[00:00:02] Speaker 00:
Mr. Dre.

[00:00:04] Speaker 00:
Good morning.

[00:00:04] Speaker 00:
And may it please the court, I'm Dominic Dre.

[00:00:06] Speaker 00:
And with Andy Hallaby, I represent Isagenix, the appellant.

[00:00:10] Speaker 00:
I'll try to reserve three minutes for rebuttal.

[00:00:13] Speaker 00:
This case does not warrant the extraordinary remedy of an injunction ordering people to do business with each other.

[00:00:20] Speaker 00:
That is especially true where all of the Bennett's alleged injuries could be redressed with monetary damages, and where the Bennett's are extremely unlikely to obtain that outcome because they have ascended to the terms at issue, specifically the non-renewal term, on at least 13 different occasions in at least three different ways.

[00:00:41] Speaker 00:
That includes nine times using a click wrap website that shares the essential features that this court blessed just last term in Oberstein, three times with a pop-up window alerting them to the fact that there had been, quote, some important amendments.

[00:00:58] Speaker 02:
The law that governs the contracts at issue here is, as I understand it, Arizona law.

[00:01:03] Speaker 02:
So it's not really what

[00:01:05] Speaker 02:
We may have said in Ninth Circuit case, ultimately this is controlled by Arizona law, is that correct?

[00:01:10] Speaker 00:
I agree with that, yes.

[00:01:11] Speaker 00:
Arizona is light on precedent, candidly, your honor.

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We cite as many Arizona cases as we can in the briefings.

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But it does have case law on circumstances where you don't have an at-will arrangement at the start, and then you have modifications that eliminate

[00:01:30] Speaker 02:
or substantially alter the at-will feature and impose some requirements on that.

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I assume that Your Honor has in mind the DeMoss case, DeMoss versus ITT, that our friends on the other side cite.

[00:01:42] Speaker 00:
Yes.

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So DeMoss is an interesting case, because it involves, first of all, it's an employee arrangement.

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And it's a consideration case.

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It's not like this.

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It doesn't involve the kind of contract formation issues.

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And there, the Arizona courts have been pretty clear.

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I believe we've seen.

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But this is in contract form.

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It's not like they were.

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you know, going to a website and purchasing a one-off thing from, you know, you go on and you buy shoes and you click consent to the terms.

[00:02:12] Speaker 02:
They had a long-term relationship.

[00:02:15] Speaker 02:
They had written contracts that did not have at will, whenever we feel like it, removal by isogenics, and that shows up later in the contract.

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And so you have to meet the requirements for

[00:02:28] Speaker 02:
Arizona law for changing a relationship from one in which you can't, don't have the unilateral right to just end it whenever you want to one way you do.

[00:02:38] Speaker 00:
Agreed.

[00:02:39] Speaker 00:
So implicit in your honor's question, I think is a very important point, which is there's no question that had this all been in in the initial instance, and they formed the contract exactly as the subsequent amendments took shape, either of the three methods, the click wrap,

[00:02:54] Speaker 00:
the pop-up or the letter, the discipline letter in 22, any of those would have sufficed in the first instance.

[00:03:00] Speaker 02:
Correct.

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So if you're starting the relationship and this is all in there, then none of that case law applies about changing the relationship.

[00:03:09] Speaker 00:
Correct.

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So the issue is whether contract modification in Arizona is different than contract formation.

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And it is not.

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So we cite, including the DeMass case, at pages 9 and 10 of the reply brief, Arizona cases detailing its offer acceptance considerations.

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So the other side appeals to DeMass to say, oh, we didn't have consideration for this.

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But DeMass has been limited.

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And we cite, I believe it's Gomez in those pages of the reply.

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in which the Arizona courts limit Demos to employment security circumstances.

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And they say, if the consideration for taking this new term that allows at-will termination, in that case it was a security protection against layoffs for more senior employees.

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seniority to who's doing the best job.

[00:03:57] Speaker 00:
Yes, exactly.

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And so they were going to take away the seniority protection in a revised contract.

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And the Arizona court said, if we allowed the consideration to be

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Exactly what the contract guaranteed them then it was illusory and it led to an absurdity the court said that has been limited Even in Arizona cases to employment security cases not even extended to employment benefits So it's it's a very specific precedent and it's a consideration case now here

[00:04:29] Speaker 02:
We must it seems to rest on general contract principles and one of the principles that states is that you know to make this kind of a change you must be informed of any new term aware of its impact on the pre-existing contract and affirmatively consent to it to accept

[00:04:48] Speaker 02:
the offered modification.

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Do you meet that standard here, or do you say that standard doesn't apply?

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I think both would be true.

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And it depends on which of the many contracts.

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Both would be true?

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Yes.

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So that's an employment case specifically narrowed by Arizona courts to employment security.

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These are not employees, to be clear.

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These are independent contractors.

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They have been aware of this.

[00:05:11] Speaker 02:
What Arizona Supreme Court case says that this doesn't apply as a matter of general Arizona contract law on modifying a non-at-will contract?

[00:05:21] Speaker 00:
Well, I think that's the Gomez case that we cite.

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I can find the citation for you, but it's limited.

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That case, DeMass has been limited fairly carefully.

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Yeah, Gomez versus Brush-Wellman, 34 Pacific 3rd, 375 at 381.

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But more importantly, consider the three times in which they were presented with a pop-up that alerted them to the fact that there had been, quote, some significant changes.

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You can see that pop-up in our briefing, page 13 of the opening brief.

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It alerts them to exactly this thing.

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The district court never mentions the pop-up.

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you know, however many years that now isogenics can just end it whenever it wants to?

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No, Your Honor.

[00:06:17] Speaker 00:
It does not say this term has changed.

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It doesn't identify a specific term that has changed.

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You have to go through and create your own red line to figure out what they change.

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I mean, this incredibly important provision is stuck on as one sentence at the end of a paragraph that deals with something else.

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in what is otherwise a long document.

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But it allows isogenics to just take away everything that they've built just by adding in that one sentence.

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And you don't even call it out.

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And so just, all you have to do is just post it and say, hey, we've put in a change.

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And you're expected to create your own red line and do that.

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I'm not aware of any precedent.

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And the other side cites none that says that you have to call out term by term red lines.

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That, by the way, would be crippling for online contract formation if that was the law.

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I don't have any, I've never seen any authority that suggests that.

[00:07:10] Speaker 02:
But most of these online relationships are one-off at-wills, and so they're not subject to this requirement.

[00:07:17] Speaker 02:
If you have a relationship that's not an at-will and that has some security or doesn't have a provision against one side doing whatever it wants to change it, you have to go through some hoops to get that feature out of it.

[00:07:31] Speaker 00:
I don't think that's correct, Your Honor.

[00:07:33] Speaker 00:
First of all, most of these cases that involve the sort of one-off, where there's skepticism, like when, for example, are browse-wrap cases, which is categorically different, but they also involve consumer products, consumer contracts, where

[00:07:49] Speaker 00:
You're dealing with people buying, as your honor suggested, a pair of shoes or something like that.

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Nobody bothers to read all those rules, all the contract terms, that is.

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These are sophisticated people.

[00:08:00] Speaker 00:
This term had been in the contract for six years before it was exercised against the Bennets.

[00:08:07] Speaker 00:
It had been in there for a very long time, through at least 13 times when they assented, including the 2002 discipline letter that made clear that we were going to strictly hold you to the PNPs.

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Now, most people, if they were getting a $2 million a year revenue stream from something, would pay attention to what that means.

[00:08:26] Speaker 01:
I make less than that for my law firm, but if they said we amended the partnership agreement- I'm sorry, are you talking there about the May 1, 2020 letter?

[00:08:34] Speaker 00:
I believe it's 22, but maybe it's 2020.

[00:08:39] Speaker 00:
Yes, I have 22 on my notes, but I could have mistyped that.

[00:08:43] Speaker 00:
Is it ER 259?

[00:08:46] Speaker 00:
That sounds right, yes.

[00:08:48] Speaker 01:
Okay, can you tell me where in that letter the provision you just quoted is?

[00:08:54] Speaker 00:
So it doesn't refer to the specific provision of we are now... No, no, I understand that, but where does it say we're going to strictly hold you to the contract?

[00:09:02] Speaker 01:
That's what you said in your brief.

[00:09:04] Speaker 01:
Can you tell me where in that letter that is?

[00:09:06] Speaker 00:
Yes.

[00:09:10] Speaker 00:
So I'll have to find you the exact language.

[00:09:17] Speaker 00:
I don't have it in front of me for which I apologize.

[00:09:20] Speaker 01:
It's fine for your rebuttal if you have any time.

[00:09:21] Speaker 00:
Yes, right.

[00:09:23] Speaker 00:
But that letter, as well as, you know, again, this is the 13 instances when folks had, or when these particular plaintiffs, I should say, had the opportunity and were alerted to the fact that there had been material changes.

[00:09:37] Speaker 04:
Council, with respect, as both my colleagues have pointed out here, this, there is some language in the contract, but it is, it's language that only lawyers could love, and you could only find it if you really do a deep search.

[00:09:52] Speaker 04:
You've got a long, long, I think it's 20 years, if I recall correctly, a long, long-term relationship.

[00:09:57] Speaker 04:
All of a sudden it gets terminated like that, and as my colleagues have pointed out, under the Arizona case law, with Demas, for example, it seems, I'm calling it, good faith and fair dealing, basically, is what I'm looking at.

[00:10:15] Speaker 04:
I know it doesn't say that, but

[00:10:19] Speaker 04:
There's a certain element of arbitrariness that seems to be the underlying reasoning of the Arizona cases.

[00:10:31] Speaker 04:
And I'm troubled by what happened here, because I know you can point out a specific provision, but as Judge Collins pointed out, you got a single sentence at the end of a non-congruent paragraph that is the basis for this.

[00:10:46] Speaker 04:
My colleague has pointed out in this letter, you got to read it

[00:10:49] Speaker 04:
pretty carefully to say that it says what you said, but all of a sudden, bang, 20 years has gone.

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What am I missing here?

[00:10:57] Speaker 00:
Well, so there's nothing sneaky going on.

[00:10:59] Speaker 00:
I actually agree that, and I think it partly underlies this court's very well-written opinion in the Stover case that said totally different circumstances involving BrowseWrap, of course.

[00:11:10] Speaker 00:
But in that case, the court said, what are you supposed to check this every hour, every day, something like that for modifications?

[00:11:19] Speaker 00:
We're not in that situation.

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This is not a sneakiness case.

[00:11:23] Speaker 04:
Why did you terminate him?

[00:11:24] Speaker 00:
Well, we've terminated him.

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We will win on the four cause, termination separately.

[00:11:30] Speaker 00:
But I'm not going to get into that.

[00:11:32] Speaker 04:
I'm trying to status on my own mind the good faith in Faradena.

[00:11:36] Speaker 00:
Why were they terminated?

[00:11:38] Speaker 00:
So parts of this, as you know, are under seal, Your Honor.

[00:11:40] Speaker 00:
I understand that.

[00:11:41] Speaker 04:
I don't want you to talk about that.

[00:11:42] Speaker 00:
Those are the good parts.

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But this is nothing sneaky going on here.

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The change of terms provision has been in the contract since 2002 when Mr. Bennett joined.

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They have used it nine times in 22 years.

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So this is not a sneaky company that's throwing stuff in.

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There's no unconscionability argument.

[00:12:09] Speaker 00:
Well, they tried an unconscionability argument, but that's not how they got relief below.

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The non-renewal has been in for six years.

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And as I said, the district court's errors are fundamentally legal, not so much factual.

[00:12:21] Speaker 00:
So the court misperceived the click wrap, browse wrap distinction.

[00:12:25] Speaker 00:
The court did not consider the many occasions where there was a pop-up that, in fact, satisfied the court's requirement.

[00:12:30] Speaker 04:
I've written a few opinions about the pop-up issues.

[00:12:33] Speaker 04:
But as my colleague points out, this is not one of these cases.

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This is a long, long-term relationship.

[00:12:41] Speaker 04:
It's not an at-will.

[00:12:43] Speaker 04:
And you have cited provisions of the contract that only the lawyer could love.

[00:12:48] Speaker 04:
They've got to look at it in great detail to even know that it's there.

[00:12:51] Speaker 00:
These people have lawyers.

[00:12:53] Speaker 00:
You'll hear from them in a moment, and maybe they can give you a case in which there's any obligation to list changed terms in Arizona.

[00:13:00] Speaker 00:
I'm not aware of any, but I would like to reserve this last couple of minutes.

[00:13:04] Speaker 00:
OK, please do.

[00:13:04] Speaker 00:
Thank you.

[00:13:06] Speaker 04:
All right.

[00:13:07] Speaker 04:
Let's hear from Mr. Wellman.

[00:13:12] Speaker 03:
Yes, Your Honor.

[00:13:14] Speaker 03:
May it please the court.

[00:13:15] Speaker 03:
My name is Scott Wellman.

[00:13:17] Speaker 03:
I represent the appellees, the Bennett's in this matter.

[00:13:20] Speaker 03:
Your honor, I'd like to maybe follow up on some of the questions and then I'm sure you'll have further questions for me.

[00:13:29] Speaker 03:
This

[00:13:31] Speaker 03:
was a case where isogenics admitted, under questioning from the court, the district court below, because they had a full hearing, that they never provided us notice of this fundamental change to the contract.

[00:13:46] Speaker 01:
Let me start right out with that, because that's one of the main points that I have.

[00:13:50] Speaker 01:
We're talking here only about a preliminary injunction, right?

[00:13:55] Speaker 01:
Correct, Your Honor.

[00:13:57] Speaker 01:
You certainly got notice in the May 25th, 2023 termination letter, right?

[00:14:05] Speaker 01:
No, Your Honor.

[00:14:07] Speaker 01:
The May 25th termination letter specifically quotes section 3.4 of the policies and procedures.

[00:14:13] Speaker 01:
So you certainly got notice that that's now in there and it says that they can terminate you at their sole discretion, right?

[00:14:21] Speaker 01:
The May 25th, 2023, your fired letter.

[00:14:26] Speaker 03:
Oh, I'm sorry.

[00:14:27] Speaker 03:
I have the wrong dates.

[00:14:28] Speaker 03:
I thought you were talking about the January 20th later.

[00:14:32] Speaker 03:
Yes, we got it at that time.

[00:14:34] Speaker 01:
Absolutely, at the time it happened.

[00:14:36] Speaker 01:
You got notice on May 25th, 2023, at least, regardless of what happened before you got notice of that.

[00:14:43] Speaker 01:
Correct, Your Honor.

[00:14:44] Speaker 01:
Now, even if that couldn't affect any claims that you had that predated that,

[00:14:53] Speaker 01:
How can you be entitled to a preliminary injunction going forward based on a lack of notice of the change terms when at least as of May 25th, 2023, you clearly have it and they're saying we're exercising it now and the judge says you can't exercise it now?

[00:15:11] Speaker 03:
Because there was no mutual assent.

[00:15:14] Speaker 03:
That was a unilateral notice.

[00:15:16] Speaker 03:
There was no chance for us when the notice was given to go back, talk to Isagenix.

[00:15:21] Speaker 01:
So your claim here is that because of the relationship, because of what the contract said when you entered into it, if your clients don't specifically agree to that term, that you have this relationship forever and they can never change it?

[00:15:41] Speaker 03:
No, Your Honor.

[00:15:41] Speaker 03:
But there may have been at that time,

[00:15:46] Speaker 03:
Other arguments such as this particular provision that was slipped in was unconscionable, given the relationship to the parties for 20 years.

[00:15:56] Speaker 03:
Remember, these are MLM distributors.

[00:15:59] Speaker 01:
No, I understand.

[00:15:59] Speaker 01:
But if your main argument is lack of notice, even if that affects pre-May 2023, I don't understand how that is relevant to a preliminary injunction that starts after May 2023.

[00:16:15] Speaker 03:
2 reasons.

[00:16:16] Speaker 03:
One, it's not just lack of notice, it's lack of mutual assent.

[00:16:20] Speaker 01:
So then how is it that they can change it if your clients never want to agree?

[00:16:25] Speaker 03:
So they could possibly do it, but that's for a different story.

[00:16:29] Speaker 03:
That wasn't litigated.

[00:16:32] Speaker 01:
But you're making this argument here that there has to be mutual assent.

[00:16:37] Speaker 01:
I mean, I don't see that in Arizona law, but so your argument is that if your clients don't agree,

[00:16:45] Speaker 01:
then they're stuck with you forever, except if they fire you for cause.

[00:16:50] Speaker 03:
That is how the agreement was entered into.

[00:16:53] Speaker 03:
That is how it was portrayed to us for 20 years.

[00:16:57] Speaker 01:
That is how they even portray it now on their... But even though going back to a very early stage of the contract, it said we can make changes whenever we want.

[00:17:15] Speaker 03:
Yes, your honor, because we have to look in the context of how MLM distributors are brought in.

[00:17:22] Speaker 01:
But I understand your notice argument, but the contract going back a really long time says that your clients are scented to, they can make changes whenever they want.

[00:17:35] Speaker 01:
So what I'm having trouble with is if they can make changes whenever they want,

[00:17:41] Speaker 01:
And we accept your argument that the pre-May 2023 isn't good enough notice.

[00:17:48] Speaker 01:
I don't understand for a PI why the May 2023 isn't good enough notice.

[00:17:54] Speaker 03:
Because the court in Silver, Douglas, and Jackson v. Amazon have all said that these type of unilateral changes

[00:18:05] Speaker 03:
without notice are not enforceable, simple.

[00:18:09] Speaker 03:
If they had told us early on that we have that, that there was a change, unilateral change, then we would have been able to assert other arguments such as unconscionability.

[00:18:19] Speaker 03:
I'll give you an example.

[00:18:21] Speaker 03:
In this industry, MLM distributors that are successful build a large downline.

[00:18:28] Speaker 03:
It's worth a lot of money.

[00:18:29] Speaker 03:
It's legacy income.

[00:18:31] Speaker 03:
It's something they can will or bequeath to their descendants.

[00:18:37] Speaker 03:
It's all in the terms and conditions.

[00:18:40] Speaker 03:
What you are suggesting is that isogenics can, with one line added to the end of a paragraph in a 45-page document,

[00:18:49] Speaker 03:
say we take all that away for us.

[00:18:53] Speaker 03:
That's a whole different legal issue for a different date.

[00:18:57] Speaker 04:
But with respect, counsel, you're not answering my colleague's question.

[00:19:02] Speaker 04:
With respect to the past, prior to the May 25th, 2023, you may have a claim with respect to that, but are you saying that because there's no right to unilateral termination, that once they give the notice, that's of no

[00:19:19] Speaker 04:
no validity because you've never negotiated the terms of the bilateral contract.

[00:19:24] Speaker 04:
Is that what it is?

[00:19:24] Speaker 03:
We have the right to look at what the notice is, sit down with them, negotiate it.

[00:19:30] Speaker 03:
Perhaps we could sell our downline to somebody else.

[00:19:33] Speaker 03:
None of that was given to us.

[00:19:35] Speaker 03:
They just confiscated it unilaterally.

[00:19:37] Speaker 03:
It's a whole different ballgame.

[00:19:38] Speaker 04:
So basically, you have the right to negotiate a new termination provision?

[00:19:43] Speaker 04:
Is that what you're saying?

[00:19:44] Speaker 03:
Well, no.

[00:19:44] Speaker 03:
We have a right to, if that had happened,

[00:19:47] Speaker 03:
which didn't happen, then at that time, we have an asset that's probably worth millions of dollars.

[00:19:55] Speaker 03:
And what is being suggested, I think, by Judge Bennett is, okay, now you know about it, now they have the right to confiscate that asset to you.

[00:20:04] Speaker 04:
But I think Judge Bennett pointed out, you may have a claim

[00:20:09] Speaker 04:
for the pre-May 25, 2023 claim.

[00:20:14] Speaker 04:
You can take the present value of whatever the long-term millions is, but going forward, you clearly have notice as of that point.

[00:20:24] Speaker 04:
So what's your position as to what your legal status is at that point?

[00:20:29] Speaker 04:
Do they not have any right to terminate under any circumstances?

[00:20:32] Speaker 04:
Do they have to bargain with you to enter into a bilateral termination agreement?

[00:20:36] Speaker 04:
What rights do you have after that date?

[00:20:38] Speaker 03:
Yes.

[00:20:39] Speaker 03:
At that time, if they had chosen to give us notice, then we have certain rights to talk about how this... What are those rights?

[00:20:47] Speaker 03:
Those rights are to sit down, negotiate, as you say, a bilateral, maybe a settlement agreement, maybe a buyout agreement, maybe a severance agreement.

[00:20:58] Speaker 03:
That does happen.

[00:20:59] Speaker 04:
That's all unspoken.

[00:21:00] Speaker 04:
You're just saying as a matter of law?

[00:21:02] Speaker 04:
that they have, those are the rights that you have and that they have to comply?

[00:21:07] Speaker 03:
I'm seeing more as a matter of industry practice.

[00:21:10] Speaker 03:
That's what happens when you have a large downline worth millions of dollars that a company comes and says, we're taking it from you.

[00:21:18] Speaker 03:
It's a confiscation of your major asset.

[00:21:21] Speaker 04:
We're not communicating, at least you and I aren't communicating, because I understand your complaint with respect to prior to, say, May 25, 2023.

[00:21:29] Speaker 04:
You can have damages and it may be millions and millions of dollars.

[00:21:33] Speaker 04:
But I'm troubled and I think my colleagues are troubled by the fact that once you have this notice about which you do not dispute, they say there are provisions in the contract that allow them to terminate unilaterally.

[00:21:44] Speaker 04:
You say there's not.

[00:21:45] Speaker 04:
So at that point though, are you saying that they cannot terminate this contract under any circumstances going forward?

[00:21:53] Speaker 03:
No, I'm not saying that.

[00:21:54] Speaker 04:
Under what circumstances can they terminate it?

[00:21:57] Speaker 03:
It would have to be a mutual assent.

[00:21:59] Speaker 03:
We would have to know about it.

[00:22:01] Speaker 03:
We would have to sit down and talk to them about it.

[00:22:04] Speaker 04:
They have to negotiate with you and the terms are indefinite.

[00:22:09] Speaker 03:
The terms are indefinite at that time.

[00:22:10] Speaker 03:
Okay.

[00:22:11] Speaker 02:
And we would get it, but understand... That's why I understand it's your position is that, you know, because the prior contract did not have this sort of freedom to

[00:22:25] Speaker 02:
terminate the entire relationship, that the MAS provides the standard for what would need to be done in order to put in such a term as a modification and that that requires both the assent and consideration.

[00:22:48] Speaker 02:
And the assent includes notice, but not just notice.

[00:22:52] Speaker 02:
Is that your argument?

[00:22:53] Speaker 02:
Correct, Your Honor.

[00:22:54] Speaker 03:
This is basic contract law that is what our position is.

[00:23:00] Speaker 02:
So I wanted to ask, what do we make of the fact... Can I just say one?

[00:23:05] Speaker 03:
Plus consideration, they would need two.

[00:23:08] Speaker 03:
That's basic contract.

[00:23:09] Speaker 03:
Notice, assent, and consideration.

[00:23:11] Speaker 02:
What do we make of the fact, you know, the original 2016 agreement acknowledged that

[00:23:20] Speaker 02:
the policies and procedures and the compensation plan document could be amended by Isagenix in its sole discretion.

[00:23:31] Speaker 02:
That language has been in there for a long time.

[00:23:34] Speaker 02:
But the 2016 agreement also says this agreement may be amended only by a writing signed by the parties hereto.

[00:23:43] Speaker 02:
What does it

[00:23:46] Speaker 02:
Does anyone ever address at any point how those two provisions fit together that the general contract says it would require a writing to change it, but then there's within that an ability to change policies and procedures and compensation

[00:24:03] Speaker 02:
is reserved to isogenics.

[00:24:06] Speaker 02:
Does the record reflect anything to enlighten that point?

[00:24:09] Speaker 03:
Your Honor, I'm not aware of anything.

[00:24:11] Speaker 03:
I don't recall, I don't believe that that was briefed or even argued.

[00:24:16] Speaker 03:
That's an interesting point.

[00:24:17] Speaker 03:
There was no writing signed by either party and that goes to my point.

[00:24:22] Speaker 03:
How can you have mutual assent unless there's knowledge and consideration to change a contract, especially the fundamental

[00:24:30] Speaker 01:
Rights the parties that this has switch gears for one second the provision of the contract that Perports to eliminate consequential damages.

[00:24:45] Speaker 03:
Yes, your honor.

[00:24:46] Speaker 01:
Is that a contract that binds your client?

[00:24:50] Speaker 01:
I Mean, is that a provision that binds your client?

[00:24:53] Speaker 01:
according to the district court.

[00:24:55] Speaker 01:
No, I'm not asking about what according to the district court.

[00:24:58] Speaker 01:
I'm asking you, as an officer of the court, is that a provision that binds your client?

[00:25:05] Speaker 03:
That is something that has to be determined.

[00:25:09] Speaker 03:
It has not been briefed.

[00:25:10] Speaker 03:
Their isogenic position is it is.

[00:25:13] Speaker 03:
In my case, I believe it probably is, yes, but that hasn't been briefed and argued.

[00:25:19] Speaker 01:
But how did that become part of the contractual relationship

[00:25:23] Speaker 01:
but not the provision that says they can fire you for any reason.

[00:25:30] Speaker 01:
How could part one have become part of the contract, but part two not?

[00:25:35] Speaker 03:
The court below address that specifically.

[00:25:39] Speaker 02:
I wonder whether the briefing is kind of missed a point here because I look at the 2013 version of the isogenics policies and procedures and 9.8 has the consequential damages limitations.

[00:25:52] Speaker 02:
So this was in

[00:25:54] Speaker 02:
the contract before the 2017 amendments that gave isogenics a termination.

[00:26:00] Speaker 02:
I was all presented to us as if they're linked, but it seems to me that isn't factually true.

[00:26:06] Speaker 02:
Am I wrong?

[00:26:09] Speaker 03:
If it's in the 2013 provision, then it's going to be the consequential damages

[00:26:15] Speaker 03:
limitation, then that's going to be something that is enforceable against the benefits.

[00:26:21] Speaker 02:
Because that's before the 2016 contract, which has a signature on it.

[00:26:24] Speaker 02:
So we know 2016, whatever is in there.

[00:26:28] Speaker 02:
So you're bound by that already, and so this whole thing seemed to me to be a bit of a red herring, but maybe I'm factually wrong.

[00:26:39] Speaker 03:
The complications of this is Mr. Bennett signed up in 2002.

[00:26:45] Speaker 03:
Mrs. Bennett, who worked with Mr. Bennett, got another position in 2016.

[00:26:49] Speaker 02:
Mr. Bennett signs a contract in 2016 that essentially looks a lot like a master agreement that this covers all my accounts, covers everything, and here's what I agreed to.

[00:27:00] Speaker 02:
So you're kind of stuck with whatever's in 2016 and incorporated into 2016.

[00:27:05] Speaker 02:
Yes, Your Honor.

[00:27:07] Speaker 03:
I agree with you.

[00:27:09] Speaker 03:
If it's in the 2016, then it's something that's applicable to us, and we have to deal with that, and we have dealt with that.

[00:27:15] Speaker 01:
So, counsel, if you have, in fact, contractually agreed to no consequential damages, how can it be irreparable harm that you can't get certain amounts of money because you've contractually agreed to it?

[00:27:32] Speaker 01:
How can you have bargained it away and then claim that it's irreparable harm because you're not going to be able to get it even though you bargained it away?

[00:27:44] Speaker 03:
Your Honor, first of all, that was not briefed below.

[00:27:50] Speaker 03:
It wasn't briefed.

[00:27:51] Speaker 01:
But that's still my question.

[00:27:53] Speaker 01:
It's your question.

[00:27:53] Speaker 01:
Because the district court found that your inability to get consequential damages was the irreparable harm, right?

[00:28:00] Speaker 03:
found that there were several reasons for it, and I can go into the others, but that's the one that the district court relied upon because we could not be made whole.

[00:28:12] Speaker 01:
So explain to me how it can legally constitute irreparable harm, justifying equitable relief, if at law you have agreed to that provision.

[00:28:24] Speaker 03:
because we cannot be made whole for our damages, Your Honor.

[00:28:28] Speaker 01:
But you're not being made whole because of what they did.

[00:28:31] Speaker 01:
You're being made whole because you agreed to that contractual provision.

[00:28:35] Speaker 01:
So if you've agreed to it at law, how can the Chancellor come in and say, no, we're going to throw out the contract

[00:28:42] Speaker 01:
when you haven't claimed that that is a non-binding provision.

[00:28:49] Speaker 01:
And in fact, you've claimed it is a binding provision.

[00:28:52] Speaker 01:
I'm just not sure how that can be irreparable harm in equity.

[00:28:55] Speaker 03:
Because as the district court pointed out, that consequential damages limitation was presented as a take it or leave it proposition.

[00:29:08] Speaker 03:
We had no choice but to take it and go on

[00:29:13] Speaker 03:
Unless we wanted to lose our entire downline our only remedy at that time if we didn't take it was to terminate the contract and would have been 15 20 years of work, but you took it Yeah, because on a take it and leave it basis.

[00:29:28] Speaker 03:
So the district court says at this point given the amount of damages Because it's a take it and leave it he finds that that's enough to constitute irreparable harm I think

[00:29:41] Speaker 03:
And I'm glad that judge Collins pointed out that it was in the 2016 or 2013 P's and P's I Believe there's going to be an argument that that it could be unenforceable Because as a contract of adhesion is unconscionable both procedurally and substantive, but that wasn't briefed and

[00:30:04] Speaker 03:
And what the district court said is at this point, we cannot be made whole because of this taken and leave it position.

[00:30:12] Speaker 04:
Other questions by my colleague?

[00:30:14] Speaker 02:
One more question.

[00:30:14] Speaker 02:
What's your response to counsel's argument that the Gammas case limits the applicability of the DeMoss case in a way that precludes your ability to rely on it here?

[00:30:30] Speaker 03:
I know the Gamma's case talks in general, but about consideration.

[00:30:36] Speaker 03:
I don't believe it has to do with the lack of notice and mutual consent, a mutual assent that's required by DeMoss, or by Amazon, or by Stover, or by Douglas.

[00:30:54] Speaker 03:
And I'd like to add that the Jackson case, the Amazon case, said specifically,

[00:31:00] Speaker 03:
Whether we're talking about employees or independent contractors, it makes no difference.

[00:31:07] Speaker 03:
Here we have an MLM distributor, and there are hundreds of thousands of them around the country who depend on this income.

[00:31:16] Speaker 03:
So they are akin to employees.

[00:31:21] Speaker 04:
Thank you.

[00:31:22] Speaker 04:
Very well, thank you.

[00:31:23] Speaker 04:
Council, you have some rebuttal time?

[00:31:29] Speaker 00:
Thank you.

[00:31:30] Speaker 00:
I'd actually like to pick up on the irreparable harm thread that the court was asking about and we didn't have a chance to reach in my opening remarks.

[00:31:38] Speaker 00:
There are a number of problems with the consequential damages serving as the sole basis for irreparable harm.

[00:31:44] Speaker 02:
2007.

[00:31:46] Speaker 02:
It's in the 2013?

[00:31:48] Speaker 00:
Yes, it arrived in 2007.

[00:31:51] Speaker 00:
And so one of the many problems is that they were stopped from arguing this because of the way that they argue for the ability, well, they assert the consequential damages as a bar, but they reject the non-renewal provision, both of which were added in the same manner at different points along the way.

[00:32:10] Speaker 04:
That's the point that was made, you can't have one without the other.

[00:32:13] Speaker 02:
Precisely.

[00:32:14] Speaker 02:
As I just pointed out, the 2016 contract is really looks like a master agreement governing everything.

[00:32:23] Speaker 02:
He signs it and it incorporates the then existing documents.

[00:32:27] Speaker 02:
And so that is, you know, that's a complete contract.

[00:32:32] Speaker 02:
This isn't, you know, I don't see this as subject to the same issue of DeMoss.

[00:32:40] Speaker 00:
DeMoss is the consideration case, Your Honor.

[00:32:42] Speaker 00:
Is that what you mean to refer to?

[00:32:45] Speaker 02:
Demos is about amending modifying a contract in order to change specific terms that in a non at will arrangement.

[00:32:57] Speaker 00:
No, that is not Demos.

[00:33:00] Speaker 00:
It is a case about allegedly absurd.

[00:33:03] Speaker 00:
consideration as illusory consideration for a modification.

[00:33:06] Speaker 00:
It's not about the procedure for a modification.

[00:33:09] Speaker 00:
So Arizona law is very clear that they're the same exact rules for formation and modification.

[00:33:15] Speaker 00:
But again, this is one of the several flaws with their irreparable harm argument.

[00:33:20] Speaker 00:
The other is they sort of rely on consequential damages as if they were impecunious, which is not true.

[00:33:27] Speaker 00:
They assert that their business will be rendered extinct, which is not true.

[00:33:30] Speaker 00:
At most, it amounts to a disruption in their business.

[00:33:33] Speaker 00:
All of this can be paid with monetary damages.

[00:33:36] Speaker 00:
What they're missing out on are commissions.

[00:33:38] Speaker 00:
That's what this is about.

[00:33:39] Speaker 00:
And they could be paid commissions later if they turn out to be correct.

[00:33:42] Speaker 00:
There's no chance they're going to turn out to be correct, either under the non-renewal for cause or without cause.

[00:33:48] Speaker 00:
And remember, they are the plaintiffs seeking the extraordinary relief.

[00:33:52] Speaker 00:
They have to demonstrate that they have these irreparable harms that cannot be compensated absent being forced into a relationship where Isagenix has to do business with them, and that of course is extraordinary, which gets to the hardships.

[00:34:05] Speaker 00:
We point out in the Nike case from this court that access to data and other employees is a hardship.

[00:34:11] Speaker 00:
There is the gamesmanship public policy concern around

[00:34:14] Speaker 00:
taking and leaving provisions that were added in the same way.

[00:34:17] Speaker 00:
We're only here because of a provision added in 2017 that allows them to seek preliminary relief in court.

[00:34:25] Speaker 00:
And we point out, and they raised this argument where they claim it wasn't argued.

[00:34:29] Speaker 00:
We argued at page 12 and 13 of our reply brief, excuse me, of the opposition to the PI.

[00:34:35] Speaker 00:
The quotes are

[00:34:38] Speaker 00:
that are cited in our reply brief in at least one place.

[00:34:42] Speaker 00:
But that's DOC 30 at 12 and 13 where we make this argument saying you can't pick and choose.

[00:34:49] Speaker 00:
And so they bring the suit in court

[00:34:52] Speaker 00:
which was only added in 2017 after the 16 edition that your honor points to, and the same modification that adds the non-renewal option for isogenics.

[00:35:03] Speaker 00:
So public policy also weighs against this kind of gamesmanship.

[00:35:07] Speaker 00:
They can't use the consequential damages bar in order to bootstrap irreparable harm.

[00:35:13] Speaker 04:
Your time is up.

[00:35:14] Speaker 04:
Let me ask my colleagues whether either of the additional

[00:35:16] Speaker 04:
It's a very interesting case.

[00:35:17] Speaker 04:
We could talk about it for a really long time, but we're not going to.

[00:35:20] Speaker 04:
So we thank both counsel for your argument.

[00:35:22] Speaker 04:
The case just argued is submitted.