IN THE DISTRICT COURT OF CLEVELAND COUNTY

STATE OF OKLAHOMA

JOHN HARRINGTON, an individual )

) CASE NO. CJ-2017-____
Plaintiff )
v. )
SETH DAUGHERTY, an individual, d/b/a )
LIFECHANGERS NUTRITION, and also d/b/a )
SETH SPENCER, and )
JOHN DOE, d/b/a OKLAHOMA STS, and)
LIFECHANGERS NUTRITION, LLC )
Defendants )

PETITION

COMES NOW Plaintiff John Harrington and states:

JURISDICTION AND VENUE

Plaintiff Harrington lives in Cleveland County and operates an Herbalife distributorship

in Norman, including operation of nutrition stores called “clubs,” allowed by Herbalife.

Herbalife is a network marketing/direct selling company out of California, that encourages

independent distributors to open nutrition “clubs” across the country and in Oklahoma. It is one

of the four largest direct sales companies in the US and is publicly traded. Individuals who

recruit others into the business or who are immediately above others in the program are often

called “sponsors.” Herbalife recently changed the operations of “clubs” in order to comply with

an FTC Injunction and Order that required it to pay 200 million dollars in 2016 to the FTC.
Defendant Seth Daugherty lives in Oklahoma County, and does business as “Seth

Spencer” and Lifechangers Nutrition. Defendant John Doe is the person who owns the trade

name Oklahoma STS, an entity that under belief is utilizing some sort of corporate structure to

capture funds and recruit persons to monthly Herbalife meetings, including persons in Cleveland

County. Defendant Lifechangers Nutrition LLC is an entity owned by Defendant Daughterty,

and is a sham business entity to further Daugherty’s profit in Herbalife.

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 The acts and omissions complained of occurred in Cleveland County Oklahoma, and

involve property in Cleveland County, such that venue and jurisdiction are appropriate.
FACTS AND CAUSES OF ACTION

1. Defendant Seth Daugherty under information lives at 2617 Merlot Court in Edmond

OK, is Plaintiff John Harrington’s sponsor (or “immediately above him”) in

Herbalife, and developed a position of trust with Plaintiff. Defendant Daugherty

encouraged Plaintiff to purchase product and invest in “nutrition clubs,” as a way to

sell more Herbalife product and profit from wholesale purchase of the product.
2. Defendant John Doe set up “Oklahoma STS” an entity that captures money from

Herbalife dealers and prospective recruits, and that meets on a regular basis. The

unknown business entity also has a web presence at www.oklahomasts.com (visited

11/6/2017). This website indicates meetings set up across the state of Oklahoma,

where persons such as Plaintiff and Defendants can attract persons to join Herbalife

under them. Defendant Daugherty is listed on the site as the contact person. Under

information and belief, a business account for Defendant Oklahoma STS has captured

thousands and thousands of dollars of funds, yet Defendant Daugherty has not shared

any of those with Plaintiff, and has purposefully removed Plaintiff’s name, preventing

Plaintiff from benefiting like the other distributors who are still on the site.

Defendant Daugherty, after Plaintiff caught him attempting to convert business

property, created rules to prevent Plaintiff his recruits him from attending meetings.
3. Plaintiff trusted Defendant Daugherty as Defendant had reached high success in the

multilevel marketing company (Herbalife). Defendant Daugherty promised Plaintiff

that he would get him to “President’s Level” and promised him that they would split

profits as partners. The proof of this partnership is in text messages, in payments

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 corroborating their fifty-fifty agreement, and numerous witnesses were privy to the

Plaintiff and Defendant Daugherty’s partnership.

4. Defendant Daugherty has greatly expanded his Herbalife business and profit, and now

is at President’s Level, being one of the highest grossing Herbalife distributors, in

large part due to conspiring with other Defendants, and directing his and Plaintiff’s

actions in purchasing large amounts of wholesale product in a clandestine fashion

contrary to Herbalife policies. Such purchase of large amounts of wholesale volume

three months in a row was accomplished by Defendant Daugherty in 2016 giving

Plaintiff funds and directing him to “stack” product sales, in violation of the FTC

Order (attached as Exhibit 1), in violation of a 1986 injunction from Santa Cruz,

California, still valid against Herbalife, and in violation of Herbalife’s policies and

procedures.
5. Defendant Daugherty falsely promised Plaintiff luxury and riches by following his

advice and purchasing “Nutrition Clubs” allowed by Herbalife. Over time, Defendant

Daugherty commenced influencing Plaintiff’s decision making regarding Herbalife

and Plaintiff followed Defendant’s directions.

6. Defendant Daugherty portrayed a lavish lifestyle, and Plaintiff sought to emulate him.

Defendant’s lifestyle, along with other high-level Herbalife distributors in Oklahoma,

includes the use of alcohol and a highly addictive illegal narcotic. After building a

large amount of trust, on April 14, 2014, Defendant Daugherty encouraged Plaintiff to

partake for the first time in the illegal narcotic, and introduced Plaintiff to this

dangerous narcotic. Over time, Plaintiff became too involved in the narcotic and

continued to rely on Defendant’s guidance and direction.

7. After getting Plaintiff involved in regular use of the illegal narcotic, Defendant

encouraged Plaintiff, as part of their fifty-fifty partnership, for Plaintiff to personally

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 guarantee the buildout of a store front in Norman, for a new Herbalife nutrition

“club” and for Plaintiff to personally sign the lease on behalf of their partnership.
8. After gaining Plaintiff’s trust, another of Defendant Daugherty’s recommendations

for their partnership was for Plaintiff to help Defendant Seth Daugherty “stack”

product and gain higher levels of success and commissions by falsifying actual retail

sales, and instead by purchasing large amounts of product. Such “stacking” is against

Herbalife’s policies and procedures, is in violation of a 1986 permanent injunction

from the Santa Cruz District Court in California (that is still valid), and in violation of

an FTC Consent Order that Herbalife signed in 2016 (after it paid 200 million dollars

to the FTC for allegedly having a sales process detrimental to consumers). Ex. 1.
9. Defendant Daughterty utilized sham shell structures to capture Herbalife

commissions and profits, including the Defendant Lifechangers Nutrition LLC, and

the bank account under the fake name “Seth Spencer.” Defendant Daughterty

conspired with Defendant John Doe who owns and operates Defendant Oklahoma

STS, to capture funds and organize the state regular Herbalife Meetings.
10. Defendant Daugherty’s numerous encouragements for Plaintiff and Defendant to

violate Herbalife policies and perform unethical actions were legion. Last year,

Defendant Daugherty recorded large amounts of sales for three months, and moved

into a higher commission structure, when in truth, the reason was that Defendant

encouraged and relied upon falsification of sales and “stacking” of product. In fact

Daugherty gave Plaintiff money to purchase product over three months, in order to

help Daughterty move into a higher commission structure (“President’s Team”) in

Herbalife.
11. Based on Defendant Daugherty’s promises and partnership, Plaintiff took out over

100,000 dollars in loans for construction and a lease and took out other loans to make

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 the store front operate. However, the store did not do well. Plaintiff and Defendant

Daugherty agreed to split profits and debts.

12. Over time, Daugherty encouraged Plaintiff to increase his use of the illegal narcotic.

Defendant Daugherty actually involved his drug “dealer,” whom he introduced to

Plaintiff, in the Herbalife business as an associate! Defendant Daugherty, while

partaking of the illegal narcotic, began to make numerous questionable decisions,

including consideration of prostitutes from backpages.com (while on a trip to

Atlanta), and relations with numerous women.

13. At Defendant Daugherty’s direction and urging, all night parties occurred regularly.
14. Plaintiff was subjected to an intervention by persons at his Church in October of

2016, and told Defendant Daughterty that he needed to seek treatment.

15. In the midst of such decision, Plaintiff caught Defendant Daugherty attempting to

convert and take for himself all the equipment, product, fixtures and property in the

club they were partners in, and Plaintiff called and made a police report. The police

determined it was a civil matter, and did not charge Defendant Seth Daugherty with

any crime.
16. As a result of Defendant Daugherty’s violation of trust, and attempt to take all the

store’s materials, in violation of their partnership agreement, Plaintiff and Defendant’s

relationship soured. “STS” meetings occur regularly and are an opportunity for the

successful upline participants in Herbalife help downline persons, and share ideas.

Also, the meetings are paid for by participants. Defendant Daugherty (who has the

position in Oklahoma of organizing the “STS” meetings as per the

www.oklahomasts.com website), conspired with co-Defendants to take money from

Oklahoma citizens for “training” contrary to the FTC injunction (Exhibit 1), to

defame Plaintiff, and to remove Plaintiff from the Herbalife social media.

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 17. The real estate company that leased the store front to Plaintiff for the partnership sued

Plaintiff for the entire rent (as Daugherty had convinced Plaintiff to only put his name

on such lease and borrow money). Plaintiff decided to better himself and seek

rehabilitation for the addiction that Defendant Daugherty introduced him to.
18. Plaintiff was able to pay for treatment on his own, until his finances dwindled.
19. Plaintiff also filed for bankruptcy and lost much income, and through the support of

his Church, Journey Church in Norman, the Church continued to pay for his

rehabilitative treatment, and counseled him regarding how to deal with the harm that

Defendants had done to him. Through counseling, treatment, and intervention,

Plaintiff has been able to keep away from the illegal narcotic.
20. To this day, Defendant Daugherty has not taken accountability for his portion of debt,

in light of the fact that he moved “up” in the company to “Presidents level” and is

receiving higher levels of commissions. Defendant Daugherty has not split any of the

profits with Plaintiff for Plaintiff’s efforts, and Defendant has not covered his debts

for the partnership and reimbursed Plaintiff for the losses that Plaintiff bore.
21. In fact, Defendant Daugherty, in concert with co-Defendants, has “badmouthed” and

defamed Plaintiff in the Herbalife circles in Oklahoma, causing Plaintiff to be

stigmatized, in order to deflect the truth that Defendant Daugherty took advantage of

Plaintiff and used his position of trust to engage Plaintiff in unlawful and

inappropriate activity.
22. Plaintiff seeks a cause of action for breach of fiduciary duty, as Defendant Daugherty

created a position of trust and abused that position, promised Plaintiff a 50/50

partnership, then introduced Plaintiff to a dangerous and illegal narcotic, and caused

Plaintiff to lose income and file bankruptcy, while Defendant Daugherty through

fraudulent representations to Herbalife1 moved up to “Presidents’ Club.”

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Defendant Daugherty devised, encouraged, and oversaw the “stacking” of product purchase to
falsely indicate that over a three month period his immediate downline was allegedly responsible

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 23. Plaintiff seeks a cause of action for breach of oral partnership agreement, and seeks

an accounting of Defendant’s profits. The purpose of the accounting request is to ask

this Court to disgorge the profits that Defendant has kept but that in part belong to

Plaintiff as part of the oral partnership, and for Defendant to pay his half of debt back

to Plaintiff, including the debt for rent, product Plaintiff paid for, attorney fees for the

bankruptcy, payment for the rehab treatment, for the construction and other business

loans taken out in furtherance of the partnership, and for intentional infliction of

emotional distress and punitive damages.

24. Plaintiff also seeks an injunction against Defendant Daugherty from continued

defamation of Plaintiff.
25. The police incident report from 2016 filed by Plaintiff clearly implicates that

Defendant Daugherty chose to lease a UHaul and had it packed, and performed a ruse

to lure Plaintiff away from the store, in violation of his fiduciary obligation to the

partnership. Happenstance, Plaintiff caught Defendant Daugherty just as he was

about to drive off with everything that the partnership had placed in the store, and the

police helped Plaintiff keep materials that belonged inside the store.
26. Under information and belief, after Daugherty was caught attempting to steal the

partnership store assets in 2016, Plaintiff learned that some of the equipment that

Daugherty had “brought to the table for the partnership” was apparently equipment he

had previously pilfered from another outfit called New Sky Nutrition. Defendant

Daugherty has apparently repeated this same pattern of violation of trust and has

taken all items from a store before.

for three consecutive months of product purchase, when in fact it was Daugherty who had
provided the purchase of such product. The purchase of wholesale volume to earn income is
both contrary to Exhibit 1 (the FTC injunction), but also a 1986 permanent injunction from
California that applies to Herbalife.

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27. Shortly after Plaintiff’s “sponsor” (The Defendant Daugherty) violated his trust and

lied to him, and attempted to convert the business away from the location that had a

long term lease Plaintiff had unilaterally signed on behalf of the partnership, Plaintiff

contacted Herbalife and told the corporate office what Defendant Daugherty, his

upline sponsor, had done.

28. Plaintiff also told the following Oklahoma Herbalife “Presidents Club” members

what Daugherty had done in violating their partnership: Kris Bikerstaff; Michael

Marand; Lance Breeden; and Nicole Breeden.

29. Neither the Presidents Team members mentioned immediately above nor Herbalife

corporate took any action to reprimand Daugherty or to protect Plaintiff. In fact

Defendant Daugherty is now being asked to fly around North America and preach to

sales audiences the method of opening up “nutrition stores” as an Herbalife dealer.

30. It did not appear that Herbalife was ever going to take action against Defendant for

the incredibly unethical actions. Plaintiff is seeking damages at this time against only

Defendant Daugherty for harm he caused, and against the other co-Defendants to the

extent they have aided and conspired with Daugherty to harm Plaintiff.
31. Plaintiff has been able to struggle and survive, in light of the massive expenditures

that Defendant Daugherty caused Plaintiff to incur for the partnership store front that

failed (approximately $150,000.00).

32. Since the Defendant Daugherty’s causing Plaintiff to seek treatment and file

bankruptcy, Plaintiff has been able to maintain a nutrition club, and has begged and

borrowed all he could to currently make ends meet.

33. Plaintiff seeks punitive damages and fees and costs, and seeks a hearing for a

preliminary injunction at the beginning of this case, to prohibit Defendants from

defaming him and from defaming Plaintiff’s existing operation of a nutrition club.

Plaintiff seeks a cause of action for unjust enrichment by Defendant Daugherty based

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 on Plaintiff’s and Daugherty’s partnership agreement and based on Plaintiff’s

sacrifices and actions to promote Daugherty’s move up to “President’s team.”

34. Plaintiff seeks a receiver to run Defendant Daugherty’s business in Oklahoma, and to

present to the Court the amount of profit that Daugherty has made from Plaintiff’s

sacrifices. Plaintiff seeks and accounting of Daugherty’s profits, and disgorgement of

half, per the partnership agreement they made, and for Daugherty to reimburse

Plaintiff for half of the partnership debt that Plaintiff had to cover.
35. Plaintiff seeks a claim for breach of fiduciary duty against Daugherty, as well as civil

conspiracy between Daugherty and other Defendants, to harm plaintiff and defame

him.
36. Plaintiff also seeks a claim for tortious interference with his business.
37. Plaintiff also seeks declaratory judgment that Defendant Lifechangers Nutrition LLC

is a sham business entity for Defendant Daugherty to take advantage of Herbalife’s

business plan in violation of the FTC injunction (Exhibit 1), in violation of the 1986

California permanent injunction against Herbalife, and in violation of Oklahoma law.

38. Lastly, Plaintiff seeks to pierce the corporate veil to show that Defendant Daugherty

(as well as other President team members in Oklahoma) has encouraged the creation

of LLC’s such as Defendant Lifechangers Nutrition LLC to “stack” and improve his

individual spot in the Herbalife matrix, to the detriment of persons such as Plaintiff.
No federal causes of action are sought, and Plaintiff seeks actual and punitive Damages

against Defendants, fees and costs, and injunctive relief.

Plaintiff seeks a hearing to present an injunction pendent lite against Defendants at the

outset of this case, and demands the first available date, in part to request that Defendants not

delete any text messages or emails in order that Plaintiff be able to conduct meaningful

discovery, and pursuant to electronic discovery guidelines.

Respectfully submitted,

_______________________________

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 Alexander Bednar, OBA # 19635
BEDNAR LAW FIRM
3030 Northwest Expressway Suite 200
Oklahoma City, OK 73112
ATTORNEY FOR PLAINTIFF

CERTIFICATE OF SERVICE

On this date, I served the following attorney, who has consistently represented Defendants in this
case since June of 2017:

Seth Daugherty
2617 Merlot Court
Edmond OK 73013

____________________________
Alexander Bednar

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