Max International Blocked from Recruiting Melaleuca Employees
1/14/2010
A Utah-based company was issued a restraining order last week, temporarily restricting the recruitment of any past or present marketing affiliates of Melaleuca, a health and home products corporation. Max International was issued a restraining order by U.S. District Judge William Downes, as the result of having allegedly conspired to have current employees that were former Melaleuca marketing executives approach their former co-workers in an attempt at recruitment. Max International was also ordered to pay $10,000,000 as a result of the lawsuit. A statement was issued by Max International stating that it would adhere to the ruling but chastised Melaleuca for using the law to infringe on the rights of its employees by deciding where they would be able to work.
Melaleuca sells hundreds of household products such as vitamins, detergents, candles and hygiene products and employs over 3,000 people. In 2008 the company generated close to $900 million in profits in addition to employee commissions.
Max International contended that while it isn't contractually obligated to Melaleuca, it never lead any of its associates to recruiting events and also argued that those the Idaho-based company had accused were independent contractors and not employed by Max International.
After making it clear that Melaleuca would suffer "devastating" and irreparable harm if the allegations against Max are true, Judge Downes wrote: "Intrinsic to the success of the direct-marketing business model is the network of customers each Marketing Executive builds.". He also stated that "Should Max be shown to have recruited top-selling members of these networks, they will undoubtedly take the lower-level branches with them when they depart Melaleuca." and finished by explaining that if the Utah company isn't recruiting Melaleuca employees, then it can suffer no harm from being barred from doing so in the future.