A federal judge in Illinois has thrown out Neora's attempt to preemptively block the FTC's fraud case against the company, calling the lawsuit frivolous.
Neora filed the Illinois suit hoping to force a court declaration that its Nerium product line was never a pyramid scheme—before the FTC's enforcement action could proceed. The company wanted the court to rule favorably on the pyramid scheme question as a matter of law, rather than wait to defend itself in the FTC case. It didn't work.
Judge Ellis sided with an earlier New Jersey ruling that found Neora's lawsuit was filed "in bad faith." The judge rejected Neora's arguments and dismissed the case on August 31st for lack of subject matter jurisdiction.
Neora had argued that even if pyramid scheme determinations are fact-specific inquiries—which the company actually acknowledged in its own complaint—the court should still conduct a fact-based inquiry to answer the question. The company offered no legal basis for this reasoning.
The dismissed lawsuit is just the latest setback in Neora's escalating legal battle with the FTC. The federal agency alleges the company operates an illegal pyramid scheme, a charge Neora has been fighting tooth and nail.
Last month, Neora failed to get the FTC case dismissed outright. However, the company did successfully lobby to move the case from New Jersey to Texas, where Neora is headquartered. On September 9th, Neora filed its answer to the FTC's complaint.
The company now faces defending itself on the merits in Texas federal court, rather than obtaining a favorable ruling before the case even gets started. The strategy backfired, and Neora will have to prove its business model is legitimate if it wants to survive the FTC's enforcement action.
🤖 Quick Answer
What was the outcome of Neora's lawsuit against the FTC in Illinois?A federal judge in Illinois dismissed Neora's lawsuit as frivolous, lacking subject matter jurisdiction. The company had attempted to preemptively block the FTC's fraud case by seeking a court declaration that its Nerium product line was not a pyramid scheme, but the judge ruled the lawsuit was filed in bad faith, following a previous New Jersey court determination.
Why did Neora file the Illinois lawsuit?
Neora filed the suit to obtain a favorable court ruling declaring its Nerium product line was never a pyramid scheme before the FTC's enforcement action could proceed. The company sought to establish this determination as a matter of law rather than defend itself in the subsequent FTC case proceedings.
On what grounds did Judge Ellis dismiss the case?
Judge Ellis dismissed the case on August 31st citing lack of subject matter jurisdiction. The judge
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