"In December 2008, an arbitrator in the State of Utah awarded a former USANA distributor approximately $7 million in compensatory damages for wrongful termination. This top-level distributor was terminated in 2003 for a material breach of their distributor agreement and for violating USANA's policies and procedures. USANA is disappointed with the arbitrator's ruling and believes that neither the decision rendered nor the amount awarded is supported by the facts of the case. USANA plans to pursue all available legal remedies to set aside and vacate the award. However, no assurance can be given that USANA will be successful in vacating the award.
USANA believes that distributor compliance is critical to the integrity of its business and is aggressive in enforcing its agreements with distributors. As a result, USANA periodically becomes involved in distributor compliance actions and considers these actions routine and incidental to its business. The arbitration described above is no exception and is the first ruling against USANA in a distributor compliance action. USANA will continue to be aggressive in enforcing its agreements with distributors.
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