Federal judge temporarily bars Utah company from recruiting Idaho rival’s workers

Judge: Utah co. can’t recruit from Idaho rival

BOISE, Idaho — A federal judge has temporarily barred a Utah company from recruiting any employees of an Idaho health and home product company.

U.S. District Judge William Downes issued the temporary restraining order last week, barring Max International from recruiting anyone who has been a marketing executive at Melaleuca in the past year and from using any of its employees that formerly worked for Melaleuca to recruit their former co-workers.

Melaleuca, which sells about 350 nutritional and household products including lotions, detergents and powdered drinks, sued the Salt Lake City-based Max International for more than $10 million last fall, contending the Utah company raided its marketing executives and then conspired to have those former workers breach their contracts with the company by recruiting other sales people.

In the order, the judge said Melaleuca convinced him that the company is likely to succeed on the merits of their claims.

Melaleuca president Frank VanderSloot couldn’t be immediately reached by The Associated Press. Brook Bond and John Zarian, two attorneys representing the Utah company, did not immediately return phone calls.

Melaleuca employs about 3,400 and pulled in $879 million in revenue in 2008. Each of its marketing executives earn commissions on customer sales or by training and motivating other sales staff in gathering new customers. The marketing executives are also required to maintain an extensive database of customer contact information and other sales executives they support; the company considers the database to be a trade secret.

Max International has maintained its innocence, contending that even though it isn’t under a contractual obligation with Melaleuca it ensured no associates of the Idaho company were present at their recruiting events. Max has also argued in court that that the people Melaleuca claim to be acting on behalf of Max are independent contractors and that Max isn’t liable for their actions.

Downes ruled in favor of Melaleuca, saying that if the allegations against Max are true, Melaleuca would suffer “devastating” and irreparable harm.

“Intrinsic to the success of the direct-marketing business model is the network of customers each Marketing Executive builds,” Downes wrote. “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.”

Downes also noted 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.