Miron

MEMORANDUM

Herbalife International of America, Inc. (Herbalife), a publicly traded corporation, develops and distributes nutritional, weight loss, and personal care products through a global network of independent distributors. Moshe and Dorit Miron (the Mirons) entered into their current distributorship agreement with Herbalife in July 1992. The Mirons have since developed an extensive distribution network in several countries, earning recognition as one of the *929 most successful distributors within the Herbalife system. In November 1996, Herbalife reassigned one of the Mirons’ recruits and his downline distributors from the Mirons’ distribution network to that of another Herbalife distributor.

The Mirons filed a complaint against Herbalife on December 16, 1998, alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing, common law fraud and negligent misrepresentation, breach . of fiduciary duty, violation of federal and state securities laws, violation of Sections 17200 and 17500 of the California Business and Professions Code, and interference with prospective economic advantage. The Mirons filed First and Second Amended…