Business Opportunity Claimants” under §4.4 of the 10 Stipulation. However, Herbalife claims – and Plaintiffs’ counsel evidently agree – 11
12 that “73% of its participants became members/distributors for the purpose of
13 purchasing product for self-consumption, as opposed to pursuing the business 14
15 opportunity.” Joint Decl., ¶ 56. Presumably, Herbalife would say that only 27% of
16 class members were motivated by the business opportunity. If this is correct, then 17 the number of damages class members who joined Herbalife for the purposes of 18
19 participating in the business opportunity, and who would therefore qualify as
20 Business Opportunity Claimants, would be 315,900 (27% of 1,170,000). 21
22 However, the number of class members who attempted to participate in the
23 Herbalife business opportunity is likely far greater than suggested by Herbalife and 24
25 Plaintiffs’ counsel. The 73% figure is based on a survey conducted by Lieberman
26 (the “Lieberman survey”) which Herbalife commissioned after the December 2012 27
28
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presentation by Pershing Square.5 Plaintiffs’ counsel hinted that there were flaws 1
2 in the Lieberman survey, Joint Decl., ¶ 57, and other commentators have raised
3 serious doubts concerning this survey.6 The 73% “self-consumption” finding is 4
5 inconsistent with Herbalife’s own representation in a securities filing, in which it
6 stated that of non-Supervisors, “discount buyers” were 27%, “small retailers” were 7 7 8 61% and “potential supervisors” were 12%. Since about 25% of Herbalife
9 distributors are Supervisors, the discount buyer percentage translates to about 20% 10 of Herbalife’s entire distributor force. 11
12 The 73% number is also inconsistent with an industry-wide survey
13 conducted by the Direct Selling Association8 in August and September of 2014 14
15 (the “DSA survey”), which found that 29% of former direct sellers cited “access to
16 discounted products as the reason they initially launched their direct selling 17
18
19
20
21 5 The exact methodology used by Lieberman, including how the sample was 22 selected and what questions were asked, has not been released publicly. 6 23 http://seekingalpha.com/article/2501015-are-herbalife-members-really-just- discount-buyers 24 7 May 1, 2012 Form 8-K 25 http://www.sec.gov/Archives/edgar/data/1180262/000129993312001046/htm_449 25.htm 26 8 The DSA is an industry trade association which is primarily comprised of multi- 27 level marketing firms; Herbalife is a member.
28 http://www.dsa.org/forms/CompanyFormPublicMembers/search?action=find&any Name=herbalife (last visited March 23, 2015).
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business.”9 Moreover, of current direct sellers, the DSA Survey found that 40% 1
2 were seeking supplemental income, 23% wanted to pay down debt, and 25%
3 wanted to save for the future. Id. at pages 1-2. This suggests that at least 88% 4
5 were motivated by the business opportunity as opposed to being motivated
6 exclusively by product discounts. The DSA Survey also found that 93% of current 7
8 MLM distributors earned some amount of money, Id. at page 2, a finding which
9 cannot be squared with the Lieberman finding that 73% of Herbalife distributors 10 are seeking only product discounts. 11
12 The findings of Herbalife’s January 2013 survey are also inconsistent with a
13 survey which Herbalife commissioned by Actionable Research in April of 2011 14
15 (the “Actionable Survey”), less than two years before the Lieberman Survey, but
16 before the current controversy over its business practices and various Wall Street 17 investors had begun. Brooks Decl., Exhibit A. Among other things, the 18
19 Actionable Survey concluded that “most former distributors joined Herbalife to
20 supplement their income.” The survey found that 44% joined to supplement their 21
22 household income, 13% needed a job, 10% saw the opportunity for high income
23 and another 10% wanted to be their own boss. Accordingly, at least 77% of the 24
25 respondents were motivated by the business opportunity. Only 17% joined in
26
27 9
28 http://directsellingnews.com/index.php/view/groundbreaking_study_reveals_the_r eal_direct_selling#.VQ-2m410yVs (last visited March 23, 2015)
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order to purchase the product at a discounted price. The Actionable Survey is 1
2 more credible than the Lieberman Survey, both because the findings are closer to
3 the findings of the DSA Survey and because it was commissioned for business 4
5 planning purposes, as opposed to the Lieberman Survey, which was commissioned
6 for defensive purposes, in the wake of the Pershing Square presentation. 7
8 Neither the May 1, 2012 Form 8-K, the DSA Survey nor the Actionable
9 Survey were mentioned by the proponents of the settlement and there is no 10 indication that Herbalife produced these surveys to Plaintiffs’ counsel, or that 11
12 Plaintiffs’ counsel or the mediator had the benefit of these surveys in the course of
13 settlement negotiations. 14
15 Herbalife’s May 1, 2012 Form 8-K (80% of distributors are business
16 opportunity participants), the DSA Survey (88% of distributors motivated by the 17 business opportunity) and the Actionable Survey (77% of distributors motivated by 18
19 the business opportunity) suggest that the class includes a much higher number of
20 business opportunity seekers than suggested by the Lieberman Survey (27% 21
22 motivated by the business opportunity). Taking the most conservative of these
23 three percentages (the Actionable Survey, commissioned by Herbalife), Objectors 24
25 assume that 77% of the class joined Herbalife because they were motivated by the
26 business opportunity. This approach indicates that 900,900 class members are 27 potential Business Opportunity Claimants (77% of 1,170,000). 28
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Step 3. Calculating the Number of Business Opportunity Claimants 1
2 Who Qualify for Pro Rata Awards. Objectors are somewhat stymied in
3 attempting to estimate the number of Business Opportunity Claimants who would 4
5 qualify for Pro Rata Awards based on purchasing over $750 worth of Herbalife
6 products. Herbalife, of course, has this information readily accessible in its 7
8 databases. The best we can do is to estimate the number of class members who
9 reached the rank of Supervisor. To qualify as a Supervisor, a Herbalife distributor 10 must purchase at least 4,000 volume points worth of Herbalife products, which 11
12 translates to about $2500 worth of products. Approximately 25% of Herbalife
13 distributors reach the level of Supervisor.10 Approximately 0.85% of Herbalife 14
15 distributors reach the level of GET or higher and are therefore excluded from the
16 Settlement Class. Settlement Stip., ¶1.13.1. 17 Accordingly, the number of Herbalife Supervisors in the damages class is 18
19 approximately 280,000 (25% of 1,170,000 = 292,500; 3.5% of 292,500 = 10,237;
20 292,500 minus 10,237 = 282,262). This understates the number of Business 21
22 Opportunity Claimants who would qualify for Pro Rata Awards, because the
23 threshold for such claimants ($750) is lower than the threshold for Supervisors 24
25 (approximately $2500).
26
27 10 28 Amended Complaint, Exhibits A and B (Herbalife Statements of Average Gross Compensation for 2009, 2010, 2011 and 2012).
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Step 4. Calculating the Average and Aggregate Damages. There have 1
2 been two previous class actions against Herbalife which raised similar allegations
3 against Herbalife on behalf of similar, albeit smaller, classes. Both resulted in 4
5 class settlements. The claims data from those settlements provides at least two
6 yardsticks for estimating damages. In Jacobs v. Herbalife International, Inc., et al, 7
8 No. CV-02-01431 SJO (RCx) (C.D.Cal.), the Court approved a settlement on
9 behalf of a nationwide class of Herbalife Supervisors who had participated in a 10 lead generation program called “The Newest Way to Wealth” which had been 11
12 operated by a group of high level Herbalife distributors. Under the settlement,
13 former Supervisors were entitled to file claims for their economic losses in 14
15 operating their Herbalife distributorships. There were 7,779 former Supervisors in
16 the class; 2,481 filed claims (a “take rate” of 31%, which is quite high for class 17 actions). The claims for economic losses totaled $19,731,186., so the average 18
19 claim was $7,953.11
20 In Minton v. Herbalife International, Inc., et al, No. BC338305 (Cal.Super., 21
22 Los Angeles Cty.), the Court approved a settlement on behalf of a California class
23 of Herbalife distributors who had participated in two other Herbalife lead 24
25
11 26 The claims administrator’s declaration is available at: http://factsaboutherbalife.com/media/2012/12/Declaration-of-Michael-Rosenbaum- 27 on-behalf-of-Claims-Administrator-sworn-to-August-23-2005.pdf (last visited 28 March 23, 2015).
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generation programs, “The Freedom Group” and “Vertical Skip Marketing.” 1
2 There were 1,026 Herbalife distributors in the class; 120 filed claims (a take rate of
3 11.7%). The claims for economic losses totaled $1,391,318, so the average claim 4 12 5 was $11,434. Brooks Decl., Exhibit B.
6 The average claims in Jacobs ($7,953) and Minton ($11,434) appear to be in 7
8 the same order of magnitude as the losses suffered by the named Plaintiffs in this
9 case. Plaintiff Dana Bostick has $3,000 worth of Herbalife products he was unable 10 to sell. Amended Complaint, ¶¶ 38-51. Plaintiff Anita Vasko ran a Herbalife 11
12 Nutrition Club and lost $12,000. Amended Complaint, ¶¶ 52-59. Plaintiff Julie
13 Trotter participated in a lead generation system called “Online Business Systems” 14
15 and lost $8842.11. Amended Complaint, ¶¶ 60-68. Plaintiff Beverly Molnar also
16 participated in Online Business Systems and spent $11,000 on leads, website, 17 training and coaching. Amended Complaint, ¶¶ 69-73. The Amended Complaint 18
19 does not provide any information concerning the amount of Plaintiff Chester
20 Cote’s losses, although he purchased enough to become a Supervisor. Amended 21
22 Complaint, ¶¶ 74-82.
23 Most of the Objectors’ claims for damages are also in this range; a few a 24
25 quite a bit higher. Acosta Decl., ¶5 ($20,000); Avila Decl., ¶5 ($7,000, split with
26 her partner); Calderon Decl., ¶7 ($22,000); Colon Decl., ¶5 ($34,000); Correa 27
28 12
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Decl., ¶5 ($3,000); Cutzal Decl., ¶5 ($113,340); Estala Decl., ¶5 ($5,000); Garcia 1
2 Decl., ¶5 ($25,000); Leon Decl., ¶5 ($10,000); Martinez Decl., ¶5 ($118,000);
3 Melchor Decl., ¶5 ($3,275); Palma Decl., ¶5 ($16,000); Pastran Decl., ¶5 4
5 ($11,500); Perez Decl., ¶5 ($100,000); Rodensky Decl., ¶5 ($6,000);Tafoya Decl.,
6 ¶5 ($7,800); Torres Decl., ¶5 ($7,000, split with her partner); Ulloa Decl., ¶5 7
8 ($50,000).
9 If we use the lowest of the yardsticks – the average of about $8,000 for the 10 claimants in Jacobs – and chop it in half – we get aggregate classwide damages of 11
12 $1.12 billion (280,000 Supervisors times $4,000 in average losses). Even if the
13 average loss were $2500, the approximate cost to become a Supervisor, the 14
15 aggregate losses are $700 million. While these numbers may seem huge, they are
16 based on average damages amounts that are lower than all of the yardsticks. And 17 they do not reflect the losses of Business Opportunity Claimants who did not reach 18
19 the rank of Supervisor.
20 So, the Settlement Fund of $15 million represents somewhere between 1% 21
22 and 2% of the potential recovery after trial, maybe less. The question for this
23 Court is whether the recovery of 1%-2% appropriately quantifies plaintiffs’ risk of 24
25 losing at trial. In other words, is there a 98% or 99% change that plaintiffs will
26 lose or recover less than $15 million at trial? Objectors do not believe that the 27 chances of success are so remote. See Acosta v. Trans Union, LLC, 243 F.R.D. 28
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377, 391 (C.D.Cal. 2007) (“Were Plaintiffs claims … grounded in such a tenuous 1
2 basis that they were hopelessly doomed to fail in court, such a colossal discrepancy
3 between their apparent litigation value and the value of the Settlement may be 4
5 acceptable. That is not true here.”).
6 Liability appears to be strong. Plaintiffs have survived a motion to dismiss. 7
8 There are well-supported allegations that Herbalife made deceptive earnings
9 claims. Amended Complaint, ¶¶158-178 . Herbalife’s primary defense to the 10 endless chain scheme claim, that it complied with the 70% Rule and the 10 11
12 customer rule, is open to serious attack, given its representations to the SEC that
13 “we do not rely on the 70% rule” in any meaningful way … and do not regard the 14 13 15 “70% rule” as material.”
16 Class certification in pyramid scheme cases is difficult, but not impossible. 17 Webster v. Omnitrition Int’l. Inc., 79 F.3d 776 (9th Cir.), cert. denied, 136 L.Ed. 2d 18
19 115, 117 S.Ct. 174 (1996) (reversing summary judgment against certified litigation
20 class of multi-level marketing distributors); Davis v. Avco Financial Services, Inc., 21
22 371 F.Supp. 782 (N.D.Ohio 1974) (certifying litigation class of distributors in
23 multilevel marketing firm Dare to Be Great), aff’d in relevant part, 739 F.2d 1057, 24 th 25 1062 (6 Cir. 1984); Torres v. SGE Management, LLC, 2014 U.S.Dist. LEXIS
26
27 13
28 http://www.sec.gov/Archives/edgar/data/1180262/000119312512295202/filename 1.htm (last visited March 23, 2015).
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3741 (S.D.Tex. 2014) (certifying litigation class of distributors in multilevel 1
2 marketing firm Ignite; an appeal is pending); Nguyen v. FundAmerica, Inc., 1990
3 U.S.Dist. LEXIS 15031, [1990 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶95,497 4
5 (N.D.Cal. 1990) (certifying litigation class against multilevel marketer); Gouldd v.
6 Lowrance, 1998 Tex.App. LEXIS 5311 (Tex.App. 1998) (affirming certification of 7
8 litigation class of distributors in multilevel marketing firm Equinox); Walsh v.
9 National Safety Associates, Inc., 695 A.2d 1095 (Conn.Super. 1996) (same), aff’d, 10 694 A.2d 795 (Conn. 1997). See also Bell v. Disner, 2015 U.S. Dist. LEXIS 15815 11
12 (W.D.N.C. February 15, 2015) (certifying defendant class of “net winners” in
13 receiver’s action involving multilevel marketing firm Zeekrewards). Undersigned 14
15 counsel obtained orders certifying litigation classes in Minton v. Herbalife,
16 referenced above, and in Capone v. Nu Skin Canada, Inc., Case No. 2:93-CV- 17 0285-S (D.Utah May 13, 1998). Brooks Decl., Exhibit C. 18
19 There is a risk that Herbalife could not afford to pay a judgment in the order
20 of magnitude described above, but with cash and cash equivalents of $645 million 21
22 and net after tax income for 2014 of $308 million, it could certainly afford to pay
23 more than $15 million.14 The $15 million Settlement Fund reflects about 2.3% of 24
25 Herbalife’s cash on hand, and about 4.8% of Herbalife’s net after tax income for
26
27 14 Herbalife 2014 Form 10-K, pp. 40-41.
28 http://www.sec.gov/Archives/edgar/data/1180262/000119312515065723/d827286 d10k.htm#tx827286_10
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2014. It does not reflect the strength of the case, notwithstanding the risks of 1
2 continued litigation. The Settlement should be rejected.
3
4
5 B. The Shipping and Handling Claim Alone is Worth Almost Twenty Times the Amount of the Settlement Fund 6
7 The Amended Complaint includes allegations that Herbalife overcharged its
8 distributors for package, handling and shipping charges. Amended Complaint, 9
10 ¶¶196-203. Plaintiffs sought to certify a “Packaging & Handling and FedEx
11 Freight Subclass,” Amended Complaint, ¶ 244,” and alleged that these overcharges 12
13 were unfair and deceptive practices (Second Claim for Relief, Cal. Bus. & Prof. 14 Code, §17200, Amended Complaint, ¶¶ 280-98) and false advertising (Third 15 Claim for Relief, Cal. Bus. & Prof. Code, §17500, Amended Complaint, ¶¶ 322- 16
17 23). In support of this claim, Plaintiffs allege that:
18 In an April 21, 2011 letter to the SEC, Herbalife states “[t]he shipping and 19
20 handlings [sic] costs for 2010, 2009, and 2008 were $58 million, $49 million
21 and $48 million, respectively.” Herbalife’s 2010 and 2009 10-Ks, however, 22 account for Herbalife’s revenues for North America (which includes 23
24 Canada, Jamaica, and Aruba) from shipping and handling for 2010, 2009,
25 and 2008 as $102.70 million, $87.30 million, and $80.8 million, 26
27 respectively.
28
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Amended Complaint, ¶199. In fact, Plaintiffs understated the extraordinary 1
2 magnitude of these overcharges because they were comparing Herbalife’s total,
3 worldwide shipping and handling costs to just the North American shipping and 4
5 handling revenues. As an analyst recently reported, using data from Herbalife’s
6 Form 10-K’s and correspondence between Herbalife and the SEC, until 2014 the 7 15 8 overcharges were well over 500% and in several years exceeded 700%. The
9 analyst suggested that a reasonable markup might be in the range of 30% to 60%. 10 Even if a reasonable markup was 100%, the excess markup charged by Herbalife 11
12 and paid by its United States distributors from 2009 through 2013 is approximately
13 $260 million dollars. Brooks Decl., ¶¶18-23. 14
15 Of course, this is only an estimate. But Herbalife should be able to produce
16 an exact number, and presumably provided the data to plaintiffs’ counsel from 17 which they could have calculated this number. Moreover, this would be a very 18
19 manageable claim to handle through a class action, whether litigated or settled.
20 Herbalife knows exactly what each class member paid for shipping and handling 21
22 charges during the class period. Once a jury determines the amount of the
23 overcharge it would be a relatively simple matter for a claims administrator, using 24
25 Herbalife’s computerized data, to pay claims. Claims could be paid even without
26 the class member having to file a claim form!
27 15 28 http://seekingalpha.com/article/2883006-red-flags-in-herbalifes-shipping-and- handling-revenues (last visited March 23, 2015).
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So, what is the class receiving in return for giving up this claim? They are 1
2 getting the promise that for the next three years:
3 Herbalife shall not simultaneously and separately charge its members a 4
5 "Packaging & Handling" fee (or similar fee) and an "Order Shipping
6 Charge" (or similar fee)” as was done during the Class Period up until 7
8 Herbalife adopted its Simplified Pricing Structure, when the two charges
9 were combined into a single “Shipping & Handling” charge. 10 Stipulation, ¶ 5.1.3. So a potential $260 million claim gets traded for a change in 11
12 terminology. But wait, it gets worse. Here is how Herbalife described this
13 change to its investors (not its distributors): 14
15 During 2013 we simplified our pricing structure for most markets by
16 increasing suggested retail prices and reducing total shipping and handling 17 revenues by a similar amount, eliminating a “packaging and handling” line 18
19 item from our invoices to Members. These changes did not materially
20 impact our consolidated Net Sales and profitability. 21 16 22 Herbalife 2014 Form 10-K, p. 59. That’s right, Herbalife lowered its shipping
23 and handling charges while it simultaneously raised its suggested retail prices (and 24
25 thereby raised the “wholesale” prices paid by distributors) in such a way that there
26
27 16
28 http://www.sec.gov/Archives/edgar/data/1180262/000119312514057107/d646721 d10k.htm
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was no impact on Herbalife’s revenue. But there’s more. At the same time as it 1
2 lowered shipping and handling rates and raised suggested retail prices, Herbalife
3 also lowered the basis on which it calculates distributor compensation: 4
5 During 2013 we simplified our pricing structure for most markets, increasing
6 suggested retail prices and reducing total shipping and handling fees, 7
8 eliminating a “packaging and handling” line item from our invoices to
9 Members, with no impact on total Member cost. In conjunction, the method 10 for Distributor Allowances and Marketing Plan payouts now generally 11
12 utilizes 90% to 95% of suggested retail price, depending on the product and
13 market, to which we apply discounts of up to 50% for Distributor 14
15 Allowances and payout rates of up to 15% for royalty overrides, up to 7%
16 for production bonuses, and approximately 1% for the Mark Hughes bonus. 17 Consequently, the revision to our pricing structure did not have a meaningful 18
19 impact on the amounts of Distributor Allowance or payouts under our
20 Marketing Plan and did not materially impact our consolidated Net Sales and 21
22 profitability.
23 Herbalife 2014 Form 10-K, p. 55. This new concept of basing distributor 24
25 discounts and bonuses on a number that is 90-95% of suggested retail price
26 (instead of just basing it on suggested retail price) is called “Earn Base.” It’s all 27
28
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laid out in an April 2013 presentation on Herbalife’s “Simplified Pricing 1
2 Structure,” which, of course, is anything but simple.17
3 For Herbalife to turn around and say to this Court that this is a benefit for 4
5 class members is a cynical fraud.
6 Even if the entire $15 million Settlement Fund were attributed to the 7
8 Shipping and Handling claim, with the Endless Chain Scheme and False
9 Advertising claims being valued at $0.00, it would be inadequate. There is no 10 explanation for why class members should be settling this very strong claim for 11
12 less than six cents on the dollar.
13 C. Herbalife Distributors Who Are Subject to Herbalife’s Arbitration 14 Clause Are Unfairly Excluded From the Damages Class 15 The Rule 23(b)(3) damages class excludes Herbalife distributors who are 16
17 subject to the arbitration clause which Herbalife unilaterally imposed on its
18 distributors beginning in September of 2013, about five months after this litigation 19
20 was filed. Settlement, ¶ 1.13.2; Order of Preliminary Approval, ¶3. It was unfair
21 and unreasonable to exclude such distributors from the damages class. First, 22 Herbalife waived the arbitration clause by failing to assert it timely (or at all) in the 23
24 litigation; the clause was not even referenced in this litigation until the filing of the
25 Stipulation of Settlement. Second, Herbalife waived the arbitration clause by 26
27 17 28 http://herbalifemail.com/pdf/pricingstructureexamples_usen.pdf (last visited March 23, 2015).
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insisting that distributors subject to the arbitration clause release their rights to 1
2 arbitrate claims for injunctive relief and agree to the injunctive relief set forth in
3 the Stipulation of Settlement. Finally, the arbitration clause is unenforceable 4
5 because Herbalife reserves the unilateral right to modify any and all provisions of
6 its distributor agreements, including the arbitration clause itself, rendering the 7
8 contracts illusory and unenforceable.
9 The parties did not submit a copy of Herbalife’s arbitration clause with their 10 settlement papers, so Objectors are submitting a copy. Brooks Decl., Exhibit D. 11
12 The arbitration clause is extremely broad, covering all claims arising out the
13 relationship between Herbalife and the “Member” whether based on the agreement, 14
15 Herbalife’s Rules of Conduct, Sales and Marketing Plan or tort, statute, fraud,
16 misrepresentation or any other legal theory. It also covers claims between one 17 Member and another Member. While there is an exclusion for actions brought in 18
19 small claims court, there is no exclusion for claims for injunctive relief.18 It also
20 includes a class action waiver. 21
22 The parties did not disclose how many Settlement Class Members are
23 subject to Herbalife’s arbitration agreement. Presumably, at a minimum, it would 24
25 include all distributors who joined Herbalife during and after September of 2013.
26
27 18 Section 4(c) of the clause provides that “The arbitrator may award declaratory or
28 injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claim.
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Most likely, it would also include all distributors who had not dropped out or 1
2 terminated their involvement in Herbalife prior to September of 2013. This is
3 because Herbalife’s Agreement of Distributorship includes a clause which provides 4
5 that Herbalife may unilaterally amend the agreement from time to time in its sole
6 discretion: 7
8 4. The Herbalife International Business Pack (“IBP”), contains (among
9 other things), the Rules of Conduct and Distributor Policies, the Sales and 10 Marketing Plan, Ordering Procedures and Sample Forms. These documents 11
12 and such other rules and policies as Herbalife has published, or in the future
13 may publish, together with such modifications and amendments as Herbalife 14
15 shall make in its sole and absolute discretion (collectively, “the Rules”), are
16 each hereby incorporated into this Agreement of Distributorship (each in its 17 then most recently published form). 18
19 Amended Complaint, Exhibit C, page 39 (emphasis supplied). It is difficult to
20 imagine how any Herbalife distributor who remained with the company after 21
22 September of 2013 would not have been swept up in this clause. Objectors
23 estimate, very roughly, that of the 1.5 million class members, 330,000 are subject 24 19 25 to the arbitration clause.
26
27 19 The Class Period runs from April 1, 2009, through December 2, 2014, or about
28 68 months. The segment of the Class Period during which the arbitration clause was in effect runs from September of 2013 to December 2, 2014, or about 15
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It is unclear whether any of the named Plaintiffs are subject to the arbitration 1
2 clause. All of them joined Herbalife before September of 2013. The Complaint
3 and Amended Complaint are silent on the issue, as are the Plaintiffs’ Declarations. 4
5 In any event, Herbalife did not raise the arbitration clause in its Motion to Dismiss.
6 Herbalife’s Answer to the Complaint does not raise its arbitration clause as an 7
8 affirmative defense. Herbalife never answered the Amended Complaint. Herbalife
9 never filed a motion to compel arbitration. The arbitration clause was not 10 mentioned in this litigation until the filing of the preliminary approval papers in 11
12 October of 2014.
13 Under the original Settlement Stipulation, class members subject to the 14
15 arbitration clause were excluded from the Rule 23(b)(3) damages class, but they
16 were still made subject to the broad general release of all claims. Settlement 17 Stipulation, ¶ 8.1. Accordingly, such class members were out of luck. They 18
19 could not make claims for their losses in the Settlement, but they had released all
20 of their claims and so would be unable to proceed in arbitration. The recent 21
22
23
24 months. There is a fairly constant rate of churn in the ranks of Herbalife 25 distributors, so we will assume that the number of distributors each month did not 26 vary much. Applying the ratio of 15/68 to the 1.5 million member class yields approximately 330,000 distributors. The parties may criticize this estimate, but it 27 was their failure to include the number in their papers which has forced us to go 28 through this exercise.
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amendment to the settlement includes an attempt to fix this serious flaw, by 1
2 providing that:
3 … the Released Claims shall not include any individual claims for monetary 4
5 relief that could be asserted in arbitration by any Settlement Class Member
6 who is excluded from the Rule 23(b)(3) class pursuant to Paragraph 1.13.2 7
8 and who has agreed to be subject to the arbitration provisions of the
9 Arbitration Agreement for Disputes Between Members and Herbalife 10 contained in the Member Application Agreement revised during or after 11
12 September 2013.
13 Amendment to Settlement, ¶ 2 (inserting new ¶ 8.6 into the Settlement 14
15 Stipulation). This was a positive change, but it still leaves a serious problem. In
16 the Settlement Stipulation, Herbalife and all Settlement Class members are settling 17 all claims for injunctive relief. These means that Settlement Class members who 18
19 are subject to the arbitration are being required to give up their rights to arbitrate
20 their individual injunctive relief claims, while their damages claims are relegated 21
22 to arbitration. Herbalife cannot be allowed to have it both ways. See In re C&H
23 News Company. 133 S.W.3d 642, 647 (Tex.App. 2003) (refusing to enforce 24
25 arbitration clause where one party retained the ability to pick and choose which
26 claims it wanted to arbitrate); Brunzell Construction Co. v. Harrah’s Club, 253 27 Cal.App.2d 764, 779 (1967) (party not permitted to pick and choose between 28
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arbitration and litigation). “The courtroom may not be used as a convenient 1
2 vestibule to the arbitration hall so as to allow a party to create his own unique
3 structure combining litigation and arbitration.” Christensen v. DeWor 4
5 Developments , 33 Cal.3d 778, 784 (1983), quoting De Sapio v. Kohlmeyer, 321
6 N.E.2d 770, 773 (N.Y.App. 1974). 7
8 This is not a case where Herbalife simply failed to timely raise the
9 arbitration clause in the litigation, filed a motion to dismiss the case on the merits, 10 and participated in discovery, including taking the depositions of the named 11
12 Plaintiffs. Here, Herbalife entered into the class action settlement which purports
13 to release the injunctive relief claims of 330,000 class members. Herbalife has 14
15 thereby waived its rights under the arbitration clause. See Saint Agnes Medical
16 Center v. Pacificare of California, 31 Cal.4th 1187, 1204 (2003) (prejudice will be 17 found where party seeking arbitration has “substantially impaired the other side’s 18
19 ability to take advantage of the benefits and efficiencies of arbitration”).
20 Finally, Herbalife’s contractual power to modify and amend its distributor 21
22 agreement, including the arbitration clause, unilaterally and in its “sole and
23 absolute discretion” (Herbalife’s words, not ours), renders the contract a nullity. 24
25 When is a contract not a contract? When one party reserves the right to change
26 any and all terms at will, without the consent of the other party. Day v. Fortune 27 Hi-Tech Marketing, 2013 U.S.App. LEXIS 19060, **9-11 (6th Cir. 2013) (holding 28
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arbitration agreement unenforceable where defendant multilevel marketing firm 1
2 retained ability to amend any term of the agreement at any time); Torres v. S.G.E.
3 Management, L.L.P., 2010 U.S. App. LEXIS 20520, *8-*13 (5th Cir. 2010) 4
5 (holding arbitration agreement illusory where multilevel marketing firm reserved
6 the right to amend contract in its sole discretion); Morrison v. Amway Corp., 517 7 th 8 F.3d 248 (5 Cir. 2008) (multilevel marketer’s unilateral ability to amend “Rules
9 of Conduct,” including adding arbitration clause, rendered arbitration agreement to 10 be illusory and unenforceable). 11
12 It was unfair and unreasonable to exclude Herbalife distributors who are
13 subject to the arbitration clause from the 23(b)(3) damages class. 14
15 D. The Failure to Permit Class Members to Recover Consequential 16 Damages is Unfair and Unreasonable. 17 18 Business Opportunity Claimants who meet the $750 threshold to qualify for
19 “Pro Rata Awards” have their damages awards capped at no more than 50% of 20
21 their aggregate purchases of Herbalife products. Settlement Stip., ¶ 4.4.5. This
22 limitation arbitrarily excludes a substantial portion of the economic losses suffered 23 by Herbalife distributors, which are the expenses they incur in operating their 24
20 25 distributorships and Herbalife Nutrition Clubs.
26
27 20 28 It was also unfair to create an arbitrary threshold of $750, below which Business Opportunity Claimants are relegated to token claims of $20 or less. Objectors
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The named Plaintiffs incurred such losses. See Bostick Decl., ¶ 8 (“I 1
2 purchased leads from third parties.”); Vasko Decl., ¶2 (subleased a prime
3 commercial location to operate her Herbalife nutrition club); Cote Decl., ¶8 4
5 (purchased leads from third parties); Trotter Decl., ¶7 (purchased leads from third
6 parties); Molnar Decl., ¶8 (purchased leads from third parties). Most of the 7
8 Objectors incurred expenses in running Nutrition Clubs. See, e.g. Acosta Decl.,
9 ¶5; Calderon Decl., ¶7; Colon Decl., ¶5; Cutzal Decl., ¶5; Estala Decl., ¶5; Garcia 10 Decl., ¶5; Leon Decl., ¶5; Martinez Decl., ¶5; Palma Decl., ¶5; Pastran Decl., ¶5; 11
12 Perez Decl., ¶5; Rodensky Decl., ¶5;Tafoya Decl., ¶5; Ulloa Decl., ¶5.
13 Herbalife knows that its distributors incur more expenses than simply the 14
15 purchase of Herbalife products. For instance, Herbalife states to its investors (not
16 to its distributors), that: 17
18 If a distributor wants to pursue the Herbalife business opportunity, the
19 distributor is responsible for growing his or her business and personally pays 20
21 for the sales activities related to attracting new customers and recruiting
22 distributors by hosting events such as Herbalife Opportunity Meetings or 23
24 Success Training Seminars; by advertising Herbalife's products; by
25 purchasing and using promotional materials such as t-shirts, buttons and 26
27
28 adopt the arguments made in the brief of Amicus Truth in Advertising, Inc. at pages 9-11.
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caps; by utilizing and paying for direct mail and print material such as 1
2 brochures, flyers, catalogs, business cards, posters and banners and
3 telephone book listings; by purchasing inventory for sale or use as samples; 4
5 and by training, mentoring and following up (in person or via the phone or
6 internet) with customers and recruits on how to use Herbalife products 7
8 and/or pursue the Herbalife business opportunity.
9 Herbalife 2011 Form 10-K, p. 53.21 At a NYSE Investor Day on December 16, 10 2008, Herbalife’s then executive vice president Des Walsh stated: “let’s trade on 11
12 the fact that when we open up a new nutrition club that we don’t spend more than
13 $5,000.”22 14
15 The parties have not offered any explanation as to why they have precluded
16 Business Opportunity Claimants to recover consequential damages associated with 17 Herbalife’s business opportunity. Damages under the Endless Chain law are not 18
19 limited to the recovery of consideration paid to the defendant, but can include
20 compensatory damages. See Li v. EFT Holdings, Inc., 2015 U.S. LEXIS 1064 at 21
22 *5 (C.D.Cal. 2015) (in endless chain scheme case, plaintiffs not limited to recovery
23 of consideration from the defendants). This is because in a rescission action the 24
25 21 26 http://www.sec.gov/Archives/edgar/data/1180262/000119312512070421/d260039 27 d10k.htm#tx260039_9 22 28 http://factsaboutherbalife.com/media/2012/06/081216-HLF-Investor-Day-at- NYSE.pdf , p. 30 (last visited March 23, 2015).
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Court has discretion to "adjust the equities between the parties." Cal.Civil Code 1
2 §1692. The primary purpose of rescission is to "restore both parties to their former
3 position as far as possible" and "to that end [the court] may grant any monetary 4
5 relief necessary to do so." Runyan v. Pac. Air Inds., Inc., 2 Cal.3d 304, 316, 85
6 Cal. Rptr. 138, 466 P.2d 682 (1970). In actions for rescission based on fraud or 7
8 misrepresentation, courts have required the party that committed the fraud to pay
9 damages in order to avoid unjust enrichment or to make the innocent party whole. 10 Runyan, supra, 2 Cal.3d at 317. Courts have awarded consequential damages to 11
12 the aggrieved party following rescission of a contract in various contexts. See
13 Sharabianlou v. Karp, 181 Cal. App. 4th 1133, (Cal. App. 2010) (defrauded real 14
15 estate purchaser could recover consequential damages, including commissions
16 paid, escrow fees, interest, and attorneys fees); Snelson v. Ondulando Highlands 17 Corp., 5 Cal. App. 3d 243, 253, 84 Cal. Rptr. 800 (1970) (permitting award of 18
19 closing costs in fraudulent sale of real estate); Leaf v. Phil Rauch, Inc., 47 Cal.
20 App. 3d 371, 120 Cal. Rptr. 749 (1975) (purchaser of defective automobile entitled 21
22 to rescission and consequential damages, including towing charges and car rental
23 fees). 24
25 In light of the clear legal authority for the recovery of consequential
26 damages for violation of the Endless Chain Scheme law, and Herbalife’s 27
28
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knowledge that its distributors were incurring such losses, the failure to permit 1
2 class members to recover their consequential damages is unfair and unreasonable.
3 E. There is No Adequate Representation of the Injunctive Relief Class 4
5 The Settlement calls for certification of an injunctive relief class under Rule
6 23(b)(2), in addition to a damages class under Rule 23(b)(3). The injunctive relief 7
8 is comprised of thirteen corporate policies which Herbalife has already
9 implemented and, as part of the Settlement, is agreeing to continue for a period of 10 three years following final approval. Settlement, ¶¶5.1.1-5.1.15. The Settlement 11
12 states that these corporate policies were implemented “[a]t least in part as a result
13 of the filing of the lawsuit.” Settlement, ¶5.1.2. [But see, TINA brief and chart] 14
15 Curiously, however, Plaintiffs’ counsel do not seek a fee for negotiating for these
16 “corporate reforms.” Joint Decl., ¶64. Nor do they seek a fee for monitoring 17 Herbalife’s compliance with these reforms. Foley Decl., ¶ 46. Nor is there any 18
19 provision in the Settlement Stipulation which requires Plaintiffs’ counsel or any
20 other third party to monitor Herbalife’s compliance with these corporate policies. 21
22 Who benefits from the injunctive relief?
23 The injunctive relief certainly does not benefit any of the named Plaintiffs, 24
25 all of whom have ceased operating as Herbalife distributors. The original named
26 Plaintiff, Dana Bostick, states that he “left Herbalife in April of 2013, and [does] 27 not intend on rejoining.” Declaration of Plaintiff Dana Bostick, ¶ 3. Plaintiff 28
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Anita Vasko apparently ceased operating her Herbalife Nutrition Club in January 1
2 of 2014, six months before she was added to the case with the filing of the First
3 Amended Complaint, and now wishes to return the product she was unable to sell. 4
5 Amended Complaint, ¶ 56 (shared rent for her Nutrition Club until January of
6 2014); ¶ 59 (no longer actively working on her Herbalife distributorship; 7
8 Declaration of Anita Vasko, ¶ 2 (still has product she was unable to return).
9 Plaintiff Chester Cote’s Herbalife distributorship has expired, and he has product 10 he wishes to return. Amended Complaint, ¶ 10; Declaration of Chester Cote, ¶ 3. 11
12 Plaintiff Judi Trotter resigned from her Herbalife distributorship in the Fall of
13 2012. Amended Complaint, ¶ 68. Plaintiff Beverly Molnar was still registered as 14
15 a Herbalife distributor when the Amended Complaint was filed, but was not active.
16 Amended Complaint, ¶ 9; ¶ 71 (after her first large purchase of Herbalife products, 17 “Molnar stopped trying to resell product and just consumed it”); ¶ 73 (Molnar 18
19 “stopped buying leads over a year ago). She still has product she wants to return.
20 Declaration of Beverly Molnar, ¶ 3. Three of the named Plaintiffs (Molnar, Cote 21
22 and Vasko) still have Herbalife inventory and want to return it. This is significant,
23 because a Herbalife distributor may ask Herbalife to repurchase their inventory 24 23 25 only if they resign their distributorship. Accordingly, all of the named Plaintiffs
26
27 23 28 See Herbalife Sales and Marketing Plan and Business Rules, pp. 49-50, attached to Amended Complaint as Exhibit C.
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are former Herbalife distributors, with no interest in Herbalife’s future corporate 1
2 policies.
3 The Rule 23(b)(2) class presumably includes some current Herbalife 4
5 distributors who might be affected by Herbalife’s corporate policies over the next
6 three years, i.e., persons who joined Herbalife prior to or during the Class Period 7
8 and have remained with Herbalife to date. However, most of the Rule 23(b)(2)
9 class is comprised of former distributors, like all of the named Plaintiffs (and, 10 incidentally, all of the Objectors), and the number of current distributors in the 11
12 class is inevitably declining as distributors resign, fail to renew, or simply become
13 inactive as their Herbalife businesses fail. 14
15 The Supreme Court has instructed that certification of such a class is
16 improper: 17 The predominance test would also require the District Court to reevaluate 18
19 the roster of class members continually. The Ninth Circuit recognized the
20 necessity for this when it concluded that those plaintiffs no longer employed 21
22 by Wal-Mart lack standing to seek injunctive or declaratory relief against
23 its employment practices. The Court of Appeals' response to that difficulty, 24
25 however, was not to eliminate all former employees from the certified class,
26 but to eliminate only those who had left the company's employ by the date 27 the complaint was filed. That solution has no logical connection to the 28
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problem, since those who have left their Wal-Mart jobs since the complaint 1
2 was filed have no more need for prospective relief than those who left
3 beforehand. As a consequence, even though the validity of a (b)(2) class 4
5 depends on whether “final injunctive relief or corresponding declaratory
6 relief is appropriate respecting the class as a whole,” Rule 23(b)(2) 7
8 (emphasis added), about half the members of the class approved by the
9 Ninth Circuit have no claim for injunctive or declaratory relief at all. 10 Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2559-60 180 L.Ed.2d 374 (2011). 11
12 Accordingly, the proper approach here would be to limit the Rule 23(b)(2) class to
13 current Herbalife distributors. The dilemma for the Plaintiffs and Herbalife is that 14
15 none of the named Plaintiffs could represent such a class, because they would not
16 be members. Accordingly, the Rule 23(b)(2) class should not have been certified. 17 The question remains, given that all of the named Plaintiffs have terminated 18
19 their participation in Herbalife, and given that Plaintiffs’ counsel have disclaimed
20 any reliance on the injunctive relief to justify their fee, why include the injunctive 21
22 relief component in the settlement at all? The answer is that it is Herbalife which
23 wants the injunctive relief. Herbalife wants this Court to approve the corporate 24
25 policies it has adopted over the past several years. See Pearson v. NBTY, Inc., 772
26 F.3d 778, (7th Cir. 2014) (“The injunction actually gives [Rexall] protection by 27 allowing it, with a judicial imprimatur (because it’s part of a settlement approved 28
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by the district court), to preserve the substance of the claims by making … purely 1
2 cosmetic changes in wording, which Rexall in effect is seeking judicial approval
3 of.”). 4
5 Recent filings in this case make crystal clear that Herbalife’s primary
6 motivation in entering into this settlement is to obtain the judicial imprimatur of 7
8 this Court upon its corporate policies. On March 6, 2015, the parties filed an
9 amendment to the Settlement stating, among other things, that “[t]he Parties now 10 desire to make clear that the terms of the Settlement Agreement do not purport to 11
12 limit the authority of any governmental agency in connection with matters relating
13 to the claims asserted in this Action.” Amendment to Stipulation of Settlement, ¶ 14
15 4. The need for such an amendment is somewhat remarkable, since the original
16 Stipulation of Settlement included a clause that was supposed to ensure that the 17 settlement did not interfere with ongoing investigations by the Federal Trade 18
19 Commission and the New York and Illinois Attorneys General. Joint Decl., ¶ 62.
20 The original Settlement provided that Released Claims do not include claims 21
22 arising from “(2) federal, state or local government statutes, rules, regulations or
23 ordinances over which a federal, state, or local government agency or similar 24
25 authority retains sole jurisdiction and for which there is no private right of action
26 accruing to the Settlement Class Members, either collectively or individually”). 27 Stipulation of Settlement, ¶ 8.1. This language was seriously flawed. For 28
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instance, it would appear to bar claims arising from statutes where government 1
2 agencies and private plaintiffs both have rights of action (so the government
3 agency does not have “sole” jurisdiction), which is true for many state consumer 4 24 5 fraud and anti-pyramid scheme statutes. The new release language in the
6 Amendment cures this defect and ensures that government agencies and 7
8 prosecutors will not be prejudiced in their enforcement actions against Herbalife
9 (Amendment, ¶¶ 1 and 2 (rewriting ¶ 8.1 of the Stipulation and adding new ¶ 8.5 10 and ¶ 8.6). 25 On March 10, 2015, Plaintiffs’ counsel filed declarations in support 11
12 of their motion for an award of attorneys fees, one of which stated that “Class
13 Counsel and counsel for Defendants have engaged in several substantive meet and 14
15 confer discussion with Attorneys General for numerous states to confirm that the
16 proposed settlement will not interfere with ongoing investigations by several state 17 Attorneys General, or release claims which could be prosecuted by Attorneys 18
19 General.” Foley Decl., ¶58. Objectors speculate with a good deal of confidence
20 that the primary impetus for the Amendment was the concern, apparently raised by 21
22 “numerous” state Attorneys General, that the original language would interfere
23 with their investigations and potential prosecution of Herbalife. 24
24 25 For instance, the California Endless Chain Scheme Law gives rise to both criminal penalties, Cal.Penal Code §327, and a private right of action, Cal.Civil 26 Code §1689.2. 27 25 Regulators may still be prejudiced by the amended Release language to the
28 extent that it interferes with potential claw back actions against the “net winners” of the Herbalife scheme, as discussed in Section II.G. below.
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With government regulators breathing down its neck, Herbalife wants to 1
2 position itself for a potential settlement with them. Herbalife would undoubtedly
3 like to enter into a deal under which it agrees to undergo some corporate reforms, 4
5 pay a modest fine, or perhaps some additional restitution, and continue doing what
6 it has always done, operate a business opportunity fraud that enriches a tiny few at 7
8 the expense of the many. Having this Court approve the “corporate policies” in
9 the Settlement would give just the sort of judicial imprimatur that Judge Posner 10 warned about in Pearson v. NBTY. As discussed in detail below, the corporate 11
12 policies provide no benefit to former Herbalife distributors, little or no benefit to
13 current and future Herbalife distributors, and fail to address the problems which 14
15 gave rise to this action in the first place. The Rule 23(b)(2) class should not have
16 been certified and, since this Court cannot modify the Settlement for the parties, it 17 should be rejected. 18
19 F. The Injunctive Relief Provided in the Settlement is Illusory and Fails
20 to Address the Allegations of the Amended Complaint
21 The Amended Complaint seeks injunctive relief “enjoining Herbalife from 22 paying its Distributors recruiting rewards that are unrelated to retail sales to 23
24 ultimate users and from further unfair, unlawful, fraudulent and/or deceptive acts.”
25 Amended Complaint, Prayer for Relief f. This request goes to the core of what 26
27 makes Herbalife an endless chain and a deceptive business opportunity. In lieu of
28 this relief, the Settlement Stipulation includes a set of thirteen “Corporate Policies”
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which Herbalife is agreeing to continue for a period of three years following final 1
2 approval. Stipulation, ¶5.1.1. The Stipulation recites that Herbalife “implemented,
3 instituted or continued to maintain” these policies at least in part as a result of the 4
5 filing of the lawsuit. Stipulation, ¶5.1.2. For the reasons detailed below, these
6 Corporate Policies provide illusory relief to the class, and fail to address the 7 26 8 allegations of the Complaint.
9 At the outset it should be noted that there is nothing in the Stipulation that 10 provides for the oversight or enforcement of the corporate policies. Recently 11
12 Plaintiffs counsel filed a motion for fees with supporting declarations in which
13 they state that “Class Counsel is not requesting any additional attorneys’ fees to be 14
15 awarded for inducing Herbalife to make those 13 specific corporate reforms, or for
16 monitoring Herbalife’s conduct for three years post-settlement to confirm that 17 Herbalife is maintaining those corporate reforms.” Foley Decl., ¶ 46. There is 18
19 nothing in the Stipulation that actually obligates Plaintiffs’ counsel to do any such
20 monitoring. There is a provision which calls for this Court to have “exclusive and 21
22 continuing jurisdiction over the implementation, interpretation, and execution of
23 the Final Judgment and Settlement Agreement.” Stipulation, ¶12.9. But there is 24
25 nothing in the Stipulation that calls for this Court take an active role in policing
26 Herbalife’s compliance with the corporate policies for the next three years.
27 26 28 Objectors also adopt the arguments raised by Amicus Truth in Advertising, Inc. in their brief at pp. 3-9.
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Objectors address these corporate policies below, and conclude that the 1
2 benefit they provide to the class is illusory; the true beneficiary is Herbalife.
3 1. Shipping and Handling Fees 4
5 The first corporate policy is as follows:
6 Herbalife shall not simultaneously and separately charge its members a 7
8 "Packaging & Handling" fee (or similar fee) and an "Order Shipping
9 Charge" (or similar fee) as was done in during the Class Period up until 10 Herbalife adopted its Simplified Pricing Structure, when the two charges 11
12 were combined into a single “Shipping and Handling” charge.
13 Stipulation, ¶5.1.3. For the reasons discussed in Section II.B. above, this 14
15 provision is illusory and provides no benefit at all to class members.
16 2. Change in Terminology from “Distributor” to “Member” 17 The second corporate policy change also involves a somewhat cryptic 18
19 change in terminology:
20 Herbalife shall not define "Distributor" in its Glossary of Terms as 21
22 "Everyone who purchases an Official Herbalife Member Pack (HMP) and
23 submits to Herbalife a valid and complete Membership Application and 24
25 whose Application has been accepted by Herbalife.”
26 Stipulation, ¶5.1.4. To those uninitiated into the looking glass world of multi-level 27 marketing, the change in terminology from “distributor” to “member” may seem 28
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befuddling. The driving force behind this change is Herbalife’s attempt to 1
2 distinguish itself as something other than a pyramid scheme. One of the factors
3 that the FTC and the Courts consider in determining whether a multi-level 4
5 marketing program is a pyramid scheme is the extent to which products are sold,
6 for a profit, to persons who are not participating in the scheme. The Amended 7
8 Complaint alleged that Herbalife’s products are difficult to retail for profit.
9 Amended Complaint, ¶¶22-24, 35-37, 50, 193-195. As discussed above in section 10 II.A., for several years Herbalife has been claiming that many of its “distributors” 11
12 are in fact merely “discount customers,” thereby neatly sidestepping the retail sales
13 controversy – their argument is that if 73% of Herbalife “distributors” are really 14
15 just members of a buying club, then the whole enterprise is supported by “retail
16 sales,” and therefore, not a pyramid. The change in terminology from “distributor” 17 to “member,” is intended to provide a defense to critics and, more importantly, 18
19 government regulators who are questioning the extent of Herbalife’s retail sales. It
20 does not provide any benefit to the persons who this settlement is ostensibly 21
22 supposed to benefit, that is, people who joined Herbalife with the intention of
23 participating in the business opportunity. It would be much more useful to employ 24
25 terminology that clearly distinguished between Herbalife participants who are
26 solely interested in purchasing the products at a discount and those who intend to 27 participate in the business opportunity. But this provision does not accomplish this 28
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– it merely continues the same confusion under a different name. In fact, 1
2 “Members” must sign the same one-sided, onerous agreement, which incorporates
3 by reference hundreds of pages of policies and rules, and a broad, sophisticated 4
5 arbitration clause and class action waiver, any and all of which Herbalife can
6 modify or amend in its sole and absolute discretion, that distributors used to sign. 7
8 If “Members” are just “discount buyers” why do they need to sign such a complex
9 document? This Corporate Policy benefits only Herbalife. 10 3. Discouraging Debt 11
12 The next Corporate Policy provides that:
13 Herbalife shall continue to discourage members from incurring debt to 14
15 pursue the Herbalife business opportunity, consistent with Rule 1.1.2 of
16 Herbalife’s Member Rules of Conduct. 17 Stipulation, ¶5.1.5. Given the abysmal failure rate of Herbalife distributors, it 18
19 certainly would be a good thing for Herbalife to discourage them from incurring
20 debt to pursue the Herbalife business opportunity. But this provision of the 21
22 settlement requires Herbalife to do nothing more than include it in its rules of
23 conduct for “members.” It does not require Herbalife to include the 24
25 discouragement of incurring debt in its distributor training events, nor does it
26 require Herbalife to determine whether distributors are actually following its 27 advice. A better term would be for Herbalife to discourage participants from 28
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spending their hard earned savings on the pursuit of the Herbalife business 1
2 opportunity. The practical effect of this term is to give Herbalife a defense to any
3 distributor who brings a claim based in part on the allegation that they went into 4
5 debt (e.g., used their credit card) to purchase Herbalife product in order to
6 participate in the business opportunity. 7
8 4. Shipping and Handling Charges
9 The next corporate policy provides that: 10 Herbalife shall continue to pay shipping charges for the return of products to 11
12 Herbalife in connection with inventory repurchases, consistent with Rule 2.5.3
13 of Herbalife’s Member Rules of Conduct. 14
15 Stipulation, ¶5.1.6. This provision fails to address the real problem with Herbalife,
16 which is that the compensation plan creates incentives for distributors to purchase 17 products in order to achieve higher ranks in the plan and to qualify to receive 18
19 bonuses and commissions. A distributor may only take advantage of the inventory
20 repurchase provision if they terminate their distributorship, thereby forever 21
22 forfeiting the right to earn commissions on their downline. Amended Complaint,
23 ¶231. Moreover, since Herbalife “claws back” commissions paid to a distributor’s 24
25 upline when products are returned, there are substantial incentives to refrain from
26 exercising this right. Amended Complaint, Exhibit C, p. 49 (“Herbalife will 27 deduct the amount of Royalty Overides, Commissions, Production Bonuses and 28
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any other earnings or benefits paid on the returned products from the appropriate 1
2 Distributors, and adjust qualifications as necessary”).
3 5. Compliance Department 4
5 The next corporate policy calls for Herbalife to continue to have a compliance
6 department: 7
8 Herbalife shall continue to maintain procedures for the enforcement of its rules,
9 including but not limited to continuing to maintain a member compliance 10 department to enforce its policies, procedures and member rules. Herbalife 11
12 shall continue to revise and supplement such policies, procedures and member
13 rules as deemed necessary by Herbalife in the exercise of reasonable business 14
15 judgment.
16 Stipulation, ¶5.1.7. Given all of the regulatory scrutiny to which it is subject, 17 Herbalife is going to maintain a compliance department out of self defense, not out 18
19 of any concern for its distributors. Herbalife’s system is based on plausible
20 deniability; it needs to give its high level distributors – its “heavy hitter” recruiters 21
22 – as much freedom as possible to misrepresent the chances for success in the
23 Herbalife business opportunity. In order to preserve the charade Herbalife needs to 24
25 show regulators it has the power to rein in “over zealous” distributors.
26 6. Prohibition of Selling Leads 27 The next corporate policy concerns a long standing problem for Herbalife: 28
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Herbalife shall maintain its rule prohibiting members from selling leads to 1
2 other members or purchasing leads from any source, consistent with Rule
3 3.3.2 of Herbalife’s Member Rules of Conduct. 4
5 Stipulation, ¶ 5.1.8. For many years Herbalife’s high level distributors have
6 promoted various lead generation systems to their downline distributors. See 7 27 8 Section II.G. below. Herbalife recognized that this was a problem at least
9 fourteen years ago, when then President Francis Tirelli wrote a memo to “All 10 President’s Team Members” stating that lead generation was “[o]ne of our greatest 11
12 opportunities [but] is also one of our greatest risks.” Brooks Decl., Exhibit E. If,
13 in fact, Herbalife is really prohibiting all lead generation systems, that would be a 14
15 good thing. But, as noted above, there is nothing in the Stipulation that provides
16 for monitoring Herbalife’s compliance. The likelihood is that Herbalife’s high 17 level distributors will find ways to evade the rule, and Herbalife will look the other 18
19 way for as long as possible.
20 7. No Initial Purchase Requirement 21
22 Herbalife shall continue to prohibit members from requiring a person to buy
23 product (other than a Mini or Full Member Pack) as a condition to becoming 24
25 an Herbalife member or distributor.
26
27 27 A white paper on Herbalife lead generation systems is available at
28 http://www.herbalifepyramidscheme.com/deceptive-practices-supporting- herbalife-pyramid-scheme-lead-generation/
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Stipulation, ¶5.1.9. This provision is a red herring. Of course, anyone who can 1
2 draw breath can become a Herbalife distributor by purchasing an International
3 Business Pack (IPB) or Mini-IBP for less than $100. Amended Complaint, ¶30. 4
5 The problems come later, when the distributor finds that in order to qualify for
6 commissions on his or her downline, steep monthly purchase volumes must be 7
8 met. See, e.g. Amended Complaint, Exhibit C, p. 12 (monthly purchase
9 requirements for payment of Royalty Overrides). This is just another defensive 10 measure for Herbalife; it enables Herbalife to argue that there is just a minimal 11
12 payment required to become a distributor.
13 8. Nutrition Club Rules 14
15 Herbalife shall maintain its rule that before signing a lease or opening a
16 Nutrition Club in a non-residential location, the Herbalife member must 17 have been an Herbalife member for at least 90 days and receive mandatory 18
19 Nutrition Club operator training, consistent with Rule 8.4.1 of Herbalife’s
20 Member Rules of Conduct. 21
22 Stipulation, ¶5.1.10. The purpose of the 90 day “training” period is explained in
23 detail in an investigative report, which explains that Nutrition Club trainees are 24
25 expected to go to other clubs and consume Herbalife shakes, a system of “coerced
26
27
28
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consuming,” before they are allowed to open their own clubs.28 A number of the 1
2 Objectors participated in these programs. Leon Decl., ¶5 (“I was told to attend
3 trainings and I had to pay for each training.”); Estalla Decl., ¶5 (“I was made to 4
5 charge people who I brought in to recruit $25 each only to bring them into a
6 scheme where they too would lose money.”); Cutzal Decl., ¶5 (“I started off 7
8 working for free for a Herbalife distributor who ran a Herbalife Nutrition Club,
9 selling Herbalife products and recruiting people for her. She told me I had to train 10 like this in order to have my own club.”); Pastran Decl., ¶5 (“I spent $600 11
12 attending meetings and trainings at Universidad Del Exito in order to learn how to
13 run a Herbalife Nutrition Club.”). This provision, far from being a benefit for 14
15 distributors, is a key part of the Herbalife Nutrition Club scheme.
16 9. Herbalife Statement of Average Gross Compensation 17 Four of the thirteen corporate policies concern various aspects of Herbalife’s 18
19 “Statement of Average Gross Compensation” (SAGC).29 They seem to be
20 designed to give Herbalife a defense in future litigation or regulatory actions. The 21
22 Statement is now part of the “member application” (even if the “member” just
23 wants to be a discount customer), so no distributor can claim that he or she didn’t 24
25 28 http://seekingalpha.com/article/2480445-herbalife-whos-consuming-all-those- 26 shakes-and-why
27 29 The 2013 SAGC is available here: http://www.herbalife.com/Content/en-
28 US/pdf/business-opportunity/statement-of-average-gross-compensation-usen.pdf (last visited March 23, 2015).
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see it. Stipulation, ¶5.1.11. Members must acknowledge reviewing the SAGC 1
2 when they sign the agreement. Stipulation, ¶5.1.12. The agreement will include a
3 disclaimer that the “member” is not relying upon “any other written or oral 4
5 information or representations about the financial results I might achieve.”
6 Stipulation, ¶5.1.15. The only substantive requirement concerning the contents of 7
8 the SAGC is that “Herbalife shall continue disclosing in its SAGC the total number
9 and percentage of all members who do not receive any compensation or payment 10 directly from Herbalife.” Stipulation, ¶5.1.13. Accordingly, Herbalife is free to 11
12 change any other aspect of the SAGC, including the type and format of the
13 “disclosures.” 14
15 The SAGC terms of the Settlement are deeply flawed:
16 There is no requirement that Herbalife disclose the attrition rates of 17
18 distributors at each level of the compensation plan. See Amended 19 Complaint, ¶106 (annual attrition rate of non-Supervisors is 90%) 20 There is no requirement that Herbalife disclose the range and amounts of 21
22 business expenses that distributors typically incur.
23 There is no requirement that Herbalife disclose the additional expenses 24
25 incurred by Herbalife Nutrition Club operators.
26
27
28
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1 The SAGC relies on the flawed and deceptive finding of the Lieberman
2 Survey that 73% of Herbalife distributors are “discount customers.” See 3 Section II.A. above. 4
5 Herbalife does not collect retail sales data from its distributors, so there is no
6 basis for the representations made throughout the SAGC that distributors can 7
8 earn retail profits, and there is no disclosure as to how much profit the
9 average distributor earns. 10
11 There is no disclosure of the complex volume requirements that distributors
12 must meet in order to qualify to earn commissions, royalties and bonuses 13 from Herbalife. 14
15 The disclaimer that the distributor has not relied upon any other financial
16 representations is unfair and deceptive, given Herbalife’s heavy reliance on 17
18 earnings “testimonials” and other earnings claims to recruit new distributors.
19 Amended Complaint, ¶¶158-192 20
21 G. The Release in the Settlement Stipulation is too broad in that it will
22 release claims against high level Herbalife distributors
23 Plaintiffs’ counsel note that numerous class members have complained about 24
25 “third parties” who solicited them to become Herbalife distributors in their
26 downlines and then sold leads and training courses to class members. Joint Decl., 27
28 ¶41. Objectors agree that the lead generation “business,” which has been carried
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on by high level Herbalife distributors for many years, is a serious problem. See 1
2 Section II.F.6 above. Plaintiffs’ counsel state that claims against “third party lead
3 generators” are not being released in the Settlement, and it appears that they intend 4
5 to preserve claims by class members against Herbalife distributors who operated
6 lead generation businesses. Joint Decl., ¶41. However, the plain language of the 7
8 release in the Settlement Stipulation will be construed to release these high level
9 Herbalife distributors, who will contend that they fall within one or more of the 10 broad categories of third parties who are being released. The Released Parties 11
12 include the following:
13 Herbalife International of America, Inc.; Herbalife International, Inc.; and 14
15 Herbalife Ltd. (collectively, “Herbalife”) and each of their present and
16 former, direct and indirect, subsidiaries, parents, affiliates, unincorporated 17 entities, divisions, groups, officers, directors, shareholders, partners, 18
19 partnerships, joint ventures, employees, agents, servants, assignees,
20 successors, insurers, indemnitees, attorneys, transferees, and/or 21
22 representatives (collectively, the “Released Parties”) shall be released and
23 forever discharged by the Class Representatives, for themselves and as the 24
25 representatives of each Settlement Class Member …
26 Stipulation, ¶8.1. At the outset it should be noted that two high level Herbalife 27 distributors are members of Herbalife’s board of directors, namely Pedro Cardoso 28
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and John Tartol.30 Both Mr. Cardoso and Mr. Tartol have operated Herbalife lead 1
2 generation businesses.31 As directors of Herbalife, both of them would clearly be
3 released by the plain language of the Release. Since the release extends to former 4
5 directors, it would also protect at least three other high level Herbalife distributors
6 who operated lead generation systems, Leslie Stanford, Leon Waisbein and Larry 7 32 8 Thompson (a former Herbalife distributor).
9 Many other high level Herbalife distributors have operated lead generation 10 systems.33 All of these individuals, if sued by class members or government 11
12 regulators in “claw back” actions, will argue that they are covered under the
13 express language of the Release, which covers Herbalife’s “affiliates,” “joint 14
15 ventures,” “agents” and “representatives.” For any court which may in the future
16 be called upon to construe the effect of the Release, the intent of the parties to 17 exclude such persons from the scope of the Release would be irrelevant, given its 18
19 plain language. See Rodriguez v. Oto, 212 Cal.App.4th 1020, 1028 (2013) (“if the
20 requisite intent appears unambiguous from the face of the contract, the third party 21
22 makes a prima facie showing of entitlement merely by proving the contract”); Fuls
23 30 24 http://ir.herbalife.com/directors.cfm 31 http://www.herbalifepyramidscheme.com/perpetrators/pedro-cardoso/ and 25 http://www.herbalifepyramidscheme.com/es/perpetrators/john-tartol/ 32 26 http://www.herbalifepyramidscheme.com/perpetrators/leslie-stanford/ http://www.herbalifepyramidscheme.com/perpetrators/leon-waisbein/ 27 http://www.herbalifepyramidscheme.com/perpetrators/tish-rochin-larry-thompson/ 28 33 http://www.herbalifepyramidscheme.com/perpetrators/
OBJECTIONS TO CLASS ACTION SETTLEMENT - 57 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 58 of 64 Page ID #:3448
v. Shastina Properties, Inc., 448 F.Supp. 983, 988 (N.D.Cal. 1978) (“where the 1
2 words of a release agreement are not ambiguous, the construction of the agreement
3 is a question of law for the court”). 4
5 The potential for claims against Herbalife’s high level distributors is not
6 merely theoretical. For example, in an action by the receiver arising out of the 7
8 SEC’s prosecution of a multilevel marketing firm known as Zeek Rewards, the
9 court recently certified a defendant class comprised of the “net winners”. Bell v. 10 Disner, 2015 U.S. Dist. LEXIS 15815 (W.D.N.C. February 15, 2015). In an action 11
12 by the Federal Trade Commission and four state Attorneys General against the
13 multilevel marketing firm Fortune Hi-Tech Marketing, the court-appointed 14
15 receiver recently received approval to commence litigation against “highly
16 compensated representatives.” Brooks Decl., Exhibit F. Plaintiffs’ counsel refer 17 to meetings they have had with State Attorneys General for “numerous states” who 18
19 are concerned with the scope of the release. Foley Decl., ¶58. In the event any
20 state attorney general or the Federal Trade Commission or a receiver decides to 21
22 bring civil actions against high level Herbalife distributors, this release could
23 interfere with those actions. 24
25
26 H. The Class Notice and Claims Process is Inadequate 27 The Class Notice and claims process have serious flaws: 28
OBJECTIONS TO CLASS ACTION SETTLEMENT - 58 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 59 of 64 Page ID #:3449
1 The Notice fails to provide class members with any information concerning
2 what they might receive under the settlement. See Custom LED, LLC,, v. 3 eBay, Inc., 2013 U.S. Dist. LEXIS 122022, *20 (N.D.Cal.) (“the notice does 4
5 not contain a range of the potential recovery that the class members can
6 expect to receive under the settlement. Thus, it is not possible for a member 7
8 of the proposed class to determine even approximately what percentage of
9 the fees paid to eBay he or she will recover under the settlement.”). 10 The Notice implies that class members who wish to object to the settlement 11
12 may nonetheless file claims, which would be the only way they could get
13 paid if their objections are overruled. The first page of the Notice includes a 14
15 graphic with the title “Your Legal Rights and Options in This Settlement.”
16 The five options include “Submit a Claim Form and/or Refund Claim Form” 17
18 and “Object.” Listing the options in this fashion suggests that a class
19 member may either file a claim or object, but not do both. Many of the 20 Objectors were confused by this aspect of the Notice, and failed to file 21
22 claims. See Acosta Decl., ¶7; Avila Decl., ¶7; Correa Decl., ¶7; Cutzal
23 Decl., ¶7; Estala Decl., ¶7; Garcia Decl., ¶7; Martinez Decl., ¶7 ; Pastran 24
25 Decl., ¶7;Tafoya Decl., ¶7; Torres Decl., ¶7.
26 Class members could not determine from the notice whether they might be 27 subject to Herbalife’s arbitration clause, and thereby excluded from the 28
OBJECTIONS TO CLASS ACTION SETTLEMENT - 59 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 60 of 64 Page ID #:3450
damages class. See Acosta Decl., ¶7; Martinez Decl., ¶7; Correa Decl., ¶7; 1
2 Cutzal Decl., ¶7; Perez Decl., ¶7.
3 The Notice fails to advise class members that they will be releasing claims 4
5 not alleged in the Amended Complaint, such as wage and hour claims
6 arising from the unpaid “internships” which aspiring Nutrition Club 7
8 operators must undertake. See http://seekingalpha.com/article/2480445-
9 herbalife-whos-consuming-all-those-shakes-and-why 10 The claims process included a procedure under which class members could 11
12 determine their “Business Opportunity Award,” but the page which states
13 the amount of the award fails to state that the award is subject to pro rata 14
15 reduction. Brooks Decl., Exhibit G.
16
17
18 I. The Class Notice Program Failed to Reach the Poor, Undocumented Victims of Herbalife’s Deceptive Marketing and Endless Chain 19 Scheme 20
21 During the Class Period, and for years prior, Herbalife steadily increased its 22
23 focus on the Latino market. In November of 2008, Rich Goudis, Herbalife’s Chief 24 Operating Office stated as follows: 25 So our major initiatives for 2009 is to continue to nurture the replication of 26
27 nutrition clubs in our Latino business. We still believe we have a lot of
28
OBJECTIONS TO CLASS ACTION SETTLEMENT - 60 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 61 of 64 Page ID #:3451
penetration left. If you look at the number of [Nutrition] clubs as 6,500 [in 1
2 the U.S.] versus over 25,000 in Mexico.34
3 In December of 2008, Herbalife’s President, Des Walsh, stated that: 4
5 And what’s remarkable is that if you look at the actual percentage of our
6 Latino business, in 2004 it represents 37% of our total U.S. sales. Now, 7
8 2008, 65%. During that time, our general market business, that is, the non-
9 Latino business, has essentially been flat.35 10 As explained by Amy Greene, Herbalife’s head of investor relations, the key to 11
12 Herbalife’s penetration into the Latino market was the development of the
13 “Nutrition Club:” 14
15 So that started in Mexico in 2003, took off in Mexico, 20,000, 25,000 home-
16 based Nutrition Clubs in Mexico. The US Latino distributors, because of 17 their close relationship to Mexico saw this growth happening in Mexico, and 18
19 said, well, we need to do it too. And so Nutrition Clubs began to open in the
20 US. What we see when it happens is an exponential increase in the 21 36 22 addressable audience.
23
24
34 25 http://factsaboutherbalife.com/media/2012/06/081118-HLF-Morgan-Stanley- Consumer-Conference.pdf , p. 4 (last visited March 23, 2015). 26 35 http://factsaboutherbalife.com/media/2012/06/081216-HLF-Investor-Day-at- 27 NYSE.pdf , p. 25 (last visited March 23, 2015). 36 28 http://factsaboutherbalife.com/media/2012/06/120111-HLF-ICR-XChange- Conference.pdf , p. 2 (last visited March 23, 2015).
OBJECTIONS TO CLASS ACTION SETTLEMENT - 61 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 62 of 64 Page ID #:3452
The class notice program has failed to address the effect of Herbalife’s 1
2 purposeful targeting of the poor Latino population. Objectors submit the
3 Declaration of Julie Contreras, President of the League of United Latin American 4
5 Citizens (LULAC) of Lake County, Illinois, who has spoken with at least 280
6 Latino victims of the Herbalife scam. Declaration of Julie Contreras (Contreras 7 37 8 Decl.), ¶6. Ms. Contreras observed widespread confusion concerning the class
9 action notices among the Latino victims. Contreras Decl., ¶7. Undocumented 10 victims were fearful about having anything to do with the legal system, and there 11
12 were rumors that Herbalife would have them deported. Contreras Decl., ¶8. She
13 avers that the notice program “failed to acknowledge the reality of differences in 14
15 the culture, language and understanding of the legal system, as well as the
16 undocumented status of many of the victims.” Contreras Decl., ¶9. She believes 17 that an outreach program in the Latino community should have been included as 18
19 part of the notice program. Contreras Decl., ¶¶10-11.
20 The class notice program was limited to sending emails and post cards. 21
22 Settlement Stipulation, Exhibit 6. There was no advertising in any media, either
23 English or Spanish, and no effort at outreach. A number of courts have recognized 24
25 that class notice programs should be tailored to address the communities affected
26 by the alleged wrongdoing, and in some cases traditional notice by mail is simply 27
28 37 Brooks Decl., Exhibit H.
OBJECTIONS TO CLASS ACTION SETTLEMENT - 62 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 63 of 64 Page ID #:3453
not sufficient. See In re Black Farmers Discrimination Litigation, 856 F. Supp. 2d 1
2 1, 36-37 (D.D.C. 2011) (approving notice program where, in addition to notice by
3 mail and telephone, there was extensive outreach plan; “class counsel will work 4
5 with community and trade organizations to disseminate news of the settlement by
6 word of mouth”); Multi-Ethnic Immigrant Workers Organizing Network, v. City 7
8 Of Los Angeles, 2009 U.S. Dist. LEXIS 132270, *15 (C.D.Cal. 2009) (Class notice
9 was distributed by five plaintiff associations to inform as many individuals as 10 practicable of the settlement; “[t]he evidence provided to the Court of the outreach 11
12 efforts reflects an exceptionally successful outreach, including email, hand-outs,
13 and other distribution efforts by the organizations”); In re Holocaust Victim Assets 14
15 Litig., 105 F. Supp. 2d 139, 144-45 (E.D.N.Y. 2000) (noting effectiveness of notice
16 plan “tailored to the unique circumstances of this case” which included direct mail, 17 publication, public relations, Internet and “grass roots community outreach”). For 18
19 the same reasons, the brief, 35-day claims period (Preliminary Approval Order, ¶
20 44), was inadequate. See In re Black Farmers Discrimination Litigation, 856 F. 21
22 Supp. 2d at 36-37 (approving 180 day claims period where notice program
23 involved extensive outreach program). 24
25 III. Conclusion and Notice of Intent to Appear
26 For the reasons set forth above, Objectors respectfully request that this Court 27 deny final approval of the Settlement. Objectors hereby give notice that they 28
OBJECTIONS TO CLASS ACTION SETTLEMENT - 63 Case 2:13-cv-02488-BRO-SH Document 121 Filed 03/24/15 Page 64 of 64 Page ID #:3454
intend to appear through their undersigned counsel at the final approval hearing in 1
2 this matter.
3
4 Dated: March 24, 2015
5 ______6 Douglas M. Brooks 7 Law Offices of Douglas M. Brooks 8 (pending pro hac vice) 9 10
11 /s/ Heather M. McKeon 12 13 COHEN MCKEON LLP HEATHER M. MCKEON 14 15 Attorneys for Objectors
16
17
18
19
20
21
22
23
24
25
26
27
28
OBJECTIONS TO CLASS ACTION SETTLEMENT - 64 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 1 of 72 Page ID #:3455 EXHIBIT A
EXHIBIT A Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 2 of 72 Page ID #:3456
Douglas M. Brooks (pro hac vice) dmbrooks(cvbrooks-Iaw.net 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
Artorneyfor Objectors
7 IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et ai., Plaintiffs, OBJECTION AND DECLARATI N vs. OF ELVIA ACOSTA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell ANIERICA, INC., et ai., Defendants.
DECLARAnON OF OBJECTOR ELVIA ACOSTA 1
-~-.... ------~ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 3 of 72 Page ID #:3457
I, Elvia Acosta, hereby declare as follows: 1. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this dcclaration based on personal knowledge and I am competent to testify to the matters set forth herein.
! My residence address is 2817 N. Moody Avenue, Chicago, IL 60634 and my telephone number is (708) 530-0311. 3. My attomey in this matter is Douglas M. Brooks, Esquire, 60 Thoreau " Street, No. 219, Concord, Massachusetts 01742, and his telephone number
.1 is (781)424-6737. -t. I was a distributor in Herbalife from 2005 to around June of2014. I reached the level of Supervisor. ). I ran a Herbalife Nutrition Club from my home but I was unable to eam a profit. My total losses from my Herbalife business were about $20,000, incl uding not just my purchases of Herbalife products but all of the expenses I paid in order to run my Nutrition Club. 6. J believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General ofthe State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. Also, I do not know whether I am subject to the arbitration clause that Herbal1fe started using after I became a distributor. 3. I am objecting to the settlement because the settlement fund is too small to compensate victims ofHerb ali fe and the changes that Herbalife is promising to make will not prevent it from ham1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
DECLARATfON OF OBJECTOR ELVIA ACOSTA - 2
----...... --.------~ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 4 of 72 Page ID #:3458
9. My atton1ey will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty ofpeZiury under the laws of the United States ofAmerica thaI the toregoing is true and correct. Executed on March 18 ,2015.
Elvia Acosta
1
DECLARATION OF OBJECTOR ELVIA ACOSTA - 3
..... -.~-- ...... ------_....._ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 5 of 72 Page ID #:3459 EXHIBITB
EXHIBITB Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 6 of 72 Page ID #:3460
Douglas M. Brooks (pro hac vice) dmbrooks@brooks-Iaw .net . 60 Thoreau Street, No. 219 I Concord, MA 01742 Telephone: (781) 424-6737
Artorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al., Plaintiffs, OBJECTION AND DECLARATI N vs. OF SABAS AVILA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et at.,
DECLARATION OF OBJECTOR SABAS AVILA - 1
-_.--_..._---_.... _------ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 7 of 72 Page ID #:3461
1 I, Sabas Avila, hereby declare as follows:
2 1. I submit this declaration in support of my objection to the proposed class
3 action settlement in this case. Except where otherwise indicated, I make this
4 declaration based on personal knowledge and I am competent to testify to
5 the matters set forth herein.
6 2. My residence address is 4612 S. Troy Street, Chicago, IL 60632, and my
7 telephone number is (773) 512-6768.
8 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau
9 Street, No. 219, Concord, Massachusetts 01742, and his telephone number
10 is (781) 424-6737.
11 4. I was a distributor in Herbalife from around February of2010 to around
12 October of2010.
13 5. I ran my distributorship with my partner, Olivia Torres, who is also
14 objecting to the settlement. We invested approximately $7,000. After a
15 few months we realized that we could not sell the Herbalife products
16 because Herbalife products were being sold at flea markets below cost. We
17 were never able to qualify for the 50% Supervisor discount. We were told
18 by our Supervisor that unless we recruited other people we would not make
19 money. We stopped participating in Herbalife because we would not lie to
20 anyone or be part ofthe deceptive practices of Herbalife, where people lose
21 money based on lies.
22 6. I believe that Herbalife is a pyramid scheme and a deceptive business
23 opportunity. I have filed complaints with the Federal Trade Commission
24 and the Attorney General ofthe State ofIllinois concerning Herbalife.
25 7. I received the Class Notice but I did not fully understand it. In particular, I
26 did not understand that I could file a claim and also object to the settlement.
27 8. I am objecting to the settlement because the settlement fund is too small to
28 compensate victims ofHerbalife and the changes that Herbalife is promising
DECLARATION OF OBJECTOR SABAS A VILA - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 8 of 72 Page ID #:3462
to make will not prevent it from ham1ing other people. Other grounds for my obj ection are set forth in the brief that my attorney is filing in this case. 9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of perjury under the laws of the United States ofAmerica
that the foregoing is true and correct. Executed on March ~, 2015.
Sabas Avila
DECLARATION OF OBJECTOR SABAS AVILA - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 9 of 72 Page ID #:3463 EXHIBITC
EXHIBITC Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 10 of 72 Page ID #:3464
Douglas M. Brooks (pro hac vice) drnbrooks@brooks-la\v.net 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
c A [torney for Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, \VESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et ai., Plaintiffs, OBJECTION AND DECLARATI N vs. OF MIGUEL CALDERON HERBALIFE INTERNATIONAL OF Han. Beverly Reid O'Connell AMERICA, INC., et ai., Defendants.
DECLARATION OF OBJECTOR MIGUEL CALDERON - 1
----..... ~.~-~~------Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 11 of 72 Page ID #:3465
I, Miguel Calderon, hereby declare as follows: I. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. My residence address is 2526 Gray Ct, Waukegan, IL 60085, and my telephone number is (847) 280-0338. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. -t. I joined Herbalife as a distributor in or around September of 2008 and continued to participate in Herbalife until sometime in 2011. I reached the level of Supervisor. ). When I joined Herbalife I was retired and looking to supplement my retirement income. I was approached by a friend who had just joined Herbalife and was looking for partners to operate a Herbalife Nutrition Club. I committed to purchase 2500 volume points of Herbalife products monthly. r sometimes doubled my monthly order in order to qualify for Herbalife's Supervisor level. 6. I worked at my Herbalife business on a daily basis, but I never had enough customers to cover the amount of inventory that Herbal i fe requires distributors to buy in order to maintain their level in the organization. 7. Nfy total losses from my Herbalife business were about $22,000, including the purchase ofHerbalife products and the rent and other operating costs of running the Nutrition Club. S. 1 believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife.
DECLARATIO'-r OF OBJECTOR MIGUEL CALDERON 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 12 of 72 Page ID #:3466
9, I did not receive notice of the class action settlement and I did not file a claim. 10. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harn1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 11. My atto111ey will appear at the Final Approval Hearing and speak on my behalf.
) I declare under penalty of perjury under the laws of the United States of America tbat the foregoing is true and correct. Executed on March)ff , 2015.
~<-< e.1 =-Crx1Jo.ro~ Miguel Calderon
DECLARA TION OF OBJECTOR MIGUEL CALDERON - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 13 of 72 Page ID #:3467 EXHIBITD
EXHIBITD
._---_.-. -- Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 14 of 72 Page ID #:3468
Douglas M. Brooks (pro hac vice) dr1brooks@brooks-]aw.net 60 Thoreau Street, No. 219 Concord, MA 01742 Tekphone: (781) 424-6737
Attorney/or Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et at., Plaintiffs, OBJECTION AND DECLARATI N vs. OF FELIPE COLON IIERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
DECLARATION OF OBJECTOR FELIPE COLON 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 15 of 72 Page ID #:3469
1, Felipe Colon. hereby declare as follows: I. I submit this declaration in support of my objeetion to the proposed class aetion settlement in this ease. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. ) My residence address is 4802 Garden Brooke Lane, Orlando, FL 32821 and my telephone number is (847) 650-6436. 3. My attorney in this matter is Dvuglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. -t. I was a distributor in Herbalife fro111 around 2007 to around 2012. I reached the level of Supervisor. .). r ran a Herbalife Nutrition Club in Illinois but I was unable to earn a profit. My total losses from my Herbalife business were about $34,000, including not just my purchases of Herbalife products but all of the expenses to run my Nutrition Club. 6. r was recnlited into HerbaUfe by a Herbalife distributor who told me I would be a rich man if I invested in their company. The first month I paid $4,000 and each month I had to pay $1500 to keep a certain level of points or lose my money. I was told that I had to recruit people in order to stay with this company. The distributors who recruited me tried to convince me that bringing more people into this scan1 would make me rich. I realized that this was wrong and that I was the victim of a horrible scam. 7. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. Thave filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife. 8. I did not receive the Class Notice and I did not file a claim.
DECLARATION OF OBJECTOR FELIPE COLON 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 16 of 72 Page ID #:3470
9. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 1O.My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty ofperjury under the laws of the United States of America that the foregoing is true and correct. Exec~March lL , 2015. ~~L-'-=1_1___ Felipe Colon
o ECLARA nON OF OBJECTOR FELIPE COLON - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 17 of 72 Page ID #:3471 EXHIBITE
EXHIBITE Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 18 of 72 Page ID #:3472
Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
Attorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, OBJECTION AND DECLARATI N vs. OF ELIZABETH CORREA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AM.ERICA, INC., et at., Defendants.
DECLARATION OF OBJECTOR ELIZABETH CORREA - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 19 of 72 Page ID #:3473
I, Elizabeth COlTea, hereby declare as follows: I. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. 1. My residence address is 1924 S. 5ih Ct, Cicero, IL 60804 and my telephone number is (708) 985-5965. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around January of2012 to sometime in 2013. I reached the level of Supervisor. ). I attended Herbalife meetings where they would make a lot of promises about Herbalife and that for every dollar I would invest I would make double. I joined with my mother in operating a Herbalife Nutrition Club out ofher home but we were unable to earn a profit. My total losses from my Herbalife business were about $3000. 6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. o Also, I do not know whether I am subject to the arbitration clause that Herbalife started using after I became a distributor. 8. 1 am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harn1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
DECLARATION OF OBJECTOR ELIZABETH CORREA - 2
-~ ...... ------ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 20 of 72 Page ID #:3474
9, My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of perjury under the laws of the United States of America
tha1 the foregoing is true and correct. Executed on March ~ , 2015,
Elizabeth Correa
DECLARATION OF OBJECTOR ELIZABETH CORREA - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 21 of 72 Page ID #:3475 EXHIBITF
EXHIBITF
-_.. _---- Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 22 of 72 Page ID #:3476
Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
Attorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al.} Plaintiffs, OBJECTION AND DECLARATI N vs. O}' MARIA CUTZAL I-IERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
,- I
DEC LARA nON OF OBJECTOR MARIA CUTZAL - 1
------..... -~~~-.~~~~...... -- ~.- -~. ------ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 23 of 72 Page ID #:3477
I, Maria Cutzal, hereby declare as follows: I. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein.
I My residence address is 2011 S. Loomis, Chicago, IL and my telephone number is (773) 240-0264. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife during 2012. I reaehed the level of Supervisor. 5. I started off working for free for a Herbalife distributor who ran a Herbalife Nutrition Club, selling Herbalife products and recruiting people for her. She told me I had to train like this in order to have my own club. She would show me her checks and tell me that I needed to keep working to have my own club. I then invested all of my family's savings into a business I was told would make me a millionaire. I worked day and night to make this business a success but I was told I had to reeruit others in order to make big checks like the distributor who recruited me. I worked so hard I even
1 sacrificed attending to my family to make the business work, but it is a pyramid scheme so I could never make it succeed unless I would recruit and deceive other people. You can never make enough by just selling the product yourself. I lost all my family's savings and nearly lost my husband because of the deceptive praetices ofHerbalife. My total losses from my Herbalife business were about $113,340, including not just my purchases of Herbal1fe products but all of the rent, expenses and labor to run my Nutrition Club.
DECLARATION OF OBJECTOR MARIA CUTZAL - 2
~~-..... -~~---...... ~-- - Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 24 of 72 Page ID #:3478
6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General ofthe State of Illinois concerning Herbalife.
7 [received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. Also, I do not know whether I am subject to the arbitration clause that Herbalife started using after I became a distributor. 8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising
~O to make will not prevent it from harming other people. Other grounds for
1 my objection are set forth in the brief that my attorney is filing in this case. 9. My atton1ey will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of perjury under the laws of the United States ofAmerica that the foregoing is true and correct. Executed on March JL, 2015.
Maria Cutzal
DECLARATION OF OBJECTOR MARIA CUTZAL - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 25 of 72 Page ID #:3479 EXHIBITG
EXHIBITG Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 26 of 72 Page ID #:3480
Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
, Artorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, OBJECTION AND DECLARATI N vs. OF JUANA ESTALA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERlCA, INC., et al., Defendants.
DECLARATION OF OBJECTOR JUANA EST ALA 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 27 of 72 Page ID #:3481
I, Juana Estal1a, hereby declare as follows: 1. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personallo10wledge and I am competent to testify to the matters set forth herein. 2. My residence address is 1924 S. 5ih Ct., Cicero, IL 60804, and my telephone number is (708) 623-9203. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-673
... .L -t. I was a distributor in Herbalife trom around February of 20 11 to around February of 20 13. I reached the level of Supervisor. 5. I ran a Herbalife Nutrition Club but I was unable to earn a profit. Herbalife representatives told me that I needed to have a dream and that my investment in Herbalife would be my dream to make money have everything I wanted. They told me I would earn double of everything I invested. I was made to charge people who I brought in to recruit $25 each only to bring them into a scheme where they too would lose money. My total losses from my Herbalife business were about $5,000, including not just my purchases of Herbalife products but the expenses to run my Nutrition Club. 6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Comnnssion and the Attorney General of the State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. 8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising
DECLARAT[ON OF OBJECTOR JUANA EST ALA - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 28 of 72 Page ID #:3482
1 to make will not prevent it fi·om ham1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of peljury under the laws of the United States ofAmerica that the foregoing is true and correct. Executed on March ~ , 2015.
Juana Estala
DECLARATION OF OBJECTOR JUANA ESTALA - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 29 of 72 Page ID #:3483 EXHIBITH
EXHIBITHi I
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Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
Attorlleyfor Objectors
I IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIF~RNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al., PlaintilJs, OBJECTION AND DECLARATI N vs. OF JOSE G. GARCIA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
DECLARATION OF OBJECTOR, JOSE G. GARCIA - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 31 of 72 Page ID #:3485
T, Jose G. Garcia, hereby declare as follows: I. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. th ! My residence address is 2900 30 Street, Zion, IL 60099, and my telephone number is (847) 987-9072. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. -J.. I was a distributor in Herbalife for about 18 months, from sometime in 2008 to sometime in 2010. I reached the level of Supervisor. 5. I ran a Herbalife Nutrition Club with a friend who was also a Herbalife distributor. I committed to purchase 2500 volume points worth of Herbalife products monthly, about $1600. I went to all of the Herbalife trainings and was fully committed to making my investment succeed. I even doubled my purchase of Herbalife products to 5000 volume points some months. Despite 18 months ofwork and nearly $25,000 invested, our sales did not improve and I had a large inventory of Herbalife products in my garage. \Vhen I finally stopped placing orders in 2010 I spoke with the Herbalife distributor who sponsored me about trying to recoup some of my investment by selling my inventory at cost to other distributors. I was told that this was 110t allowed and that my failure was due to my lack of commitment and effort. My total losses from my Herbalife business were about $25,000, including not just my purchases of Herbalife products but all of the rent and other expenses to operate my Nutrition Club.
DECLARAnON OF OBJECTOR JOSE G. GARCIA - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 32 of 72 Page ID #:3486
6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. 3. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
l}. My attonley will appear at the Final Approval Hearing and speak on my behalf
I declare under penalty of peljury under the laws of the United States of America tbal the foregoing is true and correct. Executed on March IS, 2015.
DECLARATION OF OBJECTOR JOSE G. GARCIA 3
------....-~ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 33 of 72 Page ID #:3487 EXHIBIT I
EXHIBIT I Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 34 of 72 Page ID #:3488
l Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 , Concord, MA 01742 Telephone: (781) 424-6737
A ttorney for Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, OBJECTION AND DECLARATI N vs. OF VALENTINA LEON HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
DECLARATION OF OBJECTOR VALENTINA LEON - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 35 of 72 Page ID #:3489
1, Valentina Leon, hereby declare as follows: 1. 1 submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, 1 make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. 2. My residence address is 249 Waukegan Avenue, #2, Highwood, IL 60712 and my telephone number is (224) 221-0956. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 0 I 742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around January of2011 to around April of 20 12. I reached the level of Supervisor. 5. 1 was recruited to run a Herbalife Nutrition Club. I was told that if invested my money I would be a millionaire and make a lot of money. I was told to attend trainings and I had to pay for each training. They told me I had to recruit people in order to make money. I lost all of my investment and receivl11g nothing from Herbalife. I have worked hard all my life for my money only to have Herbalife steal my money like a thief. My total losses from my Herbalife business were about $10,000, including not just my purchases of Herbalife products but expenses to run my Nutrition Club. 6. 1 believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife. 7. I did not receive the Class Notice and I did not file a claim. 8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
DECLARATION OF OBJECTOR VALENTINA LEON 2 I: Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 36 of 72 Page ID #:3490
9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of perjury under the laws of the United States of America
that the foregoing is true and correct. Executed on March ~ , 2015 .
. ~- ~tinaLeon
DECLARATION OF OBJECTOR VALENTINA LEON - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 37 of 72 Page ID #:3491 EXHIBIT J
EXHIBIT J Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 38 of 72 Page ID #:3492
Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219
c Concord, MA 01742 Telephone: (781) 424-6737
Attorney for Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al.,
Plaintif1~s, OBJECTION AND DECLARATI N vs. OF ROSSINA MARTINEZ HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AIvrERICA, INC., et al., Defendants .
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DECLARATION OF OBJECTOR ROSSINA MARTINEZ - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 39 of 72 Page ID #:3493
1, Rossina Martinez, hereby declare as follows: I. 1 submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. 2. My residence address is 6730 Lockwood Avenue, Lincolnwood, IL 60712 and my telephone number is (773) 220-9247. 3. My attol1ley in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around November of 2009 to around December of 2014. I reached the level of Supervisor. 5. I ran a Herbalife Nutrition Club in Chicago but I was unable to earn a profit. My total losses from my Herbalife business were about S 118,000, including not just my purchases of about $50,000 worth ofHerbalife products but all of the expenses and labor to run my Nutrition Club. 6. [believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attol1ley General of the State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement. Also, I do not know whether I am subject to the arbitration clause that Herbalife started using after I became a distributor. 8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from hal1l1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
DECLARATION OF OBJECTOR ROSSINA MARTINEZ 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 40 of 72 Page ID #:3494
9, My attorney will appear at the Final Approval Hearing and speak on my behalf
I declare under penalty of petjury under the laws of the United States of America that the foregoing is true and correct. Exec on March lL, 2015,
Rossina Martinez
DECLARATION OF OBJECTOR ROSSINA MARTINEZ 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 41 of 72 Page ID #:3495 EXHIBITK
EXHIBITK Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 42 of 72 Page ID #:3496
· Douglas M. Brooks (pro hac vice) [email protected] ~ 60 Thoreau Street, No. 219 Concord, MA 01742 TGkphone: (781) 424-6737
_ I Artorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, \VESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, OBJECTION AND DECLARATI N vs. OF GILBERTO lVIELCHOR SANCHEZ HERBALIFE INTERNATIONAL OF AMERICA, INC., et al., Hon. Beverly Reid O'Connell Defendants.
(, 1
DECLARATION OF OBJECTOR GILBERTO MELCHOR SANCHEZ-1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 43 of 72 Page ID #:3497
I, Gilberto Melchor Sanchez, hereby declare as follows: l. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein.
J My residence address is 551 May Street, Waukegan, IL and my telephone number is (224) 619-0559. J. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around November 30,2011 to around A pril of 20 12. I reached the level of distributor.
. " J. I worked as a Herbalife distributor but I was unable to earn a profit. My total losses from my Herbalife business were about $3,275. 6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission and the Attorney General of the State of Illinois concerning Herbalife. 7. I di d not receive the Class Notice and I did not file a claim. S. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harn1ing other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 9. l'vly attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of peljury under the laws of the United States ofAmerica
DECLARATION OF OBJECTOR GILBERTO MELCHOR SANCHEZ - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 44 of 72 Page ID #:3498
that the foregoing is true and correct. Executed on March ~ , 2015.
Gilberto Melchor Sanchez
DECLARATION OF OBJECTOR GILBERTO MELCHOR SANCHEZ - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 45 of 72 Page ID #:3499 EXHIBITL
EXHIBITL Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 46 of 72 Page ID #:3500
1 Douglas M. Brooks (pro hac vice) [email protected] 2 60 Thoreau Street, No. 219 3 Concord,MA 01742 Telephone: (781) 424-6737 4
5 Attorneyfor Objectors
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7 IN THE UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 9
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11 Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et ai., 12 Plaintiffs, 13 OBJECTION AND DECLARATI N vs. OF MARTIL PALMA 14 VALLECILLO HERBALIFE INTERNATIONAL OF 15 AMERICA, INC., et ai., Hon. Beverly Reid O'Connell 16 Defendants. 17
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DECLARAnON OF OBJECTOR MARTIL PALMA V ALLECILLO - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 47 of 72 Page ID #:3501
1 I, MartH Palma Vallecillo, hereby declare as follows:
2 1. I submit this declaration in support ofmy objection to the proposed class
3 action settlement in this case. Except where otherwise indicated, I make this
4 declaration based on personal knowledge and I am competent to testify to
5 the matters set forth herein.
6 2. My residence address is 640 South Lincoln Avenue, Waukegan, IL 60085
7 and my telephone number is (847) 445-0186.
8 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau
9 Street, No. 219, Concord, Massachusetts 01742, and his telephone number
10 is (781) 424-6737.
11 4. I was a distributor in Herbalife from around February of 2008 to around Jun
12 of2009. I reached the level of Supervisor.
13 5. I joined Herbalife after I attended a recruiting event at Concord Place. I was
14 told that it would change my life. I was told that for every thousand dollars I
15 invested I would make $2,000. I opened a Herbalife Nutrition Club with
16 three other investors. I was offered to increase my level to Supervisor by
17 committing to purchase 3,000 volume points. I agreed but I soon saw that to
18 keep at the Supervisor level I would have to make the 3,000 every month. It
19 was impossible for me to maintain this commitment and I dropped below the
20 Supervisor level, losing my investment from the prior months. I was asked
21 to recruit more people and unfortunately I referred three people who also
22 lost their money; and I lost their friendships. I only received one check
23 from Herbalife, in the amount of $5.29. My total losses from my Herbalife
24· business were about $16,000, including not just my purchases ofHerbalife
25 products but the rent, supplies and other expenses to run my Nutrition Club.
26 This ordeal not only cost me money but created a lot ofcontention between
27 me and my wife.
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DECLARATION OF OBJECTOR MARTIL PALMA VALLECILLO - 2
------_...... ------~ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 48 of 72 Page ID #:3502
1 6. I believe that Herbalife is a pyramid scheme and a deceptive business
2 opportunity. I have filed complaints with the Federal Trade Commission
3 and the Attorney General ofthe State ofIllinois concerning Herbalife.
4 7. I did not receive the Class Notice and did not file a claim.
5 8. I am objecting to the settlement because the settlement fund is too small to
6 compensate victims of Herbalife and the changes that Herbalife is promising
7 to make will not prevent it from harming other people. Other grounds for
8 my objection are set forth in the brief that my attorney is filing in this case.
9 9. My attorney will appear at the Final Approval Hearing and speak on my
10 behalf.
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12 I declare under penalty ofperjury under the laws ofthe United States ofAmerica
13 that the foregoing is true and correct. Executed on March J:L ,2015.
14 15 111!!! 16 Martil Palma Vallecillo
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DECLARATION OF OBJECTORMARTIL PALMA VALLECILLO - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 49 of 72 Page ID #:3503 EXHIBITM
EXHIBITM Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 50 of 72 Page ID #:3504
1 Douglas M. Brooks (pro hac vice) [email protected] 2 60 Thoreau Street, No. 219 3 Concord, MA 01742 Telephone: (781) 424-6737 4
5 Attorneyfor Objectors
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7 IN THE UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 9
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11 Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al., 12 Plaintiffs, 13 OBJECTION AND DECLARATI N vs. OF YADER A. P ASTRAN 14 HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell 15 AMERICA, INC., et al., 16 Defendants. 17
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DECLARATION OF OBJECTOR YADERA PASTRAN-l Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 51 of 72 Page ID #:3505
1 I, Vader A. Pastran, hereby declare as follows:
2 1. I submit this declaration in support of my objection to the proposed class
3 action settlement in this case. Except where otherwise indicated, I make this
4 declaration based on personal knowledge and I am competent to testify to
5 the matters set forth herein.
6 2. My residence address is 3240 Las Vegas Boulevard, Las Vegas, NV 89115,
7 and my telephone number is (775) 537-3346.
8 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau
9 Street, No. 219, Concord, Massachusetts 01742, and his telephone number
10 is (781) 424-6737.
11 4. I was a distributor in Herbalife from around May of 20 13 to around October
12 of2013. I reached the level of Supervisor.
13 5. I spent $600 attending meetings and trainings at Universidad Del Exito in
14 order to learn how to run a Herbalife Nutrition Club. I opened a Herbalife
15 Nutrition Club and operated it for approximately six months. I invested
16 approximately $5300 worth ofHerbalife products, plus rent, utilities,
17 equipment (blenders, furniture, a scale), but I could not make a profit. I lost
18 approximately $11.500 from my Herbalife business.
19 6. I believe that Herbalife is a pyramid scheme and a deceptive business
20 opportunity. I have filed complaints with the Attorney General of the State
21 ofNevada concerning Herbalife.
22 7. I received the Class Notice but I did not fully understand it. In particular, I
23 did not understand that I could file a claim and also object to the settlement.
24 8. I am objecting to the settlement because the settlement fund is too small to
25 compensate victims ofHerbalife and the changes that Herbalife is promising
26 to make will not prevent it from harming other people. Other grounds for
27 my objection are set forth in the brief that my attorney is filing in this case.
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DECLARATION OF OBJECTOR YADERA. PASTRAN - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 52 of 72 Page ID #:3506
1 9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
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4 I declare under penalty ofperjury under the laws of the United States ofAmerica
5 that the foregoing is true and correct. Executed on March___l=",(
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DECLARATION OF OBJECTOR YADER A. PASTRAN - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 53 of 72 Page ID #:3507 EXHIBITN
EXHIBITN
---.. _---_... _ ... Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 54 of 72 Page ID #:3508
Douglas M. Brooks (pro hac vice) [email protected] 60 Thoreau Street, No. 219 3 Concord, MA 01742 Telephone: (781) 424-6737 4 Attorney for Objectors
7 IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
1 Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al., Plaintiffs, OBJECTION AND DECLARATI N vs. OF SUSANA PEREZ HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
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DECLARAnON OF OBJECTOR SUSANA PEREZ - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 55 of 72 Page ID #:3509
I, Susana Perez, hereby declare as follows: 1. I submit this declaration in support ofmy objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. My residence address is 1815 W. Superior Street, Chicago, IL 60622 and my telephone number is (312) 399-4184. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around May of2009 to around May of 2014. I reached the level of Supervisor. 5. I ran a Herbalife Nutrition Club in Chicago but I was unable to earn a profit. Every month I had to buy $1800 of Herbalife products. I was told by the distributor who recruited me that I had to recruit others in order for me to make more money and move up in the company. I invested thousands of dollars, went into financial ruin and even lost my husband for two years because of all of the financial loss. My total10sses from my Herbalife business were well over $100,000, including not just my purchases of about $86,400 worth of Herbalife products but all of the expenses to run my 1\utrition Club, including rent of$61,240, supplies of$3,000, licenses of $500 and other expenses. 6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Comnlission and the Attorney General of the State of Illinois concerning Herbalife. 7. I received the Class Notice and filed a claim. However, I do not know whether I am subject to the arbitration clause that Herbalife started using after I became a distributor.
DECLARATION OF OBJECTOR SUSANA PEREZ 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 56 of 72 Page ID #:3510
8. I am objecting to the settlement because the settlement fund is too small to compensate victims ofHerbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on March J.!.. , 2015.
2 Susana Pere
DECLARATION OF OBJECTOR SUSANA PEREZ - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 57 of 72 Page ID #:3511 EXHIBIT 0
EXHIBIT 0 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 58 of 72 Page ID #:3512
1 Douglas M. Brooks (pro hac vice) [email protected] 2 60 Thoreau Street, No. 219 3 Concord, MA 01742 Telephone: (781) 424-6737 4
5 Attorneyfor Objectors
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7 IN THE UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 9
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11 Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et ai., 12 Plaintiffs, 13 OBJECTION AND DECLARATI N vs. OF ERIC RODENSKY 14 HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell 15 AMERICA, INC., et a/., 16 Defendants. 17
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DECLARATION OF OBJECTOR ERIC RODENSKY - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 59 of 72 Page ID #:3513
1 I, Eric Rodensky, hereby declare as follows:
2 1. I submit this declaration in support of my objection to the proposed class
3 action settlement in this case. Except where otherwise indicated, I make this
4 declaration based on personal knowledge and I am competent to testify to
5 the matters set forth herein.
6 2. My residence address is 61 Whiting Street, Apt. 5, Plainville, CT 06062 and
7 my telephone number is (860) 869-1281.
8 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau
9 Street, No. 219, Concord, Massachusetts 01742, and his telephone number
10 is (781) 424-6737.
11 4. I was a distributor in Herbalife from sometime in 2011 to sometime in 2012.
12 I reached the level of Supervisor.
13 5. I tried to succeed with my Herbalife distributorship. I purchased leads from
14 Online Business Systems, and I also advertised in local newpapers. My total
15 losses from my Herbalife business were approximately $6,000, including no
16 just my purchases ofHerbalife products but the expenses to run my
17 Nutrition Club, including leads and advertising and other expenses.
18 6. I believe that Herbalife is a pyramid scheme and a deceptive business
19 opportunity. I have filed complaints with the Federal Trade Commission
20 and the Attorney General ofthe State ofConnecticut concerning Herbalife.
21 7. I received the Class Notice and filed a claim.
22 8. I am objecting to the settlement because the settlement fund is too small to
23 compensate victims ofHerbalife and the changes that Herbalife is promising
24 to make will not prevent it from harming other people. Other grounds for
25 my objection are set forth in the briefthat my attorney is filing in this case.
26 9. My attorney will appear at the Final Approval Hearing and speak on my
27 behalf.
28
DECLARAnON OF OBJECTOR ERIC RODENSKY - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 60 of 72 Page ID #:3514
1 I declare under penalty ofperjury under the laws ofthe United States ofAmerica
2 that the foregoing is true and correct. Executed on March ~ , 2015.
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5 Eric Rodensky
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DEC LARA TION OF OBJECTOR ERIC RODENSKY - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 61 of 72 Page ID #:3515 EXHIBITP
EXHIBITP
----_...... _- ... .. Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 62 of 72 Page ID #:3516
Douglas M. Brooks (pro hac vice) dmbrooks(~brooks-law .net 60 Thoreau Street, No. 219 Concord, MA 01742 Telephone: (781) 424-6737
- ATtorneyfor Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et al., Plaintiffs, OBJECTION AND DECLARATI N vs. OF JOSE TAFOYA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell AMERICA, INC., et al., Defendants.
,8
DECLARATION OF OBJECTOR JOSE TAFOYA - 1
- .... --~..------ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 63 of 72 Page ID #:3517
I, Jose Tafoya, hereby declare as follows: 1. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. 2. My residence address is 1635 W. Foster 2F, Chicago, IL 60640 and my telephone number is (773) 470-7932. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737.
1 4. I was a distributor in Herbalife from around rv1arch of 20 11 to sometime in . r. ~L 2012. I reached the level of Supervisor. 5. I was introduced to Herbalife by a friend who told me that the products would help keep my organs healthy. To begin I had to invest $4800 to run a Herbalife Nutrition Club. Herbal1fe told me that if I invested in the business
t and bring more people to consume product and become members that I would earn 50% profit and be rich. That never happened. I never received any money from them nor did I make any money from the products I purchased. Herbalife is a pyramid because no one makes money like the Presidents who are sCalnming people. My totallosses from my Herbalife business were about $7,800, including not just my purchases of Herbalife products but the expenses to run my Nutrition Club. 6. I believe that Herbalife is a pyramid scheme and a deceptive business
)~ opportunity. I have filed complaints with the Federal Trade Commission and
•• c. the Attorney General of the State of Illinois concerning Herbalife. 7. I received the Class Notice but I did not fully understand it. In particular, I did not understand that I could file a claim and also object to the settlement.
DECLARATION OF OBJECTOR JOSE TAFOYA 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 64 of 72 Page ID #:3518
8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
1 declare under penalty of peljury under the laws of the United States of America
that the foregoing is true and correct. Executed on March ~ , 2015.
JoWTafoya J
DECLARATION OF OBJECTOR JOSE TAFOYA - 3 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 65 of 72 Page ID #:3519 EXHIBITQ
EXHIBITQ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 66 of 72 Page ID #:3520
Douglas M. Brooks (pro hac vice) ~lrl brooks@)brooks-law .net 60 Thoreau Street, No. 219 I Concord, MA 01742 i Telephone: (781) 424-6737
Attorneyfor Objectors
-- \ IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, 3 I OBJECTION AND DECLARATI N i vs. OF OLIVIA TORRES
i HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell . AMERICA, INC., et al., Defendants.
I
DECLARATION OF OBJECTOR OLIVIA TORRES - 1 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 67 of 72 Page ID #:3521
1 I, Olivia Torres, hereby declare as follows:
2 1. I submit this declaration in support of my objection to the proposed class
3 action settlement in this case. Except where otherwise indicated, I make this
4 declaration based on personal knowledge and I am competent to testify to
5. the matters set forth herein.
6 2. My residence address is 4612 S. Troy Street, Chicago, IL 60632, and my
7 telephone number is (773) 304-7780.
8 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau
9 Street, No. 219, Concord, Massachusetts 01742, and his telephone number
10 is (781) 424-6737.
11 4. I was a distributor in Herbalife from around February of2010 to around
12· October of2010.
13 5. I ran my distributorship with my partner, Sabas Avila, who is also objecting
14 to the settlement. We invested approximately $7,000. After a few months
15 we realized that we could not sell the Herbalife products because Herbalife
16 products were being sold at flea markets below cost. We were never able to
17 qualify for the 50% Supervisor discount. We were told by our Supervisor
18 that unless we recruited other people we would not make money. We
19 stopped participating in Herbalife because we would not lie to anyone or be
20 part ofthe deceptive practices ofHerbalife, where people lose money based
21 on lies.
22 6. I believe that Herbalife is a pyramid scheme and a deceptive business
23 opportunity. I have filed complaints with the Federal Trade Commission
24 and the Attorney General ofthe State of Illinois concerning Herbalife.
25 7. I received the Class Notice but I did not fully understand it. In particular, I
26· did not understand that I could file a claim and also object to the settlement.
27 8. I am objecting to the settlement because the settlement fund is too small to
28 compensate victims ofHerbalife and the changes that Herbalife is promising
DECLARATION OF OBJECTOR OLIVIA TORRES - 2 Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 68 of 72 Page ID #:3522
to nlake will not prevent it from hamling other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case. 9. My att0111ey will appear at the Final Approval Hearing and speak on my behalf.
I declare under penalty Ofpel]Ury under the laws of the United States ofAmerica that the foregoing is true and correct. Executed on March ~ , 2015.
Olivia Torres
DECLARAnON OF OBJECTOR OLIVIA TORRES - 3 Ii Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 69 of 72 Page ID #:3523 EXHIBITR
EXHIBITR Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 70 of 72 Page ID #:3524
Douglas M. Brooks (pro hac vice) dmbrooks@brooks-law .net 60 Thoreau Street, No. 219 '. Concord, MA 01742 Telephone: (781) 424-6737
ATtorney for Objectors
IN THE UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
Case No. 2:13-CV-02488-BRO-RZ DANA BOSTICK, et aI., Plaintiffs, OBJECTION AND DECLARATI N vs. OF JULIO ULLOA HERBALIFE INTERNATIONAL OF Hon. Beverly Reid O'Connell A\!lERICA, INC., et at., Defendants.
DECLARAnON OF OBJECTOR JULIO ULLOA 1
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I, Julio Ulloa, hereby declare as follows: I. I submit this declaration in support of my objection to the proposed class action settlement in this case. Except where otherwise indicated, I make this declaration based on personal knowledge and I am competent to testify to the matters set forth herein. ) My residence address is 4036 N. Pulaski Road, Chicago, IL 60641 and my telephone number is (773) 983-0008. 3. My attorney in this matter is Douglas M. Brooks, Esquire, 60 Thoreau Street, No. 219, Concord, Massachusetts 01742, and his telephone number is (781) 424-6737. 4. I was a distributor in Herbalife from around May of 20 11 to sometime in 2012. I reached the level of Supervisor.
j ). I ran a Herbalife Nutrition Club but I was unable to earn a profit. My total losses from my Herbalife business were about $50,000, including not just my purchases ofHerbalife products but all of the expenses to run my Nutrition Club. 6. I believe that Herbalife is a pyramid scheme and a deceptive business opportunity. I have filed complaints with the Federal Trade Commission
_j and the Attorney General of the State of Illinois concerning Herbalife. ;, 7. I received the Class Notice and I filed a claim. I believe the settlement claims process is unfair because victims cannot receive compensation for the expenses of operating their Herbalife distributorships or Nutrition Clubs other than their purchases of Herbalife products. 8. I am objecting to the settlement because the settlement fund is too small to compensate victims of Herbalife and the changes that Herbalife is promising to make will not prevent it from harming other people. Other grounds for my objection are set forth in the brief that my attorney is filing in this case.
DECLARATION OF OBJECTOR JULIO ULLOA 2
---_.._------ Case 2:13-cv-02488-BRO-SH Document 121-1 Filed 03/24/15 Page 72 of 72 Page ID #:3526
9. My attorney will appear at the Final Approval Hearing and speak on my behalf.
I ! I declare under penalty ofperjury under the laws of the United States of America that the foregoing is true and correct. Executed on March JL, 2015.
Julio Ulloa
c
DECLARAnON OF OBJECTOR JULIO ULLOA - 3
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