LuLaRoe seek to divide and conquer in class-action arbitration

Of the affiliate lawsuits filed against LuLaRoe that are still playing out, the most prominent is a proposed class-action pertaining to the company’s return policy.

The six-count complaint claims damages in excess of $5 million and seeks to represent a nationwide class of distributors who either attempted (unsuccessfully) to return inventory or purchased inventory during the five-and-a-half month period in which LLR had a “100% Buy Back” policy.

The complaint claims unjust enrichment, breach of contract, and deprivation of distributors’ investments, among other things.

As of April 17th, the lawsuit had been stayed pending the outcome of compulsory arbitration.

On June 14th a Joint Status Report was filed, providing insight into how arbitration is playing out.

From what I can see LuLaRoe have opted for a “divide and conquer” strategy.

The company appears terrified of a class-action, and is doing its best to ensure affiliate buy back complaints are mediated on an individual basis.

As per the Joint Status Report LuLaRoe filed its arbitration demands on April 20th.

These arbitration demands seek a declaration from the arbitrator that

(1) each of the plaintiffs must submit their claims as alleged in the First Amended Complaint filed in this action, or otherwise arising from or relating to the parties’ Retailer Agreement, to binding arbitration on an individual basis, and not a class basis;

(2), that each plaintiff must first individually mediate her claims before proceeding with the arbitration of her claims;

(3) that such individual arbitration be stayed pending individual mediation between the parties.

The twenty-two affiliate plaintiffs meanwhile simply repeated the allegations in their complaint.

Universally the affiliates are against individual arbitration and have requested

that an arbitrator be appointed to first decide LuLaRoe’s arbitration demands, that Plaintiffs’ class action demand be stayed and then split into 22 separate claims to be mediated and
arbitrated individually.

As further explained in our recently published LuLaRoe review, the company sends an assortment of patterned clothing to its affiliates.

Seeing as affiliates have no control over what patterns they receive, the importance of a buy back policy cannot be understated.

Following the introduction of a 100 percent buyback last April,

many distributors took LLR up on its offer and attempted to return their inventory, but, from social media accounts, the return process became a nightmare for many.

And then in mid-September LLR changed its buy-back policy.

A pattern shipment lottery when some are clearly more desirable than others is great for LuLaRoe but terrible for affiliates and consumers.

I don’t see any reason for LuLaRoe affiliates to be punished for the company’s choice of product distribution.

As of June 14th both parties are awaiting arbitrator selection, after which each parties’ arbitration demands will be worked through toward resolution.

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