U.S. Federal Courthouse in downtown Los Angeles. Photo by John Schreiber.
U.S. Federal Courthouse in downtown Los Angeles. Photo by John Schreiber.

A judge has set a May hearing to finalize the $15 million settlement of a class-action lawsuit brought by a former Herbalife Ltd. salesman who alleged the Los Angeles-based nutrition company was operating a pyramid scheme that victimized hundreds of thousands of people a year.

In a preliminary decision issued this week, U.S. District Judge Beverly Reid O’Connell called the settlement “fair, reasonable, and adequate.”

The company did not admit wrongdoing.

O’Connell set the May 11 hearing to consider final approval of the accord, which also requires Herbalife to provide up to $2.5 million to distributors who return unused products.

In addition, Herbalife agreed to change some corporate policies, including over how it defines distributors and handles shipping charges on returned products, for at least three years.

The lawsuit, lodged last year in federal court in Los Angeles, alleged that Herbalife is a pyramid scheme in which the company’s independent distributors earn more money recruiting new sales people than they do selling its products.

O’Connell refused Herbalife’s request to dismiss the case last year, saying former Herbalife distributor Dana Bostick’s allegations were significant enough to proceed toward trial.

City News Service

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