United States District Court, W.D. Texas
JULIE O'SHAUGNESSY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiff
v.
YOUNG LIVING ESSENTIAL OILS, LC D/B/A YOUNG LIVING ESSENTIAL OILS, THE YOUNG LIVING FOUNDATION, INC., MARY YOUNG, JARED TURNER, BENJAMIN RILEY, AND CO-CONSPIRATORS, Defendants
REPORT AND RECOMMENDATION OF THE UNITED STATES
MAGISTRATE JUDGE
SUSAN
HIGHTOWER, UNITED STATES MAGISTRATE JUDGE.
TO:
THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT
JUDGE
Before
this Court are Defendant Young Living Essential Oils,
LC's Motion to Compel Arbitration, filed on June 11, 2019
(Dkt. No. 7); The Young Living Foundation, Inc., Mary Young,
Jared Turner, and Benjamin Riley's Motion to Compel
Arbitration and Joinder in Young Living Essential Oil
LC's Motion to Compel Arbitration and Stay Proceedings,
also filed on June 11, 2019 (Dkt. No. 8); and related
response and reply briefs. On July 2, 2019, the District
Court referred the above motion to the undersigned Magistrate
Judge for Report and Recommendation pursuant to 28 U.S.C.
§ 636(b)(1), Federal Rule of Civil Procedure 72, and
Rule 1 of Appendix C of the Local Rules of the United States
District Court for the Western District of Texas.
I.
BACKGROUND
A.
The Instant Lawsuit
On
April 12, 2019, Plaintiff Julie O'Shaughnessy
(“Plaintiff”), individually and on behalf of all
those similarly situated, filed this lawsuit against
Defendants Young Living Essential Oils, LC d/b/a Young Living
Essential Oils (“Young Living”), The Young Living
Foundation, Inc. (the “Foundation”), Mary Young,
Jared Turner, Benjamin Riley, and Jane and John Doe
co-conspirators (“Individual Defendants”) for
damages and other relief under the Racketeer Influenced
Corrupt Organizations Act, 18 U.S.C. §§ 1961(5),
1962(c), and 1962(d) (“RICO Act”).
Plaintiff
alleges that “Young Living operates an illegal pyramid
scheme created under the guise of selling essential oils for
quasi-medicinal purposes.” Dkt. No. 1 at ¶ 1.
Plaintiff avers that she, and hundreds of thousands of
putative class members just like her, paid and lost hundreds
(and in some cases thousands) of dollars to become Young
Living Essential Rewards enrollees (“Members”)
based on the promise of financial health (which Young Living
calls “abundance”) and physical health, all
through its brand of essential oils. Plaintiff contends that
Young Living falsely represents to its Members that
participation in Young Living-which necessarily requires
regular monthly payments-will result in spiritual and
material riches as long as they continue to solicit
additional recruits to become Members of the Young Living
family. “In reality, ” Plaintiff alleges,
“Defendants have created nothing more than an unlawful
pyramid scheme-the cornerstone of which is Young Living's
emphasis on new member recruitment over the sale of
products.” Id. at ¶ 4. Plaintiff contends
that Defendants' activities have violated the RICO Act.
B.
The Contractual Provisions at Issue
On May
15, 2015, Plaintiff became a Member of Young Living by
enrolling online and electronically signing the “U.S.
Member Agreement & Essential Rewards Enrollment
Form.” See Exh. C to Dkt. No. 7 (“Member
Agreement”).[1] By signing the Member Agreement, Plaintiff
acknowledged: “I have read and agree to be bound by the
terms and conditions of the Agreement (which includes this
Member Agreement, the Policies and Procedures, and the
Compensation Plan).” Id. at p. 2. Relevant to
the Motion to Compel Arbitration, the Member Agreement
contains the following “Jurisdiction and Choice of
Law” clause (“Forum Selection Clause”):
The Agreement will be interpreted and construed in accordance
with the laws of the State of Utah applicable to contracts to
be performed therein. Any legal action concerning the
Agreement will be brought in the state and federal courts
located in Salt Lake City, Utah. Notwithstanding the
foregoing, if applicant resides in Louisiana, applicant may
bring an action against YL with jurisdiction and venue as
provided by Louisiana law.
Id. at p. 3 § 9 (emphasis added).
The
Member Agreement also incorporated the Young Living Policies
and Procedures (“P&P”) and the Compensation
Plan. Id. at § 5. The P&P contained the
following arbitration clause:
If mediation is unsuccessful, any controversy or claim
arising out of or relating to the Agreement, or the breach
thereof, will be settled by arbitration.[2] The parties waive
all rights to trial by jury or to any court. The arbitration
will be filed with, and administered by, the American
Arbitration Association (“AAA”) or Judicial
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