Wednesday, October 16, 2013

Dana Bostick's shitty friend: Herbalife-Bostick-Redux

Don't have time to review all the documents in the Bostick vs. Herbalife lawsuit? Here's the slimmed down version of what has transpired.

Bostick, who is most notably not Latino, and who back in August 2012, was "Just sitting at home, making money on the Internet. Putting money in my bank everyday" decided to sue Herbalife in April 2013.

Bostick, became a distributor in 2012 and claims that he couldn't sell Herbalife's products. Instead of returning the products he couldn't sell for a refund, he consumed or gave away those goods. He then sued seeking class action status, claiming that Herbalife is a pyramid scheme that violates a bevy of state and federal laws.

Bostick alleged that Herbalife:

  1. violated California's Endless Chain Scheme Law, (Cal. Penal Code § 327)
  2. violated California's Unfair Competition Law ("UCL"), (Cal. Bus. & Prof. Code§ 17200);
  3. violated California's False Advertising Law ("FAL"), (Cal. Bus. & Prof. Code§ 17500);
  4. and committed multiple violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), (18 U.S.C. § 1961)
Herbalife filed a motion to dismiss the lawsuit.

The court then entertained whether or not Bostick's allegations were sufficient to survive Herbalife's motion to dismiss. District Judge Beverly O'Connell has denied Herbalife's motion to dismiss based on the findings that Bostick's allegations sufficiently met the requirements because he did not fail to "state a claim to relief that is plausible on its face" nor did he fail to adequately allege "for purposes of a motion to dismiss" that: 
  1. distributors pay money for the right to sell Herbalife.
  2. or that supervisors pay money to receive recruitment rewards which are unrelated to the sale of products to ultimate users.
Everybody agreed that the RICO allegations should be thrown out. Additionally O'Connell's order stated that if Herbalife turned out to be in violation of Cal. Penal Code § 327, that the UCL and FAL allegations would still be actionable, and thus Herbalife's motion to dismiss was denied.

The court also noted that at this stage, it was just too soon for Herbalife's anti-pyramiding safeguards to be relevant to the allegations. The actual proof in Herbalife's defense would have to wait.

As mentioned, the order recognized that Bostick's suit adequately states a plausible claim for relief if Herbalife were in violation of § 327, but notes that because Bostick consumed or gave away the goods he purchased he could only be made whole under his first cause of action by Herbalife refunding him $95.95 for his International Business Pack.

All of this is in the vacuum that the court IS FORCED TO ASSUME all of Bostick's claims are legit. That is why the phrase "for purposes of a motion to dismiss" carries so much weight in this context. In other words the court made no ruling on Bostick's allegations, merely whether or not the form of his accusations are up to snuff enough to proceed. Although some journalists would have you believe otherwise, whether or not his claims are meritorious has not been remotely considered. I think Stuart Pfeifer has written a fair article about the outcome of the motion, whereas Michelle Celarier has literally just made up quotes.

Taken verbatim from Celarier's NY Post article on the order:

“Although defendants contend that distributors should be classified as ultimate users, downline distributors are not ultimate users,” she wrote.

The actual quote from the ruling is as follows:

Although Defendants contend that distributors should be classified as ultimate users, Omnitrition points out that “[i]f Koscot is to have any teeth, [a sale for a distributor’s personal use] cannot satisfy the requirement that sales be to ‘ultimate users’ of a product.” Id. at 783. Therefore, downline distributors are not ultimate users for purposes of the second element of the Koscot test. Accordingly, Plaintiff has adequately alleged that supervisors pay money to receive recruitment rewards which are unrelated to the sale of products to ultimate users.

In typical Celarier fashion she goes on to portray that O'Connell's order states that Herbalife is recruitment focused, thus lending credence to claims Herbalife is not a legal MLM, but a pyramid scheme. O'Connell's order, however, did not make any such claim, merely that the plaintiff adequately alleged the claims of the suit and that the suit could proceed.

One of the little jewels of the case is contained in paragraph 53 of the original complaint filed by Bostick. See below:

"On June 22, 2012, he[Bostick] attempted to “pay for his position” by coordinating with his friend. They were supposed to both purchase enough product to become a Supervisor, the “gateway to the rest of the marketing plan.” On June 22, 2012, he made a single order. That order cost him over $1,800 for the product alone. Bostick’s downline did not make the purchase and Bostick did not advance to Supervisor."

So basically Bostick's shitty friend reneged on their agreement to go balls to the wall Herbalife supervisors and Dana was stuck footing the bill. I can't help but picture Badger and Skinny Pete as I envision them formulating their master plan. Skinny Pete (Dana in my scenario because he is skinny after having successfully shed 80 lbs with Herbalife, and crystal) basically blew $1800 on Badger because Badger swore he was going to lose weight and stick with the program! WTF BRO are you stupid?!?! You knew Badger was going to pussy out! He eats like six times a week at Los Pollos Hermanos and never gets off the papasan!

Don't get me wrong, I'm not trying to belittle Bostick or dance on the grave of a what I imagine to be a dead friendship (for which I actually have no knowledge of other than what is alleged in the complaint). I have no idea what their relationship is like, but I'm using this more as an opportunity to remind myself of all the times the Badgers of my life pussied out on me or vice versa.

Maybe the crux of all my past shortcomings is also the crux of Bostick's case in that his attempt to game the system he signed up for was where he went wrong. Even though Herbalife discourages inventory loading and offers to buyback unsold inventory, his attempt to buy his position failed and he did not advance to supervisor as he'd devised. He didn't even bother to return the goods for refunds. There is no guarantee that had he followed the rules that he would have made money, but he definitely contributed to his loss by trying to conspire with his friend to boost his sales. My own failures have been similar. I've done better in life by chipping away at the monoliths than I have by scooping up a fistful of rocks when no one is looking. I think the majority of Herbalife distibutors and members don't do it for a fast buck. I think they do it for the community base they seek in attempting to achieve their own health goals, and they hope to either receive discount pricing, to subsidize their own purchases and/or to possibly get a little pocket change in the process.

Who knows how much effort Bostick put in, I don't. At least he lost 17 lbs on Herbalife products. I do know from my own experiences though that when the Skinny Petes and Badgers of the world get together and hatch a plan to make a quick buck with no effort, it should be no surprise when they fail. People like Skinny Pete and Badger will almost never get ahead or feel fulfilled; at best they'll get a few thousand dollars at the end of it all for pretending to be something they're not before they have to crawl out of the dessert and start looking for the next thing.

1 comment:

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