Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
MLM WatchSM
The Skeptical Guide to Multilevel Marketing
Search
Home
Permanent Injunction against Herbalife (1986)
JOHN K. VAN DE KAMP, Attorney General of the State of California
HERSCHEL T. ELKINS & CHARLTON HOLLAND
Assistant Attorneys General
ALBERT NORMAN SHELDEN (619) 137-7754
PETER G. DeMAURO (916) 342-5331
Deputy Attorneys General
1515 K Street, Suite 511
Sacramento, California 95814
ARTHUR DANNER, III, District Attorney of Santa Cruz County
DON GARTNER (408) 425-2071
Assistant District Attorney
701 Ocean Street
Santa Cruz, California 95060
Attorneys for Plaintiffs
LAW OFFICES Of CONRAD LEE KLEIN
CONRAD LEE KLEIN
14001 Ventura Boulevard
Sherman Oaks, California 91423
Telephone: (818) 986-8600
Attorneys for Defendants
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CRUZ
PEOPLE OF THE STATE OF CALIFORNIA AND THE DIRECTOR OF THE
DEPARTMENT. OF HEALTH SERVICES,
Plaintiffs,
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
vs.
HERBALFE INTERNATIONAL, INC., a California corporation, and MARK
HUGHES, et al.
Defendants.
No. 92767
FINAL JUDGMENT
AND
PERMANENT INJUNCTION
)
The People of the State of California and the Director of the Department of
Health Services, having filed their complaint here in and defendants having been
served with a summons and a copy of the complaint tiled herein; and defendants
Herbalife International, Inc. (herein Herbalife), a California corporation, and Mark
Hughes, an individual, having filed their answer to the complaint; and plaintiffs
appearing through their attorneys John Van de Kamp, Attorney General,
Herschel T. Elkins and Charlton Holland, Assistant Attorneys General; Albert
Norman Shelden and Peter G. DeMauro, Deputy Attorneys General, by Albert
Norman Shelden and Peter G. DeMauro, and Arthur Danner III, District Attorney
of Santa Cruz, Don Gartner, Assistant District Attorney, by Don Gartner; and
defendants Herbalife and Mark Hughes appearing through their attorneys Law
Offices of Conrad Lee Klein by Conrad Lee Klein; and
It appearing that plaintiffs, the People of the State of California and the Director
of the Department of Health Services, and defendants above named, personally
and through their- attorneys, have stipulated and consented to the entry of this
final judgment and permanent injunction prior to the taking of any proof and
without trial or adjudication of any fact or law herein and without this final
judgment constituting evidence or an admission by said defendants regarding
any issue or any fact alleged in said complaint, defendants having denied the
allegations in the complaint;
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED:
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
1. This court has jurisdiction in the State of California over the subject matter
hereof and the parties hereto.
2. The provisions of this final judgment are applicable to: (a) defendants, Herbalife, Mark
Hughes, and each of them, and their respective successors in interest, whether corporate or
otherwise, and (b) those officers, directors and employees of said defendants and any other
entities acting under, by or on behalf of either such defendant or pursuant to their direction,
who have notice of this injunction.
3. Pursuant to Business and Professions Code Sections 17203 and 17535,
defendants are hereby permanently enjoined and restrained from:
A. Using or causing to be used pages B-3 through B-10 of the Official Career
Book which bears a copyright date of 1982.
B. Representing that defendants’ products contain herbs: (1) which in and of
themselves naturally curb the appetite; (2) which burn of£ calories; or, (3)
which naturally cleanse the system. Defendants, however, are not restrained
from representing that the herbs when used in the quantity recommended by
defendants assist the natural self-cleansing function of the body, if there is a
reasonable basis therefore
C. Representing that one who uses defendants’ products will lose weight without
a reduction in the user’s caloric intake.
D. Representing that defendants’ Formula #2 is helpful for the conditions or
organs enumerated in the complaint on file at page 14, lines 8-27.
E. Representing that because of its iodine content, the use of kelp in Formula #2
is valuable in a weight reduction program.
F. Representing that the inclusion of lecithin in Formula #2 will result in an inch
loss from fatty areas.
G. Representing that the manner in which defendants include cider vinegar in
Formula #2 acts to help curb the appetite.
H. Representing that because of the herbs and the manner in which they are
included in Herbalife’s products, the use of such products will cleanse the villi
and help prevent the clogging of the villi in the intestine. defendants however,
are not restrained from representing that the effect of the herbs as used in
their product on the villous portion of the digestive tract is to aid its nutrient
absorption function, if there is a reasonable basis therefor.
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
I. Representing that the Herbalife Cell-U-Loss product: (1) contains herbs which
on their own naturally eliminate “cellulite” or the appearance of “cellulite”; (2)
has the medicinal properties which are helpful for the conditions or organs
enumerated in the complaint herein at pages 15-16 lines 25-3; or (3) directs
weight loss to particular portions of the body. Defendants, however, are not
restrained from representing that Cell-U-Loss is a unique vitamin, mineral and
herb formula which assists elimination of excess fluids and helps reduce the
appearance of “cellulite,” if there is a reasonable basis therefor.
J. Representing that the Herbalife N.R.G. product: (1) naturally increases
energy; (2) naturally provides a nutritional lift; (3) has the medical action and
uses enumerated in the complaint herein at page 16, lines 19-24; (4) helps to
reduce hunger; or (5) that the product is a nutritional factor in health.
Defendants, however, are not restrained from representing that N.R.G.
provides a tremendous lift, aids mental alertness and reduces feelings of
fatigue, if there is a reasonable basis therefor.
K. Failing to disclose in the career book and on the label that one of guarana’s
components is caffeine.
L. Representing that the Herbalife product: (1) dissipates the abnormal build-up
of plaque in the arteries, or (2) provides protection for the entire vascular
system. Defendants, however, are not restrained from representing that
Herbalifeline includes several nutritional factors important for health, in a base
of carefully selected herbs and supplies a full-spectrum marine source lipid
complex, which is particularly rich in Omega 3 tatty acids, which are
considered by various scientific experts to playa role in good cardiovascular
health, if there is a reasonable basis therefore.
M. Representing that the Herbalife Schizandra Plus product helps to combat
damage that can lead to premature aging. defendants, however, are not
restrained from representing that the nutrients in this product help combat
premature damage to cells from toxins in the environment, and did cell
integrity, if there is reasonable basis therefor.
N. Representing that Tang Kuei relieves menstrual disorders. defendants,
however, are not restrained from representing that Tan Kuei is an herbally
based formula which nutritionally helps with the normal discomforts associated
with the menstrual function, if there is a reasonable basis therefor.
O. Representing that Flora Fiber restores flow in the intestine and prevents
disease. Defendants, however, are not restrained from representing that Flora
fiber helps reconstitute and maintain essential flora of the gastrointestinal
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
tract, provides fiber for a natural cleansing effect on the intestinal tract and
helps contribute to a proper diet, if there is a reasonable basis therefor.
P. Representing that K-8 stops or affects psycho-neurotic depression.
defendants, however, are not restrained from representing that K-8 is an
herbal formula with amino acids which helps to naturally offset feelings of
temporary stress and moodiness, if there is a reasonable basis therefor;
Q. Making false or misleading representations with respect to any specific goals
for participants in defendants’ marketing program relating to the number of
new customers or new participants a participant may obtain within a specific
time period or an amount of money a participant may earn through bonuses
and overrides.
R. Representing that defendants’ otter their products with a “100% Satisfaction
Guarantee (or your money back) or any other such refund otter unless: (1)
defendants in a clear and conspicuous manner disclose any limitations which
apply to the refund offer at the time the refund offer is disclosed; and, (2)
defendants continue to clearly inform participants in their marketing program
of such participants’ obligations vis-a-vis a purchaser who invokes the refund
offer, if participants in defendants’ marketing program have any such
obligation.
S. Defendants shall not use any “live” testimonials relating to the experience the
individual giving the testimonial had with one or more of defendants’ products
unless prior to the taking of any testimonials at live presentations, defendants
shall indicate, orally or in a conspicuous writing, to those giving testimonials
that: (1) testimonials cannot contain any untrue or misleading representations;
(2) testimonials regarding any of defendants’ weight loss products or products
for- special dietary use may not describe curative or preventive properties or
experiences for disease or illness. Provided, however, defendants may
indicate that an individual giving a testimonial may, if it is true as to that
individual, make reference to general feelings of well-being as well as make
reference to a product’s effect to the same extent that defendants can refer to
that product’s effect. If defendants have reason to believe that a testimonial in
contravention of the above has been given. they shall, no later than at the
conclusion of the testimonial portion of the presentation, disavow such
testimonial to those physically in the audience, and shall not thereafter utilize
such contravening testimonial in any manner. If defendants have reason to
believe that an individual either gave a testimonial in violation of (1) above, or
continues to give testimonials in violation of (2). above, then defendants shall
not permit that. person to again otter testimonials for defendants’ product(s).
The provisions of this paragraph .S. shall not apply to any live training
meetings given only for and attended by distributors of Herbalife products;
provided, however, representations or claims for defendants products not
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
allowed to be made pursuant to this judgment shall not be made at such
meetings.
T. (1) Subject to the exceptions in Section 6, below, engaging in the following
described conduct: (a) Representing or implying that any current product of
defendants diagnoses, cures, mitigates, treats or prevents disease if the
product is a “new drug” as defined in Health and Safety Code Section 26021
unless defendants have first complied with the requirements of Health and
Safety Code Section 26670 (a) or (b), and having the representations made
for any products comply with the provisions of Health and Safety Code
Sections 26660 and 26661, if those sections are applicable; (b) Offering for
sale any drug unless it is safe and effective or any food unless it is sate and
defendants have a reasonable basis for the claims made for such drug or
food; (c) Representing that defendants’ Formula 2 is helpful for any physical
order or disease. The provisions set forth in subsection (a) of Section T do not
apply to Herbatan and APR because those products, as of the date of this
judgment, are not considered new drugs by the plaintiffs so long as the
products are in compliance with proposed or final over-the-counter
monographs of the Food and Drug Administration and advertising for such is
in conformity with the standards therein; but plaintiffs’ right to enforce
applicable laws are not affected hereby.
(2) If plaintiffs claim that any conduct not con forming to the preceding paragraph
has been engaged in, then plaintiffs shall proceed against defendants
therefor, if at ail, by taking action pursuant to Business and Professions Code
sections 17200 et seq. and 17500 et seq., or the applicable Health and Safety
Code sections, or any other statutory provisions, but not by direct
enforcement of this judgment, as for example, by way of contempt.
(3) Nothing contained in this Section T shall be deemed to be a limitation on any
other provision, or the method of enforcement of any other provision, of this
judgment nor the penalties, if any, which may be available under the
provisions of Sections 17207 and 17535.5 of the California Business and
Professions Code.
4. Whenever a reasonable basis. for a representation or claim is required
pursuant to the terms of this judgment, such bas is does not exist. if the
defendants knew or in the exercise of reasonable care should have known that
the representative or claim was untrue or misleading at the time it was made.
5. A. defendants shall not establish, maintain or operate a marketing program in
which:
(1) A participant pays a valuable consideration for the chance in whole or in part,
to receive, either directly or indirectly, compensation, which is based on other
than retail sales for introducing one or more additional persons into
participation in defendants’ marketing program or for the chance to receive
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
compensation., either directly or- indirectly, when the newly introduced
participant introduces a new participant into defendants’ marketing program;
(2) Any compensation, however denominated (including but not limited to
“commissions,” “overrides,” “achievement bonuses,” or any term of similar
import), defendants pay or participants receive is based upon anything other
than the retail sale of defendants’ products; and
(3) A participant can obtain any specific level in defendants’ Marketing program
based upon criteria other than the amount of retail sales made by the
participant or person (s) introduced into defendants’ marketing program by
the participant.
B. defendants shall be in compliance with this Section 5, as long as a verification
or documentation system they implement allows them, at any given point in
time, to verify or: document to plaintiffs that any and all participants who
receive commissions, bonuses, overrides and/or advancement from
defendants in defendants marketing program, after entry of this judgment, are
based on retail sales made by or through such participant(s) or others
introduced directly or indirectly under participant(s). Plaintiffs shall not seek
such verification or documentation prior to 90 days after entry of this
judgment., and defendants shall be in compliance with this verification or
documentation requirement if their records are current and accurate to a point
in time which does not precede plaintiffs’ request for verification or
documentation by more than 90 days. Plaintiffs’ request for verification or
documentation of retail sales shall be made to defendants counsel of record.
C. The term “retail sale” as used in this Section 5 means a sale at defendants’
product(s) in any of the following situations: (1) to persons who are not part of
defendant’s marketing program or distribution system; or, (2) to persons who
are not buying to become part of defendants marketing program or distribution
system; or, (3) to persons who, although desirous of becoming or who are a
part of defendants’ marketing plan or distribution system are buying for their
own personal or family use.
6. Notwithstanding anything to the contrary herein, defendants shall not be in
violation of this final judgment and permanent injunction by advertising,
offering or selling products:
A. In compliance with Federal regulations relating to foods for special dietary use
as such regulations are adopted by California Health and Safety Code Section
26208 or any successor sections; provided however, advertisements or otters
which exceed the scope of such regulations or relate to issues not covered by
such regulations are to that extent, subject to the provisions of Section 3.
B. In compliance with guidelines established and approved by the Federal Food
and Drug Administration in over-the-counter monographs; or other Federal
Permanent Injunction against Herbalife (1986) http://www.mlmwatch.org/04C/Herbalife/1986order.html
Food and Drug Administration criteria, provided however, advertisements or
otters which exceed the scope of such guidelines or relate to issues not
covered by such guidelines are to that extent, subject to the provisions of
Section 3.
C. In compliance with California Health and Safety Code Sections 26000 through
~6851, commonly known as the Sherman Food, Drug and Cosmetic Act.