International Law

Why Did USANA get Slapped?

Tracy Coenen has a nice post about the Usana lawsuit against Barry Minkow, Usana Health Sciences loses Big in Court

Here is the Court Order in the Usana Lawsuit.

Minkow was sued by Usana in connection with the report he released. When the lawsuit was brought, I questioned whether it would survive a SLAPP motion - a motion to dismiss.

Here are some quotes from the Judge.

"The hallmark of a SLAPP suit is that it lacks merit, and is brought with the goals of obtaining an economic advantage over a citizen party by increasing the cost of litigation to the point that the citizen party's case will be weakened or abandoned, and of deterring future litigation."

What are the elements of a SLAPP motion?

"USANA must show "there is a reasonable probability [it] will prevail on the merits at trial" by "show[ing] both that the claim is legally sufficient and there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment."

And what did the Court conclude?

"Ultimately, under California's anti-SLAPP statute, the court strikes the first, second, third, and fifth claims for relief from the amended complaint."

Only the Federal cause of action remains - injunctive relief for Minkow "manipulating the stock price." This is a bit odd because Minkow continues to release damaging reports about Usana and they haven't actually tried to bring the injunction on.

In the end, Usana was judged to have brought a lawsuit so devoid of merit that even if everything they said could be proved, they would not prevail at law.

The Judge was convinced that this lawsuit was essentially designed to increase Minkow's legal costs to the point that he would have to give in to Usana's demands. And so, Usana got SLAPPED.

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