LifeVantage pays $400,000 in dispute stemming from failed takeover attempt.
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Utah-based Zrii LLC, a marketer of nutritional fruit drinks endorsed by popular doctor Deepak Chopra, has agreed to settle a flurry of lawsuits filed after a senior-management rebellion against its owner and CEO lead to a mass exodus.
Competitor LifeVantage Corp. of San Diego paid $400,000 to Zrii. The California company is where several former Zrii managers went to work after leaving the Draper company in February.
Zrii sued LifeVantage, claiming it had conspired with the executives to either take over the Utah company on the cheap or ruin it.
A federal judge in California signed an order this week dismissing the case. Zrii also agreed to settle lawsuits filed in Delaware and Utah against the managers, top independent distributors and employees who were fired or quit after an attempt to buy the company from CEO William F. Farley failed.
LifeVantage CEO David Brown said Wednesday that in the settlement, his company did not admit to any interference with Zrii. "We continue to maintain that, while the circumstances were unfortunate, we didn't do anything wrong. We understand that maybe there were some hurt feelings, but I think all sides thought it was the best thing to move forward and get it behind us."
Farley did not return a voice mail message seeking comment.
In February, Farley, a former Fruit of the Loom executive who lives in Chicago, arrived at Zrii's Draper headquarters and found no employees, except a few in customer service. He was presented with letters calling on him to resign and with an offer to buy the company.
Senior managers and several top independent distributors charged that the company was nearly broke because Farley had treated it like his personal bank account and used funds extravagantly. They also said he violated sales tax laws, authorized illegal political campaign contributions and engaged in unspecified inappropriate personal behavior.
Farley in turn sued, saying the top managers and distributors had tried to force him out in order to take over the company on the cheap.
Two former senior managers and co-founders of Zrii, Curtis Call and Clint McKinlay, apparently were not indemnified from future legal action by Farley and Zrii as part of the settlement with LifeVantage. Both had been with LifeVantage until being recently laid off.
"It's come to my attention through my attorney that Curtis Call and I have been left out of the settlement for reasons unbeknownst to me," McKinlay said Wednesday, declining further comment.
Call did not return a voice mail message seeking comment. LifeVantage's Brown declined to provide details of the settlement.
Kirby Zenger, also a Zrii co-founder, remains chief operating officer of LifeVantage, which has opened an office in South Jordan, where most of its operations are based.
Farley and Zrii also sued 31 former lower-level employees who had resigned after the failed takeover, charging they had been part of the conspiracy. Zrii attorney Mary Anne Q. Wood said individuals would be dismissed from the lawsuit if they agreed to drop wage and other claims against the company.
A Delaware lawsuit similar to the California action was dismissed on Tuesday.
In another development, Zrii top-level distributors Doug and Dave Vass of Calgary, Canada, announced Tuesday they had resigned from Zrii and would move to Nu Skin Enterprises of Provo.
The brothers, who had been among the most vocal critics of the actions of the former company managers, said on a Web site video they based their decision to leave on principles of participating only in companies that have integrity, honesty and innovative products.
In an e-mail, Doug Vass said he would not comment further. The brothers said they were earning "six figures" at the time they left Zrii.
February: Owner and CEO William F. Farley arrives at Draper headquarters to find most employees not at work.
He's presented with letters from execs and distributors demanding his resignation and an offer to buy the company. They accuse Farley of financial self-dealing and misconduct that left the company nearly broke.
Farley refuses the offer to sell, managers resign or are fired; at least 30 other employees also resign.
Farley sues accusers in Delaware and California, along with LifeVantage, the company where ex-managers went to work.
He also sues former lower-level employees in Utah district court, alleging they helped in a conspiracy to take over the company.
December: LifeVantage pays $400,000 to settle the lawsuit in California and suits in Delaware and Utah.