Sunday, November 11, 2007

TEAM: LEGAL UPDATE November 10, 2007

Original Source

LEGAL UPDATE November 10, 2007
Sunday, November 11, 2007

Quixtar verse Woodward et al
Yesterday, November 9, 2007 Michigan Circuit Court Judge the Honorable Paul J. Sullivan issued his written ruling in the claim brought by Quixtar (Plaintiffs) against Orrin Woodward, Chris Brady (Defendants) and Team for allegedly violating the Preliminary Injunction imposed on Defendants on August 24, 2007.

In short the Quixtar claim against Defendants was DENIED (win for Woodward/Brady/Team).

In Judge Sullivan’s 10 page Order there are some interesting points and observations made that I think are important enough to try and explain here.

As you recall this ruling by the Court followed an evidentiary (take testimony from live witnesses) hearing that lasted almost three days in the middle of October. At the conclusion of that hearing the Judge ruled from the bench that he was not going to shut down the major conference meeting in Louisville, KY but that he would issue a written ruling on all of the other items in due course. This ruling is what was issued on November 9 and is a matter of public record.

Quixtar’s complaint centered around four allegations against Defendants.

Failure to comply with Preliminary Injunction.
Solicitation of IBOs to resign from Quixtar.
Inappropriate use of Quixtar’s Line of Sponsorship (LOS).
Team being in competition with Quixtar.

Let me summarize the Judge’s ruling on each of these items.

Compliance with Preliminary Injunction The Judge stated that both Team and Defendants had made good faith efforts to comply with the original court Order. Woodward did this by resigning as the “Manager” of Team and by resigning as a member of the Team Policy Council. Team’s good faith efforts as noted by the Judge were the closing down of over 100 Open meetings and the removal of BSM’s (tools specifically related to the Quixtar business). Summary – the Judge found no fault in Defendants or Team in this area.

Solicitation of IBOs to resign from Quixtar The Judge noted that Quixtar had evidence that 15,000 IBOs had resigned in September and the majority was affiliated with Team. He further noted that this number suggested more than a mere coincidence. However, the Ruling states, there was no evidence that the Defendants or Team were directly behind the resignations. He noted that Woodward and Bob Dickie (CEO of Team) both testified that no IBOs were solicited to resign and that Team did not provide a form resignation to IBOs.

The Judge went on to say that the fact of the matter was that there was evidence presented that there were MANY reasons IBOs chose to resign from Quixtar. He acknowledged that when the top Team leaders were terminated this could create resignations because of the loyalty among the various “legs” of the Team leaders. He also stated that Quixtar admitted that some IBOs might have resigned because of disagreement on the price of Quixtar products. And finally he said that it was important to note that Quixtar took direction actions against Team where by IBOs felt intimidated. This included various blog postings by Quixtar, emails stating the sale of Team business support materials were in violation of Quixtar Rules of Conduct and the requirement of IBOs to sign and return a statement saying they would no longer promote use of Team BSM and that failure to sign and return the letter would result in suspension. In other words the Judge acknowledged here that Quixtar itself had done much that could have caused an IBO to resign and that it was not clear at all that Defendants had coerced anyone to resign.

The Judge did say that testimony was given whereby there could have been technical violations of the Order by at least one and possibly two members of Team. He pointed out that there was significant evidence that Mr. Stroh suggested people should disassociate with Team. The same type of thing occurred with Tyler Libby whereby he sent out a voice mail saying that it was not a good time to partner with Quixtar. Both of these could be considered violations of the Order but neither Mr. Stroh nor Mr. Libby were named as Defendants and that neither was in a policy making position with Team and there was not clear link that either Mr. Stroh or Mr. Libby were “aiding and abetting the actions of the named Defendants to violate the order”. In my opinion the message here is that even though the two IBOs mentioned above did not cause Defendants to be in contempt, NO ONE should encourage anyone to resign from Quixtar – which decision has to be one of personal choice.

Use of LOS Quixtar had claimed that because one of their private investigators they hired who went to a Team meeting (undercover I might add) was asked for his IBO number and upline Platinum that Team must be using this information (that Quixtar claims is unique to the LOS) improperly and without authorization. The Judge stated that it was inherently suspicious that the forms required to be completed by the private investigator at a Team meeting requested Quixtar identification information if it is a fact, as Team argues that it does not need the Quixtar LOS. Bob Dickie testified that the forms at that particular location were outdated and discontinued in 2006 when Team began allowing non Quixtar IBOs to attend Team meetings.

Evidence presented at the hearing was that Team used a separate form in addition to any Quixtar registration form when a person joined Team. While some of the personal information would obviously be overlapping Team maintained its own member list and personal information and therefore had no use for the Plaintiff’s LOS. The Court ruling stated that merely because there is an overlap in membership of Team and Quixtar does not mean Team “raided” or “looted” Quixtar’s LOS in violation of the Preliminary Injunction.

The Judge further stated that testimony was unequivocal that Quixtar’s LOS was never utilized to promote Team meeting attendance or for any other purpose. The individuals signed up for both Team and Quixtar appear to have been secured by Defendants and not referred by Quixtar.

In summary on this topic, the Judge said he was bothered by the fact that information belonging to Quixtar had been requested by persons attending Team functions since the August 24th Court Order and stated this might again be a technical violation of the order. However, the Judge goes on to say that there was no evidence that any of the Defendants ordered LOS information to be collected and in fact Woodward testified that he had not done so and Quixtar presented no evidence to the contrary. Finally, he stated that there was simply insufficient evidence to conclude a violation was such that the Defendants or Team should be found in contempt.

Competing with Quixtar Quixtar is claiming that Team, because it is no longer an authorized producer of Quixtar BSMs (which by the way as I have said before there IS NO SUCH THING OR NO PROVISION FOR BEING AN AUTHORIZED PROVIDER OF QUIXTAR BSMS – yes I am yelling) and only produces more generic Support Materials (SMs) that are not business or company specific that Team is now a competitor of Quixtar.

In other words Quixtar is claiming Team – or anyone for that matter they choose - can’t produce anything specific to do with Quixtar and now that Team has made that change and are now selling generic materials Team is a competing business – talk about damned if you do and damned if you don’t.

Quixtar claimed that the October conference in Louisville was to be the platform to publicly launch a new Team business; the court ruled there was little evidence to support this proposition. We now know of course that this was not the case but that Louisville was exactly as it was billed – a leadership development conference and part of the public relations cycle associated with the public release of Orrin and Chris’ book Launching a Leadership Revolution.

The Court stated that the business of the Plaintiff and that of Team have very different emphases. Plaintiff is a multi level marketing business which sells and distributes such things as energy drinks, soaps, and cleaners while Team sells motivational supplies and materials.

In summary the Court stated that as the actual businesses of plaintiff and Team appear to be sufficiently dissimilar, the Court cannot conclude that Team violated the original Court Order regarding competition.

Overall Conclusion by the Court

The Court found that there was no basis to sanction the Defendants or Team even though there are technical things that have been done on their face to appear to violate the order (some Team members encouraging IBOs to resign, mass resignations and asking for IBO number and upline names in order to by tickets or materials from Team). However, there was extensive testimony that the Defendants and Team attempted to comply with the Order and have taken significant steps to do so. The Judge stated that in the end there was simply insufficient evidence against the Defendants or Team and therefore Quixtar’s motion for contempt is DENIED.

The Court acknowledged that while the alleged violations did not meet the test for the court to impose sanctions that they could be violations of the Quixtar Rules of Conduct and would, if necessary, be decided by an arbitrator to determine if any relief is necessary – injunctive or compensatory, for either or both parties.

Again folks, my goals are to summarize the facts, offer my opinion, and put all of that in a manner that can be understood by the average non lawyer such as me. Hope this helped!

Posted by Ron Simmons at 11:42 AM

Full Document


Anonymous said...

THANK YOU!! Your posts are truely helpfull. Please keep it up! :)

pbrite said...

Could you e-mail me a copy or link to the legal doc concerning this decision? It's


Broom said...

To pbrite: You can find the full document on the website. In the article titled "Judge Sullivan Finds In Favor of Team and IBOs", there if a link called 'read document'. Scroll down a bit and you'll see 'attchments' and a link to the full decition.