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Harris v. Visalus, Inc.

United States District Court, E.D. Michigan, Southern Division

June 14, 2019

ERIC J. HARRIS, SR., individually, and on behalf of all others similarly situated, and CAPRECE BYRD, BRYANT WATTS, RENAE WHITE, LAURA HERL, DR. FRANK McWHORTER, ERIC J. HARRIS, SR. and CONNIE BATES, individually on their own behalf, Plaintiffs,
v.
VISALUS, INC., a corporation, et al.

          ORDER GRANTING PRELIMINARY APPROVAL OF SETTLEMENT

          MATTHEW F. LEITMAN UNITED STATES DISTRICT JUDGE.

         Plaintiff Eric J. Harris, Sr., acting individually and on behalf of the Settlement Class (“Named Plaintiff), filed an Unopposed Motion for Preliminary Approval of Proposed Settlement (the “Motion”). The Motion seeks preliminary approval of Named Plaintiff's agreement (the “Agreement”), for himself and on behalf of the Class, with ViSalus, Inc. (“ViSalus”), Nick Sarnicola, Ashley Sarnicola, Blake Mallen, Ryan Blair, Todd Goergen, Gary J. Reynolds, Vincent Owens, Kevin Merriweather, and Michael Craig (collectively “Defendants”) to settle all individual and class claims that have, or could have, been made, in Plaintiffs' Third Amended Complaint. This Court, having reviewed the Motion and the exhibits, including the written settlement agreement (the “Agreement”), finds itself apprised of the issues and grants the Motion. Accordingly, IT IS HEREBY ORDERED:

         Preliminary Approval of the Agreement

         1. This Court preliminarily approves the Agreement, between Plaintiffs and Defendants, subject to further consideration thereof at the Final Approval Hearing. The capitalized terms used in this Order have the same meaning as in the Agreement unless otherwise stated in this Order.

         2. The Preliminary Approval Date is the day this Court enters this Order and sets the timing of the events leading to this Court's Final Approval Hearing. Each event shall be calculated under Fed.R.Civ.P. 6.

         3. After extensive litigation and arm's-length negotiations by experienced counsel for the Parties, the Parties executed the Agreement. The Parties' negotiations included extensive mediation proceedings, with the benefit of an experienced, neutral mediator, 4. Under the Agreement, each Cash Payment Eligible Settlement Class Member may elect between two alternative forms of relief: first, a Cash Option that terminates the Class Member's Independent Promoter (“IP”) status with ViSalus and forfeits all that Class Member's rights to receive or own Units under the Founders Equity Incentive Plan (“FEIP”); and second, a Benefits Option which allows the Class Member to retain all rights to receive or own Units under the FEIP, and provides enhanced compensation, free services, and other benefits. Class Members who submit no Valid Election Form receive the Benefits Option.

         5. Under the Agreement, each Cash Payment Eligible Settlement Class Member who elects the Cash Option receives a cash payment of, for Class Members who the first time reached the rank of National Director (ND), Executive Director (ED) or Presidential Director (PD) during the time period that the FEIP was offered (January 1, 2015 to March 1, 2017), $1, 500.00, and for Class Members who for the first time reached the rank of Ambassador or higher, $4, 000.00, with payment to Class Members in both categories subject to possible reduction depending on the number of Class Members choosing this option.

         6. Under the Agreement, each Class Member who is not a Cash Payment Eligible Settlement Class Member or who does not submit a Valid Election Form shall be deemed to have elected the Benefits Option and receive all corresponding benefits, which includes these benefits (besides any other benefits to which he or she may be entitled as an IP):

a. 25% Commission Rate on all sales (both first time sales and subsequent sales) made to customers who purchase product from ViSalus for the first time after the Effective Date (i.e., new customers) for one (1) year from the Effective Date;
b. Free re-enrollment as an IP on the Basic enrollment track (no purchase necessary) for one (1) year from the Effective Date;
c. Free event registration for one (1) event, if any are held within one (1) year from the Effective Date, and if none are held within one (1) year, then free event registration for the next held event, if held within eighteen (18) months from the Effective Date;
d. Free Vi-Net Pro Subscription for:
(i) one (1) year from the Effective Date for all Settlement Class Members who choose the free re-enrollment listed in Section 6(b) above and who previously paid for Vi-Net Pro; or
(ii) six (6) months from the Effective Date for all Settlement Class Members who choose the free re-enrollment listed in Section 6(b) above and did not previously pay for Vi-Net Pro.

         7. The Agreement also requires ViSalus to pay, or cause to be paid, to Individual Plaintiffs Caprece Byrd, Byrant Watts, Renae White, Laura Herl, Dr. Frank McWhorter and Connie Bates, through their counsel, the total sum of ($450, 000).

         8. This Court finds that the terms embodied in the Agreement appear, upon preliminary review, fair, reasonable and adequate and warranting preliminary approval and sending notice of the Settlement to the Class Members to consider its terms before the Final Approval Hearing under Fed.R.Civ.P. 23(e).

         The Settlement Class

          9. This Court finds that the proposed Settlement Class likewise meets the requirements of Fed.R.Civ.P. 23(b)(3), 23(c)(1), and 23(c)(1)(B), and conditionally certifies the following Settlement Class, as of the date of this Order, to consider the Settlement:

All U.S. Independent Promotors of ViSalus, Inc. who qualified for units in the Founders' Equity Incentive Plan between January 1, 2015 through March 1, 2017.

         10. Excluded from the Settlement Class, even if they meet the criteria above, are (i) (i) Defendants, and any IPs owned, controlled or otherwise affiliated with any Defendant other than merely by the IP's status as an IP; (ii) IPs who are named defendants, or who are owned, controlled, or otherwise affiliated with named defendants in Kerrigan et al. v. ViSalus, Inc., et al., No. 2:14-cv-12693; (iii) the presiding judge(s) and his or her (or their) immediate family; (iv) any individual who elects to be excluded from the Settlement Class; and (v) any person who has previously released claims against Defendants or whose claims have been fully and finally adjudicated by a court with jurisdiction over the claims.

         11. This Court preliminarily finds that Eric J. Harris, Sr. has, and will fairly and adequately represent and protect the interests of the absent Class Members under Fed.R.Civ.P. 23(a)(4).

         12. These attorneys and their respective firms have zealously litigated this case and the Court appoints these attorneys and their respective firms to serve as Class Counsel ...


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