Herbalife Seeks to Prevent Confidential Information from Reaching Ackman in Lawsuit

A protective order lays out the ground rules during the discovery phase of litigation for protecting confidential information such as Herbalife’s marketing strategies, which could be disclosed through depositions of witnesses, production of documents and written answers to questions.

Josh Long, Associate editorial director, Natural Products Insider

May 7, 2014

2 Min Read
Herbalife Seeks to Prevent Confidential Information from Reaching Ackman in Lawsuit

Herbalife Ltd. is seeking to protect itself from confidential information in a lawsuit leaking to its adversary, Bill Ackman of Pershing Square Capital Management, L.P.

The parties have agreed that material marked as “HIGHLY CONFIDENTIAL-ATTORNEYS EYES ONLY" may not be disclosed at any time to the hedge fund Pershing Square or any of its representatives, including Ackman and Sullivan & Cromwell, LLP, an international law firm.

Ackman has accused Herbalife of operating a pyramid scheme, an allegation Herbalife has repeatedly denied.

Ralph Zarefsky, a U.S. Magistrate Judge in California, signed the stipulated order on April 24 in a proposed class action lawsuit that was filed last year against Herbalife by a former distributor, Dana Bostick.

The order lays out the ground rules during the discovery phase of litigation for protecting confidential information such as Herbalife’s marketing strategies.

The parties agreed information cannot be marked confidential “if the material has been published, distributed to the public, accessible to the public, or disclosed to a nonparty without a confidentiality agreement or a reasonable expectation that the material would be maintained by the non-party in confidence."

Under the 21-page protective order, if a Pershing representative is designated as an expert in the case, Bostick could now show the expert material that Herbalife designated as confidential without first providing a written notification to the company and seeking to resolve the dispute. If the dispute couldn’t be resolved, the court would intervene and the burden would fall on Bostick to “demonstrate why it would be unduly prejudiced unless granted relief from" the non-disclosure provision.

In a lawsuit filed last year against Herbalife, Bostick claimed he was "doomed from the start by an Herbalife marketing plan that systematically rewards recruiting over retail sales." Herbalife countered Bostick couldn't have been fooled because he agreed that he read a statement that revealed distributors' modest earnings. Herbalife also argued Bostick exerted little effort trying to sell the products.

The case is before the U.S. District Court for the Central District of California, 13-cv-02488.



About the Author(s)

Josh Long

Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition

Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.

He has moderated and/or presented at industry trade shows, including SupplySide East, SupplySide West, Natural Products Expo West, NBJ Summit and the annual Dietary Supplement Regulatory Summit.

Connect with Josh on LinkedIn and ping him with story ideas at [email protected]

Education and previous experience

Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.

Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.

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