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Utah firm Max International settles Melaleuca suit for $1.2 million

Published: Sunday, Feb. 13 2011 6:20 p.m. MST

IDAHO FALLS — A Utah health and home product company has agreed to pay $1.2 million to its Idaho Falls-based rival to settle a lawsuit over allegations it poached employees and urged them to breach contracts.

Max International in Salt Lake City was sued by Idaho's Melaleuca in fall 2009, who contended the Utah company raided its marketing executives and then conspired to have those former workers breach their contracts with the company by recruiting other sales people.

Melaleuca sells about 350 nutritional and household products including lotions, detergents and powdered drinks. Max International sells similar products and uses a similar business model.

The settlement was reported by a story published Sunday in the Post Register.

"Our actions here were vindicated, and the outcome says the actions we tried to seek against Max International were finally realized," Melaleuca President McKay Christensen told the newspaper. "We think Max took the right actions here in settling the case, and we're pleased to have a positive outcome."

Max co-CEOs, Joseph Voyticky and David Bagley, apologized to the Idaho company, saying it "deeply regrets any actions, if any, by its officers, employees or associates that contributed to any contract violations by former Melaleuca (sales agents)."

Christensen said that, as a condition of the settlement, Max officials agreed to honor Melaleuca's contracts and nonsolicitation agreements.

In January 2010, a federal judge temporarily barred Max International from recruiting employees at Melaleuca, which has been in operation for 25 years.

At that time, U.S. District Judge William Downes said Melaleuca convinced him that the company was likely to succeed on the merits of its claims.

In 2008, Melaleuca employed about 3,400 and pulled in $879 million in revenue. Its marketing executives earn commissions on customer sales or by training and motivating other sales staff in gathering new customers.

The marketing executives are also required to maintain an extensive database of customer contact information and other sales executives they support; the company considers the database to be a trade secret.

Information from: Post Register, http://www.postregister.com

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