Neways Wins Victory Enjoining SISEL
SALT LAKE CITY--(Business Wire)-- A federal court in Utah has issued an injunction against Sisel International, LLC and five of Sisel's top distributors in Japan. Among other things, the injunction requires Sisel and these distributors to return all of Neways' distributor information in their possession and prohibits Sisel and its distributors from using such information. In addition, the Court found that Sisel's top three distributors--Koji Yamamoto, Fumiko Matsumoto and Toru Egashira--likely have breached their contracts with Neways by recruiting Neways distributors to join Sisel, and are now prohibited from continuing to recruit Neways distributors for a period of one year from each distributor's date of suspension from Neways.
In its 23-page ruling issued February 11, 2008, the Court ordered Sisel, Mr. Yamamoto, Ms. Matsumoto, Mr. Egashira, Kaoru Kitagawa, and Chiharu Hayashi to thoroughly search for and return all information relating to Neways' distributors and prohibited them from using such information in the future.
The victory was a significant one for Neways, and came after a two-week evidentiary hearing in federal court. Neways alleged that Sisel and its Japanese distributors were misappropriating Neways' confidential and trade secret information regarding Neways' distributor network, and that the Japanese distributors were breaching their contracts with Neways by soliciting Neways distributors to join Sisel. After hearing all of the evidence, including testimony by the Japanese distributors themselves, the Court found that Neways was likely to prevail on these claims and that the defendants should be enjoined.
This is the third time in less than a year that Neways has prevailed against Sisel or one of Sisel's distributors. In May 2007, the same federal court ordered Sisel, its owner Thomas Mower, Sr., and several of its employees to return all copies of Neways' product formulas, vendor lists, and distributor lists, and prohibited them from continuing to use that information. Two months later, a Utah state court entered an order against Sisel distributors Jef and Patricia Welch restraining them from recruiting any present Neways distributor to participate in another multi-level marketing company. As a result of the federal court's recent ruling, a similar restraint is now in place against Mr. Yamomoto, Ms. Matsumoto, and Mr. Egashira.
"Neways is extremely pleased with the Court's ruling," said Eric Larsen, Neways' C.E.O. "In enjoining Sisel and its top Japanese distributors, the Court has affirmed what Neways has always believed--that companies are free to compete in this market, but they must do so fairly and honestly. We hope that is what we will see in the future."
Chris Crump, Neways' General Counsel, said a significant part of the case against Sisel has been about protecting Neways' distributors and confidential distributor information. "Two courts have now recognized the importance of those protections," said Crump, "and Neways will continue to take all necessary steps to ensure that our distributors' businesses are protected."
The case will now proceed on Neways' other claims against Sisel, Mr. Mower, and the other defendants. These claims include allegations that Mr. Mower breached his fiduciary duties to Neways, that Sisel's products are the result of unlawful theft by Sisel of Neways' trade secrets, and that Mr. Mower and a number of other Sisel employees have intentionally destroyed evidence to prevent it from being discovered in the case.
The case is entitled Neways Inc. v. Thomas E. Mower, Sr., et al., No. 2:07-CV-339.
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