UNITED STATES DISTRICT COURT 

IN THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

TIMOTHY KERRIGAN, et al, Case No. 2:14-cv-12693 

 Hon. Matthew F. Leitman 

Plaintiffs, 

vs. 

VISALUS, INC., et al 

Defendants. 

___________________________________/

PLAINTIFFS’ RESPONSE IN OPPOSITION TO 

VISALUS DEFENDANTS’ MOTION TO STRIKE CLASS ALLEGATIONS 

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TABLE OF CONTENTS 

INDEX OF AUTHORITIES ..................................................................................... ii 

ISSUE PRESENTED ............................................................................................... iv 

CONTROLLING AUTHORITIES ............................................................................ v 

INTRODUCTION ..................................................................................................... 1 

LEGAL STANDARD AND ARGUMENT .............................................................. 4 

A. PLAINTIFFS’ COUNSEL DOES NOT HAVE A CONFLICT 

OF INTEREST THAT WOULD REQUIRE THE COURT TO 

STRIKE THE CLASS ALLEGATIONS .............................................. 5 

1. Defendants Attempt To Create Conflict Situation By Creating 

An Imaginary Defendant ............................................................. 8

2. Plaintiffs’ Counsel Is Not Required To Take Conflicting 

Positions ....................................................................................11 

3. Defendants’ Argument That Plaintiffs’ Counsel Would Be 

Suing Its Own Clients If Appointed Class Counsel In Byrd Is 

Absurd .......................................................................................15 

4. Plaintiffs’ Counsel Is Not Seeking To Recover From A Single 

Defendant In The Three Lawsuits And There Is No Blanket Rule 

That Plaintiffs’ Counsel Cannot Represent Different Plaintiffs 

In Different Actions Against ViSalus ......................................16 

CONCLUSION ........................................................................................................20

 

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INDEX OF AUTHORITIES

Cases

Billingsley v. Bachinskas, 78 F.R.D. 407 (N.D. Tex. 1978) ....................................11 

Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998) .....13 

Forde v. Anjoy Travel Ltd., 94 F.R.D. 41(S.D.N.Y. 1982) .....................................10 

Greenfield v. Villager Indus., Inc., 483 F.2d 824, (3d Cir. 1973) ...........................11 

Honolulu Fed. Sav. & Loan Ass'n v. Verex Assur., Inc., 116 F.R.D. 474, (D. Haw. 

1987) .....................................................................................................................11 

Imhoff Inv., LLC v. SamMichaels, Inc., No. 10-10996, 2012 WL 2036765, at *2 

(E.D. Mich. May 21, 2012) ........................................................................... 4, 6, 7 

In re Dynex Capital, Inc. Sec. Litig., No. 05 Civ, 1897, 2011 WL 2581755, at *6 n. 

8 (S.D.N.Y. Apr. 29, 2011) .................................................................................... 8 

In re Payment Card Interchange Fee & Merch. Disc.Antitrust Litig., 827 F.3d 223 

(2d Cir. 2016) .......................................................................................................13 

In re Ready–Mixed Concrete Antitrust Litig., 261 F.R.D. 154, 168 (S.D.Ind.2009) 5 

Kuper v. Quantum Chem. Corp., 145 F.R.D. 80, 82–83 (S.D. Ohio 1992) ............20 

Moore v. Margiotta, 581 F. Supp. 649, 652–53 (E.D.N.Y. 1984) ..........................20 

Ortiz v. Fibreboard Corp., 527 U.S. 815, 856 (1999) ...................................... 13, 18 

Pipes v. Life Investors Ins. Co. of America, 254 F.R.D. 544, 550 (E.D. Ark. 2008)

 ..............................................................................................................................13 

Sandoval v. Ali, 34 F. Supp. 3d 1031, 1047 (N.D. Cal. 2014) ................................18 

Spagnola v. Chubb Corp., 264 F.R.D. 76, 96 (S.D.N.Y. 2010) ..............................13 

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Other Authorities

Newberg on Class Actions § 3:75 (5th ed.) .............................................................19 

Rules

Fed. R. Civ. P. 23(a)................................................................................................... 4 

Fed. R. Civ. P. 23(a)(4) .............................................................................................. 4 

Fed. R. Civ. P. 23(g)(1)(A) ........................................................................................ 5 

 

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ISSUE PRESENTED 

Does Plaintiffs’ counsel have a conflict of interest that would require the Court to 

strike the class allegations in this lawsuit? 

Plaintiffs' Answer: No. 

 

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CONTROLLING AUTHORITIES 

Cases

Imhoff Inv., LLC v. SamMichaels, Inc., 2012 WL 2036765, at *2 (E.D. Mich. May 

21, 2012) 

Sandoval v. Ali, 34 F. Supp. 3d 1031, 1047 (N.D. Cal. 2014) 

Rules

Fed. R. Civ. P. 23(a) 

Fed. R. Civ. P. 23(a)(4) 

Fed. R. Civ. P. 23(g)(1)(A)

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INTRODUCTION 

After having substantially lost every motion in this case for 2 1⁄2 years, usually 

after advancing contradictory and confused positions, Defendants’ latest (untimely) 

motion to strike the class allegations is possibly the least plausible motion filed to 

date. It is probably not a coincidence that this latest motion is filed on the eve of a 

hearing in November which should finally settle the issues which claims should be 

directed to the more than 40 defendants who participated in this long-running 

fraudulent scheme, and hopefully, will shortly lead to class certification for the over 

387,000 individual promoter class members to recover the approximately $360 

million in losses they suffered.1 [Dkt. # 115 at Memorandum p.1]. 

Let us put this motion in perspective. The instant case was filed in July, 2014, 

with the Court finding in two rulings that the compensation plan recruitment scheme 

described an inherently fraudulent pyramid scheme [See Dkt. # 75]. Plaintiffs spent 

the next two years in discovery finding out which of the dozens of companies and 

LLC’s set up by various promoters, the defendant “Founders,” the Goergen family 

participants, and the Ropart Asset Management private equity funds have legal 

 

1

 The class definition being sought is: 

The class consists of individuals who reside in the United States and 

Canada who became Independent Promoters between July 9, 2008 and 

the present who have lost money they paid to ViSalus. 

[Dkt.# 115 at Motion p. 2] 

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culpability. The Second and Third Amended Complaints set forth why and how over 

40 defendants managed the scheme, sucked it dry, and distributed over $150 million 

to themselves and each other, while leaving the company essentially collapsed. In 

the meantime, the Founder Defendants and Defendant Todd Goergen, who have 

continued to run ViSalus before and after the Kerrigan lawsuit, concocted a 

fraudulent equity scheme—an unregistered securities offering tacked on top of the 

Compensation Plan that pays for recruiting, and which was designed to entice new 

promoters to keep the sinking (or sunk) ViSalus company afloat for another couple 

of years. 

The Byrd plaintiffs2 and proposed class—“Independent Promoters ...who 

have lost money they paid toViSalus”– is composed of about 700 (as best we can 

tell at this time) people, each of whom is also a class member of Kerrigan, differing 

only that the conduct forming the basis of Byrd occurred after Kerrigan was filed 

and was based on an offering that most of the Kerrigan class members did not act 

on. As the Byrd complaint itself articulates, Ms. Byrd was not aware of the Kerrigan

litigation when she was induced to become a promoter, and was only given the 

Kerrigan complaint by a Colorado state securities attorney who opened an 

investigation into the securities offering she complained about. Ms. Byrd, and 

 

2 Caprece Byrd, et al. v. ViSalus, Inc., et al., Case No. 4:17-cv-12626 (E.D. Mich.) 

(“Byrd”).

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subsequently a number of other promoters retained Plaintiffs’ counsel to pursue the 

claim as a class. 

After Kerrigan was filed and its business practices put at issue, and 

particularly its lack of real, arms-length customers, some of the defendants in 

Kerrigan, in 2017 decided to sell directly to customers on Amazon, and in the 

process ruin one of its promoters’ business, a program of direct sales through 

Amazon developed by Michael Gehart. Thus, Gehart, an Independent Promoter who 

suffered a loss of money paid to ViSalus— also a Kerrigan class member when the 

Kerrigan class gets certified—retained Plaintiffs’ counsel to pursue an individual 

claim unique to him through which he could not recover as a Kerrigan class 

member.3 

Neither of these cases present a conflict of interest. Each case has exactly the 

same interest: to recover damages from an overlapping pool of culpable parties for 

the same conduct arising out of a collapsed pyramid scheme. Defendants’ motion is 

a fabrication composed of “what ifs” and essentially misrepresentations. Plaintiffs’ 

counsel can fairly and adequately protect the interests of this class (and Michael 

Gehart and the Byrd class) and is committed to zealously representing its clients. 

Defendants’ Motion must be denied. 

 

3 Michael Gehart v. ViSalus Inc., et al., Case No. 4:17-cv-12132 (E.D. Mich.) 

("Gehart").

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LEGAL STANDARD AND ARGUMENT 

The prerequisites for maintaining any class action are: “(1) the class is so 

numerous that joinder of all members is impracticable; (2) there are questions of law 

or fact common to the class; (3) the claims or defenses of the representative parties 

are typical of the claims or defenses of the class; and (4) the representative parties 

will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). 

Defendants’ Motion to Strike Class Allegations does not take issue with the class 

number, the common questions of law or fact common to the class, or the claims or 

defenses of the representative parties, but is based solely on the fourth prerequisite, 

and not even the representative parties’ ability, but on Plaintiffs’ counsels’ ability to 

fairly and adequately protect the interests of the class. “To satisfy the fourth 

prerequisite for class-action status, the Court must find that “the representative 

parties will fairly and adequately protect the interests of the class.” Imhoff Inv., LLC 

v. SamMichaels, Inc., 2012 WL 2036765, at *2 (E.D. Mich. May 21, 2012) (citing 

Fed. R. Civ. P. 23(a)(4)). “This is a two-pronged inquiry, “one relates to the 

adequacy of the named plaintiffs' representation of the class and requires that there 

be no conflict between the interests of the representative and those of the class in 

general; the other relates to the adequacy of class counsel's representation.”” Id. 

(citing In re Ready–Mixed Concrete Antitrust Litig., 261 F.R.D. 154, 168 

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(S.D.Ind.2009)). Rule 23 provides four guidelines for the Court to consider when 

determining the adequacy of class counsel’s representation: 

(i) the work counsel has done in identifying or investigating potential 

claims in the action; 

(ii) counsel's experience in handling class actions, other complex 

litigation, and the types of claims asserted in the action; 

(iii) counsel's knowledge of the applicable law; and 

(iv) the resources that counsel will commit to representing the class. 

Id. at *2 (citing Fed. R. Civ. P. 23(g)(1)(A)). 

Defendants’ Motion does not raise issue with any of the four guidelines above, 

rather bases its entire Motion to Strike the Class Allegations by challenging 

counsels’ adequacy on the ground of violation of professional ethics and an alleged 

“conflict.” 

A. PLAINTIFFS’ COUNSEL DOES NOT HAVE A CONFLICT OF 

 INTEREST THAT WOULD REQUIRE THE COURT TO 

 STRIKE THE CLASS ALLEGATIONS 

That this alleged “conflict” does not exist - - and Defendants’ counsel knows 

it does not exist-- is plain from the relief sought by this bogus motion. Striking the 

class allegations would not cure an actual conflict of interest. If representing Gehart

or Byrd ethically conflicted with representing the class, then having Plaintiffs 

continue to represent the individual parties (Kerrigan, Valli, and Mikovich) is 

equally an ethical problem not cured by striking the class allegations. But no one 

who wrote this motion seriously believes there is a conflict. Rather, it is a last ditch 

effort to gin up something between now and class certification. 

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Efforts like this have been tried and failed. “When assessing the adequacy of 

counsel, courts must distinguish and disregard ‘petty issues manufactured by 

defendants to distract the judge from his or her proper focus under Rule 23(a)(3) and 

(4) on the interests of the class.’” Imhoff Inv., LLC v. SamMichaels, Inc., 2012 WL 

2036765, at *2 (E.D. Mich. May 21, 2012) (citation omitted). Defendants’ Motion 

is exactly that – petty and manufactured, and an attempt to distract the Court from 

its proper focus under Rule 23. 

The most obvious reason why there is no conflict is because everyone in each 

of the three cases represented by the Plaintiffs’ counsel has the same goal and 

interest. Every member of the Byrd class is also simultaneously a class member of 

the Kerrigan litigation, and every dollar of the Byrd class losses is recoverable if and 

when the RICO and securities claim in Kerrigan proceed to trial on a class basis. 

Same with Michael Gehart. He is almost without doubt a money-losing promoter 

(Defendants do not claim otherwise) and would be entitled to a portion of the 

Kerrigan class recovery. Both Byrd plaintiffs and Gehert thus have exactly the same 

aim and goal as the Kerrigan class: to succeed in the Kerrigan class. What the Byrd

plaintiff class and Gehart also have are additional claims not available to the 

Kerrigan class, claims that arose after that suit was filed and based on different 

wrong doing. That fact does not create a conflict, and no case, no matter how badly 

misread by Defendants, says so. Neither do the professional rules. Rule 1.7(a) 

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provides that a “directly adverse” representation is prohibited; subsection (b) limits 

“materially adverse” representation. 

The utter failure to come to grips with this basic fact leads to the second 

articulated basis for the motion to strike – that Plaintiffs’ counsel has an alleged 

conflict because the Defendants don’t have enough money to pay all their clients for 

the harms they have caused. The argument is equally perverse (especially since 

Defendants take no issue with flaunting their wealth gained from Plaintiffs’ money). 

First, each of the three cases has a different group of Defendants for any judgment 

against them, and second, Defendants have offered no back-up to this position or 

provided any evidence that the assets of each of the named Defendants is insufficient 

to recover any judgment against them.

 The fact that Defendants have chosen to raise ethical issues against Plaintiffs’ 

Counsel here rather than before attorney discipline board is further evidence that 

Defendants are attempting to divert the Court from the real issues at hand. See, e.g., 

Imhoff Inv., LLC v. SamMichaels, Inc., 2012 WL 2036765, at *2 (E.D. Mich. May 

21, 2012) (“Defendants sometimes challenge class counsel's adequacy on the ground 

of violation of professional ethics in connection with the class litigation ... [Most 

courts] have directed the defendants to bring any ethical complaints they have in the 

proper legal disciplinary forums and have not barred class certifications grounded 

on any determination of the merits of such ethical complaints”) (quoting In re Dynex 

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Capital, Inc. Sec. Litig., No. 05 Civ, 1897, 2011 WL 2581755, at *6 n. 8 (S.D.N.Y. 

Apr. 29, 2011)). There is no “real” conflict of interest (or other ethical violation) in 

Plaintiffs’ counsels’ representation of Michael Gehart or the Plaintiffs and purposed 

class in the Byrd litigation that would require Plaintiffs’ counsel to be dismissed 

from this lawsuit and require the court to strike the class allegations. 

1. Defendants Attempt To Create Conflict Situation By 

 Creating An Imaginary Defendant 

Defendants claim that Plaintiffs’ counsel cannot represent Michael Gehart and 

the interests of this class or the Byrd class by claiming Gehart is an (imaginary) 

defendant in this case. Defendants claim Gehart could be a Defendant in this 

litigation and the Byrd litigation by rattling off some general similarities between 

himself and the Independent Promoter Defendants in this litigation and Defendant 

Vincent Owens in the Byrd litigation, and then compound on the argument by 

claiming that since he is or could be a potential defendant Plaintiffs’ counsel must 

consider him as a potential source of recovery in order to adequately represent the 

Plaintiffs and the putative class here. Then Defendants’ go as far as claiming that if 

Plaintiffs’ Counsel is going to zealously represent Gehart, and if he is a viable 

defendant in this case, then his strongest defense is that ViSalus is not a pyramid 

scheme – which is obviously adverse to the interests of this case and class. 

Not only is this confusing, it is entirely invented. As things actually exist, 

Gehart is not a defendant in this litigation, and he is not a defendant in the Byrd 

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litigation because he didn’t do anything to become a defendant. The Individual 

Promoter Defendants are culpable because they knew about the pyramid scheme, 

acted to further the scheme, and were paid big money to sell the dream to promoters 

like Kerrigan and Gehart. Of course, to this day each of the defendants claim there 

was no scheme or they knew nothing—apparently Gehart alone out of all the people 

involved was the mastermind with scienter to establish, perpetuate, and/or carry out 

the scheme to defraud the Plaintiffs and class here. 

 Plaintiffs’ counsel is not required to take the “adverse” position that ViSalus 

is not a pyramid scheme. To the contrary, the fact that it is a pyramid scheme is part 

of Gehart’s RICO claim, and is plastered all over the complaint filed on his behalf. 

[Dkt. # 1 at Pars. 1, 7, 10, 26, 72, 82, 91, etc.].4 Gehart’s sharing of ViSalus 

marketing materials on his social media pages, or the fact that he achieved their rank 

of Ambassador, hardly implicates Gehart in Defendant’s scheme (if this were the 

standard there would be hundreds if not thousands of distributors that would have to 

be named since ViSalus provided every new distributor with marketing materials to 

share and scripts to use to try and recruit others). Gehart did not materially 

 

4 Gehart’s complaint spells this out in Par. 91: 

The association-in-fact has a longevity sufficient to permit those 

associates to pursue the enterprise’s purpose - - the establishment and 

perpetuation of an unlawful pyramid scheme and the operation of a 

fraudulent pyramid scheme. That scheme is described in the Kerrigan 

et al. v. ViSalus litigation currently pending. 

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misrepresent ViSalus’s worth and an “equity payout” in order to induce hundreds of 

people to invest in the Founders Equity Incentive Plan as did Vincent Owens and the 

other defendants in the Byrd litigation. In short, all Defendant’s social media 

“evidence” shows is that Gehart did what every promoter who got sucked into the 

pyramid scheme did, including Kerrigan himself, who got the other name plaintiffs 

involved in the dream. 

Of the over 400,000 promoters identified in Kerrigan, approximately 85% lost 

money, including, most likely, Gehart. Even if Gehart himself is not among that 

85%, are Defendants seriously suggesting that each of the approximately 60,000 

promoters who did not lose money should be named as a defendant? If Defendants 

really believed that Gehart should have been a defendant, then he should have been 

brought into this litigation as a third-party defendant. If Gehart is so important, 

where was the F.R.C.P. 19(a) motion? Of course, Defendants would then have had 

to explain why the thousands of promoters who are not members of the class, 

because they made a little money, should not themselves be joined in the litigation. 

The cases Defendants cite on this issue provide no support. They involve a 

class representative (not the class counsel) with interests antagonistic to the class. 

In Forde v. Anjoy Travel Ltd., 94 F.R.D. 41(S.D.N.Y. 1982), the class 

representative’s theory of liability is different from the other class members. In 

Honolulu Fed. Sav. & Loan Ass'n v. Verex Assur., Inc., 116 F.R.D. 474, (D. Haw. 

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1987), the class representative’s position as an intermediary created a conflict 

between the plaintiffs and the class. In Billingsley v. Bachinskas, 78 F.R.D. 407 

(N.D. Tex. 1978), the plaintiff had a conflict because he had been employed by the 

defendant so he could not act as a class representative. Defendants attempt to apply 

these cases to the adequacy of counsel with Greenfield v. Villager Indus., Inc., 483 

F.2d 824, (3d Cir. 1973), but Greenfield stands for nothing of the sort. In Greenfield, 

inadequacy of the counsel was due to counsel’s failure to provide adequate notice to 

the absent class members as it had promised the court it would. Id. at 830-31. Gehart 

is not attempting to serve as a class representative in either this case or the Byrd

litigation and Defendants have failed to provide any support that Plaintiffs’ counsels’ 

representation of Gehart is antagonistic to the class here. 

2. Plaintiffs’ Counsel Is Not Required To Take 

 Conflicting Positions 

The basis of this litigation is that, whether by RICO, federal securities, or state 

law, ViSalus and the Defendants named here orchestrated an illegal pyramid 

scheme. Plaintiffs’ counsel never need to take the position in the Gehart litigation 

(as set forth above) or in the Byrd litigation (where the pyramid scheme legality or 

illegality does not make a difference with respect to the securities fraud) that ViSalus 

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and the Defendants here were not operating an illegal pyramid scheme – the only 

position that would be inconsistent with the potential class here.5 

Defendants badly misread the complaints in each case if they seriously claim 

that they offer different factual positions. Defendants seem to claim that plaintiffs’ 

complaints say something different with respect to the demand for product and 

product sales, but this is untrue. Each suit filed by Plaintiffs’ counsel alleges (and 

will prove if necessary) that there was little to no demand for product by real 

customers.6 Far from being “conflicting” or contrary, the facts supporting Gehart’s 

claim are only conflicting and inconvenient for the Defendants in Kerrigan, since 

their “customer” claims turn out to be Amazon customers buying the product directly 

 

5 In Byrd, the Complaint states in Par. 2 with the words, “Defendant ViSalus is a 

failed pyramid scheme.” In Gehart, the Complaint, in Par. 1, starts “when he joined, 

Plaintiff did not know that ViSalus operated an illegal pyramid scheme.” 

 

6

 As Gehart’s complaint alleges, in Par. 25: 

What Plaintiff did not know until he was in the system was that 

customers were few, and the real payments could only come from 

recruiting others into the system. 

And the RICO scheme described beginning in Par. 31 begins with the paragraph 

entitled “Lack Of Real Customers.” The fact that Gehart had to sell product to 

customers outside of the ViSalus system only supports this point, not contradicts it. 

The people that did actually like the product did not want to be bothered with 

ViSalus’s incessant recruiting tactics and purchased the product from Gehart on 

Amazon outside of ViSalus’s system.

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online rather than through the promoters who paid $499 or $999 so they could sell 

to few “customers.” 

The Byrd complaint is also consistent. See FAC, Dkt. # 30, Pars. 9, 59, 227, 

and elsewhere. More to the point, whether there was or was not “demand” for the 

product is not the basis for or relevant to Byrd. The fake equity offered as part of the 

Founders Equity Incentive Plan was offered because the product sales within the 

system could not support the bonuses it was paying out to its professional promoters. 

Each of the newly-recruited promoters in Byrd articulates why they joined and how 

much money they lost as promoters. 

All of the cases that Defendants’ cite in their motion to support their argument 

that Plaintiff’s counsel must take adverse positions to represent the clients involved 

in the three litigations are out of place - they involve adversity between the subclasses as part of a settlement7

 or inadequate class representatives,8 neither of which 

an issue here. None of the plaintiffs in any action are requesting the court to order 

 

7 Ortiz v. Fibreboard Corp., 527 U.S. 815, 856 (1999) (the class was divided 

between holders of present and future claims thus requiring separate counsel for 

each); In re Payment Card Interchange Fee & Merch. Disc.Antitrust Litig., 827 F.3d 

223 (2d Cir. 2016) (counsel could not represent a class seeking injunctive relief and 

a class seeing monetary relief in the same litigation); and Broussard v. Meineke Disc. 

Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998) (class sub-groups had conflicting 

interests). 

8 Spagnola v. Chubb Corp., 264 F.R.D. 76, 96 (S.D.N.Y. 2010); Pipes v. Life 

Investors Ins. Co. of America, 254 F.R.D. 544, 550 (E.D. Ark. 2008) 

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ViSalus to stop operating in its entirety and the adequacy of the class representative 

is not the issue in dispute. 

Defendants’ final argument, that a judgment in this litigation would render 

any stock in ViSalus “valueless” thus equating to conflict between the Plaintiffs and 

class here and the Byrd litigation, is nonsensical. The Byrd Complaint alleges that 

the plaintiffs were fraudulently induced to buy a security that has no value based on 

false representations of current performance and lies about future dividends. A 

judgment against ViSalus and the Founders would only confirm this to be true. And 

Defendants apparently concede that the equity they were offering to promoters was 

fake (“The Founders Equity Incentive Plan, which Plaintiffs’ counsel 

mischaracterizes as an actual securities offering, is a phantom equity incentive 

plan...”) (Defs.’ Mtn. at 18).9 The theoretical fact that Defendants claim that 

distributors could receive a cash payout (or what they called a “dividend” before 

getting sued for securities fraud) if the distributor remains active and at the 

qualifying rank whenever ViSalus decides to determine who it will pay if it does 

decide to pay, and all at its sole discretion (all of which is another part of the 

fraudulent inducement claim) based on the value of the company does not actually 

 

9 The Byrd equity plan is being investigated by two securities agencies, in Colorado 

and Michigan. 

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create a conflict for Plaintiffs’ counsel or cause issue with Plaintiffs’ counsels’ 

ability to zealously advocate for its clients. 

3. Defendants’ Argument That Plaintiffs’ Counsel Would 

 Be Suing Its Own Clients If Appointed Class Counsel 

 In Byrd Is Absurd 

Defendants have either misread the proposed class definition in the Byrd

litigation or are intentionally misrepresenting the class definition. The Individual 

Promoter Defendants named here are not class members in Byrd. Every member of 

the Byrd class is a money-losing promoter who got suckered into investing $25,000, 

$40,000 or more to “earn” “equity.” If Defendants gave away some of that “equity” 

internally to their co-Defendants (as apparently they did to several promoters, 

including a Byrd and Kerrigan defendant, Gary J. Reyonds), these few people are 

not and would not be members of the Byrd class and no, they would not become 

Plaintiffs’ counsels’ new clients upon certification. This should be clear from the 

proposed class definition in both the original complaint and the first amended 

complaint filed in the Byrd litigation, which expressly excluded the Individual 

Promoter Defendants from the class.10 If appointed class counsel in Byrd, Plaintiffs’ 

counsel would not be suing its own clients. 

 

10 In the original complaint the class described consisted of “all those who purchased 

or otherwise acquired ViSalus securities, or were informed by ViSalus that they were 

“unit holders” of such equity in the course of an offering called “Founders Equity 

Incentive Plan.” Excluded from the Class are Defendants, the officers and directors 

of the Company, members of their immediate families and their legal 

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4. Plaintiffs’ Counsel Is Not Seeking To Recover From A 

 Single Defendant In The Three Lawsuits And There Is 

 No Blanket Rule That Plaintiffs’ Counsel Cannot 

 Represent Different Plaintiffs In Different Actions 

 Against ViSalus 

Defendants claim that Plaintiffs’ counsel is attempting to recover from a 

single defendant with a finite amount of resources, and therefore, suing on behalf of 

Byrd and Gehart on the heels of Kerrigan presents a conflict with respect to 

Kerrigan. There are two problems associated with this argument. 

First, there is no “single” pool of money nor there is not a single defendant in 

any one of the lawsuits, rather multiple and different defendants named in each of 

the three suits, and these defendants present different “pools” of money available for 

recovery. The damages thus far articulated in the Kerrigan case are approximately 

$350 million. There are four general “pools” of money potentially available to 

compensate the plaintiff class. The $15 million D & O policy covering the Founders 

 

representatives, heirs, successors or assigns and, any person or entity in which 

Defendants have or had a controlling interest.” (emphasis added) 2:17-cv-12626-

LJM-SDD Doc # 1 at 20. In the First Amended Complaint, the class described 

consists of “all those who purchased or otherwise acquired ViSalus securities, or 

were informed by ViSalus that they were “unit holders” of such equity in the course 

of an offering called the “Founders Equity Incentive Plan.” Excluded from the Class 

are Defendants, those individuals identified as defendants in the Kerrigan lawsuit 

who may have obtained equity “units” in the Plan, their agents, and others who 

obtained their “units” without investment, the officers and directors of the Company, 

members of their immediate families and their legal representatives, heirs, 

successors or assigns and, any person or entity in which Defendants have or had a 

controlling interest.” (emphasis added). 4:17-cv-12626-MFL-DRG Doc # 30 at 22. 

Case 2:14-cv-12693-MFL-DRG ECF No. 189 filed 10/12/17 PageID.8066 Page 22 of 28
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and ViSalus for the 2014 policy year and a series of contractual agreements to pay a 

portion of defense costs from ViSalus’s former owner, Blyth, Inc. is one “pool.” The 

Founders personally, and through their various companies pulled out a large amount 

of money from the operation between 2011 and 2013, as much as $90 million, 

comprising another “pool.” The Ropart Asset Management/Goergen defendants, 

who pulled out at least $55 million between 2008 and 2012 are a third “pool.” And 

the Individual Promoter Defendants, and their associated companies, pulled out 

approximately $15-20 million, comprising the last leg of the “pool.”11 Each of these 

has different defenses and the Plaintiffs’ claims against each may proceed for 

damages in different years and under different legal theories. 

 

11 Visalus, Inc., 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, LLL, Ropart Asset Management Fund II, LLC, Rock 

Ridge Asset Management Company, LLC, Ropart Asset Management, LLC, Living 

Trust Dated 9/30/1991 F/B/O Robert B. Goergen, OCD Marketing, Inc., Hashtag 

One, LLC, Power Couple, Inc., Arriveby 25, Inc., Bam Ventures, Inc., Jason 

O’Toole International Holdings, 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 LLC, 

Prospex Automated Wealth Systems, Inc., 9248-2587 Quebec, Inc., Jason O’Ttoole, 

and Lori Petrilli. In Byrd, in addition to ViSalus, the founders and several top 

promoters, including Ashley Sarnicola and Vincent Owens (not previously named 

as a defendant) are named as defendants.

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The Byrd class damages are believed to be $15 million, and, as noted 

elsewhere, are largely subsumed into the Kerrigan damages in that every Byrd

plaintiff by definition is a money-losing promoter. But Byrd and in all likelihood 

Gehart, expand rather than contract, the potential recovery pool. The Kerrigan

litigation is defended by 2014 D&O policies issued in 2014, while ViSalus was a 

subsidiary of Blyth, Inc. But the Byrd litigation will trigger ViSalus D&O policies 

issued since 2015, with their own indemnity provision, thus adding to the recovery 

pool. ViSalus’s general commercial insurance may cover have coverage obligations 

over Gehart’s claim from 2017. The Plaintiffs and the class here, Michael Gehart, 

and the plaintiffs and the class involved in the Byrd litigation have not sued a single 

defendant and are not all competing for the same pool of resources. 

Second, although Defendants attempt to imply there is a blanket rule 

prohibiting an attorney currently representing another class against the same 

defendant from serving as class counsel, there is no blanket rule. Class counsel may 

represent two classes, even in related cases, as long as the litigant’s interests do not 

inherently conflict. Sandoval v. Ali, 34 F. Supp. 3d 1031, 1047 (N.D. Cal. 2014). In 

Sandoval, the court denied to disqualify class counsel due to potential conflicts of 

interest (analyzing both the Ortiz and Lou cases cited by Defendants here) because 

the defendants had only raised speculative concerns about a conflict of interest. Id. 

at 1047. The Sandoval court noted: 

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The treatise Newberg on Class Actions § 3:75 (5th ed.) takes a 

more nuanced approach: 

Like a lawyer in any litigation, a class action attorney may not 

simultaneously represent two clients if those clients' interests are 

directly adverse or if there is significant risk that the dual 

representation will materially limit the lawyer's representation of 

one client. Such attorney conflicts, like those of the class 

representative, are material to the question of whether the 

proposed class counsel can adequately represent the class; but as 

with class representatives, only client conflicts that are material 

and presently manifest—rather than merely trivial, speculative, 

or contingent on the occurrence of a future event—will affect the 

adequacy of class counsel. Id. (internal footnotes omitted). 

According to Newberg, “[i]n general, class counsel may 

represent multiple sets of litigants—whether in the same action 

or in a related proceeding—so long as the litigants' interests are 

not inherently opposed.” Id. Newberg notes that concurrent 

representation may be beneficial in some situations, and that 

courts have found counsel inadequate due to conflicts where “the 

recovery of one group in one forum inherently conflicts with the 

recovery of the other.” Id. Newberg sets forth examples such as 

where a limited fund means that the recovery of one claimant will 

cut directly into recovery by another, where substantive law 

permits recovery by only one or the other set of litigants, where 

one client is litigating an appeal to a class action settlement in 

which another client claimed recovery, and where counsel's 

actions have generated conflicts between class representatives 

and the class. Id.

Id. at 1047. 

 Here, the interests of Plaintiffs and the proposed class, Michael Gehart, and 

the plaintiffs and proposed class in the Byrd litigation do not inherently oppose one 

another. Defendants have offered no evidence of the financial status of each of the 

Defendants named in each litigation, or any real conflict, but rather theoretical and 

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manufactured conflicts of interest. All plaintiffs are not vying for relief from the 

same limited source as in Kuper v. Quantum Chem. Corp., 145 F.R.D. 80, 82–83 

(S.D. Ohio 1992) as Defendants’ claim, but rather multiple defendants and resources 

(inconsistent with Moore v. Margiotta, 581 F. Supp. 649, 652–53 (E.D.N.Y. 1984), 

where counsel could not elucidate that there was a difference in the funds that the 

two classes were seeking). There simply is no conflict that requires curing and no 

reasoning behind striking the class allegations in this suit. 

CONCLUSION 

Defendants have failed to set forth any sort of ethical violation or any other 

reason for this Court to strike the class allegations in this lawsuit. Plaintiffs’ counsel 

does not have a conflict in representing multiple plaintiffs in multiple lawsuits 

against ViSalus and the several other defendants named in the suits. Defendants’ 

Motion merely fabricates a conflict as an attempt to dismiss Plaintiffs’ counsel and 

ask the court to strike the class allegations, and accordingly, should be denied. 

 

 

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 Respectfully submitted, 

 SOMMERS SCHWARTZ, P.C. 

s/ Andrew Kochanowski 

Andrew Kochanowski (P55117) 

Sarah L. Rickard (P78767) 

One Towne Square, Suite 1700 

Southfield, MI 48076 

(248) 355-0300 

akochanowski@sommerspc.com

srickard@sommerspc.com 

 

 

PREBEG, FAUCETT & ABBOTT, PLLC 

Matthew J.M. Prebeg 

(TX Bar No: 00791465) 

Brent T. Caldwell 

(TX Bar No: 24056971) 

8441 Gulf Freeway, Suite 307 

Houston, TX 77017 

(832) 743-9260 

mprebeg@pfalawfirm.com

bcaldwell@pfalawfirm.com

 WEXLER WALLACE LLP 

Edward A. Wallace 

(IL Reg. No. 6230475) 

Adam Prom 

(IL Reg. No. 6317283) 

55 W. Monroe Street, Suite 3300 

Chicago, IL 60603 

(312) 589-6272 

EAW@wexlerwallace.com

ap@wexlerwallace.com

Dated: October 12, 2017 

Case 2:14-cv-12693-MFL-DRG ECF No. 189 filed 10/12/17 PageID.8071 Page 27 of 28
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CERTIFICATE OF SERVICE

I certify that on October 12, 2017, I electronically filed the forgoing paper 

with the Clerk of the Court using the CM/ECF system, which will send notification 

of such filing to all counsel of record on the ECF Service List. 

s/ Andrew Kochanowski 

Andrew Kochanowski (P55117) 

Sommers Schwartz, P.C. 

One Towne Square, Suite 1700 

Southfield, MI 48076 

(248) 355-0300 

akochanowski@sommerspc.com

Case 2:14-cv-12693-MFL-DRG ECF No. 189 filed 10/12/17 PageID.8072 Page 28 of 28