Direct Selling

Buchalter is one of the few full service law firms that has a practice group knowledgeable and experienced in the issues of concern to network marketing and direct sales companies.

As one of only two law firms to actually go to trial against the Federal Trade Commission on a “pyramid lawsuit” in the last twenty-five years, Buchalter has gained an unparalleled understanding of the current regulatory environment and how the FTC and state attorneys general view such issues as what constitutes an illegal pyramid, false and misleading income claims, retail sales, and products. We pride ourselves on staying abreast of legal and regulatory industry developments.

Buchalter was tapped as lead counsel to represent BurnLounge and its founder in their seven year long legal battle against the Federal Trade Commission, handling everything from the initial pleadings, injunction and asset freeze, through pretrial discovery, law and motion practice, a three week bench trial in federal court, appeal to the Ninth Circuit Court of Appeals, and the subsequent remand back to the trial court.  The firm was also involved in the FTC’s 2002 enforcement lawsuit against Trek Alliance. 

The firm is experienced in representing direct sales companies in connection with a host of issues pertaining to relationships between companies and their past and current independent distributors. We counsel our clients to assist in mitigating and avoiding litigation and, where necessary, representing them in arbitrations and individual and class action lawsuits involving issues such as the discipline and termination of distributors, cross-marketing and improper solicitation, employee misclassification, business development agreements, misappropriation of trade secrets, trademark and copyright infringement, and unfair competition. The firm is also experienced in enforcing the forum selection and arbitration clauses commonly found in companies’ policies and procedures.

As the industry is well aware, a confluence of events has brought heightened attention to compliance issues including, particularly, the Herbalife and Vemma settlements and consent decrees, the advent of Truth in Advertising (TINA) as a self-appointed consumer watchdog, and increased oversight and rulemaking by federal and state regulatory agencies.

Given this environment, it is more important than ever for direct sales companies to have legal counsel experienced in advising the industry with respect to their business practices, policies and procedures, compensation plan, and discipline and distributor oversight programs. Companies of all sizes face the prospect of possible legal actions, including regulatory investigations and lawsuits, private litigation brought by disgruntled distributors and consumers, and class action lawsuits alleging everything from employee misclassification to unfair competition to false advertising to racketeering (RICO).

The firm’s other practice groups, including its Labor and Employment, Intellectual Property, Insurance, and Tax practice groups, are also experienced in representing direct sales companies, and are sensitive to the legal issues unique to the industry.