Kerrigan et al v. VISALUS, INC. et al

Filing 230

ORDER Granting 228 MOTION Preliminary Approval of Class Action Settlement. (Fairness Hearing set for 10/1/2019 at 10:00 AM before District Judge Matthew F. Leitman.) Signed by District Judge Matthew F. Leitman. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

TIMOTHY KERRIGAN, LORI MIKOVICH
and RYAN M. VALLI, individually, and on
behalf of all others similarly situated,
Case No. 2:14-cv-12693
Hon. Matthew F. Leitman

Plaintiffs,
v.
VISALUS, INC., a corporation, et al.,
Defendants.

ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT
Plaintiffs Timothy Kerrigan, Lori Mikovich and Ryan Valli (“Named
Plaintiffs”) acting individually and on behalf of the Settlement Class, filed an
Unopposed Motion for Preliminary Approval of Proposed Settlement (the
“Motion”).

The Motion seeks preliminary approval of the Named Plaintiffs’

agreement with ViSalus, Inc. (“ViSalus”), Nick Sarnicola, Robert Goergen, Sr.,
Todd Goergen, Ryan Blair, Blake Mallen, Frank Varon, Kyle Pacetti, Jr., Michael
Craig, Timothy Kirkland, Holley Kirkland, Aaron Fortner, Rachel Jackson, Tara
Wilson, Anthony Lucero, Rhonda Lucero, Jake Trzcinski, Gary J. Reynolds, Kevin
Merriweather, Ropart Asset Management Fund I, LLC, Ropart Asset Management
Fund II, LLC, Living Trust Dated 9/30/1991 f/b/o Robert B. Goergen, OCD

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Marketing, Inc., Power Couple, Inc., Arrive By 25, Inc., BAM Ventures, Inc.,
Gooder, LLC, Red Letters, LLC, M-Power Path, Inc., A Berry Good Life, Inc.,
Network Dynamics America Corp., Freedom Legacy, LLC, Residual Marketing,
Inc., Got Heart Global, Inc., Jaketrz, Inc., Mojos Legacy, LLC, Beachlifestyle
Enterprises, LLC, Wealth Builder International, Prospex Automated Wealth
Systems, Inc., 9248-2587 Quebec, Inc., Jason O’Toole, and Lori Petrilli (collectively
“Defendants”) to settle all multi-level marketing related individual and class claims
that have, or could have, been made, Plaintiffs’ Fourth Amended Complaint. This
Court, having reviewed the Motion and the exhibits, including the written settlement
agreement (the “Agreement”), finds itself apprised of the issues and grants the
Motion. Accordingly,
IT IS HEREBY ORDERED:
Preliminary Approval of the Agreement
1.

This Court preliminarily approves the Agreement, between Plaintiffs

and Defendants, subject to further consideration thereof at the Final Approval
Hearing. The capitalized terms used in this Order have the same meaning as in the
Agreement unless otherwise stated in this Order.
2.

The Preliminary Approval Date is the day this Court enters this Order

and sets the timing of the events leading to this Court’s Final Approval Hearing.
Each event shall be calculated under FED. R. CIV. P. 6.
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3.

After extensive litigation and arm’s-length negotiations by experienced

counsel for the Parties, the Parties executed the Agreement.

The Parties’

negotiations included extensive mediation proceedings, with the benefit of an
experienced, neutral mediator,
4.

Under the Agreement, each Class Member may elect between two

alternative forms of relief: first, a Cash Option that terminates the Class Member’s
Independent Promoter (“IP”) status with ViSalus; and second, a Benefits Option
which provides enhanced compensation, free services, and other benefits. Class
Members who submit no Valid Election Form receive the Benefits Option.
5.

Under the Agreement, each Class Member who elects the Cash Option

receives a cash payment of $25 or $50, subject to possible reduction depending on
the number of Class Members choosing this option. The maximum amount to be
paid out under the Cash Option is $4,535,000, and Class Members who elect the
Cash Option shall be terminated as IPs and no longer eligible to receive benefits as
IPs.
6.

Under the Agreement, each Class Member that does not submit a Valid

Election Form shall be deemed to have elected the Benefits Option and receive all
corresponding benefits, which includes these benefits (besides any other benefits to
which he or she may be entitled as an IP):

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a.

25% Commission Rate on all sales (both first time sales and

subsequent sales) personally made by the Class Member to customers who
purchase product from ViSalus for the first time after the Effective Date (i.e.,
new customers) for one (1) year from the Effective Date;
b.

35% Product Discount on up to $1,000.00 in product purchases

made by the Class Member at normal IP (i.e., wholesale) prices for one (1)
year from the Effective Date (up to $1,000.00 in product purchases for only
$650.00);
c.

Free re-enrollment as an IP on the Basic enrollment track (no

purchase necessary) for one (1) year from the Effective Date;
d.

Free event registration for one (1) event, if any are held, for one

(1) year from the Effective Date, and if none are held within one (1) year, then
free event registration for the next held event, if held within eighteen (18)
months from the Effective Date; and
e.

Free Vi-Net Pro Subscription for:
(i) one (1) year from the Effective Date for all Settlement Class

Members who choose the free re-enrollment listed in Section (c) above
and who previously paid for Vi-Net Pro; or

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(ii) six (6) months from the Effective Date for all Settlement Class
Members who choose the free re-enrollment listed in Section (c) above
and who did not previously pay for Vi-Net Pro.
7.

The Agreement also requires the adoption of the following corporate

reforms/injunctive relief for a period of three (3) years from the Effective Date:
a.

Within thirty (30) days of the Effective Date, ViSalus will

publish and maintain a retail price list for all products on its corporate website
which will be prominently available to all IP’s and customers;
b.

ViSalus will prominently disclose in the IP Application and the

ViSalus Policies and Procedures that any product purchases are optional and
that IPs are not required to purchase or stock inventory as a condition of doing
business;
c.

ViSalus will not compensate IPs primarily for the act of

recruiting or registering other IPs;
d.

ViSalus will maintain a policy allowing buy backs of product at

commercially reasonable terms for a period of at least 30 days from purchase;
e.

When making sales-based bonus payments or incentives to IP’s,

ViSalus will condition such payments or incentives on reasonably reliable
reported levels of sales to end-user consumers (i.e., non-IP customers) and IPs
who purchase product for personal consumption;
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f.

ViSalus will not make any false or misleading representations

regarding IPs who are parties to a special compensation agreement with any
IP named as a Defendant in the ViSalus Action or with ViSalus;
g.

ViSalus will maintain a compliance department and have and

enforce rules requiring IP compliance with applicable law; and
h.

ViSalus will not make any representations regarding its current

or former relationship with Blyth, the Goergen family, or its sales activity
between 2010 and 2014 that are false or misleading.
8.

This Court finds that the terms embodied in the Agreement appear,

upon preliminary review, fair, reasonable and adequate and warranting preliminary
approval and sending notice of the Settlement to the Class Members to consider its
terms before the Final Approval Hearing under FED. R. CIV. P. 23(e).
The Settlement Class
9.

This Court finds that the proposed Settlement Class likewise meets the

requirements of FED. R. CIV. P. 23(b)(3), 23(c)(1), and 23(c)(1)(B), and
conditionally certifies the following Settlement Class, as of the date of this Order, to
consider the Settlement:
All current or former independent promoters (“IPs”) of ViSalus who
reside in the United States or Canada that lost money as a ViSalus IP
between July 9, 2008 and the Preliminary Approval Date. In
determining whether an IP lost money as an IP for purposes of this
Settlement Class, the following calculation was used:

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a. $49.00 of the cost of any ViSalus promoter system purchased (regardless
of additional amounts spent above $49.00); plus
b. the costs spent on Vi-Net; plus
c. all renewal fees paid by the IP, minus
d. all commissions received by the IP; minus
e. the value of all free product received by the IP (including, but not limited
to, free products received as part of the 3 for Free promotion); and minus
f. the value of all Vi Points earned by the IP.

10.

Excluded from the Settlement Class, even if they meet the criteria

above, are (i) IPs who profited from ViSalus (that is, earned more as a ViSalus IP
than they paid ViSalus); (ii) Defendants, and any IPs owned, controlled or otherwise
affiliated with any Defendant other than merely the IP’s status as an IP; (iii) the
presiding judge(s) and his or her (or their) immediate family; (iv) any individual that
elects to be excluded from the Settlement Class; and (iv) any person who has
previously released claims against Defendants or whose claims have been fully and
finally adjudicated by a court with jurisdiction over the claims.
11.

This Court preliminarily finds that Timothy Kerrigan, Lori Mikovich

and Ryan M. Valli have and will fairly and adequately represent and protect the
interests of the absent Class Members under FED. R. CIV. P. 23(a)(4).
12.

These attorneys and their respective firms have zealously litigated this

case and the Court appoints these attorneys and their respective firms to serve as
Class Counsel and represent the Settlement Class for the Settlement:
Andrew Kochanowski
Lance C. Young
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Sommers Schwartz, P.C.
One Towne Square, Suite 1700
Southfield, MI 48076
Matthew Prebeg
Prebeg, Faucett & Abbott PLLC
8441 Gulf Freeway, Suite 307
Houston, TX 77017
Edward Wallace
Mark Miller
Wexler Wallace LLP
55 W. Monroe St. Suite 3300
Chicago, IL 60603
13.

This Court preliminarily finds that Class Counsel and their respective

firms have and will fairly and adequately represent and protect the interests of the
absent members of the Settlement Class under FED. R. CIV. P. 23(a)(4) and (g).
14.

If the Agreement is terminated or is not consummated, Defendants shall

be deemed to have reserved all rights they now possess to oppose class certification.
15.

This Court preliminarily approves the Settlement as described in the

Agreement and preliminarily finds that the Settlement benefits are fair, adequate,
and reasonable under the circumstances, considering the risks and costs of litigation
for each party.
Approval of Notice Plan and Schedule
16.

This Court has reviewed and approves the Notice Plan set forth by the

Parties, which is detailed in their written Agreement, attached as Exhibit 1 to their
Motion, and incorporated in this Order. This Court finds that the Notice, Exhibit 1Page 8

A, and Detailed Notice, Exhibit 1-C, both attached to the Motion, clearly and
concisely state, in easily understood language, all the elements in FED. R. CIV. P.
23(c).

In keeping with the Notice Plan that this Court herein approves, the

Settlement Administrator shall comply with the Notice Plan set forth in Exhibit 1,
including but not limited to the terms of Exhibit 1 (II)(C). Specifically, based on
contact information in ViSalus’ records, the Settlement Administrator shall email
Exhibit 1-A to the Class Members. For those emails returned as undelivered, under
the Notice Plan, the Settlement Administration shall mail Exhibit 1-A to the Class
Member’s address in ViSalus’ records.
17.

This Court finds that the Notice Plan affords the best practicable notice

under the circumstances and, when completed, shall constitute fair, reasonable, and
adequate notice of the Settlement to all persons and entities affected by or entitled
to participate in the Settlement, in compliance with FED. R. CIV. P. 23(c)(2) and due
process.
18.

This Court appoints Epiq Class Action & Claims Solutions, Inc.

(“Epic”) as the Settlement Administrator. This Court finds that Epic has the
experience and resources to act as the Settlement Administrator.
19.

This Court authorizes the Settlement Administrator to provide notice of

the Settlement to the Settlement Class and administer the claims of the Class
Members as provided in the Agreement.
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20.

This Court further orders the Settlement Administrator to implement

the notice events identified in the Notice Plan, using the forms attached as Exhibit
1-A & C to this Order under this schedule:
EVENT

DATE

Settlement Notice emails sent to Class No later than 30 days after the
Members
Preliminary Approval Date

Objections to the Settlement
21.

Any Class Member who objects to the Agreement shall file a written

objection with this Court, with a copy served on Class Counsel and ViSalus’ counsel,
pursuant to this schedule:

EVENT

DATE

Deadline to File and Serve Objections No later than 75 days after the
and Deadline of Notice to Appear at the Preliminary Approval Date
Final Fairness Hearing

22.

This Court will not consider a Class Member’s objection to the Settlement

unless that Class Member files a written objection. This Court will not hear from any
Class Member at the Final Approval Hearing unless that Class Member’s written
objection states he or she wishes to appear before this Court. All written objections
must: (a) be marked as “Written Objections to Settlement Agreement” in Kerrigan
et al. v. ViSalus et al., Civil Action No. 14-cv-12693; (b) state the objector’s full
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name, address, and telephone number; (c) set forth a brief statement regarding the
objections; (d) state the reasons for the objections; (e) include copies of any papers
that support the objections; (f) the objector’s signature and verification under oath
that the objector believes he or she is a Class Member; and (g) if the objector wants
to be heard at the Final Approval Hearing, state that the objector intends to appear
at the Final Approval Hearing. If an attorney makes the objection, the written
objection must provide the attorney’s name, address, email address, and telephone
number. Counsel for the Parties may file any responses to the objections submitted
(if any) at least five (5) days before the date of the Final Fairness Hearing.
Requests to be Excluded from the Settlement
23.

Any Class Member who wishes to be excluded from the Settlement

Class shall mail written notice of exclusion to the Settlement Administrator, pursuant
to this schedule:

EVENT

DATE

Deadline to Postmark or Send No later than 75 days after Preliminary
Electronically
the
Notice
of Approval Date
Exclusion

24.

Any Class Member’s notice of exclusion shall include all of the

following: (a) full name, (b) phone number, (c) current address, (d) a statement that

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the person wishes to be excluded from the Settlement and (e) the signature of the
person who wishes to be excluded.
25.

Any Class Member who submits a timely notice of exclusion that

complies with the requirements in this Order shall not be bound by the Settlement,
the Agreement, or the Final Order and Judgment. At least weekly after receiving an
exclusion, the Settlement Administrator shall provide copies of each notice of
exclusion to Class Counsel and ViSalus’ counsel.
26.

Any Class Member who does not properly and timely mail a notice of

exclusion as set forth herein shall be included in the Settlement Class and shall be
bound by the Settlement, the Agreement and the Final Order and Judgment.
27.

Any Class Member who submits a notice of exclusion that complies

with the requirements of this Order and objects to the Settlement shall be deemed to
have excluded himself or herself from the Settlement Class. The Court will not
consider an objection to the Settlement from a person that has excluded himself or
herself from the Settlement Class.
Administration of Communications from Class Members
28.

To effectuate the Settlement and the Notice Plan, the Settlement

Administrator shall be responsible for receiving all notices of exclusion and Election
Forms. The Settlement Administrator shall preserve (on paper or transferred into

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electronic format) all documents received from Class Members in response to the
notices for three (3) years, or under a further order of this Court.
29.

Each Class Member may submit a Valid Election Form by email or mail

to the Settlement Administrator. Valid Elections Forms may be submitted no later
than 75 days after the Preliminary Approval Date.
30.

Any Class Member who does not submit a Valid Election Form shall

receive the Benefits Option.
31.

Any information received by the Settlement Administrator for this

Settlement that pertains to a Class Member, or information submitted with a notice
of exclusion (other than the identity of the person requesting exclusion), shall not be
disclosed to any person other than Class Counsel, ViSalus’ counsel, and this Court,
or as otherwise provided in the Settlement Agreement.
Final Fairness Hearing
32.

This Court will have the Final Fairness Hearing no earlier than 100 days

after the Preliminary Approval Date. Specifically, this Court will hold the Final
Fairness Hearing in Courtroom 127 of the United States District Court for the
Eastern District of Michigan, 600 Church Street, Flint, MI 48502 on October 1, 2019
at 10:00 a.m. At the Final Fairness Hearing, this Court will consider the Settlement,
including the following:

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a.

whether the Settlement Class should be finally certified for the
entry of a final judgment;

b.

whether the Agreement is fair, reasonable and adequate;

c.

whether the claims should be dismissed with prejudice and final
judgment entered in this matter;

d.

whether Named Plaintiffs should be granted incentive awards in
the following amounts: (i) Timothy Kerrigan, $15,000.00; (ii)
Lori Mikovich, $10,000.00; and (iii) Ryan Valli, $10,000.00.

e.

whether Class Counsel’s motion for attorneys’ fees and expenses
should be granted, such fees and expenses not to exceed
$4,265,000.

33.

Class Counsel shall file with this Court a memoranda or other materials

to support this Court’s final approval of the Settlement no later than 85 days after
the Preliminary Approval Date. Class Counsel shall file their application(s) for
attorneys’ fees and expenses, and service awards, with this Court no later than 65
days after the Preliminary Approval Date.
34.

If finally approved, every term and provision of the Agreement (except

as modified by the Final Approval Order) shall be deemed incorporated into the
Final Order and Judgment and shall have the full force and effect of an Order of this
Court.
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Service of Objections, Notices of Intent to Appear and Other Documents
35.

When this Order directs that papers, briefs, objections, notices and other

documents be served upon Class Counsel and ViSalus’ counsel, service shall be
made to the attorneys listed below by the United States Mail, first class, addressed
as follows:
Class Counsel
Andrew Kochanowski
Sommers Schwartz, P.C.
One Towne Square, Suite 1700
Southfield, MI 48076
[e-mail]

Counsel for ViSalus
Edward A. Salanga
Quarles & Brady LLP
2 North Central Avenue
Renaissance One
Phoenix, AZ 85004
[e-mail]

Status of Litigation and Settlement
36.

There shall be no discovery and other pretrial proceedings for the

Settlement Class, pending Final Approval of the Class Settlement, except for such
proceedings as provided for in the Agreement, or which may be necessary to
implement the Settlement, the Agreement, or this Order.

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37.

Pending Final Approval, no Class Member, either directly,

representatively, or in any other capacity (other than a Class Member who validly
and timely elects to be excluded from the Settlement Class), shall commence,
continue or prosecute against any or all Released Persons any action or proceeding
in any court or tribunal asserting any of the matters, claims or causes of action that
are to be released upon Final Approval under the Agreement, and are enjoined from
so proceeding.
38.

Upon Final Approval, all Class Members who do not file a timely notice

of exclusion shall be forever enjoined and barred from asserting any of the matters,
claims or causes of action released pursuant to the Agreement, and any such
Settlement Class Member shall be deemed to have forever released the Released
Persons from any and all such matters, claims and causes of action as provided for
in the Agreement.
39.

If the Agreement is terminated and the Settlement is not fully

consummated, all proceedings had in connection therewith shall be null and void,
without prejudice to the status quo rights of any party that existed before the Parties
executed the Agreement.

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40.

Neither this Order nor the Agreement shall constitute any evidence or

admission of liability by any Defendant, nor shall they be offered into evidence in
this or any other proceeding except to consummate or enforce the Agreement or the
terms of this Order.
IT IS SO ORDERED.
/s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
Dated: June 14, 2019

I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on June 14, 2019, by electronic means and/or ordinary mail.
s/Holly A. Monda
Case Manager
[phone]

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