U n i t e d S t a t e s D i s t r i c t C o u r t
F o r t h e N o r t h e r n D i s t r i c t o f C a l i f o r n i a
wrote: "Because the IBOs are Quixtar's actual customers andconsumers of its products, Quixtar requires an ever expandingnetwork of so-called distributors (IBOs) in order to keep Quixtarafloat." Id. Plaintiffs claimed that because it constituted afraudulent pyramid scheme or "endless chain," Quixtar's practices"violated the federal RICO and mail and wire statutes and theCalifornia Penal Code § 327." Id. ¶ 52. Also named as Defendantsin the FAC are individuals and entities alleged to be Quixtardistributors in the "lines of sponsorship" linking Plaintiffs andQuixtar. Id. ¶¶ 8-16.
B. Procedural Background
Although this action commenced nearly four years ago, theparties seek to settle this action relatively early in theproceedings. Plaintiffs' Initial Complaint was filed on January10, 2007. ECF No. 1 ("Compl."). On March 5, 2007, Defendantsseparately filed several motions to dismiss and/or stay the actionand compel Plaintiffs to participate in arbitration pursuant toarbitration provisions in the IBO registration agreements. ECFNos. 28, 32, 36. On March 31, 2008, the Court denied thesemotions, finding the arbitration agreements to be procedurally andsubstantively unconscionable and therefore unenforceable. ECF No.115 ("Mar. 31, 2008 Order").
Defendants appealed this order under9 U.S.C. § 16(a)(1)(B), and the Court stayed proceedings pendingthe appeal. ECF No. 127. On April 20, 2010, a Ninth Circuit panel
The March 31, 2008 Order also provides a more detailed account ofthe procedural history of the case, including a discussion ofseveral continuances, motions to strike, and Plaintiffs' motion tofile an amended complaint. See id. at 2-5.
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