SPRINGVILLE, UT (Sept. 23, 2009)—As part of Neways’ ongoing efforts to safeguard this business opportunity for its loyal members, the company recently won an injunction against two former Neways distributors to prevent them from recruiting their Neways downlines into a competing multilevel-marketing operation in violation of their Neways distributor agreements.
As high-level Neways Diamond Ambassadors, Yoshinori Chihara and Izumi Nakai chose to leave Neways and join Sisel International, an MLM company started by a previous owner of Neways. While former Neways members are free to recruit their personally sponsored downline members into a competing business, they are prohibited from recruiting anyone else from their former Neways organization for a period of one year. In addition, former Neways members are prohibited from using or sharing any of Neways’ confidential and proprietary information, including downline reports and genealogies.
Third District Court Judge Glenn K. Iwasaki granted Neways’ motion for a temporary restraining order against Yoshinori Chihara and Family Sunshine, Inc., the business entity through which Izumi Nakai operated her Neways distributorship. The restraining order prohibited Chihara and Family Sunshine from recruiting members of their former Neways downlines to Sisel in violation of Neways’ Policies and Procedures, and prohibited them from using or disclosing Neways’ confidential and proprietary information, including downline reports and distributor contact information.
Shortly after entry of the temporary restraining order, Chihara, Nakai, and Family Sunshine agreed to entry of a permanent injunction prohibiting them, until July 1, 2010, from recruiting Neways distributors to Sisel or any other MLM company in violation of Neways’ Policies and Procedures; requiring them to return all Neways’ confidential and proprietary information, including downline reports, to Neways; and prohibiting them from using or disclosing such information.
Neways’ damage claims against Chihara, Nakai, and Family Sunshine remain pending.
“We’re absolutely committed to protecting the businesses of our loyal independent distributors,” said Chris Crump, Neways’ Chief Legal Counsel. “When a high-level distributor is enticed to leave Neways, we aggressively monitor that person’s downline and take immediate legal steps if the distributor goes against the Neways Policies and Procedures, which all distributors agree to uphold when they join Neways.”
“Taking legal action of this nature is arduous and expensive,” said Neways CEO Eric Larsen, “but we see it as a necessary step to safeguard our distributors and their Neways businesses, which they’ve worked so hard to build. I’m very pleased that we prevailed in this situation and made the future more secure for our distributors and employees.”
This is the fifth time in nearly three years that Neways has prevailed in obtaining injunctive relief against Sisel or its distributors. In 2007, a U.S. federal court ordered Sisel to return confidential trade secrets to Neways, including distributor lists, vendor lists, and product formulas.
0 Responses
Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.