Neora’s
bid to dismiss the FTC’s pyramid scheme case against it
has been rejected.

The company did however manage to get the case moved to Texas.

The thrust of Neora’s motion to dismiss is they
filed first against the FTC
in Illinois.

Neora’s lawsuit came about as a result of the FTC giving it a chance to settle before it
filed its own lawsuit
in New Jersey.

While agreeing that both lawsuits are “substantially similar”, which is typically enough to satisfy the first-to-file rule, the court found Neora’s Illinois lawsuit was “filed in bad faith”.

The facts in the present case suggest that the Illinois Action was merely an attempt to beat the FTC to the courthouse by filing suit in Defendants’ preferred district.

The suggested reason Neora choice Illinois is because a recent Seven Circuit ruling prohibits the FTC for seeking “monetary restitution as part of a consumer protection enforcement action”.

That is should the FTC prevail, Neora’s choice of Illinois would prevent the FTC from providing restitution to victims.

Similarly the court recognized that the FTC had likely chosen New Jersey to avoid the Seven Circuit ruling. The first-to-file rule however only requires to the court to consider the motivation behind the first filing (Neora’s lawsuit in Illinois).

This point of contention prompted Chief Judge Wolfson to conclude;

Because it appears that Neora and Olson’s decision to file suit in the NDIL were motivated by bad faith, and venue gamesmanship, I need not apply the first-to-file rule.

Accordingly, Defendants’ motion to dismiss this matter based on the first-filed rule is denied.

In the event their motion to dismiss was denied, Neora requested the FTC’s lawsuit be transferred to Texas.

The court found that New Jersey’s ties to the FTC’s filed case “are tenuous, at best”. This includes arguments the FTC presented regarding ties to New Jersey through Neora’s manufacturing process.

Public interest in moving the case was also found to be neutral.

The end-result was no substantive reason for not moving the FTC’s case to Texas, and so it was ordered on July 27th.

On August 7th Neora filed for an extension of time to reply to the FTC’s complaint. The motion was granted the same day.

I’ve been tracking Neora’s Illinois case but as of yet there’s been nothing substantial to report on.

Stay tuned for updates on both cases as we receive them.

Update 11th September 2020 – 
Neora’s lawsuit against the FTC has been
dismissed
.

Update 11th October 2020 – 
The FTC’s case has been given a
November 2022 trial date
.

🤖 Quick Answer

What was the outcome of Neora's motion to dismiss the FTC pyramid scheme case?
The court rejected Neora's bid to dismiss the FTC's pyramid scheme case, determining that the company's Illinois lawsuit was filed in bad faith as an attempt to circumvent the first-to-file rule. However, the case was successfully transferred to Texas, Neora's preferred jurisdiction.

Why did Neora file a lawsuit against the FTC in Illinois?
Neora filed its Illinois lawsuit to preempt the FTC's anticipated legal action by invoking the first-to-file rule, which typically prevents subsequent lawsuits on substantially similar matters. The court found this strategy was executed in bad faith to gain advantage in Neora's preferred district.

How did the FTC's settlement opportunity relate to Neora's litigation strategy?
The FTC offered Neora an opportunity to settle before filing its own

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