Success by Well being’s bid to overturn abstract judgment through a movement for reconsideration has been denied.
The FTC was granted legal responsibility abstract judgment towards Success by Well being in September.
Of their movement for reconsideration, the SBH defendants centered their consideration on VOZ Journey.
The FTC maintains VOZ Journey was a pyramid scheme as a result of it had no retail merchandise.
VOZ Journey associates paid a charge, which certified them to earn on recruited associates who additionally paid a charge.
The SBH defendants argue VOZ Journey wasn’t a pyramid scheme as a result of
VOZ Journey packs had been a authentic product line that was about to launch on the time the FTC initiated this motion and obtained the non permanent restraining order.
It’s the FTC itself that brought about the VOZ Journey pack to not launch, stopping the product line from reaching customers.
In help of this the SBH defendants tendered an electronic mail despatched to their service provider vendor, which they assert proves that they had a product contract.
Moreover the SBH defendants took problem with the FTC’s professional, Dr. Bosley, allegedly conducting ‘“no evaluation” as to VOZ Journey.’
Submitted declarations from SBH associates had been additionally cited, with the defendants claiming the declarations “explicitly checklist the VOZ Journey product.”
Lastly the SBH defendants introduced up their need to relaunch VOZ Journey with out MLM, as an indication that it wasn’t a pyramid scheme.
The courtroom rejected all the SBH defendant’s arguments.
As a common matter, the courtroom discovered the SBH defendant’s movement ‘doesn’t come near satisfying LRCiv 7.2(g)’s normal for reconsideration.’
The Particular person Defendants don’t cite any new proof or new authorized authorities.
As an alternative, they merely try to supply new arguments in protection of the VOZ Journey program that they failed to lift of their response to the FTC’s abstract judgment movement.
That is impermissible.
With respect to the e-mail communication, the courtroom shut down its submission as per FRCP Rule 56.
In granting legal responsibility abstract judgment, the courtroom relied on
intensive proof suggesting that the Particular person Defendants’ statements concerning the VOZ Journey program had been “an entire fabrication,” that “[t]right here was nothing,” that “SBM and Benefit Companies each terminated the entities’ contract with one another” earlier than the issuance of the TRO, and that the Particular person Defendants “had not retained a brand new vendor as of the entry of the TRO.”
Of their response to the FTC’s movement, the Particular person Defendants failed to reply to the FTC’s proffered proof on these factors.
As a result of SBH failed to handle the proof, the courtroom accepted it as undisputed (Rule 56(e)(2)).
The Courtroom was entitled to depend on this undisputed proof for functions of its abstract judgment evaluation, and the Particular person Defendants can not get hold of reconsideration of the abstract judgment order by belatedly proffering proof that was at all times out there to them in an effort to create factual disputes.
In different phrases, you may problem beforehand submitted proof with “new” data.
The SBH defendants are as an alternative difficult the FTC’s proof with data that “was at all times out there to them”, which via a reconsideration movement is just not allowed.
With respect to VOZ Journey being a pyramid scheme, the courtroom famous the SBH defendants didn’t problem “the primary prong of the pyramid scheme check”.
As an alternative, they appear to dispute solely the discovering as to the second prong—that individuals’ rewards had been based on recruitment fairly than retail gross sales.
Nothing within the Particular person Defendants’ movement suggests this discovering was incorrect, not to mention manifestly misguided.
Because the FTC accurately factors out in its response, gross sales of VOZ Journey packs spanned for a lot of months regardless of the absence of an underlying product and the gross sales efforts even continued after relationship with Benefit Companies started to crumble.
Moreover, and as famous within the abstract judgment order, it’s undisputed that Noland made false statements throughout a December 20, 2019 cellphone name associated to the VOZ Journey program, by falsely claiming that the “greatest journey deal ever” had “simply occurred” and been “inked” when, actually, no new journey contract had simply been signed.
“Noland” refers to SBH proprietor Jay Noland, one of many particular person defendants difficult the abstract judgment order.
With respect to the contents of SBH’s submitted electronic mail, particularly that their vendor relationship with Benefit Companies might need been repaired, the courtroom asserted this was “wholly speculative”.
Nor would such a hypothetical improvement have undermined the discovering underlying the legal responsibility discovering on Rely One—that, on this report, VOZ Journey rewards had been primarily based totally on recruitment.
SBH’s submitted affiliate declarations had been rejected as a result of
Defendants made no effort of their abstract judgment response to establish any statements inside the declarations—which had been submitted as a single, 1,882-page exhibit—that touched upon the VOZ Journey program.
It was not the Courtroom’s position to hunt via such a voluminous exhibit in the hunt for remoted statements that may help the Particular person Defendants’ place, significantly the place the Particular person Defendants made no effort of their response to defend the VOZ Journey program.
Nor do the belatedly proffered parts of the affiliate declarations create a triable problem of reality as to the VOZ Journey pyramid-scheme legal responsibility discovering.
For instance, even assuming that one client believed he was acquiring a “journey alternative” when he bought a VOZ Journey pack, the undisputed proof submitted by the FTC establishes that no such alternative really existed.
On Dr. Bosley not addressing VOZ Journey, the FTC wrote;
The Particular person Defendants’ arguments are “baffling” as a result of “Dr. Bosley’s report features a detailed evaluation of VOZ Journey.
The courtroom doesn’t particularly deal with this argument however seems to have adopted the FTC’s place (the courtroom quotes Bosley citing VOZ Journey in her evaluation).
Lastly addressing the SBH defendant’s need to launch VOZ Journey with out MLM, the courtroom wrote;
These statements shed no gentle on whether or not the Particular person Defendants’ pre-lawsuit operation of VOZ Journey with an MLM element certified as a pyramid scheme.
In different phrases, what SBH may or may not do with VOZ Journey immediately, has no bearing on the enterprise they ran.
The courtroom went on to affirm that Success by Well being and VOZ Journey had been the identical enterprise and deny the reconsideration movement.
Wanting ahead the SBH defendants are difficult the granting of a preliminary injunction.
The preliminary injunction was granted by the District Courtroom after the Ninth Circuit rejected a beforehand filed enchantment.
The enchantment pertained to the Supreme Courtroom’s AMG choice earlier this 12 months. In essence the Ninth Circuit left it as much as the District Courtroom to rule on the movement.
The courtroom granted the preliminary injunction and an enchantment on that call is again on the Ninth Circuit.
