Michael Lavigne v. Mark Addy

967 F.3d 1110
CourtCourt of Appeals for the Eleventh Circuit
DecidedJuly 29, 2020
Docket18-14048
StatusPublished
Cited by14 cases

This text of 967 F.3d 1110 (Michael Lavigne v. Mark Addy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Michael Lavigne v. Mark Addy, 967 F.3d 1110 (11th Cir. 2020).

Opinion

Case: 18-14048 Date Filed: 07/29/2020 Page: 1 of 18

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 18-14048 ________________________

D.C. Docket No. 1:17-cv-23429-MGC

MICHAEL LAVIGNE, JENNIFER LAVIGNE, CODY PYLE, JENNIFER RIBALTA, JEFF RODGERS, PATRICIA RODGERS, IZAAR VALDEZ, FELIX VALDEZ,

Plaintiffs-Appellees,

versus

HERBALIFE, LTD, et al.,

Defendants,

MARK ADDY, JILLIAN ADDY, DENNIS DOWDELL, GARRAIN S. JONES, CODY MORROW, CHRISTOPHER REESE, GABRIEL SANDOVAL, EMMA SANDOVAL, JOHN TARTOL, LESLIE R. STANFORD, et al.,

Defendants-Appellants.

Appeal from the United States District Court for the Southern District of Florida ________________________

(July 29, 2020) Case: 18-14048 Date Filed: 07/29/2020 Page: 2 of 18

Before MARTIN, NEWSOM, and O’SCANNLAIN,∗ Circuit Judges.

O’SCANNLAIN, Circuit Judge:

In this class action dispute among distributors of Herbalife products, we must

decide whether the district court properly denied a motion to compel arbitration.

I

Herbalife, Ltd.; Herbalife International, Inc.; and Herbalife International of

America, Inc. (henceforth, “Herbalife”) describe themselves as a global nutrition

company that operates through a direct sales network of many thousands of

independent distributors, also known as Herbalife “members.” These distributors are

told that, through hard work and an effective sales strategy, they can achieve

substantial, ongoing income by selling Herbalife products. In 2017, Patricia and Jeff

Rodgers, Jennifer and Michael Lavigne, Cody Pyle, Izaar and Felix Valdez, and

Jennifer Ribalta (hereinafter, the “aggrieved distributors”) filed this putative class

action in the Southern District of Florida against Herbalife, as well as forty-four

individuals who are alleged to be Herbalife’s top-earning distributors (hereinafter,

the “top distributors”).

A

∗ Honorable Diarmuid F. O’Scannlain, United States Circuit Judge for the Ninth Circuit, sitting by designation.

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The aggrieved distributors entered into six distributor agreements with

Herbalife. Patricia Rodgers filled out the paperwork to become an Herbalife member

in June 2010. Some six months later, she claims, she traveled over a hundred miles

to Orlando, Florida, to attend her first large Herbalife recruiting event, the “January

Spectacular.” According to Patricia, the keynote speaker at this event was a highly

successful distributor who told the attendees that if they simply put in enough time,

money, and effort, then they, too, could achieve life-changing financial success. Two

months later, Patricia says, she attended another of these so-called “Circle of

Success” events, this time with her husband, Jeff, in Daytona Beach. Over the next

four years, Patricia and Jeff purportedly attended over fifty Circle of Success events,

in which they were continuously assured by Herbalife’s top distributors that success

was just around the corner. Patricia and Jeff claim that, in their efforts to achieve

their dreams, they moved from Miami to Jacksonville, cashed out a retirement

account and a settlement annuity, sold jewelry, and borrowed money from family

members. All told, Patricia and Jeff allege that they spent over $100,000 on

Herbalife, including $20,000 on Circle of Success events.

Jennifer and Michael Lavigne share a similar story. In December 2014,

Jennifer signed up to become an Herbalife member. The following month, she

claims, she and her husband, Michael, attended their first Circle of Success event,

the “January Kickoff” in Columbus, Ohio. Over the next year-and-a-half, they

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purportedly attended one event every month, which they assert cost them over

$5,000. Why keep going back? According to the Lavignes, the key to success was

attending every single event (or so they were told).

Cody Pyle, who signed a distributor agreement with Herbalife in July 2014,

says that he attended his first Circle of Success event in Norman, Oklahoma in

November of that year. Over the next two years, he claims, he attended another

twenty-five such events, where he was frequently told that the key to success was

not only attending every event but also qualifying for VIP status by purchasing more

Herbalife products. For three consecutive months, Pyle says, he tripled his Herbalife

purchases, yet he never achieved his long-sought-after wealth. Instead, he claims

that he lost over $30,000 on Herbalife, including $11,600 on traveling to and

attending Circle of Success events.

Izaar Valdez and her father, Felix Valdez, claim that they became Herbalife

members in 2008, when they attended a Circle of Success event in Miami and were

lured in by assurances that, as members, they could make half-a-million dollars a

year. (According to Herbalife, Izaar’s membership lapsed in 2011 because she failed

to pay an annual fee; she re-enrolled in 2013, but she again failed to pay the fee and

her membership was terminated in 2016.) Felix claims that he subsequently sunk

tens of thousands of dollars from his construction company into Herbalife. Izaar

asserts that, in 2014, she spent over $3,500 attending Circle of Success events and

4 Case: 18-14048 Date Filed: 07/29/2020 Page: 5 of 18

more than $10,000 purchasing Herbalife products so that she could qualify for VIP

status at events. She also claims that her husband left her and her three children

because of her financial losses. She says that when she sought the advice of her

Circle of Success “mentors,” they advised her to stay the course by continuing to

attend events and to qualify for VIP treatment.

Jennifer Ribalta, who became an Herbalife member in 2011, claims that,

beginning in February of that year, she attended one Circle of Success event per

month for thirty-eight consecutive months. On thirty of these occasions, she

purportedly worked on a “Production Team” where she helped to set up and manage

the events, but she received no pay for doing so and she still had to purchase her own

tickets. In total, she claims that she spent $15,000 on the Circle of Success.

B

As the aggrieved distributors tell it, their suit is not concerned with Herbalife’s

practice of selling products through independent distributors, which has already been

the subject of a complaint by and settlement with the Federal Trade Commission.

Rather, their complaint focuses on the “Circle of Success,” which the aggrieved

distributors claim is an ongoing enterprise between Herbalife and the top distributors

that produces expensive monthly events in cities across the country. The purpose of

these events, they contend, is to “disseminate misleading and fraudulent income

claims,” to “recruit new members into the fraudulent business opportunity scheme,”

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and to “increase the investment and engagement of those already ensnared in the

scheme.” According to the aggrieved distributors, those who attend the Circle of

Success events are told that the path to success as an Herbalife distributor is to

“attend every event” and to “‘qualify’ for special treatment at these events by making

large monthly purchases of Herbalife’s products.” However, they contend that, after

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Bluebook (online)
967 F.3d 1110, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michael-lavigne-v-mark-addy-ca11-2020.