Dynamite and Dog Bites: Strict Liability in the Burke Hedges Case

Salt Lake City — In yesterday’s blog post about Burke Hedges v. LifeVantage (LFVN) I brought to the public eye breaking news regarding what the Hedges team can share in court at Monday’s trial. It was decided that Hedges would not be allowed to share the whole case, but what does that mean for the MLM Trial of the Century?

What we learned today is that Hedges’ attorneys had prepared to share their case on wrongful termination. And it is, in fact, that part of the case being suppressed from the jury on the ground of strict liability.

If you’ve never heard of strict liability, according to legal experts it’s reserved for severe cases in the state of Utah.

For instance, if a dog bites a person while walking down the street with it’s owner, the owner is strictly liable regardless of circumstance. Same if someone uses dynamite to build a tunnel, and the use of dynamite results in injury. The court understands that using dynamite is so dangerous that anyone who takes that risk to any end is strictly liable for injury.

In this case, the wrongful termination piece has been complicated from the start. Initially, a judge ruled in favor of Hedges to present his $34 million dollar case of wrongful termination to a jury. At the time of that ruling, LFVN said they terminated Hedges in good faith after allegations of misconduct. The Company was unable to prove material breach because they were not successful in proving the allegations were true.

But that judgment was later overturned after the defense appealed by presenting evidence that Hedges actually breached his contract on a technicality when he used a marketing tool, called OPUS Marketing System, without written approval.

Hedges claims to have sought and received approval to use the system, but there was nothing in writing. Instead, a video of verbal approval exists, but the judge didn’t consider it in the decision. The judge assessed that Hedges had committed a material breach and the termination was not wrongful, reversing his previous decision.

Since then, the Hedges team has been preparing for the MLM Civil Trial of the Century, or at least that’s what they’ve been calling it as the public anxiously await the day in court that would put a claim of pretextual back on the table.

But in an unanticipated blow to the Hedges team, in a hearing this week the Judge said no dice. The decision was made that if Hedges was in breach of contract he is strictly liable for the termination that resulted. And since the judge had already ruled that the material breach was on Hedges, he will have to wait until appeals to present the MLM Civil Trial of the Century worth $34 million in damages and a chance to stand up for distributor rights.

So what does that mean for Monday? For now, the MLM Civil Trial of the Century is to be continued in appeals court. Instead, the Hedges team will present an undisputed case for $60,000 that LifeVantage did not make good on as part of their contractual obligation.

In turn, LifeVantage will ask for more in damages on a counterclaim that Hedges owes them for the value of stock. LifeVantage will try to prove that the conversion of the stock to Hedges was fraudulent, while team Hedges will continue to defend that the stock was offered in lieu of payment.

For the latest updates, and to find out when the appeal is scheduled — stay tuned to this blog.