By Nathan Hale, LAW360
Law360 (February 21, 2018, 10:52 PM EST) — Former distributors for global nutrition supplement company Herbalife Ltd. are urging a Florida federal court to deny the company’s bid to force their potentially $1 billion racketeering suit into arbitration, arguing a unilaterally imposed arbitration clause is unenforceable and inapplicable.
The plaintiffs’ response filed Feb. 12 is the latest chapter in the suit, which was filed in September in Miami by eight former Herbalife distributors. The suit focuses on the company’s Circle of Success event cycle — a series of costly seminars held around the country at which the company’s representatives and inner circle of top distributors work to build enthusiasm among the network’s hundreds of thousands of members and to drum into them the message that success depends on attending as many of these events as possible.
Herbalife and the individual defendants, who include several of its top distributors, argued in the pending motion to compel arbitration that the plaintiff members are required by an agreement in their distributor contracts to arbitrate all disputes, but the plaintiffs countered last week that the company’s claim to having an “unfettered right” to amend its contracts without notice makes the arbitration provision “illusory and unconscionable.”
“I think a very basic premise that most first-year law students understand is you can’t have a contract if you don’t have offer and acceptance,” plaintiffs’ counsel Etan Mark of Miami-based Mark Migdal & Hayden told Law360. “And the notion of being able to amend a contract on a prospective basis without any restrictions and without having to provide notice to your counterparty is, we believe, not a contract at all.”
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