On October 23, 2017, the Arnold Law Firm filed a nationwide putative class action lawsuit against LuLaRoe on behalf of anyone who has been a LuLaRoe consultant within the past four years. Because the company’s consultant contract states that any disputes are to be resolved in California pursuant to California law, the Complaint was filed in U.S. District Court for the Central District of California. The case was assigned to District Judge Stephen V. Wilson and Magistrate Judge Sheri Pym, located in Riverside.
The Complaint alleges that LuLaRoe operated what is called an “endless chain scheme” in California law. In this type of unlawful scheme, people are recruited into a purported business in order to recruit others; the focus is on getting more participants to join the scheme instead of selling products to actual consumers. This kind of organization is unlawful because it is virtually destined to collapse, especially for the people at the bottom.
The Complaint alleges that LuLaRoe obtained upwards of a billion dollars through operating such a scheme. The Complaint does some basic math: 80,000 reported consultants x $5,000 buy-in for the starter kit = $400 Million. And then there were the purchases that followed.
Under California law, money obtained through unlawful or unfair business practices may be taken away by the courts. The court may decide to order restitution, which involves giving back money to the victims. The court may decide to order disgorgement, which involves taking away profit from the offending party and either giving it back to the victims or to some related good cause.
The Complaint also alleges violation of RICO – the Federal law forbidding certain patterns of unlawful activity.
As the lawyers who filed this class action, we are looking for current and former consultants to come forward and share their stories with us. Many have already done so. The more people who come forward, the better chances we have to take care of everyone’s needs.
We will keep this site updated as we move through the class action litigation process. Please come back and check, and please feel free to get contact us, either by using the contact us form here or by emailing us. Please note that the email below is the address for counsel in this matter, and will be received the by attorney who signed and filed the class action complaint: