MLMSurvivor.com

May 22, 2001

Today, this website owner received the following letter from Melaleuca's Vice President and General Counsel, Kenneth J. Sheppard.

Re: Melaleuca, Inc.
MLMSurvivor.com

Dear Ms. Carter:

We have reviewed the information contained in your MLMSurvivor.com web site under the title "Melaleuca Distributors Sue their Upline and the Company." We note the disclaimer on your home page which states that the site exists "to provide factual information for prospective and current MLM distributors," and to give people "a chance to get all the facts before they spend their time and their money." You also state that, to the very best of your ability you present accurate information. We would like to take this opportunity to clarify certain false and misleading information contained in your report on the Holten v. Melaleuca lawsuit so that you can revise your report to truly provide factual information.

The Holten v. Melaleuca lawsuit was brought in a Texas state court in Houston. The principle plaintiff was Mr. Jim Holten, a resident of a suburb of Houston. The case was tried before a jury comprised of 12 people who live in the Houston area. The plaintiffs were represented by well qualified counsel and were given a fair and impartial trial. The jurors heard evidence from both sides, were given the opportunity to deliberate on the evidence and found no wrongdoing on Melaleuca's or any of the other defendants' part.

Please bear in mind that statements taken from the Complaint are mere allegations made by plaintiffs and their attorney. Given the outcome of this case, your restating the plaintiffs' allegations as if they are fact is false, misleading and libelous. For example, you state that "Melaleuca, on the other hand, represented its retention rate to be a whopping 94.5 percent!" Melaleuca did not and does not make that representation. The jury agreed. Such allegations were rejected by the jury and should no longer be asserted as either allegation or fact. What Melaleuca does accurately report is that, on average, 95% of the customers who ordered from us last month will order again this month. Additionally, Melaleuca's 95% monthly reorder rate does not equate to a 66% annual dropout rate as you claim. Your statement concerning alleged confessions by the Hagens at a large meeting are also based on mere allegations that, again, were not proven at trial. In fact, the claims against the Hagens were dismissed from the lawsuit before the case ever went to the jury.

Your mentioning Kim Holten's suicide is unfortunate and insensitive. Kim Holten's death had nothing to do with Melaleuca. Mr. Holten's misguided claims regarding is [sic] wife's suicde were dismissed before the trial even started.

Finally, Melaleuca did not terminate any distributors' businesses arbitrarily and without just cause. Each of the plaintiffs whose Melaleuca businesses were terminated had seriously violated Melaleuca's policies. The plaintiffs received several hundred thousand dollars in compensation from Melaleuca while they were actively promoting their Melaleuca businesses. Therefore, they did have plenty to show for their efforts. Ironically, two of the plaintiffs actually re-enrolled with Melaleuca after pursuing a competing business opportunity.

Your conversations with two persons present at the trial did not reveal anything to you about the judge's behavior, except the opinions of two people who were not pleased with the outcome of the case. The judge acted wisely and honorably in upholding her responsibilities as an adjudicator of the law applicable to this case. Had she not done so, the plaintiffs would have had ample grounds to appeal the decision in this case. The plaintiffs did not do so.

We respectfully request that you honor your stated commitment to present accurate information by removing the false, misleading, deceptive and libelous statements about Melaleuca and revising your report about the lawsuit in the light of the above information.

If you have any further questions about this case please feel free to call me at 208-522-0700.

Mr. Sheppard's letter mixes fact (some of it irrelevant) with opinion as if both are equally weighty. He takes statements which are clearly summaries of the plaintiffs' petition, and accuses me of publicizing "false and misleading information."

In fact, the article clearly states the disposition of the case, as well as summarizing the plaintiffs' complaint and giving my own opinion of certain elements of the case.

However, Mr. Sheppard would like me to publicize his (in other words, Melaleuca's) version as if it were fact.

As someone who routinely receives large numbers of complaints about a variety of MLMs, I am just as entitled to have -- and to express - my point of view as Mr. Sheppard is to express the point of view of his employer.


Melaleuca's Response May 22, 2001 Today, this website owner received the following letter from Melaleuca's Vice President and General Counsel, Kenneth J. Sheppard. Re: Melaleuca, Inc. MLMSurvivor.com Dear Ms. Carter: We have reviewed the information contained in your MLMSurvivor.com web site under the title "Melaleuca Distributors Sue their Upline and the Company." We note the disclaimer on your home page which states that the site exists "to provide factual information for prospective and current MLM distributors," and to give people "a chance to get all the facts before they spend their time and their money." You also state that, to the very best of your ability you present accurate information. We would like to take this opportunity to clarify certain false and misleading information contained in your report on the Holten v. Melaleuca lawsuit so that you can revise your report to truly provide factual information. The Holten v. Melaleuca lawsuit was brought in a Texas state court in Houston. The principle plaintiff was Mr. Jim Holten, a resident of a suburb of Houston. The case was tried before a jury comprised of 12 people who live in the Houston area. The plaintiffs were represented by well qualified counsel and were given a fair and impartial trial. The jurors heard evidence from both sides, were given the opportunity to deliberate on the evidence and found no wrongdoing on Melaleuca's or any of the other defendants' part. Please bear in mind that statements taken from the Complaint are mere allegations made by plaintiffs and their attorney. Given the outcome of this case, your restating the plaintiffs' allegations as if they are fact is false, misleading and libelous. For example, you state that "Melaleuca, on the other hand, represented its retention rate to be a whopping 94.5 percent!" Melaleuca did not and does not make that representation. The jury agreed. Such allegations were rejected by the jury and should no longer be asserted as either allegation or fact. What Melaleuca does accurately report is that, on average, 95% of the customers who ordered from us last month will order again this month. Additionally, Melaleuca's 95% monthly reorder rate does not equate to a 66% annual dropout rate as you claim. Your statement concerning alleged confessions by the Hagens at a large meeting are also based on mere allegations that, again, were not proven at trial. In fact, the claims against the Hagens were dismissed from the lawsuit before the case ever went to the jury. Your mentioning Kim Holten's suicide is unfortunate and insensitive. Kim Holten's death had nothing to do with Melaleuca. Mr. Holten's misguided claims regarding is [sic] wife's suicde were dismissed before the trial even started. Finally, Melaleuca did not terminate any distributors' businesses arbitrarily and without just cause. Each of the plaintiffs whose Melaleuca businesses were terminated had seriously violated Melaleuca's policies. The plaintiffs received several hundred thousand dollars in compensation from Melaleuca while they were actively promoting their Melaleuca businesses. Therefore, they did have plenty to show for their efforts. Ironically, two of the plaintiffs actually re-enrolled with Melaleuca after pursuing a competing business opportunity. Your conversations with two persons present at the trial did not reveal anything to you about the judge's behavior, except the opinions of two people who were not pleased with the outcome of the case. The judge acted wisely and honorably in upholding her responsibilities as an adjudicator of the law applicable to this case. Had she not done so, the plaintiffs would have had ample grounds to appeal the decision in this case. The plaintiffs did not do so. We respectfully request that you honor your stated commitment to present accurate information by removing the false, misleading, deceptive and libelous statements about Melaleuca and revising your report about the lawsuit in the light of the above information. If you have any further questions about this case please feel free to call me at 208-522-0700. Sincerely, Kenneth J. Sheppard Vice President and General Counsel Mr. Sheppard's letter mixes fact (some of it irrelevant) with opinion as if both are equally weighty. He takes statements which are clearly summaries of the plaintiffs' petition, and accuses me of publicizing "false and misleading information." In fact, the article clearly states the disposition of the case, as well as summarizing the plaintiffs' complaint and giving my own opinion of certain elements of the case. However, Mr. Sheppard would like me to publicize his (in other words, Melaleuca's) version as if it were fact. As someone who routinely receives large numbers of complaints about a variety of MLMs, I am just as entitled to have -- and to express - my point of view as Mr. Sheppard is to express the point of view of his employer. More About Melaleuca
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