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Utah judge blames weight-loss company for delays in settling lawsuit

Published March 14, 2013 9:43 pm

Courts • He shoots down Basic Research's arguments that tentative agreement can't be enforced.
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An angry federal judge on Thursday said the Salt Lake City-based maker of a disputed weight-loss product appeared to be obstructing a settlement it had agreed to in a lawsuit alleging the company defrauded consumers.

U.S. District Court Judge Ted Stewart had tough words for Basic Research and its attorney as they tried to place blame for finalizing a deal on lawyers for thousands of consumers who bought the weight-loss product advertised as "eat all you want & still lose weight."

Stewart was skeptical of arguments by attorney Christopher Sullivan that important details of the settlement had not been ironed out, meaning that the court could not enforce an agreement Sullivan described as tentative. The attorney argued that ordering a settlement would be unconstitutional and would be appealed.

The judge said, however, that the remaining issues were easily resolved by the parties and that Basic Research appeared to be the party obstructing progress in a lawsuit that had gone on far too long.

At one point Stewart warned Sullivan, "I think it would be best not to argue with me."

Basic Research was sued in 2007 over its marketing of a weight-loss dietary supplement called Akävar 20/50, which was sold in U.S. retail outlets such as GNC, Walgreens, Target, Rite Aid, Costco and Kmart, court documents say. Basic Research declined to supply sales figures, but a 2009 court filing says they were "well into the tens of millions of dollars."

Last September, the two sides reached an agreement during a mediation session in San Francisco, with terms that were signed by Dennis Gay, the president and CEO of Basic Research, along with its lead attorney.

Since then, Scott Shepherd, a Philadelphia attorney who represents consumers, told Stewart some negotiations had taken place but that attorneys for Basic Research had stopped trying to tie up final details and indicated they were no longer interested in settling. Shepherd asked Stewart to enforce the deal the sides had reached.

"The defendants just decided they didn't want to do it," Shepherd said, pointing out that their actions came even after the company's attorneys had filed notice with the court that the suit had been settled.

Stewart said he would issue a ruling soon.