Distributors Beware! LifeVantage Can Terminate Your Contract for Any Reason
SALT LAKE CITY — We are looking over the facts in the case Burke Hedges v. LifeVantage Corporation (LFVN). A tale that began in 2009 when Hedges was hired as an independent contractor and terminated shortly after in 2010. By 2011, a wrongful termination suit was filed by Hedges, and his company Backbone Worldwide Inc.
If you haven’t been following, I suggest you start here to catch up to the details up until this point.
In today’s post, I am analyzing two rulings on Burke Hedges v. LifeVantage that are a matter of public record in the Salt Lake County District 3 Courts. Or rather, I am analyzing one ruling and a curious reversal that have become central to the case, today.
This brings us up to a November 2016 hearing on the case, where the defendant, LFVN, requested a summary judgement to dismiss the wrongful termination claims that Hedges made against the MLM giant.
The legal team for LFVN made the case they retain the right to implement, renew and terminate contracts, as they see fit. They drew comparisons to the same way employers have the right to hire and fire at sole discretion.
They used hearsay claims against Hedges’ conduct as evidence of their mindset. The defense team set out to prove not that the claims were true, only that the team at LFVN believed the claims to be true and that was grounds for assessing a material breach of contract.
Again, they set out to prove the opinion of top executives at LFVN was enough to constitute a breach of contract even though Hedges vehemently denied all claims. Luckily for distributors, the defense’s motion for summary judgment was denied.
The judge did not agree that a belief about someone’s actions was enough to justify material breach of contract.
One Big Step for Distributor Rights?
That should be the end of it.
Unfortunately, that’s not the case. The wonderful and terrifying thing about our justice system is no decision is final, especially if you can afford a good lawyer.
In this civil case, LFVN filed a motion for the judge to reconsider his ruling based on precedents set in other cases and a new allegation that Hedges and Backbone Worldwide acted independently of LFVN in using a marketing system that was not approved by the Company, a claim Hedges denies.
And even though the two sides of the case could not agree on the facts regarding the use of Opus marketing system, upon reconsideration it was determined that LFVN does not have to prove “material breach”.
The terms of the contract are written that “any breach” is grounds for termination. And according to the court, that means the allegation of a breach is good enough for the company to terminate contracts.
At the end of the day, LFVN can terminate any distributor, for any reason, as long as the courts believe they did it in good faith, meaning they believed that a breach occurred. LFVN does not need proof of a breach to terminate your distributor contract, they only need proof of their state of mind at the time of termination.
According to Hedges, not only is that disheartening for his case, it flies in the face of the American dream that MLMs stand to provide for distributors.
Can you truly be in total control of your future and financial freedom if the company you are contracted with can take it away from you at any time? For answers to questions like this one, follow the blog.
