There are only a handful of attorneys who understand the network marketing industry. Among those, the number who litigate lawsuits is even fewer. Subscribe to my monthly newsletter for updates about what topics often arise in MLM litigation.
Distributor cases occur when a company terminates a top distributor or substantially changes its compensation plan. The outcome of the resulting litigation often depends on whether the company followed its internal procedures; whether the reasons for its actions conform with its policies and procedures; and is consistent with established company policy.
When a distributor moves from one company to another, there is often a strong temptation to recruit others from the original company into making the same move. Litigation often centers around whether there was active solicitation and whether such solicitation violates trade secret laws and/or the original company's policies and procedures.
Network marketing companies are often accused of operating illegal pyramid schemes. Companies that do operate illegal pyramid schemes are usually doing so in violation of federal securities laws. Therefore, these cases usually result in federal securities law litigation.