Source: https://quackwatch.org/cases/civil/amerisciences/complaint/
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Four Sue AmeriSciences for Refunds | Quackwatch
Optometrist Edward J. Furey, of Roswell, Georgia is suing AmeriSciences and three of its officers for failing to give refunds. The company, headquartered in Houston, Texas, sells dietary supplements through a multilevel network of distributors. Furey’s suit, shown below, accuses the defendants of failing to refund more than $150,000 for products he purchased and also for failing to properly disclose his cancellation rights as required by Georgia law. Furey’s attorney, Henry A. Turner of Decatur, Georgia represents three other former distributors with similar cases. The cases must be brought individually because Georgia laws do not permit MLM-related class action suits.
) CIVIL ACTION FILE NO.
2007CV142077JURY TRIAL DEMANDED
COMES NOW Edward 1. Furey (hereinafter “Plaintiff’) and files this his Complaint against AmeriReach.com, LLC d/b/a AmeriSciences (hereinafter AmeriSciences”), Barry Cocheu (hereinafter “Cocheu”), Lou Gallardo (hereinafter “Gallardo”), and Steven Redman (hereinafter “Redman”), respectfully showing the following:
The claims of Plaintiff in this action arise statutorily pursuant to the provisions of O.C.G.A. § 10-1-415 and O.C.G.A. § 10-1-417 of the Georgia Sale of Business Opportunities Act (hereinafter the “Act”), and O.C.G.A. § 10-1-399 and O.C.G.A.§ 10-1-405 (c) of the Georgia Fair Business Practices Act of 1975 (hereinafter the “FBPA”).
Upon Plaintiffs joining Defendant AmeriSciences, and continuing during the term of Plaintiffs relationship with Defendant AmeriSciences, the Defendants were statutorily required to make written disclosure to Plaintiff of his legal rights which arise statutorily under Georgia law requiring inter-alia that Defendant AmeriSciences repurchase certain products if Plaintiff terminated his relationship with Defendant AmeriSciences (hereinafter the “Cancellation Rights”). Said disclosure was required to include enumeration of each and every right set forth in O.C.G.A. § 10-1-415 (d) (1) of the Act (hereinafter the “Repurchase Disclosure Requirements”).
Defendant AmeriSciences’ disclosure of Plaintiffs statutorily prescribed Cancellation Rights (hereinafter the “AmeriSciences Disclosure”) was not in conformance with the Repurchase Disclosure Requirements under Georgia law.
“We do not reach this argument, however, because we find that since appellee’s action was not based on the contract, a defense alleging that the contract allows the complained of conduct or prohibits legal action for its redress simply does not apply. In Attaway v. Tom’s Auto Sales, 144 Ga. App. 813, 814–815 (242 SE2d 740) (1978), we held that when an action is brought for violation of the FBP A, contractual defenses are irrelevant and inapplicable. The same principle applies here, and we hold that contractual defenses are inapplicable when an action is based not on the contract but solely on an alleged violation of the Sale of Business Opportunities Act.” Id. at 340; [Emphasis added].
” … the Act (the “FBP A”) itself is in no way tied to contractual rights and is wholly self-sustaining.” Attaway at 814. [Emphasis added].
Defendant AmeriSciences is a Florida limited liability company with its headquarters located at 2772 Bingle Road, Houston, Texas 77055. Upon information and belief, Defendant AmeriSciences’ primary business is the marketing of nutritional supplements through a network of independent marketing consultants (hereinafter “IMC’s”). The network of IMC’s is structured in a Multi-Level Marketing (hereinafter “MLM”) format. Consequently, Defendant AmeriSciences is a “multilevel distribution company” as that term is defined in the Act. Further, Defendant AmeriSciences is subject to those provisions of the Act which control many of the activities of organizations that employ an MLM structure in Georgia, including without limitation O.C.G.A. § 10-1-415 (c), O.C.G.A. § 10-1-415 (c) (4), O.C.G.A. § 10-1-415 (d), and O.C.G.A. § 10-1-415 (d) (1). Defendant AmeriSciences (i) solicits business in Georgia, (ii) does business with its network of IMC’s located in Georgia, and (iii) derives income from Georgia. Therefore, Defendant AmeriSciences is subject to the jurisdiction and venue of this Court pursuant to O.C.G.A. § 9-10-91(1), and 9-10-93. Due and legal service of process can be perfected upon Defendant AmeriSciences by serving its Registered Agent Steven Redman, Esq. at 2772 Bingle Road, Houston, Texas 77055, pursuant to O.C.G.A. § 9-10-94.
According to Defendant AmeriSciences’ Website (www.amerisciences.com), Defendant Cocheu is a Founding Member, President, and Chief Executive Officer of Defendant AmerisCiences’ Personal liability for Defendant Cocheu, for the conduct complained of herein, arises pursuant to O.C.G.A. § 10-1-405 (c) of the Act. [Miles Rich Chrysler-Plymouth, Inc. et a1. v. Mass, 201 Ga. App. 693,411 S.E.2d 901 (1991) affirming a private cause of action under O.C.G.A. § 1 0-1-405 (c) against a corporate officer for violations of the FBPA].
Defendant Cocheu is subject to the jurisdiction and venue of the Court pursuant to O.C.G.A. §§ 9-10-91 (1) because he directly facilitated Defendant AmeriSciences’ transaction of business in Georgia resulting in the unlawful conduct set forth herein. Further, Defendant Cocheu has been physically present in Georgia facilitating the unlawful conduct, even though O.C.G.A. § § 9-10-91 (1) does not require physical presence in Georgia. [First Nat. Bank of Ames, Iowa v. Innovative Clinical & Consulting Svcs., LLC, 279 Ga. 672, 620 S.E.2d 352 (2005) holding a single event may be a sufficient basis for the exercise of long arm jurisdiction if its effects within the forum are substantial enough even though the nonresident has never been physically present in the state]. Service of process can be perfected upon Defendant Cocheu at 13811 Sedalia Springs Court, Houston, Texas 77077, pursuant to O.C.G.A. § 9-10-94.
According to Defendant AmeriSciences’ Website (www.amerisciences.com), Defendant Gallardo is a Founding Member and Operating Chairman of Defendant AmeriSciences. Personal liability for Defendant Gallardo, for the conduct complained of herein, arises pursuant to O.C.G.A. § 10-1-405 (c) of the Act. [Miles Rich Chrysler­Plymouth, Inc. et a1. v. Mass, 201 Ga. App. 693, 411 S.E.2d 901 (1991) affirming a private cause of action under O.C.G.A. § 1 0-1-405 (c) against a corporate officer for violations of the FBPA].
Defendant Gallardo is subject to the jurisdiction and venue of the Court pursuant to O.C.G.A. §§ 9-10-91 (1) because he directly facilitated Defendant AmeriSciences’ transaction of business in Georgia resulting in the unlawful conduct set forth herein. Further, Defendant Gallardo has been physically present in Georgia facilitating the unlawful conduct, even though O.C.G.A. §§ 9-10-91(1) does not require physical presence in Georgia. [First Nat. Bank of Ames, Iowa v. Innovative Clinical & Consulting Svcs., LLC, 279 Ga. 672, 620 S.E.2d 352 (2005) holding a single event may be a sufficient basis for the exercise of long arm jurisdiction if its effects within the forum are substantial enough even though the nonresident has never been physically present in the state]. Service of process can be perfected upon Defendant Gallardo at 2206 Bywater Drive, Houston, Texas 77077, pursuant to O.C.G.A. § 9-10-94.
According to Defendant AmeriSciences’ Website (www.amerisciences.com). Defendant Redman is a Founding Member and Executive Vice President of Defendant AmeriSciences. Upon information and belief, Defendant Redman is also General Counsel for Defendant AmeriSciences. Personal liability for Defendant Redman, for the conduct complained of herein, arises pursuant to O.C.G.A. § 10-1-405 (c) of the Act. [Miles Rich Chrysler-Plymouth, Inc. et a1. v. Mass, 201 Ga. App. 693,411 S.E. 2d 901 (1991) affirming a private cause of action under O.C.G.A. § 10-1-405 (c) against a corporate officer for violations of the FBPA].
Defendant Redman is subject to the jurisdiction and venue of the Court pursuant to O.C.G.A. §§ 9-10-91 (1) because he directly facilitated Defendant AmeriSciences’ transaction of business in Georgia resulting in the unlawful conduct set forth herein. Further, Defendant Redman has been physically present in Georgia facilitating the unlawful conduct, even though O.C.G.A. § § 9-10-91 (1) does not require physical presence in Georgia. [First Nat. Bank of Ames, Iowa v. Innovative Clinical & Consulting Svcs., LLC, 279 Ga. 672, 620 S.E.2d 352 (2005) holding a single event may be a sufficient basis for the exercise of long arm jurisdiction if its effects within the forum are substantial enough even though the nonresident has never been physically present in the state]. Service of process can be perfected upon Defendant Redman at 2772 Bingle Road, Houston, Texas 77055, pursuant to O.C.G.A. § 9-10-94.
Defendant AmeriSciences, Defendant Cocheu, Defendant Gallardo, and Defendant Redman are hereinafter collectively referred to as the “Defendants”.
On July 20, 2007, Plaintiffs legal counsel had physically delivered to Defendant Cocheu a letter (hereinafter the “July 20th Letter”) giving formal notice that (i) Plaintiff was terminating his relationship with AmeriSciences pursuant to O.C.G.A. § 10-1-415 (c) (3) of the Act, and (ii) placing Defendants on notice that Plaintiff, pursuant to O.C.G.A. § 10-1-415 (d) (1) of the Act, would be requesting that Defendant AmeriSciences repurchase certain unused, unopened, and unexpired products Plaintiff had purchased directly from Defendant AmeriSciences (hereinafter the “Products”). A true and correct copy of the July 20th Letter is annexed hereto as Exhibit “A” and incorporated herein by reference.
The Products have, prior to filing of this Complaint, been physically inspected by Defendant AmeriSciences. Consequently, Plaintiff and Defendant AmeriSciences have stipulated to the description, quantity, and net original cost of the Products listed on a Product Spreadsheet (hereinafter the “Stipulated Product Spreadsheet). Net Original Cost of the unused, unopened, and unsold Products listed on the Stipulated Product Spreadsheet totals $157,206.40. A true and correct copy of the stipulated Product Spreadsheet is annexed hereto as Exhibit “B” and incorporated herein by reference.
FACTUAL ALLEGATIONS PERTINENT TO PLAINTIFF’S CLAIMS
(1) If the participant has purchased products or paid for administrative services while the contract of participation was in effect, the seller shall repurchase all unencumbered products, sales aids, literature, and promotional items which are in a reasonably resalable or reusable condition and which were acquired by the participant from the seller; such repurchase shall be at a price not less than 90 percent of the original net cost to the participant of the goods being returned. For purposes of this paragraph, ‘original net cost’ means the amount actually paid by the participant for the goods, less any consideration received by the participant for purchase of the goods which is attributable to the specific goods now being returned. Goods shall be deemed ‘resalable or reusable’ if the goods are in an unused, commercially resalable condition at the time the goods are returned to the seller. Goods which are no longer marketed by a company shall be deemed ‘resalable or reusable’ if the goods are in an unused, commercially resalable condition and are returned to the seller within one year from the date the company discontinued marketing the goods; provided, however, that goods which are no longer marketed by a multilevel distribution company shall not be deemed ‘resalable or reusable’ if the goods are sold to participants as nonreturnable, discontinued, or seasonal items and the nonreturnable, discontinued, or seasonal nature of the goods was clearly disclosed to the participant seeking to return the goods prior to the purchase of the goods by the participant. Notwithstanding anything to the contrary contained in this paragraph, a multilevel distribution company may not assert that any more than 15 percent of its total yearly sales per calendar year to participants in dollars are from nonreturnable, discontinued, or seasonal items;”
Collectively, O.C.G.A. § 10-1-415 (c), O.C.G.A. § 10-1-415 (c) (4), and O.C.G.A. § 10-1-415 (d) of the Act require that Defendant AmeriSciences disclose to Plaintiff, and other Georgia IMC’s, each and every one of their statutorily prescribed Cancellation Rights as expressly set forth in O.C.G.A. § 10-1-415 (d) (1).
The cancellation rights disclosed by Defendant AmeriSciences to Plaintiff, and other Georgia IMC’s, must provide at a minimum each and everyone of the statutorily prescribed Cancellation Rights set forth in O.C.G.A. § 10-1-415 (d) (1). Since the Cancellation Rights arise through Statute, Defendant AmerisCiences cannot in any way limit through contract or otherwise Plaintiffs statutorily prescribed Cancellation Rights.
Section 10.04 (a) of Defendant AmeriSciences’ Policies and Procedures, containing the AmeriSciences Disclosure, states in pertinent part:
(a) An IMC who terminates his or her business relationship with COMPANY has the right to return for repurchase on commercially reasonable terms currently marketable inventory including COMPANY produced promotional materials, sales aids and kits in possession of the IMC and purchased by the IMC to the date of termination. For purposes hereof, “reasonable commercial terms” shall mean the repurchase of marketable inventory within one (1) month from the IMC’s date of purchase at not less than 90% of the IMC’s original net cost less appropriate set-offs and legal claims, if any. In addition, for purposes of this Section, products shall not be considered “currently marketable” if returned for repurchase after the product’s commercially reasonable usable or shelf life period has materially diminished; nor shall products be considered “currently marketable” if COMPANY clearly discloses to the IMC prior to purchase that the products are seasonal, perishable, discontinued, or special promotional products and are not subject to the repurchase obligation. Sales materials and kit must be in reasonable condition or this repurchase obligation is waived.” [Emphasis added].
A true and correct copy of Defendant AmeriSciences’ Policies and Procedures is annexed hereto as Exhibit “C” and incorporated herein by reference.
The AmeriSciences Disclosure, made by the Defendants to Plaintiff, was in the form of Section 10.04 (a) of Defendant AmeriSciences’ Policies and Procedures as set forth in Paragraph 36 above.
Section 10.04 (a) of Defendant AmeriSciences’ Policies and Procedures expressly sets forth a one (1) month Calendar Deadline from the date of product purchase by Plaintiff.
By its very wording, Section 4.08 utterly fails to meet the express disclosure requirements of O.C.G.A. § 10-1-415 (d) (1). Further, O.C.G.A. § 10-1-415 unambiguously places the burden on the Defendants to disclose Plaintiffs statutorily prescribed Cancellation Rights consistent with the rights contained in O.C.G.A. § 10-1-415 (d) (1). The burden is not on Plaintiff to conduct research into the Act in an attempt to properly understand his statutorily prescribed Cancellation Rights. The “catch all” language contained in Section 4.08 of Defendant AmeriSciences Policies and Procedures cannot cure the fatally flawed language of Section 10.04 (a) because these paragraphs, neither individually nor collectively, meet the express disclosure requirements of O.C.G.A. § 10-1-415 (d) (1).
12. IMC’s will receive a 90% refund of all sales aids and literature in resale condition within thirty (30) days (or if state laws require a longer refund period, COMPANY will abide by those states laws and regulations with respect to refunds) of purchase from the Company (Georgia-no time limit; New Mexico-1 year). IMC’s will be responsible for all shipping costs associated with the return of such items. [Emphasis added].
On its face, Paragraph 12 of the IMC Agreement has absolutely no applicability to Plaintiffs claims since Paragraph 12 deals only with the repurchase of sales aids and literature, none of which are part of Plaintiffs claims. Further, the fact that Paragraph 12 gives some hint that there is “no time limit” in Georgia, as applied to sales aids and literature, cannot begin to cure the fatally flawed language contained in Section 10.04 (a) of Defendant AmeriSciences Policies and Procedures. A true and correct copy of the back of the IMC Agreement is annexed hereto as Exhibit “D” and incorporated herein by reference.
O.C.G.A. § 10-1-415 unambiguously requires the Defendants disclose Plaintiffs statutorily prescribed Cancellation Rights consistent with each and everyone of the rights contained in O.C.G.A. § 10-1-415 (d) (1) and be set out so that IMC’s of Defendant AmeriSciences will clearly understand their statutorily prescribed Cancellation Rights upon their termination of the IMC Agreement. The Defendants have utterly failed to meet these requirements, Even if O.C.G.A. § 10-1-415 somehow allowed the “cobbling together” (which it does not) of Sections 10.04 and 4.08 of the Polices and Procedures with Paragraph 12 of the IMC Agreement, the Cancellation Rights disclosure expressly required by O.C.G.A. § 10-1-415 (d) (1) is still not met.
Defendants’ failure to properly disclose Plaintiff s statutorily prescribed Cancellation Rights when he joined AmeriSciences, and during the term of his relationship with Defendant AmeriSciences, was willful and intentional.
Plaintiff, and other Georgia IMC’s of Defendant AmeriSciences, properly relied on the fact that the Defendants had disclosed their statutorily prescribed Cancellation Rights consistent with the requirements of Georgia law.
Defendants’ failure to properly disclose Plaintiffs statutorily prescribed Cancellation Rights is violative of the express requirements of O.C.G.A. § 10-1-415 (c), O.C.G.A. § 10-1-415 (c) (4), O.C.G.A. § 10-1-415 (d), and O.C.G.A. § 10-1-415 (d) (1) of the Act and Plaintiff has suffered damages in an amount to be proven at Trial.
Defendants’ willful and intentional violation of O.C.G.A. § 10-1-415 (d) (1) of the Act entitles Plaintiff to an amount of damages to be proven at Trial.
“(b) The violation of any provision of this part shall constitute an unfair or deceptive act or practice in the conduct of a consumer act or practice or consumer transactions under Part 2 of this article, the ‘Fair Business Practices Act of 1975,’ and shall authorize an affected participant or purchaser to seek the remedies provided for in Code Section 10-1-399 … ”
O.C.G.A. § 10-1-399 (a) of the FBPA provides that Plaintiff may bring a private action under the FBPA to recover his general damages as a result of Defendants’ unlawful conduct. Therefore, based upon Defendants’ conduct set forth in Counts 1 and 2 above, Plaintiff is entitled to recover his general damages.
Upon information and belief, the Defendants were directly involved in the drafting and approval of materially misleading cancellation rights disclosures provided to Plaintiff and other Georgia IMC’ s. In determining if the Defendants’ violations of the FBP A were intentional, controlling legal authority sets the following standard:
“The intentional violation as contemplated by the FBP A is a volitional act constituting an unfair or deceptive act or practice conjoined with culpable knowledge of the nature (but not necessarily the illegality) of the act.” Colonial Lincoln-Mercury v. Molina, 152 Ga. App. 379, 383-384 (11), 262 S.E.2d 820(1979). [Emphasis added].
Based upon the standard set forth in Colonial Lincoln-Mercury v. Molina, Defendants’ violations of the FBP A were intentional.
O.C.G.A. § 10-1-399 (a) of the FBPA provides that Plaintiff is entitled to recover exemplary damages in the case of intentional violations. As set forth in Paragraph 54 above, Defendants’ conduct was intentional thus entitling Plaintiff to receive exemplary damages sufficient to deter, penalize, or punish Defendants’ in light of the circumstances of this case.
O.C.G.A. § 10-1-399 (c) of the FBPA also provides that Plaintiff is entitled to recover three (3) times the actual damages sustained for intentional violations. As set forth in Paragraph 54, Defendants’ conduct was intentional thus entitling Plaintiff to an award of treble damages. Plaintiff has previously sent a written “Thirty Day Notice” to Defendant pursuant to the requirements of O.C.G.A. § 10-1-399 (b) of the FBPA. A true and correct copy of the Thirty Day Notice is annexed hereto as Exhibit “E” and incorporated herein by reference.
“(d) If the court finds in any action that there has been a violation of this part, the person injured by such violation shall, in addition to other relief provided for in this Code section and irrespective of the amount in controversy, be awarded reasonable attorneys’ fees and expenses of litigation incurred in connection with said action;”
As set forth in Paragraph 54 above, Defendant’s conduct was intentional thus entitling Plaintiff to an award of attorneys’ fees and expenses of litigation in connection with this action.
a. Judgment to Plaintiff, in an amount to be proven at Trial, as general damages incurred by Plaintiff for Defendants’ intentional misconduct in failing to properly disclose Plaintiffs Cancellation Rights pursuant to O.C.G.A. § 10-1-415 (d) (1);
b. Judgment to Plaintiff, in an amount to be proven at Trial, as general damages incurred by Plaintiff for Defendants’ intentional refusal to repurchase the unused, unopened and unexpired Products pursuant to the requirements of O.C.G.A. § 10-1-415 (d) (1);
e, Judgment to Plaintiff for reasonable attorneys’ fees and expenses of litigation incurred in connection with said action, pursuant to O.C.G.A. § 10-1-399 (d) of the FBPA;