Oprah’s lawsuit serves as a strong reminder
Last week, Oprah’s production company, Harpo productions, filed a lawsuit against more than 50 companies alleging those companies had used their names and images to sell beauty products and dietary supplements containing acai and resveratrol without permission. See below for the actual lawsuit. Among those companies was MonaVie, a prominent network marketing company that sells acai juice products. In the lawsuit, the Plaintiffs spend little time stating their claims against each individual defendant. In general, they reference credit card fraud, fraudulent use of meta tagging for search engine optimization (which is way over my head), and unauthorized use of copyrighted works. They main thrust of their argument is found in the allegation below:
These Defendants are willfully capitalizing on Plaintiffs’ valuable reputation and intellectual property rights to lure consumers into ordering their Infringing Products on the false premise that they have been tested or recommended by Ms. Winfrey and/or Dr. Oz when they have not. Defendants are fabricating quotes or falsely purporting to speak in Dr. Oz and/or Ms. Winfrey’s voice about specific brands or products that neither of them has endorsed. Defendants conduct has gravely injured Plaintiffs’ reputations.
As a MLM lawyer in the network marketing industry, it always interests me when a network marketing company get sued. Usually, the alarm bells go off when a company gets sued for operating a fraudulent pyramid scheme, usually as a class action lawsuit or a regulatory action. It’s sort of like driving by the scene of a car accident…you can’t help but stare. In this case, those allegations are never made. But there’s still a lesson to be learned from this lawsuit. Network marketing companies will always be held accountable for the actions of their sales force, regardless if the company condones the behavior or not. In my opinion, monavie will be fine with this lawsuit. If monavie can demonstrate a history of cracking down of false and misleading statements about Oprah’s “endorsement” of monavie (which I’m sure they can), the plaintiffs will have no case. But if the history of enforcement is lacking and monavie allowed itself to benefit from the misstatements, it’ll be a different and very expensive scenario.
I’ve personally worked with Monavie’s compliance department and I know first hand they’re one of the best compliance departments in the industry. With monavie, distributors are required to get all training materials approved by the compliance department before they can use them in the field. If distributors in monavie were using tools that implied Oprah’s endorsement, I’m guessing the tools were unauthorized.
Amway dealt with stronger allegations in both the UK and in the United States with the Pokorny class action lawsuit. Those actions alleged that Amway distributors were purposely misrepresenting the Amway opportunity and luring prospects into other fraudulent schemes. In the UK case, Amway tried arguing that it cannot be held liable for practices employed by its independent sales force. The judge took exception to the argument and made the following statement in the Order:
I do not agree.. . . Amway cannot reap the benefit of such misstatements or misrepresentation without accepting the proper consequences flowing from the means by which that benefit was obtained. It permitted itself to be surrounded with a penumbra of impropriety, and took the advantages to its business thereby gained.”
Since Amway benefited from the misrepresentations made by distributors, the judge said they cannot shift blame.
There’s a lot to be learned from this lawsuit. I know companies that wish they could throw their hands up and blame their sales force, but since it’s a common enterprise between the company and the sales force, they’re all in the same boat. If you’re an executive at a network marketing company, it’s time to tighten those screws on your rusty compliance department. If the department has holes in it, a few bad apples could cost the company a fortune.
Harpo Productions Lawsuit — Oprah & Dr. Oz Suing More Than 50 Corporations
Tags: Dr. Oz, Harpo Productions, monavie, Oprah
August 28th, 2009 at 12:41 pm
Thanks for posting the lawsuit, I haven’t seen it posted anywhere else yet.
I’ve always wondered about FORMER endorsements, such as the one involving Asafa Powell and Amway/Nutrilite. Amway has asked IBOs to stop talking about this endorsement, but can they legally prohibit discussing FORMER endorsements?
Also, Amway has NOT dealt with the Pokorny lawsuit, it hasn’t gone to trial yet. Amway DID have to deal with the tool scam in the UK, and on another thread I showed how the tool scam no longer exists in the UK.
So far, with respect to the tool scam, it has not shown to be true in the U.S. that “Network marketing companies will always be held accountable for the actions of their sales force, regardless if the company condones the behavior or not.” The Pokorny lawsuit will test this statement, but the trial date is probably several months or more in the future, assuming it isn’t settled out of court.
August 28th, 2009 at 2:22 pm
Tex,
I did a search for the Pokorny case on Pacer to see if any thing has been filed recently. I was unable to find anything, which suggests the case is closed. It was either settled or the plaintiffs dropped it.
August 28th, 2009 at 2:44 pm
When I last checked, probably 3-4 months ago, they were still waiting to go to court, and didn’t expect to do so for several more months. I called, but my contact is on vacation through next week, and they will try to get someone else to reply. Wouldn’t the case still show up on Pacer, as settled out of court/dropped?
August 28th, 2009 at 3:37 pm
Well this compliance department must have been before Heather Seamons started working there. They have a lot of egg on their face with their threat of law suit on me: http://www.lazymanandmoney.com/monavie-sue-me/
It’s interesting when the shoe is on the other foot – MonaVie claiming that I’m misusing their trademarks. Perhaps they know how Oprah feels now.
August 28th, 2009 at 10:09 pm
Did you have any view on the former endorsement issue?
August 28th, 2009 at 10:25 pm
I didn’t see anything about the former endorsement issue. I don’t know anything about Asafa Powell or a relationship of that person to Amway/Nutrilite.
August 29th, 2009 at 2:40 pm
Here’s one site, and it’s even a NUTRILITE site! Just google nutrilite and powell to find many others.
“http://www.nutrilite.com/en-us/General/NewsRoom/PressReleases/asafa-powell.aspx”
August 29th, 2009 at 6:07 pm
Tex, I only have a guess as to former endorsements. There needs to be truth in advertising. So long as you’re clear that the endorsement was in the past, I would think it would be fine. However, if the context of the message implies that the endorsement is current, then you’re ƒalsely using someone’s likeness and reputation to promote a brand without their permission. That’s all just a suspicion, though. I’m guessing Amway asked all of their IBOs to refrain from talking about Powell because if they let distributors talk about FORMER endorsements, they knew it would get twisted.
August 29th, 2009 at 7:05 pm
That’s logical. However, with the internet it is rather hard to enforce, as stories of past and current endorsements are available essentially forever.
September 6th, 2009 at 1:57 pm
The funny part is that monavie never said that the product itself is endorsed by oprah and Dr. Oz, But clearly the acai berry which the health drink is composed of had it’s blessing by the 2 considering it’s showcase on the Oprah show itself. Not only that, Monavie Was showcased on the doctors show which is an affiliate of the mighty “O” corporation. They even gave a bottle of “Mona Vie” to everyone in the audience. Check the clip yourself on YouTube. As far as I’m concerned, it’s just a bunch of crying that gonna go nowhere.
September 6th, 2009 at 2:07 pm
I went off the cuff there a bit, I can’t say for sure if The doctors have anything to do with the “O” corporation, but all the facts other than that remain the same
September 6th, 2009 at 2:57 pm
Concrete,
If what you are saying is true, then Mona Vie has absolutely nothing to worry about, and Oprah and her highly paid lawyers filed a frivolous lawsuit.