2017-2019 Pyramid Scheme Class Actions

 

TINA.org has seen a marked uptick in federal pyramid scheme class-action complaints filed against various multi-level marketing (MLM) companies since 2017. Eight of the cases involve DSA member companies with three companies – Advocare, Arbonne, and Nerium – ranked as DSA top 20 members in both 2017 and 2018 based on 2016 and 2017 net sales in the United States. Two of the companies – Advocare and Nerium – were also the subject of FTC pyramid scheme lawsuits filed in 2019. The FTC’s Advocare case resulted in Advocare, its former CEO, and two top promoters being permanently banned from multilevel marketing, as well as the company paying $150 million. The FTC’s case against Nerium is pending. Five of the cases involve LuLaRoe, a company that is the subject of a 2019 pyramid scheme lawsuit filed against it, as well as its founders and one of its promoters, by the Attorney General of the state of Washington.

For more of TINA.org’s coverage of lawsuits alleging that MLM companies are pyramid schemes, click here.

For more coverage of MLMs and pyramid schemes, click here.

Case Name
(Court, Case Number)
Date Originally Filed Status
1 Ranieri v. Advocare International
(N.D. Tex., 17-cv-691)
Mar. 2017 Pending
2 Yiru v. Worldventures
(N.D. Tex., 17-cv-2155*)$
May 2017 Pending
3 Dagnall v. Arbonne International
(C.D. Cal., 17-cv-1214*)
May 2017 Settled
4 Yang v. MarketAmerica
(C.D. Cal., 17-cv-4012)$
May 2017 Arbitration granted; stayed pending arbitration
5 Wu v. Sunrider
(C.D. Cal., 17-cv-4825*)$
May 2017 Summary judgment affirmed on appeal
6 Jia v. Nerium International
(N.D. Tex., 17-cv-3057*)$
Aug. 2017 Arbitration granted; settled
7 Wu v. Jeunesse
(C.D. Cal., 17-cv-7475)
Oct. 2017 Voluntarily dismissed
8 Lemberg v. LuLaRoe
(C.D. Cal., 17-cv-2102)
Oct. 2017 (1) Voluntarily dismissed (Lemberg, Brown, Hall, Lien and Stuckart); Stayed pending arbitration (others)
9 Berry v. LuLaRoe
(C.D. Cal., 17-cv-2176)
Oct. 2017 Voluntarily dismissed (2)
10 Haskett v. LuLaRoe
(C.D. Cal., 17-cv-2212)
Oct. 2017 Voluntarily dismissed (2)
11 Guo v. Kyani
(C. D. CA., 17-cv-8257)$
Nov. 2017 Arbitration granted; Appeal filed
12 Atkinson v. LuLaRoe
(C.D. Cal., 17-cv-2287)
Nov. 2017 Voluntarily dismissed (2)
13 Rocke v. LuLaRoe
(C.D. Cal., 17-cv-2414)
Nov. 2017 Voluntarily dismissed (2)
14 Smith v. LifeVantage
(D. Utah., 18-cv-621*)
Jan. 2018 Pending
15 Paige v. Bitconnect
(S.D. Fla., 18-cv-81549*)
Jan. 2018 Transferred to MDL (3)
16 Mengesha v. Bitconnect
(S.D. Fla., 18-cv-81329*)
Jan. 2018 Transferred to MDL (3)
17 Whitmire v. Monat Global (4)
(S.D. Fla., 18-cv-20636)
Feb. 2018 Transferred to MDL (5)
18 Alabaster v. Monat Global (4)
(W.D. Okla., 18-cv-224)
Mar. 2018 Transferred to MDL (5)
19 Merritt v. Monat Global (4)
(N.D. Tex., 18-cv-657)
Mar. 2018 Transferred to MDL (5)
20 Hoffpauir v. Monat Global (4)
(S.D. Fla., 18-cv-21606)
Apr. 2018 Transferred to MDL (5)
21 Maur v. Monat Global (4)
(S.D. Fla., 18-cv-21915)
May 2018 Transferred to MDL (5)
22 In Re: Monat Hair Care Products Marketing, Sales Practices and Products Liability Litigation
(18-md-2841, S.D. Fla.; MDL No. 2841)
June 2018# Pending (5)
23 In Re Bitconnect Securities Litigation
(18-cv-80086, S.D. Fla.)
June 2018# Dismissed; Appeal filed (3)
24 Chen v. Premier Financial Alliance
(N.D. Cal., 18-cv-3771)$
June 2018 Pending
25 Xiong v. Jeunesse
(C.D. Cal., 18-cv-1430)$
Aug. 2018 Dismissed for lack of subject matter jurisdiction
26 Wang v. Premier Financial Alliance et al
(N.D. Cal., 19-cv-1150)
Feb. 2019 Consolidated with Chen case
27 Sperring v. LuLaRoe
(C.D. Cal., 19-cv-433)
Mar. 2019 Appeal regarding July 2019 arbitration order filed 
28 Zou v. MarketAmerica
(M.D.N.C., 19-cv-954)
Mar. 2019 Arbitration granted
29 O’Shaughnessy v. Young Living Essential Oils
(W.D. Tex., 19-cv-412)
Apr. 2019 Arbitration denied; Affirmed on appeal
30 Penhall v. Young Living Essential Oils
(S.D. Cal., 19-cv-2340)
Dec. 2019 Pending

(1) The original complaint in Lemberg v. LuLaRoe did not include pyramid scheme allegations. The pyramid scheme allegations were added to the case in the January 2018 amended complaint, which also added several named plaintiffs.

(2) The named plaintiffs in the Atkinson, Berry, Haskett, and Rocke cases were added to another class action against LulaRoe (Lemberg v. LuLaRoe) that was amended in January 2018.  The Lemberg amended complaint also added pyramid scheme allegations. In April 2018, the Lemberg case was stayed pending arbitration.

(3) Several similar cases regarding Bitconnect were transferred to a court in Florida to be heard as part of a multidistrict litigation (MDL), In Re Bitconnect Securities Litigation (18-cv-80086, S.D. Fla.). These complaints similarly allege that the defendants violate federal securities laws and operate both a pyramid scheme and a Ponzi scheme.

(4) The main allegation in this complaint is that the company falsely advertises its products. It is included in the chart because it also claims that the company functions as a pyramid scheme.

(5) Several similar cases against Monat Global were transferred to a court in Florida to be heard together as part of a multidistrict litigation (MDL), In Re: Monat Hair Care Products Marketing, Sales Practices and Products Liability Litigation (Case No. 18-md-2841, S.D. Fla.; MDL No. 2841). These complaints similarly allege that the company falsely advertises its hair care products and some of them claim that the company functions as a pyramid scheme.

* This case has been transferred from the court where it was originally filed. (Some of the cases were transferred from state court to federal court. Other cases were transferred from a court in one state to a court in another state.)

# This is the date that cases began being transferred to the MDL.

$ Lawsuit filed by Lindemann Law Firm

 

Updated 7-31-20

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Multi-Level Marketing – a way of distributing products or services in which the distributors earn income from their own retail sales and from retail sales made by their direct and indirect recruits.

The Direct Selling Association (DSA) is a national trade association for direct selling companies that primarily use multi-level marketing compensation plans.

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