Herbalife pyramid scheme class action lawsuit

Class action lawsuit claims Herbalife is a pyramid scheme.

New deadlines have been set in a class action lawsuit accusing Herbalife International of America Inc. of operating a pyramid scheme, indicating that settlement negotiations may occur within the next year.

U.S. District Judge Beverly Reid O’Connell set June 16, 2014 as the deadline for hearing arguments to certify the class action lawsuit on behalf of all persons who were Herbalife distributors from April 2009 to the present. O’Connell also ordered both sides to enter into private mediation and settlement discussions no later than Feb. 23, 2015.

If the Herbalife class action lawsuit is certified, the company could potentially face millions of dollars in liability from the company’s 400,000 distributors.

The lead plaintiff in the case, Dana Bostick, sued Herbalife in April 2013, claiming he was “doomed from the start by an Herbalife marketing plan that systematically rewards recruiting over retail sales.”

Bostick is a former distributor for Herbalife and claims to have spent approximately $3,439 on Herbalife products, tools, coaching, websites, and incidental expenses. Despite his best efforts, he was only able to recruit one person — a close friend — and was unsuccessful at selling Herbalife products because he had to do so at nearly full retail value. Bostick alleges that Herbalife “is comprised of a hierarchy of distributors, with the various levels determining eligibility for discounted Herbalife products and other benefits.”

Herbalife had tried to have the class action lawsuit dismissed in October, but O’Connell denied the motion based on the financial evidence Bostick had presented. O’Connell ultimately found that Bostick presented adequate evidence to classify Herbalife as a pyramid scheme, based on the unfair distribution of profit loss and gain.

In Bostick’s presentation, he showed that distributors actually pay to have the opportunity to sell Herbalife products and only receive rewards when they recruit new participants or sell the products.  For Bostick, he paid $95.55 for an “International Business Pack,” which was supposed to be a marketing starting kit, containing everything that they may need in becoming a successful distributor.  O’Connell agreed that the evidence Bostick presented showed that the company’s business model meets the definition of a pyramid scheme, and dismissed Herbalife’s request.

The class action lawsuit claims that Herbalife violated Section 327 of the California Penal Code, which prohibits schemes that require an individual to pay money in exchange for the possibility to receive compensation for recruiting others to work.

Bostick alleges Herbalife did exactly this by giving their distributors virtually no opportunity to earn a profit on Herbalife’s products, because the multi-level marketing company (MLM) sets the suggested retail price of the products.  The rates are exceedingly high, with the company offering extra incentives to their top distributors with recruiting bonuses, the class action claims.  Many distributors found it difficult to sell these products to customers when they are available online for significantly cheaper.

Herbalife had allegedly reeled in their distributors with promises of a quick road to a lavish lifestyle, and building a steady income to retain that wealth.  Instead, due to the required products the distributors were required to buy themselves, the top distributors allegedly only earned $0.46 to $0.64 in recruiting bonuses.

In court documents, Herbalife argued that Bostick could not have been fooled in such a way because he had read a statement which revealed the distributors’ modest earnings before he had signed.  On average, a distributor would earn $2,900 a year, while a medium compensation level had been $741.  Additionally, Herbalife argued that Bostick exerted very little in trying to sell the products, and had made no attempt to return them.

While Bostick’s legal team acknowledged his lack of effort to sell the products, they argued that it did not change the fact that the company had violated California state law against pyramid schemes.  The fact that recruiters of Herbalife get paid whether or not the distributors sell the products was the main attribution of this violation.

Both Herbalife and Bostick will have the chance to mediate before any trial is decided, and seem to be confident in their arguments.

Plaintiffs are represented by Dracht and Thomas Foley with Santa Barbara, CA-based Foley Bezek Behle & Curtis, LLP. Herbalife’s counsel includes Jonathan David Schiller, Jonathan Sherman and Karen Paik of New York-based Boies Schiller & Flexner LLP

This Herbalife Pyramid Scheme Class Action Lawsuit is Dana Bostick v. Herbalife International of America Inc., et al., Case No. 2:13-cv-02488, in the U.S. District Court for the Central District of California.

UPDATE: On Oct. 17, 2014, Herbalife asked a federal judge to push back pre-trial deadlines again as the parties finalize the terms of a class action settlement.

UPDATE 2: A California federal judge preliminarily approved the Herbalife class action settlement on Dec. 2, 2014.

UPDATE 3: Former Herbalife distributors who believe the pyramid scheme class action settlement is inadequate are reportedly planning to object to the deal. The deadline to file a claim for the Herbalife settlement passed on Feb. 3, 2015, according to the settlement website. However, some Class Members are concerned they were not adequately informed of the claim process. Class Members who wish to exclude themselves from or object to the Herbalife class action settlement must do so by March 24, 2015.

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Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.

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26 Comments

  • S Donovan January 30, 2014

    I had become a distributor for Herbal life in 2006 with similar circumstances as Bostick in the 2009 Law suit against herbal life. The difference is I tried to sell the product back to Herbal Life but was told that they couldn’t do that. I am wondering if there is a law suit out there now that I could join to try and re-coop some of my money.
    Any comment would be appreciated

    • Connie May 1, 2014

      I would love to join in the class action also if I could find out how. Please let me know if you know how. I just sent to the dump product that I could not sell and Herb life had not interest in buy back from me. I sold OK but did not make any money because the more you sell, the more the pressure you to buy and have on hand….. Such fraud is only a pyramid game and after I saw the Owner died of drugs, I knew I was taken for a ride.

  • evelyn khan May 24, 2014

    I also want to join this settlement if anyone knows how please contact me

  • Rene July 22, 2014

    I would like to join this class action lawsuit as well. I read that in California the deadline to join was January 2014? What about Tx.? Herbal life’s CEO should be on American Greed here pretty soon for what he’s done! I paid about $3,500 for the gold packet which would make me a supervisor! I was also told that if I purchased this” gold packet” i had more opportunity for more $$$ I never made a single penny even though i tried hard to sell their products. I also tried to return the product and was told i could not…If someone knows how I could join the lawsuit please contact me . Thanks.

  • Top Class Actions October 22, 2014

    UPDATE: On Oct. 17, 2014, Herbalife asked a federal judge to push back pre-trial deadlines again as the parties finalize the terms of a class action settlement.

  • Dee November 4, 2014

    Between purchasing product and supplies from the website and business cards, and teeshirts etc I am in the hole over $1000. and I made a total of $35. UGH!!! I like the products but was told that I am not allowed to put anything other than positive things on my facebook and they all had to be Herbalife related. I am also being pushed to get on calls and attend meeting (Which cost me money to go to). I am making the up line richer and me and my family poorer.

  • Top Class Actions December 4, 2014

    UPDATE: A California federal judge preliminarily approved the Herbalife class action settlement on Dec. 2, 2014.

  • Donna January 13, 2015

    I am in the same boat as everyone else. Was promised to make money. I could not sell the products that they told me I had to buy in order to get started. All these products still sit in the boxes because I can not sell them or return them. I would like to get something back for all the money I lost and cannot get back through the company. I would like to be in this class action settlement. Maybe some thing good will come out of this for all.

    • j rodriguez January 15, 2015

      you may call 1-877-651-4185 I got a card in the mail. or you may write to Bostick v. Herbalife Claims administrator P.O.Box 43323 Providence,RI 02940-3323 deadline to apply for benefits is FEB 3, 2015

  • John January 13, 2015

    I joined Herbalife back in 2011, and paid $100 to get the products to start selling it. I tried to sell my products the best I could, but nobody seemed to want to buy it or found it too expensive. I knew there was a risk with doing door to door sales, but I really wanted to start making money since I was a junior in High School at that time, and had no job yet. However, I was never able to sell the products. The only thing I found wrong with Herbalife is how I had to pay for the products before I could start selling them, which meant that they already made money out of me before I could even start making money. I don’t know if it would matter for me to join in this type of settlement since I already did two jobs last year, and I got another one in early January of this year too (after not working at those two jobs anymore).
    Personally, I don’t see how I could make much money out of this settlement b/c I already have a job, and only lost $100 with Herbalife (I only found out about this case a couple of days ago, as well, since I received a First Class Mail about it).

  • stanley chalmers January 15, 2015

    I also tried to become a distributor at the cost of almost $2400.00 and to date, I have not made a penny. Friends advised me that it was a scheme, but I believed and kept buying. I would also like to join the class action.

  • j rodriguez January 15, 2015

    Call 877-651-4185 or write Bostick V. Herbalife Claims Administrator P.O.BOX 43323 Providence, RI 02940-3323. Just tell them you want to put in a claim for the Herbalife law suit.

    • J. Liss January 18, 2015

      I received a card in the mail giving me deadlines to file. I want to be included. My story is about the same, only the “kit” cost me $100, and I was my best customer, buying what I wanted, and did sell to friends some of the products.

  • j rodriguez January 15, 2015

    call 877-651-4185 deadline to put in claims is Feb 3,2015

  • clara sanchez January 18, 2015

    i been a member for the last 9 years with herbolife and i have not earn what they have told me about the products I still have some products that I bought last year and Im unable to return them ,also i have to invest on everythime they want me to assist to one of the nutrition, programs,i had spent a lot of money with out good results.last year i was behind to pay on the member ship and they sent me back from the 42% to 25% i lost money.I hope I can get some of my money back with this settlement I had receive a card settlement about herbolife, I had invest more than $3.000 and I hope I can get some of my money on this settlement.and how can I make a claim for the herbolife law suit.

  • Lucy January 23, 2015

    My father was a distributor until his death in 2010.
    We received a postcard in the mail about the lawsuit.
    I’m wondering if he qualifies for the settlement.
    I called the number on the postcard (also the number on the website) and the only thing you get is recordings. There is no way to ask a human being a question.
    If anyone knows who to call, let me know please.

  • Delia H. January 25, 2015

    I joined Herbalife way back 2008. I invested $2,900.00. And was told to buy leads to enhance my business. I put in the total amount of $12,000.00 for those worthless leads. Also, I wasted some money to attend several conventions. I lost almost $18,000.00 .It’s so sad because my up line never call me nor support me. I have my distributor number on hand and I have my I.D. with the expiration date 01/31/10 and can be check on the Herbalife Home office files. I hope that I can be included in the lawsuit for the fact that I lost a lot of money.

  • Sondra Dunn January 27, 2015

    I too was taken for a ride with Herbalife. Had to \attend\ all instructional calls per my \mentor\. I should have been more cautious, but unfortunately it is what it is. We all got taken for a ride. (sorry about the pun) I want to be part of this law suit to get some satisfaction and money back

  • carole orchard January 28, 2015

    i became a member in 2009 costing me some $3000. odd had some training with thier website and recieved a sample kit of some of thier products. approx 2 months late i wanted to quit the co. so i recieved a refund. However i feel the refund was not sufficient(less than half of my investment!)

  • Roberta Doane January 30, 2015

    I received a card in the mail giving me a deadline to file.(3 days). My story is about the same as a lot of other people. I bought the starter kit and all of the products to get started. I couldn’t seem to get anyone interested in buying it. I would like to send all of the unused products back, but I can’t afford it. So it just sits in my closet. I just want to get my money back for the product. So if joining the class action settlement will do that then so be it..

  • DAVID BAUTISTA February 2, 2015

    Recibí una carta en el correo y me dio un plazo para presentar la declaración.(3 día). Mi historia es casi lo mismo que un montón de otras personas. He comprado el kit de inicio y todos los productos para empezar. Yo no era capaz de conseguir cualquier persona interesada en comprarlo. Me gustaría enviar todos los productos no usados, pero no puedo pagarlo. Así que sólo se sienta en mi armario. Sólo quiero volver para el producto de mi dinero. Así que si unirse al acuerdo de demanda colectiva hará que así sea.
    y dar cuenta del enganio que este prducto , y como se asen ricos enganiando a la gente gracias D B

  • Juana G February 4, 2015

    I had received the post card in the mail today Feb 4th and had missed the deadline how do I go about. Tried already the website and wont let me proceed.
    Thanks

  • indra paul February 9, 2015

    In 2008 I invest all my money as a single mother in the sum of $3500 dollars I got the products I could not get the stuff sell it was in the 30 days or 90 days return policies that I was ask to take it back to one of there distributors name Chad he told me not to worry I was going to get my check back in full I never did and when I tried effortlessly to contact him he changed his phone I cried many nights try to contact herballife many times tell my complain but nothing was done so i give-up

  • indra paul February 9, 2015

    I received the post card in the mail on Feb 4 so I could not get my claim in what can the next step be thank you need some information.

  • James February 11, 2015

    We got the notice to file a claim yesterday Feb 10, 2015. Yet the deadline to file the claim form was Feb. 3 2015. Wtf?! Can’t figure out how to get in touch with anyone about this.

  • Top Class Actions February 18, 2015

    UPDATE 3: Former Herbalife distributors who believe the pyramid scheme class action settlement is inadequate are reportedly planning to object to the deal. The deadline to file a claim for the Herbalife settlement passed on Feb. 3, 2015, according to the settlement website. However, some Class Members are concerned they were not adequately informed of the claim process. Class Members who wish to exclude themselves from or object to the Herbalife class action settlement must do so by March 24, 2015.

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