Blakemore v Avon Products, Inc.
Avon Ladies Move Forward in Channel Stuffing Case
A national class action filed against health and beauty company Avon Products, Inc., on behalf of independent sales representatives, has been revived by an appellate court after being dismissed by the Los Angeles County Superior Court. The lawsuit alleges that Avon artificially boosted its financial performance by "channel stuffing " -- forcing independent sales representatives to pay for unordered products even after the shipments are returned to Avon, in violation of California unfair competition and business practices laws. The action seeks unspecified compensatory and punitive damages.
The lawsuit, filed on behalf of plaintiff Raven Blakemore, Robin Smith, Lupe Lane, and Elda Garcia accuses Avon of shipping products that its independent sales representatives never ordered, then dunning the sales rep for payment, even if the representative returned the unordered goods to Avon. The lawsuit also alleges that Avon immediately accounts for the unordered shipments as revenues.
In two rulings issued on March 16 and June 1, 2004, the Los Angeles Superior Court dismissed three of the plaintiffs from the lawsuit, finding that they were not proper class representatives. The Superior Court also threw out the plaintiffs' claims for fraudulent concealment, breach of contract, and unfair competition, finding that the facts stated in their complaint failed to support such claims. The plaintiffs appealed the rulings.
On June 24, 2004, after considering arguments made by counsel for both sides, the Court of Appeals ordered the Superior Court to either vacate its March 16 and June 1 rulings and enter new rulings in favor of the plaintiffs, or convince the Court of Appeals that it should not have to do so. This means that the case will now go forward in the trial court under the presumption that there is a valid claim for fraudulent concealment, breach of contract, and unfair competition.
