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    HAEGGQUIST & ECK, LLP AMBER L. ECK (177882) ambere@haelaw.com AARON M. OLSEN (259923) aarono@haelaw.com 225 Broadway, Suite 2050 San Diego, CA 92101 Telephone: (619) 342-8000 COHN LIFLAND PEARLMAN HERRMANN & KNOPF LLP PETER S. PEARLMAN psp@njlawfirm.com KELLY M. PURCARO kmp@njlawfirm.com Park 80 West Plaza One 250 Pehle Avenue, Suite 401 Saddle Brook, NJ 07663 Telephone: (201) 845-9600 Attorneys for Plaintiffs and the Proposed Class

    UNITED STATES DISTRICT COURT

    FOR THE CENTRAL DISTRICT OF CALIFORNIA

    Stella Lemberg; Jeni Laurence; Amandra Bluder; and Carissa Stuckart, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs, vs. LuLaRoe, LLC d/b/a LuLaRoe, a California Limited Liability Company; LLR, Inc., a Wyoming Corporation; and DOES 1-10, Inclusive, Defendants.

    Case No.: CLASS ACTION CLASS ACTION COMPLAINT DEMAND FOR JURY TRIAL

    Case 5:17-cv-02102-AB-SHK Document 1 Filed 10/13/17 Page 1 of 28 Page ID #:1

  • 1 CLASS ACTION COMPLAINT

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    Plaintiffs, Stella Lemberg, Jeni Laurence, Amandra Bluder, and Carissa

    Stuckart (Plaintiffs), by and through their attorneys, bring this action on behalf of

    themselves and the Class1 against LuLaRoe, LLC d/b/a LuLaRoe, LLR, Inc.

    (collectively, LuLaRoe or Defendants), and DOES 1-10, inclusive. Plaintiffs

    make the following allegations upon information and belief (except those allegations

    as to the Plaintiffs or their attorneys, which are based on personal knowledge), based

    upon an investigation that is reasonable under the circumstances, which allegations

    are likely to have evidentiary support after a reasonable opportunity for further

    investigation and/or discovery.

    I. NATURE OF THE CASE

    1. This case arises out of a multi-level marketing scheme, whereby

    LuLaRoe created a direct-buyer system so consumers must go through

    representatives or consultants to buy LuLaRoes clothing products. To be a

    consultant, however, LuLaRoe requires an initial expenditure upwards of $5,000 for

    a start-up inventory kit of clothing and other promotional materials. As bait to lure

    consultants to sign up and/or to purchase more inventory, in April 2017, LuLaRoe

    promised consultants they could cancel their agreements with LuLaRoe and be

    refunded 100% of the wholesale amount of inventory purchased, including shipping

    charges. The 100% refund had no conditions or exceptions attached. To further induce

    consultants, LuLaRoe uniformly promised that the 100% buyback policy would never

    expire:

    Today, we would like to provide clarity regarding the 100% Buy Back on Inventory policy. This policy does not have an expiration date, nor does it have a required timeframe in which the product should have been purchased in.2

    1 The Class is defined in 77 below. 2 See https://build.mylularoe.com/news/1/27/105, page 2 (last visited 9/14/17).

    Case 5:17-cv-02102-AB-SHK Document 1 Filed 10/13/17 Page 2 of 28 Page ID #:2

  • 2 CLASS ACTION COMPLAINT

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    2. Unfortunately, overnight on September 13, 2017, LuLaRoe reneged on

    its end of the bargain. Instead of honoring its 100% buyback and free shipping

    agreement, LuLaRoe is not providing fee shipping and is honoring at most a 90%

    refund and even then it comes with numerous exceptions, thereby cheating Plaintiffs

    and the Class out of thousands of dollars.

    3. To redress the harms suffered, Plaintiffs, on behalf of themselves and the

    Class, bring claims for: (1) violation of Californias Unfair Competition Law

    (UCL), Business & Professions Code 17200, et seq.; (2) violation of Californias

    Unfair Advertising Law, Business & Professions Code 17500, et seq.; (3) quasi-

    contract (a/k/a unjust enrichment); (4) breach of contract; (5) breach of the covenant

    of good faith and fair dealing; and (6) conversion.

    JURISDICTION AND VENUE

    4. The Court has jurisdiction under the Class Action Fairness Act of 2005,

    28 U.S.C. 1332(d)(2), because the suit is a class action, the parties are minimally

    diverse, and the amount in controversy exceeds $5,000,000, excluding interest and

    costs. The Court has supplemental jurisdiction over Plaintiffs state law claims

    pursuant to 28 U.S.C. 1367(a).

    5. This Court has personal jurisdiction over Defendants because they are

    headquartered in this District, do a substantial amount of business in California,

    including in this District; are authorized to conduct business in California, including

    in this District; and have intentionally availed themselves of the laws and markets of

    this District through the promotion, sale, marketing, and/or distribution of their

    products and services.

    6. Venue is proper in this district under 28 U.S.C. 1391(a)(1) and (a)(2)

    because a substantial part of the events or omissions giving rise to this claim occurred

    in this district. Venue is also proper under 18 U.S.C. 1965(a), because Defendants

    transact a substantial amount of its business in this District and have a forum selection

    Case 5:17-cv-02102-AB-SHK Document 1 Filed 10/13/17 Page 3 of 28 Page ID #:3

  • 3 CLASS ACTION COMPLAINT

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    clause in certain of its LuLaRoe Independent Consultant Program Application and

    Agreement[s] which selects the Central District of California as the venue.

    THE PARTIES

    Plaintiffs

    7. Plaintiff Stella Lemberg is/was a LuLaRoe Consultant who resides in

    Fair Lawn, New Jersey.

    8. Plaintiff Amandra Bluder is/was a LuLaRoe Consultant who resides in

    Oceanside, California.

    9. Plaintiff Jeni Laurence is/was a LuLaRoe Consultant who resides in

    Eastvale, California.

    10. Plaintiff Carissa Stuckart is/was a LuLaRoe Consultant who resides in

    Keizer, Oregon.

    Defendants

    11. Defendant LuLaRoe, LLC d/b/a LuLaRoe is a California corporation

    with its principal place of business located at 1375 Sampson Avenue, Corona,

    California 92879.

    12. Defendant LLR, Inc. is a Wyoming corporation with its principal place

    of business located at 1375 Sampson Avenue, Corona, California 92879.

    13. Defendants are clothing manufacturers, selling clothing nationwide

    through a multi-level marketing model, otherwise known as a pyramid scheme, as

    described below.

    14. The true names and capacities of defendants sued herein as Does 1

    through 10, inclusive, are presently not known to Plaintiffs, who therefore sue these

    defendants by such fictitious names. Plaintiffs will seek to amend this complaint and

    include these Doe Defendants true names and capacities when they are ascertained.

    Each of the fictitiously named defendants is responsible in some manner for the

    conduct alleged herein and for the injuries suffered by Plaintiffs and the Class.

    Case 5:17-cv-02102-AB-SHK Document 1 Filed 10/13/17 Page 4 of 28 Page ID #:4

  • 4 CLASS ACTION COMPLAINT

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    FACTUAL ALLEGATIONS

    Brief History and Rapid Growth of LuLaRoe

    15. On May 1, 2013, LuLaRoe was incorporated. It is a clothing sales

    organization based in Corona, California, founded by DeAnne Brady and Mark

    Stidham. LuLaRoe has approximately 33 varieties of knit shirts, skirts, dresses, and

    leggings ranging from $25 to $75 per item.

    16. LuLaRoe is in the business of advertising, marketing, producing,

    manufacturing, and selling clothing such as knit shirts, skirts, dresses, and leggings

    through individual consultants, also called representatives or retailers (referred to

    hereafter as Consultants), such as Plaintiffs and the Class. LuLaRoe is a classic

    multi-level marketing scheme. LuLaRoe signs up Consultants to sell its products and

    to sign up a Consultants own network of Consultants. Man