International Law

Team Minkow Winning Streak Continues

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It is remarkable how little people understand legal judgments and the obvious signs of a winning settlement.

Les Clement writes of Barry Minkow's decision to stop commenting on USANA as

"The timing of Minkow's surrender was not that surprising considering his already discredited case against Usana, and to a lesser extend Herbalife, had taken another battering the past few days."

Uh, this is a willful misrepresentation of the facts. Recall that Team Minkow won against USANA's ridiculous attempt to sue Team Minkow into silence.

Team Minkow won the SLAPP motion, got 4 out of 5 causes of action dismissed and recovered attorney fees.

Had Minkow not engaged in short selling USANA stock, the lawsuit would have been over: a complete victory for Team Minkow.

Now I am going to speculate given the facts reported about the settlement. I have no other sources than public information.

Minkow agreed to settle the absurd remaining claim against him, and also agreed to stop talking about USANA. I have speculated earlier that he essentially was paid off, or his attorneys were paid off by USANA.

Why? Because had he lost the remaining cause of action, USANA could not have obtained any future injunctive relief. USANA had to give Minkow something in order to get him, but only him, to stop talking about their pyramid scheme.

Len also, mistakenly, claims that

"Within days of Minkow's first anti-Usana report being published in mid-March, 2007, three class action law suits were filed on behalf of shareholders based specifically on Minkow's claim that Usana was an illegal pyramid scheme (the most prominent allegation of wrong doing among many).

The suits were eventually consolidated into one, and that suit has just been dismissed with prejudice (meaning the plaintiff is barred from ever bringing an action again based on the same claim).

Here are some, but not all, of the issues the court considered, and then summarily rejected:
? Lack of demand for Usana Products
? Inevitable Market Saturation
? Misrepresentation of Usana's Long-Term Sustainability
? Unlawful Pyramid Scheme"

Uh, because the disclosure to the buying public, not the independent associates, that a) associate recruitment is vital, b) but varies, and cannot be counted upon, and c) that USANA faces competition for its recruits from many other competitors, Judge Kimball ruled that there could be no misleading representations to the public about the USANA business model, at least on the particular pleadings.

But none of this should be taken as a factual finding that these four elements are not present in USANA's business model.

Indeed, the recent California lawsuit against YTB should give Len pause - but it won't.

Full post as published by Misleading Advertising Law on August 06, 2008 (boomark / email).