Within days of MonaVie’s embarrassing loss in Utah District Court, MonaVie dismisses its lawsuit against former distributor Joe Licciardi. While it might certainly be embarrassing, I think MonaVie is making a smart decision on this one.
In summary, MonaVie sued its former Black Diamond distributor, Joe Licciardi, for soliciting members in his downline for Momentis, another MLM. Click this link to see MonaVie’s lawsuit against Joe Licciardi. The lawsuit is an easy read. Basically, MonaVie went after Joe for violating the non-solicitation provision in the Policies and Procedures. The lawsuit centered on Joe’s use of his Facebook account to solicit people into his Momentis business. Momentis is an MLM that sells utility services i.e. energy.
MonaVie’s non-solicitation policy, arguably one of the more restrictive non-solicitations in the industry, states:
Nonsolicitation during Agreement. You are free to participate in other direct selling, multilevel, or network marketing business ventures or marketing opportunities (collectively “Network Marketing”). However, . . . during the term of this Agreement, you shall not [solicit] . . . other MonaVie Distributors or Customers to any other Network Marketing business, other than those you have personally sponsored. This includes general solicitations on your social networking site where your “friends” include persons not personally Sponsored by you and who are Distributors. It also includes merely mentioning your participation in another Network Marketing Business.
MonaVie argued that Joe initially created his Facebook account to attract and recruit MonaVie distributors. While he was building MonaVie, he built up a following on Facebook. As expected, Joe’s Facebook following was a mix of personally enrolled reps and non-personals. When he flipped the switch and allegedly started using the same account to promote Momentis, MonaVie sent him a notice to stop. When Joe failed to stop, MonaVie sent him a lawsuit.
MonaVie requested a Temporary Restraining Order (“TRO”). A TRO is a temporary injunction given in extreme cases, usually when the monetary damages can be severe without the injunction.
What’s an injunction? An injunction is a court order that requires a party to do or refrain from doing specific things i.e. “stop soliciting,” or “stop making that product,” etc.
As MonaVie learned in this case, TROs are VERY hard to win. Whenever someone is precluded from doing something BEFORE a full hearing, it’s a big deal. There are several lessons to learn from this case:
If a company is going to request a TRO, they need more proof than a single email and a few status updates on a freaking Facebook account.
Assess the Harm
Companies really need to assess the harm a distributor poses when he or she leaves. When someone is sued by a large company, their entire livelihood is threatened. It bleeds into their personal lives, impacting their friends and families. If you sue someone, the value needs to exceed the inevitable negative PR backlash. In some cases, it’s absolutely warranted. In this case, was it worth it?
As I’ve written in the past, when distributors leave their MLM and join something else, they need to nuke their Facebook account and START OVER! If Joe followed this free advice, he could have saved himself a few dollars and a lot of headache. In the article, I wrote:
Delete your facebook profile and create a new fan page. After leaving a company, it’s wise to delete the old profile and create a new facebook fan page. First, deleting your profile publicly communicates your intentions of honoring the agreement, which will be important in the event of a dispute. Second, it eliminates the likelihood of error. Again, one update on your facebook profile can be hazardous. In the future, segment your “friends” in your personal profile, separating friends and family from your MLM promotional efforts. Regarding the fan page, fan pages are one directional….people “Like” the fan page if they desire to receive information from the individual (or brand). They’re “opting-in” to receive information, which undermines any argument that the leader is specifically targeting members from the downline.
Do Not Misinterpret!
This case does NOT mean that distributors can use Facebook and remain in compliance with any non-solicitation obligations. On the contrary, if this case had gone the distance, I would argue that MonaVie had the upper hand. But as I’ve said before, TROs are only awarded in extreme cases. This was not such a case. Just because MonaVie lost the TRO battle does not mean it was set to lose the war.
The Open Door Policy is No More…In Fact, It Never Was
In so many words, Randy Schroeder, President of MonaVie, has indicated that the Open Door Policy is not a sustainable policy. But his recent statement assumes an incorrect fact: that the policy even existed in the first place. If it was sincere, why did MonaVie keep its restrictive covenants in its policies i.e. the noncompete and the non-solicitation clauses? In my opinion, if Dallin could go back in time, he’d delete that silly post. As a MLM lawyer that represents numerous companies, those restrictive covenants are important and valuable for a number of reasons. Leaving them out of the Policies is foolish. Leaving them in while at the same time admonishing them is weird.
See below for a copy of the dismissal. One of two things could have happened: (1) Both parties settled the dispute; or (2) MonaVie realized that it’s not worth it and voluntarily dropped it. If you learned something in this post, please be so kind and hit the +1 button or Like button above.