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Melaleuca, Inc., An Idaho Corporation v. Brian Bartholomew and Angelique Bartholomew

May 14, 2012

MELALEUCA, INC., AN IDAHO CORPORATION,
PLAINTIFF,
v.
BRIAN BARTHOLOMEW AND ANGELIQUE BARTHOLOMEW, HUSBAND AND WIFE, DEFENDANTS.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction (Dkt. 8). The Court heard oral argument on the motion on May 10, 2012. The Court will grant the motion in part for the reasons explained below.

BACKGROUND

Melaleuca is a consumer goods company that sells primarily nutritional, personal care, and household products. Melaleuca sells products directly to its customers by using independent contractors called Marketing Executives. Melaleuca's Marketing Executives refer customers to Melaleuca and earn commissions on purchases made by those customers. Additionally, Marketing Executives earn commissions through a somewhat complicated structure, which generally rewards them for training, motivating, and otherwise supporting other Marketing Executives in their efforts to refer customers. Each Melaleuca Marketing Executive has a Marketing Organization which consists of the customers referred by that Marketing Executive and the other Marketing Executives he or she supports, plus the customers and Marketing Executives referred or supported by those Marketing Executives, and so on.

When Marketing Executives join Melaleuca, they sign what is called an Independent Marketing Executive Agreement with Melaleuca. In this case, Defendants Angelique Bartholomew and Brian Bartholomew each signed an agreement on November 10, 2005 when they first joined Melaleuca as Marketing Executives. LaClare Decl., Ex.

A (Dkt. 8-4). The signature line of that agreement indicates that the Marketing Executive agrees to the terms on the front and back of the agreement. The back side of the agreement is titled Terms and Conditions. Section 9 of the Terms and Conditions reads: "I have carefully reviewed the Melaleuca Compensation Plan and Statement of Policies and acknowledge that they are incorporated as part of this Agreement in their present form and as modified from time to time by Melaleuca at its sole discretion." Id. A copy of the Melaleuca Compensation Plan and Statement of Policies in effect at the time the Bartholomews signed their agreement in 2005 is not attached to the agreement, nor was it provided to the Court.

On November 30, 2007, Angelique Bartholomew signed a second agreement, which incorporated an amended version of the Statement of Policies. Second LaClare Decl., Exs. D & E (Dkt. 11-2). On December 11, 2011, Angelique Bartholomew signed a third agreement, which incorporated the current version of Melaleuca's Statement of Policies. Second LaClare Decl., Ex. F (Dkt. 11-2). Policy 20 of the current Statement of Policies, which is set forth in its entirety here, states, 20 Non-Solicitation and Conflicts of Interest Marketing Executives are independent contractors and may be active in other business ventures while they are Marketing Executives for Melaleuca. However, to qualify for compensation under Melaleuca's Compensation Plan, Marketing Executives have the ongoing responsibility to service, supervise, motivate, train and assist the Marketing Executives in their Marketing Organization. They also have the responsibility to promote Melaleuca products and the Melaleuca income opportunity. Melaleuca and its Marketing Executives have made a great investment in the establishment of organizations consisting of Customers and Marketing Executives. This constitutes one of Melaleuca's most valuable assets. Melaleuca reserves the right to cease paying compensation to any Marketing Executive who recruits any Melaleuca Customer or Marketing Executive to participate in another business venture. In order to protect the efforts of all Marketing Executives in building and maintaining their individual Marketing Organizations and Customer bases, and in order to protect Melaleuca's interest in the overall Customer base, Marketing Executives and all members of their Immediate Household are required to abide by the following policies:

(a) Non-Solicitation of Melaleuca Customers and Marketing Executives:

(i) During the period that their Independent Marketing Executive Agreements are in force Marketing Executives and all members of their Immediate Household are prohibited from directly, indirectly or through a third party recruiting any Melaleuca Customers or Marketing Executives to participate in any other business venture

(ii) For a period of twelve months after cancellation or termination for any reason of a Marketing Executive's Independent Marketing Executive Agreement, the Marketing Executive and all members of his or her Immediate Household are prohibited from directly, indirectly or through a third party recruiting to participate in any other business venture any Melaleuca Customers or Marketing Executives:

(1) who were in the Marketing Executive's Marketing Organization or Support Team at any time during the term of his or her association with Melaleuca;

(2) with whom the Marketing Executive had contact during the term of his or her association with Melaleuca;

(3) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household has obtained at any time during the term of his or her association with Melaleuca; or

(4) whose contact information (name, address, phone number or email address, etc.) the Marketing Executive or members of his or her Immediate Household obtained at any time from another person who obtained the information because of any other person's association with Melaleuca.

The prohibitions under clauses (a)(i) and (ii) above include but are not limited to, presenting or assisting in the presentation of other business ventures to any Melaleuca Customer or Marketing Executive or implicitly or explicitly encouraging any Melaleuca Customer or Marketing Executive to join any other business ventures. It is a violation of this policy to recruit a Melaleuca Customer or Marketing Executive to participate in another business venture even if the Marketing Executive does not know that the prospect is also a Melaleuca Customer or Marketing Executive. It is the Marketing Executive's responsibility to first determine whether the prospect is a Melaleuca Customer or Marketing Executive before recruiting the prospect to participate in another business venture. (Please refer specifically co the definition of "recruit" in the Definitions of Terms at the end of these Policies.)

(b) During the period that their Independent Marketing Executive Agreements are in force, and for a period of twelve months after the cancellation or termination thereof for any reason, Marketing Executives and all members of their ...


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