This is also an indication of the failure of Melaleuca to live up to its promises to "roll up." When a distributor within the upline or downline of the company leaves for whatever reason, there is always an issue as to what happens to the income that the spot would generate. A distributor's position has the capacity to earn money by way of the residual income afforded by the downline working essentially "for" that position. If the position is eliminated, that spot is still theoretically earning the residuals from downline sales. The question is, what happens to that income? Melaleuca promised each of the Plaintiffs in this lawsuit that unlike many other companies, Melaleuca would always roll up a position. In other words, if a position was eliminated, persons downline or upline would be entitled to earn the benefit of the missing distributor's position. This turned out to be yet another misrepresentation. No roll ups were accomplished. The money presumably went back to Melaleuca and/or Vandersloot. Each of your plaintiffs have been kept from the benefits of a roll up. In particular, Mike Berg's upline quit the business, and he would have been entitled to a major jump in his income relative to the roll up. Despite many and repeated requests in this regard, the roll up never occurred, and he, like the others, suffered the economic consequences of this misrepresentation.

The Failas were terminated from Melaleuca without cause. The Failas are professional trainers of network marketers. They travel literally the globe putting on seminars and selling their various books which relate to network marketing. The Failas became Melaleuca distributors, and it was actually quite a coup for Melaleuca to attract potential distributors with the stature of the Failas, well known in the multi-level marketing world as they are. At about the same time as the changes in the compensation structure were being arbitrarily imposed on the distributors, the Failas were terminated after allegedly marketing another company to Melaleuca distributors. This did not happen, and Melaleuca knows or surely should have known it did not occur prior to the dismissal of the Failas. However, as part of the scheme of Melaleuca to continue the lies and deceptions to its distributor workforce, it was necessary to eliminate people such as the Failas who knew network marketing, who knew how an ethical system should work, and who would be in a position to call "foul" in a very, very credible way. Eliminating the Failas, breaking their contract, misrepresenting their position to them, and contriving a way to get rid of the Failas, was the answer to the potential problem of the Failas speaking out to identify the lies.

Among the lies and misinformation spread by the Defendants, Plaintiffs were lead to understand that the products sold by Melaleuca were all safe in all respects. The ingredients were natural ones, they were told, and were so pure and harmless that a baby could unwittingly drink Melaleuca cleanser stored under the kitchen sink with no adverse consequences. Such a claim was a grand and bold one, and was all part of the sales and marketing claims used by Melaleuca distributors to sell more product and recruit more distributors. In truth and in fact, there are Melaleuca products which are highly dangerous upon ingestion, and contain chemicals and compositions which are incompatible with human life. While the Defendants misrepresented their products in America, causing your plaintiffs to similarly tout characteristics which were flat untrue, the Canadian authorities require various Melaleuca products to bare the international symbol for poison, a skull and cross bones.

							 VIII. Causes
    of Action    
						

Each of your Plaintiffs bring claim against Defendants in
    the following respects: 

1. For the negligent conduct of all Defendants, in failing to act as a reasonable person would under the same or similar circumstances
   relative to the representations and marketing of the Melaleuca product.
2. For the negligent misrepresentations of all Defendants relating to the Melaleuca program, its retention rate, the safety of its products, and other matters which came to be known as untrue.
3. For the fraud perpetrated upon Plaintiffs relative to the intentional misrepresentations made with the intent to inducePlaintiffs into building businesses and selling product, all for the financial advantage of the corporation, but ultimately in a manner where the effort expended by Plaintiffs greatly outweighed the benefits received.
4. For the promissory estoppel inherent within the representations made by Defendants to Plaintiffs.
5. For the breach of express and implied contracts and promises made by Defendants to Plaintiffs.
6. For violation of the Texas Deceptive Trade Practices Act.
7. For violation of the Texas Business Opportunities Act.
8. Conspiracy to fraudulently induce Plaintiffs to enter into an agreement to execute what they believed to be a legitimate, worthwhile business opportunity.
9.  

							
								      IX. Damages    
						

    Each of your plaintiffs have suffered severe and significant
    damages. Plaintiffs have expended time and effort in a losing proposition. Defendants,
    on the other hand, profited tremendously by spreading the misrepresentations
    about the products and retention rate. Plaintiffs are entitled
    to the value of the business and its potential as represented
    to them, as measured against the value of the businesses which
    they received, and which they worked so hard to build. Plaintiffs
    are further entitled to the consequential losses occasioned by
    contract breaches and misrepresentations. 

    As to Plaintiffs, JAMES AND MATHEW HOLTEN, they lost more than
    just time and money. They lost their wife and mother respectively.
    The Holtens know that it is difficult to cast blame on another
    when someone takes such a drastic step as taking one's own life.
    This father and husband, and this son know that many people might
    look at any attempt to blame this business for Kim's suicide
    as a reach of sorts. Yet, they each know what their wife and
    mother was like before the revelation about the retention rate.
    They each know when Kim went into the depression from which she
    did not return, where she became despondent to the point of taking
    her own life. They know what she was like when she was excited
    about Melaleuca, and they know what she was like after. They
    know. They know what claimed Kim, and they are not embarrassed
    to ask a jury to determine if these Defendants should be brought
    to justice for what pain they have inflicted on their family
    and the families of the other Plaintiffs, and even the families
    of other people who have not been so bold as to make and stake
    their claim here.

    Plaintiffs, JAMES AND MATHEW HOLTEN, herein plead the rights
    and protections of the Wrongful Death and Survival Statutes.

    All Plaintiffs further claim right to reimbursement of attorney
    fees, costs of suit and other relief of court.

    WHEREFORE, PREMISES CONSIDERED, Plaintiffs respectfully pray
    that upon final trial hereof they have and recover any and all
    actual and consequential damages, exemplary damages, pre-judgment
    and post judgement interest as allowed by law, attorney's fees,
    and costs of courts, and any and all other relief to which Plaintiffs
    might otherwise be justly entitled.


    
Respectfully submitted,


    
PHILLIPS & AKERS, P.C.


    



    
By: ___________________________

    Brock C. Akers

    State Bar No: 00953250

    3400 Phoenix Tower

    3200 Southwest Freeway

    Houston, Texas 77027

    Telephone: (713) 552-9595

    Facsimile: (713) 552-0231

    ATTORNEYS FOR PLAINTIFFS


    
CERTIFICATE OF SERVICE


    
I hereby certify that a true copy of the foregoing instrument
    has been served in compliance with Rules 21 and 21a of the Texas
    Rules of Civil Procedure on this 2nd day of June, 1999.


    
________________________________

    Brock C. Akers

This page updated 5/24/2004