Medifast is Ordered to Pay Fees…. Five Years After Filing a SLAPP Suit

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It’s taken more than five years and hundreds of thousands of dollars to dispose of the frivolous and unethical lawsuit Medifast Inc. (aka Take Shape For Life) and their dishonest attorneys filed against Tracy Coenen and Sequence Inc.

You will recall that I won my anti-SLAPP motion to dismiss, and Medifast appealed, ensuring that the suit would drag on for years. In June 2014, the appeals court affirmed my dismissal and told Medifast to suck it. But of course, Medifast STILL wanted to fight… this time about the attorneys’ fees they were legally obligated to reimburse.

Yesterday the court ordered Medifast to pay nearly $200,000 and never darken my door again:

In accordance with those orders and decisions, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:

(1) This action is dismissed as to defendants TRACY COENEN and SEQUENCE, INC., and judgment is hereby entered in their favor;
(2) Plaintiffs BRADLEY MACDONALD and MEDIFAST, INC. shall take nothing by way of their First Amended Complaint against defendants TRACY COENEN and SEQUENCE, Inc.; and
(3) Judgment is entered in favor of defendants TRACY COENEN and SEQUENCE, INC., and against plaintiffs BRADLEY MACDONALD and MEDIFAST, INC., jointly and severally, in the amounts of $190,520.50 for attorney’s fees, $7,502.00 for nontaxable costs related to the proceedings in the District Court, and $855.00 for costs in the Ninth Circuit (for a total of $198,877.50).

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that plaintiffs, jointly and severally, shall be obligated to pay defendants TRACY COENEN and SEQUENCE, INC. the aforesaid sums, each with interest accruing at the legal rate from the date of entry of judgment until paid in full.

IT IS SO ORDERED.
DATED: April 20, 2015

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Medifast Victory For Tracy Coenen

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medifastAnother victory for Tracy Coenen in the malicious lawsuit filed more than 4 years ago by Medifast (NYSE: MED) related to their Take Shape for Life business unit. In 2011, I was dismissed from the lawsuit following my successful filing and argument of an anti-SLAPP motion. Medifast immediately appealed that decision to the United States Court of Appeals for the Ninth Circuit.

Today, my dismissal from the Medifast lawsuit was affirmed by the Court of Appeals, which said:

5. Finally, we affirm the district court’s order granting of Coenen’s anti-SLAPP motion. Coenen’s statements were either not libelous per se or were republications for which she should be afforded immunity under the CDA.
6. Appellee Coenen shall recover her costs on appeal. All the other parties shall bear their own costs on appeal.

Medifast can suck it.

Multi-Level Marketing Income Disclosures

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Medifast Pyramid SchemeSome multi-level marketing (MLM) companies release income disclosures or earnings disclosures. These documents theoretically provide insight into how much distributors earn in commissions or overrides.

However, the disclosures are generally worthless. What is more important than the information in these documents? The information that is not disclosed in the documents.

Multilevel marketing companies purposely omit important information that would allow potential distributors or investors to have real insight into these plans. Continue reading

Defamation and Statements of Opinion

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A couple of months ago, a ruling on an anti-SLAPP motion in a defamation case against Gawker Media (owner of website Gizmodo) got my attention. Scott Redmond, with his service called Peep Telephony (or Peep Wireless), was upset because Gizmodo posted a negative review of the service. More specifically, Gizmodo called the service a scam, saying that it offers “free” cellular service for phone calls, texts, and data access. A look at Peep’s website produced this criticism:

To be frank, this all sounds like bullshit. In fact, the combination of everything described was so strange, it almost made the company seem like a larger-than-life prank on the tech world. The closest thing to a technical explanation for Peep is this: Continue reading

Multi-Level Marketing Companies and Pyramid Schemes

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For decades, muti-level marketing companies like Amway, Mary Kay, Herbalife, Avon, and Usana have fought against being labeled as pyramid schemes. They say that pyramid schemes are illegal, and that their MLM business format is perfectly legal.

My definition of MLMs is a little nuanced. I tend to call them legalized pyramid schemes. What I mean by this is that multi-level marketing companies are indeed pyramid schemes, but our state and federal governments allow them to operate and generally call them legal if they have the right window dressing. Continue reading

Take Shape For Life and Medifast: Court Filing Explains Pyramid Scheme Allegations

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This week, response briefs were due from the defendants in the case of Medifast v. Barry Minkow, Fraud Discovery Institute, Robert FitzPatrick, Tracy Coenen, and Sequence Inc. I was dismissed from Medifast’s SLAPP suit (see information on the lawsuit here), and my brief  in the Medifast appeal can be found here. The brief of Minkow and Bob FitzPatrick was also filed this week, and sheds some light on the allegations that Take Shape For Life (TSFL) and Medifast are offering a pyramid scheme to distributors (called “health coaches”).

The entire brief filed on behalf of Minkow, FDI, and FitzPatrick is found here (10MB file). Below I highlight some of the most relevant (and most interesting) portions, particularly the bits regarding the allegations that Medifast’s multi-level marketing business is a pyramid scheme or endless chain recruitment scheme. Continue reading

Medifast and Take Shape For Life: Appeals, Pyramid Schemes, Truth, and Lies

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Yesterday my attorneys filed my response to the appeal in the lawsuit brought against me by Medifast, Inc. for my non-defamatory writings about the company and its Take Shape For Life multi-level marketing business. Medifast sued me on February 17, 2010, lied repeatedly to the court about my writings leading up to the lawsuit, and ultimately the judge dismissed me from the lawsuit on March 29, 2011.

You can read an important filing related to our anti-SLAPP motion here, which details what did and did not happen prior to the lawsuit. Medifast is appealing my dismissal from the lawsuit. Below is our response to Medifast’s appeal, and a pdf of the filing is found here.

My favorite quote from the brief: “Medifast claims that Coenen published false information, but it is Medifast that continues to make false accusations against Coenen.” Continue reading

Medifast “Take Shape For Life” Lawsuit: Total Vindication for Tracy Coenen in SLAPP Suit

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More than a year ago, Medifast Inc. (NYSE:MED) sued me, my company Sequence Inc, Barry Minkow, his company Fraud Discovery Institute, Robert FitzPatrick, William Lobdell, and an anonymous message board poster for defamation. Barry Minkow and FDI initiated an investigation of the company in 2008, and the rest of us researched the company and contributed our opinions to FDI’s reports on the company and its multi-level marketing division Take Shape For Life (TSFL).

We criticized the company and its MLM business model. We expressed negative opinions about the disclosures Medifast makes about this “business opportunity.” I dared to suggest that Medifast might be a weight loss pyramid scheme.

A year after the first report on the company was released by FDI, Medifast sued us for $270 million, alleging defamation, criminal conspiracy, unfair business practices, and market manipulation. The defendants each filed anti-SLAPP motions, basically saying that Medifast was attempting to silence critics in violation of our First Amendment rights. Continue reading

The Truth Comes Out in the Medifast Litigation

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UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

Nearly a year ago, Medifast Inc. (NYSE:MED) filed suit against me and several others, for what it claimed was defamation of its Take Shape For Life division (TSFL). My client initiated an investigation of Medifast more than year prior to the filing of the lawsuit, and published several reports on the company. I was retained as a consultant to do a small bit of analysis. Some of my work was included in reports published by the client, parts of which were reproduced on this blog, along with some of my own analysis of Medifast and TSFL.

TSFL is a multi-level marketing company which peddles weight loss products. It entices new “health coaches” to invest in the system with claims of “healthy body, healthy mind, healthy finances.” I was critical of this business model, as I frequently am with MLMs. Continue reading

A Victory For Free Speech in California: Will I Get My Victory?

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UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

A Swedish film maker, WG Film, won a victory for free speech in California. The documentary film producer made a movie about Dole Food, called “Bananas!”, detailing how the company was using pesticides and how it was treating its Nicaraguan workers. The film wasn’t flattering and, naturally, Dole sued the company for defamation.

The producers filed an anti-SLAPP motion in California, saying that the the movie was protected as free speech. Dole then dismissed the lawsuit, but did so without prejudice, which left an open threat that the lawsuit could be refiled at any time. Continue reading