A federal court on April 2nd rejected a second attempt by Success by Health (SBH) affiliates to join the Federal Trade Commission’s (FTC) regulatory action against the multi-level marketing company. This ruling follows an earlier denial of their initial intervention bid.
The affiliates sought to intervene under Rule 24 of the Federal Rules of Civil Procedure, which allows for intervention of right or permissive intervention. Courts must grant intervention of right if certain conditions are met. Permissive intervention, however, is subject to the court’s discretion.
The court evaluated the motion based on three key factors: the stage of the proceedings, prejudice to other parties, and the reasons for and length of any delay. The litigation had already been ongoing for thirteen months when the affiliates filed their motion. This delay was a critical factor in the court's decision.
The court found that the proposed intervention came too late in the process. Discovery had concluded, and a motion for summary judgment had already been filed. Introducing new issues through a proposed class certification or a review of the FTC’s enforcement action at this late stage would prejudice the existing parties' ability to resolve the case efficiently. The court deemed the prejudice factor at best neutral.
Regarding the reasons for and length of the delay, the court found no adequate explanation for the affiliates’ significant wait to request intervention. Evidence indicated that many affiliates knew or should have known about their potential interest in the litigation as early as January or February 2020, a full year before they formally moved to intervene.
The court's denial prevents SBH affiliates from further delaying proceedings. Over 100 affiliates had submitted more than 300 declarations supporting the defendants. Many also sent personal letters expressing their support for SBH and their opposition to the FTC and the court-appointed receiver.
The court has received countless personal letters from SBH affiliates expressing their support for the Individual Defendants and the SBH enterprise and their discontent with the FTC, the Receivership.