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A judge has dismissed much of a lawsuit in which one Utah therapeutic oils company is suing another for allegedly poaching from its network of independent distributors by using confidential information.
Fourth District Court Judge Christine Johnson has dismissed all of the claims made by Young Living Essential Oils LC of Lehi against competitor doTERRA Inc. of Orem, which was formed by officers, employees and distributors who left Young Living. But the judge's decision leaves in place claims of violation of contract and confidentiality agreements against doTERRA principals.
"It's unfortunate that so much time, energy, and money on both sides have been spent on something that never should have been taking up time in our courts," doTERRA President and CEO David Stirling said in a statement.
Arthur Berger, attorney for Young Living, said the judge ruled that the company waited too long to sue and not on the allegations of wrongdoing by doTERRA founders who remain as defendants.
"Other claims are still moving forward, including breach of contract claims against certain founders of doTERRA that they improperly solicited Young Living's distributors and used Young Living's confidential information in violation of their contractual agreements," Berger said in an email.
Both companies operate as a multilevel marketers in which corps of independent distributors earn commissions on products sold to others who they have recruited into the company and who in turn entice still more people to join, with commissions flowing upward through different layers.
doTERRA was formed in 2008 by Stirling and others who left Young Living Essentials. Both companies sell oils and other products for body care and nutrition made from flowers, roots and other plant parts.
Johnson also ruled that Young Living had failed to show that it had suffered anything other than negligible damages from the solicitation of distributors who did not end up joining doTERRA.
Young Living provided only "pure conjecture" on possible damages, and its own expert had admitted it may be impossible to identity them, the judge wrote in a 47-page ruling.
"Given the extraordinary effort (in both time and money) which has been invested into these proceedings thus far, the notion that this particular claim should proceed forward so that Young Living can request one dollar in damages is troubling," Johnson wrote.
But the judge also said it was undisputed that some of those who went over to doTERRA had retained Young Living property, including computers and documents that the company says contained confidential information. An investigation by an outside law firm also revealed that some Young Living distributors had been contacted by doTERRA officials using information only available from its rival, Johnson wrote.
Stephen Quesenberry, an attorney for doTERRA, said he is confident the remaining parts of the lawsuit also will be invalidated.
"I believe Young Living is using the case as a public relations tool to fire up its distributors," Quesenberry said.
Earlier this year, the two companies agreed to settle lawsuits against each other in federal court in Utah that included allegations of the theft of trade secrets, faked lab tests, false advertising and rival tests that purportedly showed that "pure" products were contaminated with unnatural substances.
In a statement at the time, the two companies said neither admitting wrongdoing but were acknowledging that "essential oil chemistry is complex and that some tests can be confusing for the public to interpret. … As a result, Young Living and doTERRA have withdrawn their negative claims and published testing results about the purity of each party's respective products."