A Salt Lake City company that sells a controversial weight-loss supplement agreed to settle nationwide class-action lawsuits and pay back consumers, but then stopped negotiations to finalize the accord, court documents claim.
Now, attorneys representing consumers are asking a judge to enforce the settlement with Basic Research.
Basic Research was sued in 2007 over its marketing of a weight-loss dietary supplement called Akävar 20/50. Basic Research, its officers and related companies defrauded consumers with advertisements that, according to the lawsuit, falsely claimed that Akävar was a "New! European Weight-Loss Breakthrough" product guaranteed to work while users "eat all [they] want & still lose weight."
"Defendants know that Akävar is not a foolproof alternative to weight loss with guaranteed success and defendants know that the product has not been subjected to clinical trials," the suit says.
A federal court judge ruled in 2009 that a Utah lawsuit, which by then had been consolidated with a similar actions from California, could go forward as a class action that included consumers nationwide.
Last September, the two sides agreed to a settlement with terms that were signed by Dennis Gay, the president and CEO of Basic Research, along with its lead attorney.
The proposed settlement requires Basic Research to make a refund to any consumer who submits a sworn statement that they had purchased Akävar. The company also was to pay $3.5 million in costs and attorney fees.
Akävar was sold in many of the largest U.S. retail outlets, including GNC, Walgreens, Target, Rite-Aid, Costco and Kmart, court documents say. Basic Research declined to supply sales figures, but a 2009 court filing says sales were "well into the tens of millions of dollars" in the three years the product had been offered.
As negotiations last year continued with some back and forth back between attorneys over the final settlement agreement, Basic Research's attorneys ceased interactions in December, according to the motion asking the judge to intervene and enforce the agreement.
Salt Lake City attorney Jon Harper, local counsel for the plaintiffs, declined comment. Attorneys and a spokesman for Basic Research did not return emails seeking comment.
But in filings opposing the motion, the company argued that the consumers' attorneys argument "glosses over the fact that the parties extended negotiations have never resulted in a final agreed-upon executed settlement document."
It also said the materials in the mediation should be confidential and their use in court is "entirely improper."
U.S. District Judge Ted Stewart set a hearing for March 14 to consider the arguments.
Basic Research and the Federal Trade Commission also are involved in another legal battle over the same issues. The company in 2006 had agreed to settle previous claims about deceptive marketing of weight-loss products.