Friday, November 9, 2007

Lawsuit Filed Against Learning Annex for 1.2 Million Dollars- Forgery-Plagiarism - Bill Zanker- Posted by Robert Paisola















THE LEARNING ANNEX AND CEO, BILL ZANKER, CO AUTHOR OF Donald Trumps Book "Think Big and Kick Ass" Sued for 1.2 Million Dollars for Fraud. Download the Final Court Filings Here..

ftp://ftp.pblwest.com/


Net Marketing v. Learning Annex

If you are interested, a copy of the Amended Complaint filed Tuesday by Net Marketing against the Learning Annex can be downloaded from an FTP site by clicking on the link below:

ftp://ftp.pblwest.com/


J. THOMAS BECKETT (5587)
PARSONS BEHLE & LATIMER
One Utah Center
201 South Main Street, Suite 1800
Salt Lake City, UT 84111
Telephone: (801) 532-1234
Facsimile: (801) 536-6111
Attorneys for Net Marketing Alliance, LLC







JAY GOLDBERG (NY: JG0662)
JAY GOLDBERG, P.C.
250 Park Avenue, Suite 2020
New York, NY 10177-2099




IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH






NET MARKETING ALLIANCE, LLC,
Plaintiff,
vs.
THE LEARNING ANNEX, LLC,
Defendants.



FIRST AMENDED COMPLAINT
(JURY DEMAND)



Case No. 2:07CV00356
Judge: Hon. Dale Kimball




Plaintiff, Net Marketing Alliance, LLC (“NET”), by and through its undersigned
counsel, hereby states its amended claims for relief against the defendant, the Learning
Annex, LLC (“LAN”).




INTRODUCTION
1. Only three companies have successfully competed recently in the “large
venue” seminar business – where business stars and personalities give motivating
speeches to large crowds who then purchase how-to books, instructional tapes and
follow-up training sessions. And for these three companies, this business has been very
lucrative.




2. This Amended Complaint recounts the recent history of two such business
competitors, and how one, the defendant, LAN, illegally and unfairly caused grievous
harm to the other, the plaintiff, NET, for the sole and improper purpose of obtaining a
monopoly in this particular business sector.




3. First, LAN feigned a good faith interest in a corporate merger with NET.
LAN had no interest in completing such a merger. Instead, it contrived that interest to
further its scheme to learn all it could about NET’s trade secrets and its business, key
employees, vendors, speakers, and strategic business partners.




4. Because NET reasonably believed that LAN was acting in good faith, NET
placed its trust and confidence in LAN. Having done so, it disclosed everything to
LAN.




5. But LAN was not acting in good faith.




6. LAN outrageously misused what it had learned to mount an illegal and
unconscionable disinformation campaign against NET. It used what it had learned
about NET’s vendors and strategic partners to discourage and dissuade them, in
sometimes vulgar terms, from ever doing business with NET again.




7. In the midst of this onslaught, Bill Zanker, LAN’s CEO, phoned James
Mitton, one of NET’s owners, and wrongfully berated and falsely threatened him:
“James, I’ve got enough to put you into bankruptcy. I’m putting you into bankruptcy.
I’ve got great attorneys. …. I am not going to stop!”




8. And he did not stop – not even while NET was in fact paying its creditors.
He set up a phone bank, and he and his agents thereafter contacted nearly all of NET’s
employees, vendors, speakers, and strategic partners to spread LAN’s false accusations.
They told everyone they could connect with that NET was bankrupt and could not be
trusted.




9. Finally, incorrectly assuming that its campaign had put NET out of
business for good, LAN then looted NET’s speakers and key employees, and it
converted virtually all NET’s trade secrets.




10. In the aftermath, NET was grievously injured. And LAN is now staging
“large venue” seminar events which are virtually indistinguishable from those that
NET labored for years to produce to perfection.




11. Ultimately, however, despite LAN’s efforts, NET survived. Now NET
seeks to – and it is entitled to – recapture its rightful, former position. It also seeks very
substantial damages for LAN’s breaches of duty and contract, improper business
interference, unfair business practices, conversion, and monopolistic designs.




12. This Amended Complaint is the defendant’s demand for justice and just
compensation – not less than $100 million -- comprising actual damages, punitive
damages, treble damages and attorneys fees.







PARTIES




13. LAN is a business entity with its principal place of business in New York,
NY. By virtue of the substantial harm it has inflicted on NET, LAN now holds a virtual
monopoly in the “large-venue seminar” industry.




14. NET is a Utah limited liability company doing business in Utah County,
Utah. It was a preeminent participant in the “large-venue seminar business” until it
came under attack by LAN. There are five other potential plaintiffs who may decide to
join this action, because they have been recently similarly victimized by LAN.




JURISDICTION AND VENUE




15. Jurisdiction is proper under 28 U.S.C. § 1332(a) because the plaintiff is a
citizen of the State of Utah, the defendant is a citizen of the State of New York, and the
amount of controversy exceeds $75,000, exclusive of interest and costs.




16. Jurisdiction is proper also proper under 28 U.S.C. § 1331 inasmuch as this
amended complaint presents questions that arise under federal law.




17. Venue is proper in this district pursuant to 28 U.S.C. §§ 1391(a)(1),
1391(a)(2) and/or 1391(c) because a substantial part of the events and omissions giving
rise to the claims herein occurred in the State of Utah, and the defendant is a business
entity which has transacted business within the State of Utah pursuant to Utah Code
Ann. § 78-27-24(1), or has otherwise availed itself of the privileges of the laws of Utah.




FACTUAL BACKGROUND




A. Overview: NET and LAN were Two of Three Competitors in
a Relatively Small but Very Lucrative Business Sector.




18. Over the past several years, three seminar companies (the “Big 3”) have
controlled nearly the entire United States market for large “making it and keeping it”
seminars. In these seminars, up to 10,000 people attended events, for free or by paying
a nominal fee. Hundred of thousands of people attended these events every year.
Hundreds of millions of dollars were grossed annually by the Big 3 selling educational
books, tapes, and follow-up events to the attendees.




19. The “Big 3” were LAN, Peter Lowe’s Success Seminars, and NET.




20. LAN, the most recent member of the Big 3, became a $100 million business
by developing an expertise in marketing events with billboards and free street-corner
flyers such as this:







21. Peter Lowe’s Success Seminars achieved its success with marketing efforts
focused on its corporate human resource connections and newspaper ads.




22. The third and most successful member of the Big 3, NET, achieved its
primacy with a unique, direct-mail marketing system that utilized scores of discrete but
interrelated trade secrets that were developed at considerable expense over a long
period of time, and which gave NET a distinctive look of its own:




23. NET’s trade secrets included
everything that made their direct mail
solicitations and seminar events successful.
These secrets ranged from how to integrate
commercial and private mailing lists, to the
best room temperature for an event; from how long before an event invitations should
be mailed, to which stamp on the solicitation envelope results in the highest response
rate; from the right typeface for the return address, to the right shape of the flap which
seals the envelope. Of course, this also included the substance of the presentations that
their speakers made at their events. In other words, NET’s trade secrets included all the
right steps to take to attract to events as many participants as possible who are most
likely to purchase products to enhance their well-being.




24. These trade secrets were developed by NET at enormous cost – more than
$100 million, perhaps as much as $250 million – over many years of trial and error and
computer-monitored experimentation. They resulted in NET’s unprecedented success
in the ordinarily unforgiving marketing venue of direct mail solicitation.




B. Further Overview: In its Quest to Achieve a Monopoly,
LAN Laid a Plan to Destroy NET and Convert NET’s Trade
Secrets for its Own Use and Benefit.




25. At one time, LAN and NET enjoyed a mutually beneficial and symbiotic
business relationship. But LAN had designs to take over NET’s business. To do that,
LAN had to acquire NET’s expertise in direct mail and its supportive system of postseminar
follow-up events. To obtain that, LAN had either to purchase NET in an armslength,
fair business transaction, or destroy NET and obtain NET’s secrets by picking
up the pieces.




26. LAN chose the latter course. Bill Zanker, CEO of LAN, devised a plan. His
plan was to feign such a purchase, learn the identity of NET’s business partners,
threaten and bully those partners in order to discourage them from doing business with
NET, thus driving NET out of business, and then convert NET’s trade secrets and other
intellectual properties to propel LAN into a monopolistic position.







27. The brutality of Zanker’s plan – effected by threats made in sometimes
vulgar terms – is best illustrated by his own words and messages:




a. To the recent purchaser of National Medical, an affiliate of NET’s,
Zanker left a phone message stating: “Congratulations. I just read on the
Internet that you bought National Medical from [a principal of NET]. Probably
not the smartest thing to do ‘cause the creditors will be all over your ass, but
anyway, give me a call.”




b. To two of NET’s closest business partners, Real Estate Investor
Support and INVESToo1s, Zanker stated: “I like you guys, but I have to sue you
to put NET out of business.”




c. To NET’s best-known seminar speakers, Zanker suggested: “Drop
your speaking contracts with NET and speak for me because I am putting NET
into bankruptcy. You will have no more speaking opportunities unless you
come with me.”




d. To NET’s long-term business partners, Zanker relayed the
following message: “I am going to put NET into bankruptcy soon, so come and
do business with me because NET will be out of business.”




e. Remarkably, to NET’s unsecured creditors, Zanker gave incorrect
legal advice: “I am putting NET into bankruptcy right away, so you should not
accept any payments from them because you will just have to give those funds
back to the bankruptcy trustee.”




f. To one of NET’s principles Zanker stated the following threat very
clearly: “James, I’ve got enough [creditors] to put you into bankruptcy. I’ve got
great bankruptcy attorneys. I am not going to stop!”
g. In Zanker’s book, Think Big and Kick Ass in Business and Life, he
stresses – “ Go for the jugular.”




28. Despite its innumerable threats, LAN never did file a bankruptcy petition
against NET. It did not have to. Zanker had achieved his goal – to alienate NET from
its business partners – just by making threats. He almost put NET out of business.




29. This Amended Complaint alleges that Zanker and LAN (i) initiated and
pursued fictitious merger negotiations with NET for the improper purpose of
discovering NET’s trade and business secrets, (ii) used NET’s confidential business
information against it with a baseless disinformation campaign designed to put NET
out of business, and (iii) then brazenly and illegally converted NET’s trade secrets for
their own use and benefit. Specific allegations in this regard are detailed below,
following a brief review of the longstanding contractual and business relationship
between NET and LAN, every aspect of which LAN has materially breached.




C. The True History: NET and LAN’s Relationship, While
Certainly Competitive, Was Previously Marked by Cooperation
and Fairness as set Forth in two Written Agreements and a
Course of Conduct Between the Parties, Which Agreements and
Conduct LAN has Materially Breache.:




30. Early in 2005, NET’s predecessor in interest, MIT entered into a Speaker
Agreement with LAN which set out terms and conditions under which MIT would
participate in LAN’s seminars.




31. The Speaker Agreement provides, in part:
The income from speaker sales will be split 40% to [MIT/NET] & 60% to
[LAN]. ‘Proceeds’ do not include sales subject to collection problems (e.g.,
bounced checks, credit card charge challenges)



.1
32. The Speaker Agreement also provides:
Sales made after the event to [LAN]’s telemarketing department will be
split on a 50/50 basis between [LAN] and [MIT/NET]. On sales made
1 In practice, the parties also excluded all cancelled checks and refunded sales from the split in order to achieve a 40/60 split on actually received monies.

through [MIT/NET] to event attendees up to and including after two
weeks after each event, [MIT/NET] agrees to send [LAN] 50% of the
sales…”




33. In mid-2005, MIT (NET) and LAN also entered into an Agreement entitled
MIT Financial / Learning Annex Partnership Agreement (the “Partnership Agreement”).




34. The Partnership Agreement provides, in part:
Speakers. [LAN] agrees not to contact or solicit services of past, present, or
future MIT speakers or employees. Any request or referrals to [LAN] for
MIT topics, speakers or employees or other companies will be directed to
Mitch Huhem at MIT [NET].




Mutual Understanding. Both companies will not allow derogatory
comments to be made about topics, products, or speakers of either
company at any time.




Any modifications to this agreement will be in writing and subject to
mutual agreement.






35. Early in 2006, MIT became involved in a trademark dispute with the
Massachusetts Institute of Technology and voluntarily ceased operating under the
name of MIT. It operated as Professional Support Services LC (“PSS”) through January,
2006. In February, 2006, it began operating under the name of NET. LAN was aware of
these events and seamlessly conducted business with PSS and NET, pursuant to both
the Speaker Agreement and the Partnership Agreement, as it had conducted business
with MIT.




36. Through 2005, 2006 and the first half of 2007, NET and LAN worked well
together and abided the Speaker Agreement and the Partnership Agreement. Among
other things, they routinely split event and aftersales’ proceeds pursuant to the Speaker

Agreement and they neither solicited the others’ speakers, nor disparaged the other’s
business, pursuant to the Partnership Agreement.




37. During 2007, pursuant to the Speaker Agreement and the Partnership
Agreement, NET and LAN participated together in multiple events, including:




NO. DATE LOCATION
1 2/24/2007 Atlanta Expo
2 3/16/2007 Los Angeles Expo
3 3/17/2007 San Francisco Expo
4 3/23/2007 Toronto Expo
5 4/12/07 Philadelphia Expo
6. 5/19/07 Dallas Expo




38. In relation to the events outlined above, and flagrantly in breach of the Speaker Agreement, LAN owes but refuses to pay NET in excess of $1,200,000.00.




39. This $1.2 million amount is based directly from reports generated by
Michelle D’Agostino, Sr. Controller of LAN.




40. In addition, LAN owes NET for monies collected through LAN’s
telemarketing efforts. Pursuant to the Speaker Agreement and the historic practice of
the two companies, the parties split follow-up telemarketing sales 50/50. NET has
accounted for every sale made from LAN’s leads, but was told repeatedly during the
failed merger negotiations (described below) not to pay “since we are going to buy
you anyway.” On the other hand, LAN has failed to give any accounting to NET of
telemarketing sales derived from LAN’s utilization of NET’s database. In addition,
LAN has also refused to account for monies collected at Don Burnham events,
additional collection efforts on payment plans, and subsequent sales derived from
NET’s database leads; all of which LAN had agreed to pay to NET. LAN is also in
breach of the Partnership Agreement for having solicited NET’s speakers and
disparaged NET’s business.




D. Further Breaching These Agreements, and Every Code of Fair
Business Conduct, LAN Proposed and Pursued Sham Merger
Discussions With NET for the Improper Purpose of Discovering
the Identity of NET’s Confidential Business Information and
Trade Secrets.




41. In September 2006, LAN proposed to NET a potential acquisition of all of
NET’s assets by LAN. Its proposal was a sham to learn the identity of NET’s business
partners and to discover NET’s trade secrets. In connection with that, the parties
entered into a Letter of Understanding (“LOI”) which, among other things, prohibited
the disclosure of the upcoming negotiations.




42. Thereafter, NET and LAN entered into negotiations and NET provided to
LAN an enormous amount of confidential information and trade secrets including, but
not limited to, financial statements, balance sheets, profit and loss statements, profits
summaries, and information regarding seminars and telemarketing operations. LAN
provided NET next to nothing.






43. LAN did not actively pursue these negotiations between the Fall of 2006
and the Spring of 2007.




44. On or about April 12, 2007, LAN recommenced its negotiations with NET
and propounded further extensive due diligence requests.




45. During April and May of 2007, NET provided to LAN extensive
proprietary and confidential information regarding all legal, financial and
administrative aspects of its business. These materials included most, if not all, of
NET’s proprietary vendor lists and accounts payable information, as well as
information regarding NET’s speakers and strategic partners.




46. During this time, NET thought it was in the midst of good faith merger
negotiations. Curiously, also during this time, Zanker and Samantha Del Canto (LAN’s
VP) were meeting secretly with NET’s key employees without giving notice to NET or
receiving any authorization from NET.




47. At one of these meetings, in late-April, 2007, Zanker and Del Canto ordered
lunch brought in for NET’s staff. Over lunch, Zanker introduced himself as the owner
of LAN, one of the largest and most financially powerful seminar companies in the
nation. He told them, “my goal is to own the largest seminar company in the world.”




48. Zanker then made an astounding announcement to NET’s employees: “As
many of you know, our companies have merged.” This statement by Zanker was false,
and it violated the LOI that required red confidentiality until a final agreement had
been reached. NET’s owners, who were not advised of these meetings, learned
afterwards that LAN had announced the uncompleted merger to NET’s employees as a
fait accompli.




49. Thereafter, and also without NET’s principals’ knowledge or authorization,
Zanker and Del Canto held private meetings with several of NET’s key employees to
interrogate them about various aspects of Net’s proprietary tax lien program and asset
protection program. They also gave them specific instructions regarding how NET had
to conduct its business going forward with LAN.




50. According to one employee describing those meetings, “Zanker and Del
Canto stormed into my office. They began giving me orders for which they demanded
full compliance. [They] commanded me to place 10 - 12 large events in the month of
June and to increase the mail quantity … to as much as 300,000 mail pieces per city …
despite my warnings that such events would not be profitable and that such an
approach would be disastrous.”




51. According to another employee describing those meetings, “[Del Canto]
immediately became very animated and adamantly required that we staple the [Notice
of Cancellation] to the order form upside down with text facing the back of the order
form, so at first glance the cancellation form is not readily noticeable.2 She actually
2 NET believes it has a duty to advise the prospective attendees at its events that may cancel their participation at any time. To assure they understand this, NET provides each prospective attendee with a form of “Notice of Cancellation,” which they may use for that purpose. In the episode described above, LAN’s Vice President, Ms. Del Canto, was attempting to cause NET to violate that duty by making it more difficult for their prospective attendees
to recognize that they could cancel their participation at any time.




called her attorney right then and there and discussed the matter with him. She
essentially gave me the directive to make sure her request was fulfilled immediately.”




52. LAN’s unauthorized instructions to NET’s employees, had they been
followed, would have cost NET millions of dollars and hurt its reputation for credibility
with its customers.




E. Having Achieved the Primary Objective of its Merger
Proposal – to Obtain NET’s Business and Trade Secrets – LAN
Scuttled the Sham:




53. Suddenly, in mid-May, 2007, LAN declared that NET owed it more than $4
million under the Speaker Agreement. At no time was this a viable claim. At all times
it was quite certainly LAN which owed NET a substantial amount of money – more
than $1 million – under that agreement. In retrospect, LAN’s threat was clearly just a
pretense for scuttling the negotiations.3




54. Indeed, shortly after making its phony claim, LAN informed NET that it
was not going forward with the impending merger deal. It provided no good faith
basis for doing so. Rather, the same day, Zanker demanded immediate payment of $4
million by NET to LAN.




55. At that time, NET was facing the ordinary financial challenges that it had
faced during the slow summer months for many years.




3 At trial, NET expects to show that it is LAN’s modus operandi falsely to accuse its vendors and partners of
liability for exaggerated claims as a means to force unwarranted business concessions. This evidence will show
LAN’s propensity to treat all its business associates unfairly in the same manner that it has




56. NET had arranged, as it always did, to get through this slow time. It had
plans in place to increase its liquidity by many millions of dollars.




57. In connection with its sham merger negotiations, however, LAN had
instructed NET not to take those financially responsible steps. That, and LAN’s refusal
to pay NET substantial amounts that LAN unquestionably owed NET, were substantial
factors in NET’s serious subsequent financial stress.




58. Indeed, as a direct consequence of these actions by LAN, immediately after
LAN withdrew from the sham merger negotiations, NET had to lay off most of its
workforce.




59. NET filed this lawsuit shortly thereafter as a request for declaratory
judgment that NET’s outstanding obligations to LAN are exceeded by LAN’s
outstanding obligations to NET by at least $1.2 million.




F. Immediately After Scuttling the Sham Negotiations, LAN
Began Using NET’s Confidential Business Information Against
it to Drive it out of Business.




60. Immediately after it scuttled the merger negotiations, LAN initiated a
disinformation campaign against NET that was intended to interfere with NET’s
longstanding contractual relationships and disparage NET’s business reputation and
prospects for financial success.




61. Specifically, LAN began working the phones contacting NET’s contacts and
attempting to mislead them into believing that:




a. NET was going out of, or had gone out of, business;
b. LAN was going to force NET into bankruptcy;
c. LAN wanted NET’s vendors to join it in forcing NET into
bankruptcy because NET could not pay its debts;
d. Even if NET did pay its debts, those payments would have to be
returned by the vendors as preferences to NET’s bankruptcy
trustee; and
e. NET’s vendors should sell their account receivables to LAN and
come work with LAN instead of NET.




62. Zanker made many of these contacts himself; his employees and attorneys
contacted the rest.




63. LAN directed its disinformation campaign (i) to virtually all of NET’s most
substantial vendors, including Graphic Communications, Flower Basket Boutique, AFC
Express, the law firm of Greenberg Traurig, Sun Litho, Rickard List Marketing,
Colorado Envelopes, and Exact Target, (ii) to NET’s primary strategic partners,
including James Smith at Real Estate Investor Services, Lee Barba at INVESTools, and
Don Burnham at AIA, (iii) to NET’s principal speakers, including Wayne Grey, James
Smith, Steve Nickle, Robert Bluhm, and Sam DeHoyas, and (iv) to NET’s key
employees.




64. For example, on or about August 17, 2007, an agent of LAN contacted Sun
Litho, Inc. and advised “that NET was going to file bankruptcy,” and that LAN “would
pay me pennies on the dollar to satisfy your bill.”




65. Also, in the first week in August, 2007, an agent of LAN contacted Flower
Basket Boutique and advised them that NET “would soon be declaring bankruptcy.”

66. Also, on or about August 9, 2007, an agent of LAN contacted NET’s
attorney, Greenberg Traurig, LLP, and left a voice mail offering to purchase their
receivable from NET “because we want to push them into bankruptcy….”




67. One of NET’s strategic partners recorded a call from one of LAN’s lawyers
offering 33 cents on the dollar for that party’s claim against NET (although that party
had no such claim).4 He reported LAN’s lawyer stating that LAN was “going to put
[NET] out of business by August 1st or August 2nd at the latest.” He then received a
call from “the so-called Owner of Learning Annex who also said he was ‘Taking Down
Net Marketing.’” That caller, LAN’s CEO, Bill Zanker, wanted that creditor to join a
lawsuit against NET. That creditor declined and reported the contact to NET, ending
his email with a question: “Are they allowed to be making these phone calls to us?”
68. Zanker’s threats to force NET into bankruptcy was a subterfuge. While
NET’s principals were selling personal assets to assist NET to pay off its creditors in
good faith, Zanker was advising those creditors not to accept NET’s payments. Zanker
was not giving this advice for the purpose of benefiting NET’s creditors. His “advice,”
in this regard, was solely intended to dissuade NET’s vendors and partners from ever
doing business with NET again.




69. In the meantime, NET paid all its creditors. Presently it has virtually no
outstanding indebtedness.




4 Evidently, LAN was improperly using NET’s accounts payable information, obtained in the merger negotiations, while contacting NET’s vendors, not knowing that this and other vendors had since been paid by NET.





G. Believing it had Driven NET out of Business, LAN Brazenly
and Illegally Began to Use and Continues to Use NET’s Trade
Secrets to Further its Monopolistic Design.






70. LAN is now producing “large venue” seminar events that are virtually
indistinguishable from the events that NET carefully designed over the course of many
years utilizing literally dozens of trade secrets developed over a long period of time and
at great expense.




71. As explained in more detail above, NET’s trade secrets include the proper
management of every possible variable in the process of identifying and inviting
potential seminar students, teaching them, and providing them all the follow-on goods
and services that they might desire.




72. As explained below, LAN’s conversion of NET’s secrets has been
wholesale. It begins with LAN’s conversion of NET’s know-how about how invitations
to events should best be made.





73. The following are typical examples of LAN’s invitation pieces. They show
LAN’s distinctive style (before it began copying NET’s distinctive style):




74. NET’s typical direct mail pieces, on the other hand, show NET’s distinctive
style, which is entirely different from LAN’s. The following is an actual copy of a direct
mail piece developed by NET. Direct mail pieces like this were delivered to millions of
prospective seminar students by NET over the years. This particular piece was sent in
early-February, 2007, for an event NET produced in Boise, Idaho.




75. The following is an actual copy of a direct mail piece mailed by LAN to
hundreds of thousands of prospective students in mid-September, 2007, for an event in
San Diego (and more than ten other LAN events). It is obviously a flagrant copy of
NET’s work, right down to using the same stamp:




76. LAN has also copied the items that NET typically included with its
invitations: a free ticket and promotional materials. LAN did not previously include
such items in its mailings.




77. The following is an actual copy of the typical free event ticket that was
produced by NET and included in its early-February, 2007 invitation to hundreds of
thousands of prospective seminar students:




78. Remarkably, the following is an actual copy of the free event ticket that was
delivered by LAN to hundreds of thousands of seminar students in mid-September,
2007. LAN had not previously included free tickets in its direct mailings. Its first effort
to produce and distribute free tickets was a flagrant plagiarism of NET’s work:



79. LAN also copied NET’s promotional materials. The following (on the left)
is an actual copy of the promotional materials that accompanied NET’s early-February
invitation to an event featuring George Ross, a regular NET speaker and advisor to
Donald Trump. Next to it (on the right) is an actual copy of the promotional materials
that were delivered by LAN to hundreds of thousands of seminar students in late-
September, 2007 for an event LAN produced in Ontario, California:




NET’s Promotional Materials: LAN’S Promotional Materials:




80. LAN’s promotional materials were most certainly not the result of
evolutionary changes to LAN’s historical promotional materials (shown below on the
left). Rather (as shown by the highlighted exact-match language on the right) LAN’s
most recent promotional materials are obviously plagiarized from NET’s work :




81. LAN did not have NET’s permission to
solicit NET’s speakers to speak at events sponsored
by LAN.




82. Nor did LAN have NET’s permission to use NET’s invitation.




83. Nor did LAN have NET’s permission to use NET’s free ticket design.




84. Nor did LAN have NET’s permission to plagiarize its promotional
materials.




85. After Mr. Ross spoke at LAN’s event on October 5, 2007, in Ontario,
California, a member of the audience asked him to sign her invitation. When Mr. Ross
saw it he immediately recognized it as NET’s work. He quickly advised NET that he
had not authorized LAN to copy NET’s work and that he was dismayed by LAN’s
flagrant use of NET’s work. He also noted that he had not authorized LAN to use his
signature on the promotional materials that were distributed by LAN after having been
copied from NET’s work.




86. LAN also improperly solicited NET’s speakers to make presentations at
LAN’s events in San Diego, Ontario, and for other events, notwithstanding the fact that
LAN is contractually prohibited from soliciting NET’s speakers, and notwithstanding
the fact that those presentations are NET’s property and protected by NET’s copyrights.




87. LAN’s plagiarism of NET’s work has not been restricted to the invitation,
free ticket, promotional materials and featured speaker. LAN has also plagiarized
NET’s presentations.




88. For example, in Scottsdale, Arizona, on October 11, 2007, Mr. Steve Nickel
gave a speech at a LAN event which was a nearly identical duplication of a presentation
that NET’s speaker, Robert Bluhm had given for years based on a presentation
developed by one of NET’s founders, Jay Mitton. The following illustrates a portion of
a transcript of the speech that Mr. Nichol is presently giving for LAN, with highlights to
show the extent to which that speech is a wholesale “rip-off” of NET’s efforts and
intellectual property:







Specimen Pages from Plagiarized Speech:




89. Participants who attended LAN’s recent events have reported that those
events were, in all respects, virtual copies of previous NET events. They were confused
as to who was sponsoring these events




90. Indeed, NET’s customer service department receives calls almost daily
from its long-standing, loyal students who are confused by LAN’s plagiarized
seminars. Remarkably, in addition, LAN’s own customer service department is now
demonstrably confused and unable to tell the difference between LAN’s events and
NET’s events, and their own representatives have telephoned NET’s customer service
department to ask NET to support products that LAN is now selling.




91. NET’s goods and services are also being disparaged by LAN’s plagiarism.
The public is being presented with NET’s materials by LAN in its promotion and
advertising, but without NET’s permission or the backup of NET’s experience, support
and expertise.




92. LAN has obtained a monopolistic stranglehold on the “large venue”
seminar business sector. That fact is demonstrated by the recently and severely eroded
economic power of the professional speakers who operate in that sector. Their share of
revenues is now reduced, and their payments are now delayed. This is a direct result of
NET’s current absence from this market sector. That is a direct consequence of LAN’s
illegal and improper monopolistic conduct.




93. LAN did not ask for or obtain NET’s permission to plagiarize its business.




94. Apparently, LAN did not believe that was necessary because it thought its
disinformation campaign, which was informed by its sham merger negotiations, had
knocked NET out of business entirely.




95. LAN is wrong on both counts.




96. Because of LAN’s outrageous conduct, NET has suffered substantial
damages. Those substantial damages give rise to at least the following Claims for
Relief.




FIRST CLAIM FOR RELIEF
(Breach of Confidential Relationship)



97. NET realleges paragraphs 1 through 96.




98. LAN wrongfully sought to destroy NET’s business so that it could exercise
monopoly power in the industry and otherwise benefit itself. Towards that end, it
purported to be interested in merging with NET.




99. In connection with its sham merger negotiations with NET, LAN received
information with the understanding that this data would be used solely for the purpose
of determining whether or how to merge with NET.




100. By reason of these facts, a fiduciary or confidential relationship existed
between the parties which restricted LAN’s ability to use the information it received
solely for that purpose.




101. Despite this relationship, LAN breached its duty of confidence by
wrongfully misusing the information that it had obtained to attempt to cause and
actually to cause NET’s business associates not to do further business with NET and by
attempting to use and actually using NET’s trade secrets and trade dress to capitalize
freely on NET’s costly research and development efforts and to make the public believe
that NET had given its imprimatur to LAN’s business activities.




102. LAN further breached its confidential relationship with NET in connection
with its breaches of the Partnership and Speaker Agreements.




103. NET has suffered damages because of LAN’s actions in this regard




104. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.



SECOND CLAIM FOR RELIEF




(Federal law: Monopolization: Sherman Act)




105. NET realleges paragraphs 1 through 104.




106. LAN, by its actions complained of herein, has monopolized, or attempted
to monopolize, the “large scale” seminar business in violation of 15 U.S.C. § 15(a).




107. The relevant market has been damaged as a consequence of the acts
complained of herein, and NET has suffered substantial damages because of LAN’s
actions in this regard.




108. NET is entitled to treble damages, and its attorneys fees, pursuant to 15
U.S.C. § 15(c).




THIRD CLAIM FOR RELIEF
(Misappropriation of Trade Secrets)




109. NET realleges paragraphs 1 through 108.




110. In connection with its “due diligence” efforts, LAN collected information
constituting trade secrets from NET. Specifically, LAN collected the identities of NET’s
vendors, speakers, employees, and strategic partners.




111. Thereafter, LAN wrongfully used that information in order to prosecute its
disinformation campaign against NET.




112. NET has suffered damages because of LAN’s actions in this regard.




113. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.

FOURTH CLAIM FOR RELIEF
(Conversion)




114. NET realleges paragraphs 1 through 113.




115. To the extent that, as alleged above, LAN misappropriated confidential
information belonging to NET which does not qualify as trade secrets, such
misappropriation constituted a conversion of confidential information.




116. NET has suffered damages because of LAN’s actions in this regard.
117. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.




FIFTH CLAIM FOR RELIEF




(Federal Law: Unfair Competition: Lanham Act)




118. NET realleges paragraphs 1 through 117.




119. LAN has falsely and misleadingly presented its seminar events as bearing
NET’s imprimatur by its misuse of NET’s trade dress and trade secrets.




120. LAN has falsely and misleadingly led NET’s commercial associates to
believe that LAN would put NET in bankruptcy, that NET was not paying its debts,
that NET’s vendors should not accept payments from NET, and that NET would be out
of business soon.




121. LAN has acted falsely and misleadingly used information improperly
obtained in connection with its sham merger negotiations.




122. LAN’s falsehoods and misrepresentations actually deceived or at least had
a tendency to deceive a substantial portion of the potential customers that LAN
contacted, as well as potential customers not contacted directly by LAN, but who
learned of LAN’s misrepresentations as such misrepresentations spread through the
relevant market.




123. LAN’s falsehoods and misrepresentations have disparaged NET’s goods
and services.




124. LAN’s falsehoods and misrepresentations were material in that they were
likely to influence, and in fact did influence, the purchasing decisions of the potential
customers and the economic power of relevant market participants.




125. LAN’s falsehoods and misrepresentations were disseminated the United
States mail, an instrumentality of interstate commerce.




126. LAN’s falsehoods and misrepresentations violated the Lanham Act, 15
U.S.C. § 1125.




127. NET has suffered damages because of LAN’s actions in this regard.
128. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages




SIXTH CLAIM FOR RELIEF
(Intentional Interference with
Prospective Economic Relations)




129. NET realleges paragraphs 1 through 128.




130. LAN intentionally interfered (and continued to interfere) with NET’s
existing and potential future economic relations with its vendors, speakers, employees
and strategic business partners by telling NET’s contacts that NET was not paying its
debts, that NET was going to be in bankruptcy, that any payments made by NET would
have to be returned to NET’s bankruptcy trustee, and that they should do business with
LAN, rather than with NET.




131. LAN intentionally interfered with NET’s existing or potential economic
relations with its vendors, speakers, employees and strategic business partners, for an
improper purpose; that is, to force NET out of business.




132. LAN intentionally interfered with NET’s existing or potential economic
relations with its vendors, speakers, employees and strategic business partners by
improper means; that is, by approaching entities whose identities were confidential to
NET, and by making false statements to those entities.




133. NET has suffered damages because of LAN’s actions in this regard.




134. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.




SEVENTH CLAIM FOR RELIEF
(Utah Unfair Competition)




135. NET realleges paragraphs 1 through 134.




136. LAN’s past and continuing acts, described above, constitute unlawful,
unfair and fraudulent business acts or practices that have infringed on NET’s trade
name and consequently violate Utah Code Annotated §§ 13-5A-101, et. seq., and the
common laws of the State of Utah




137. NET has suffered damages because of LAN’s actions in this regard.

138. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.




EIGHTH CLAIM FOR RELIEF
(Breach of Contract – Speaker Agreement)




139. NET realleges paragraphs 1 through 138.




140. Since April of 2007, LAN has breached (and continued to breach) the
Speaker Agreement by refusing and failing to pay to NET the sums outlined above.




141. As a result of LAN’s breach of the Speaker Agreement as outlined above,
NET has been damaged in a sum to be determined according to proof at the time of
trial, in excess of $1,200,000.00.




NINTH CLAIM FOR RELIEF
(Breach of Contract – Partnership Agreement)




142. NET realleges paragraphs 1 through 141.




143. On multiple occasions, LAN breached (and continues to breach) its
Partnership Agreement with NET by contacting and soliciting past, present and future
NET speakers between approximately April of 2007 and the present.




144. On multiple occasions, LAN also breached (and continues to breach) its
Partnership Agreement with NET by contacting and soliciting past, present and future
NET employees between approximately April of 2007 and the present.



145. On multiple occasions, LAN also breached (and continues to breach) the
Partnership Agreement by disparaging NET, and making disparaging statements to
NET’s business contacts between approximately April of 2007 and the present.
146. As a result of LAN’s breaches of the Partnership Agreement, NET has been
damaged in a sum to be determined according to proof at the time of trial.




TENTH CLAIM FOR RELIEF
(Breach of Contract – Letter of Intent)




147. NET realleges paragraphs 1 through 146.




148. LAN breached the LOI on April 12, 2007, by disclosing the existence of
merger negotiations to NET’s employees, and leading NET’s employees to believe that
the merger had been accomplished.




149. NET has suffered damages because of LAN’s actions in this regard.




ELEVENTH CLAIM FOR RELIEF
(Breach of Covenant of Good Faith and Fair Dealing)




150. NET realleges paragraphs 1 through 149.




151. All of the agreements between LAN and NET, whether written or oral,
express or implied, including the Speaker Agreement, the LOI, and the Partnership
Agreement, (collectively “Agreements”) contained an implied covenant of good faith
and fair dealing.




152. In performing the acts complained of herein, LAN breached the implied
covenants of good faith and fair dealing contained in one, more, or all of those
Agreements.




153. NET has suffered damages because of LAN’s actions in this regard.
TWELFTH CLAIM FOR RELIEF




(Injunctive Relief)




154. NET realleges paragraphs 1 through 153.




155. NET is entitled to an injunction prohibiting LAN from
a. using NET’s invitation design, free ticket design, and promotional
materials;




b. using NET’s speakers;
c. soliciting and/or continuing to employ NET’s key employees;
d. contacting NET’s vendors;
e. contacting NET’s strategic partners;
f. using NET’s presentations; and
g. in all respects, misusing NET’s trade secrets or violating its
intellectual property rights.
156. NET will be irreparably injured unless LAN is so enjoined.
157. LAN’s actions have so damaged NET that NET cannot equitably be
required to post any bond.




THIRTEENTH CLAIM FOR RELIEF
(Receiver)




158. NET realleges paragraphs 1 through 157.




159. Pending determination of the causes of action herein, NET is entitled to the
appointment of a receiver to collect and administer all revenues derived from seminars
to which LAN has attracted participants using NET’s invitation and promotional
materials, and all seminars at which LAN has used NET’s presentation materials.



FOURTEENTH CLAIM FOR RELIEF
(Slander Per Se/Trade Libel)



160. NET realleges paragraphs 1 through 159.




161. LAN told many of NET’s contacts that NET was not paying its debts, that
NET was going to be in bankruptcy, that any payments made by NET would have to be
returned to NET’s bankruptcy trustee, and that they therefore should do business with
LAN, rather than with NET.




162. All of LAN’s statements in this regard were false, disparaging, and
defamatory.




163. NET has suffered damages because of LAN’s actions in this regard.




164. LAN’s actions in this regard have been purposeful and malicious, allowing
NET to recover its attorneys fees and justifying the imposition of punitive damages.




FIFTEENTH CLAIM FOR RELIEF
(Declaratory Judgment)




165. NET realleges paragraphs 1 through 164.




166. An actual case and controversy exists between the parties with respect to
their obligations inter se, pursuant to the Speakers Agreement and the Partnership
Agreement, and declaratory relief is necessary and appropriate to determine the rights
and obligations of the respective parties thereto.




JURY DEMAND




167. NET hereby demands a trial by jury on all its claims for relief that may, by
law, be heard by a jury of its peers.




WHEREFORE, NET Marketing Alliance, LLC prays for a judgment in its favor
and against the Learning Annex, LLC:
1. For payment of NET’s damages, for not less than $100 million, in an
amount to be determined at trial, including its actual damages and;
2. For treble damages, where allowed by law;
3. For punitive damages according to proof;
4. For NET’s attorneys fees as allowed by law;
5. For Injunctive relief; and
6. For such other and further relief as this Court deems just and
proper.




DATED this 5th day of November, 2007.
PARSONS BEHLE & LATIMER
__/s/___________________________
J. Thomas Beckett
JAY GOLDBERG PC
__/s/___________________________




Jay Goldberg
17039.003/1013080.1 38
Plaintiff’s Address:
Net Marketing Alliance, LLC
2230 N. University #2A
Provo, Utah 84604

2 comments:

LeAnn Del Canto said...

Mediation Efforts Collapse in $15 Million Lawsuit Against INVESTools

NewswireToday - /newswire/ - American Fork, UT, United States, 09/07/2006 - “Standstill agreement” no longer in effect in INVESTools lawsuit, TrueNorth’s general counsel says.


TrueNorth Academy, a market leader in providing outsourced services for developing, marketing and fulfilling distance learning systems, today announced that mediation efforts have collapsed in the ongoing $15 million lawsuit filed by it and company executive, Ross W. Jardine, against INVESTools, Inc.

As a result, litigation efforts against INVESTools, et. al., are being pursued aggressively by both TrueNorth and Jardine.

According to Jack Brannelly, executive vice president and general counsel of TrueNorth, the parties had previously entered into a “standstill agreement” (a joint decision to pause litigation proceedings) to pursue mediation. However, Brannelly says, due to the mediation breakdown, the standstill agreement is no longer in effect.

“Given the seriousness of the claims in this $15 million INVESTools lawsuit brought against it by TrueNorth Academy and Jardine, as well as the fact that mediation efforts have completely broken down, we felt it was imperative to press forward with legal proceedings in order to protect our intellectual property as well as Ross’ name and bring this litigation to a successful close,” Brannelly said.

LITIGATION ROOTS OUTLINED

Jardine, an original founder of INVESTools, left the company on August 26, 2003. Under terms of the Termination Agreement and General Release between Jardine and the company, the parties agreed that Jardine’s severance period would run from August 26, 2003 until June 15, 2004. INVESTools also agreed that after June 15, 2004, it would not use Jardine’s name or image in any manner in any “marketing, sales, educational or instructional materials, or in any other manner to benefit” INVESTools.

In October 2005, Jardine and TrueNorth (the current exclusive licensee of Jardine’s personality rights) discovered that INVESTools was using Jardine’s name, voice, picture and video images in numerous educational products, more than 16 months beyond the end of the severance period. It is expected that discovery of INVESTools internal documents will disclose additional unauthorized use of Jardine’s name.

As a result, TrueNorth and Jardine originally filed suit against INVESTools in the 3rd District Court of Utah, Salt Lake City on November 1, 2005 (ROSS JARDINE, an individual and TRUE NORTH ACADEMY, L.L.C., a Utah limited liability company, Plaintiffs, v. INVESTOOLS, INC., a Delaware corporation; PETER LOWE INTERNATIONAL, INC., a Florida nonprofit corporation, THE MCGRAW-HILL COMPANIES, INC., a Delaware corporation, NBC UNIVERSAL, INC., a Delaware corporation, PROFESSIONAL SUPPORT SERVICES, L.C., dba MIT FINANCIAL, dba MIT FINANCIAL GROUP, a Utah limited liability company, Defendants.). The suit alleges INVESTools’ unauthorized use of Jardine’s name, likeness and image in violation of the Termination Agreement and General Release and seeks damages in excess of $15 million.

In addition to INVESTools (and as noted in the formal name of the suit), the case also names as defendants Peter Lowe International, Inc., The McGraw- Hill Companies, Inc. (NYSE: MHP), NBC Universal, Inc. (NYSE: GE), and Professional Support Services, L.C., also known as MIT Financial and Net Marketing Alliance. According to the suit, these latter defendants are named for their various levels of involvement with INVESTools during the period of alleged unauthorized use of Jardine’s name, image, voice and likeness.

About TrueNorth Academy
Formed in 2005, TrueNorth Academy is an outsourcing company that helps organizations take existing products and enhance them as personal training programs, creating greater end-user loyalty and profitability. Companies turn to TrueNorth for such outsourced services as product development and marketing, as well as distance learning systems fulfillment.

About Ross W. Jardine
Ross W. Jardine has been an active investor since 1988 and is considered one of the innovators in the field of investor education. Jardine was a co-founder of INVESTools (NASDAQ: IEDU), one of the worldwide leaders in investor education. He has personally trained tens of thousands of individual investors how to manage their own personal investments using the tools and strategies he developed, and he has been a featured speaker at hundreds of investment seminars and conferences in dozens of countries around the world.

Jardine is the author of the book “The Bear Market Game Plan,” as well as dozens of training courses, seminars and video presentations on personal investing and option strategies. His courses and seminars have been sold under the INVESTools, BusinessWeek, CNBC, Nightingale-Conant and Success Magazine brands.

Jardine is also considered by many as one of the pioneers in the field of e-commerce, having founded one of the first successful online shopping sites (iMall) in 1994, a company later sold to Excite@Home. He also created the first-ever Website for the Super Bowl in 1995, as well as developing online strategies for the Covey Leadership Center, HealthRider and a host of other companies.

Jardine co-founded TrueNorth Academy in 2005, a company that is the current exclusive licensee of Jardine’s personality rights. He graduated from Brigham Young University with a bachelor’s degree in Public Relations (cum laude) in 1987, with an emphasis on Business.

mrktg said...

Believe it or not, this is one of the most critical components to a successful seminar. There are many things to consider such as time of year, national holidays, weather, specific hotel chains, etc. But, it's important when planning your seminars for marketing to pay close attention to this step.