SETTLEMENT
A spokesman for Longaberger parent company, Dallas-based JRJR Networks, said the company doesn’t comment on individual lawsuits. “This is just one in many between the parties,” he said in an email.
Longaberger’s lawyer called the award “a vindication of everything” she had said in the suit.
“Both Tami and I are extremely pleased,” said Steven W. Tigges of Zeiger, Tigges & Little LLP. “The arbitrator gave us exactly what we asked for, to the penny, which speaks volumes of the arbitrator’s view of the case. Tami is very pleased and joyful to have this behind her. We look forward to collecting the money.”
The award, filed late Thursday in Franklin County Common Pleas Court, arose from events that took place after JRJR Networks, then known as CVSL, bought a 51.7 percent stake in Longaberger in 2013.
The company, which specializes in party-plan sales of baskets, had fallen on hard times as customer tastes in decor changed. But after JRJR Networks’ purchase, the company seemed to be on the path to recovery.
However, financial troubles persisted and JRJR Networks asked Tami Longaberger, then CEO of the company, for a $1 million loan. By April 2015, a frustrated Tami Longaberger sent JRJR’s leader, John Rochon Sr., a resignation letter.
Rochon asked Longaberger to withdraw her resignation so JRJR, which is publicly traded, would not have to report it to the U.S. Securities & Exchange Commission, according to Thursday’s filing.
A month later, instead of repaying Longaberger as she left the company, Rochon fired her for what he has called “good cause.”
Tami Longaberger filed suit, and JRJR Networks filed a countersuit, alleging fraud.
In Thursday’s filing, the arbitrator said JRJR Networks failed to submit anything to support its counterclaim, leading the arbitrator to deem that the counterclaim had “been abandoned.”
Rachel Longaberger Stukey, Tami Longaberger’s sister, also sued JRJR Networks in 2016 and settled for an undisclosed amount in January. Her suit stemmed from JRJR’s reported failure to follow through on terms of a promissory note it issued to Stukey.
The Longaberger Company has struggled since founder Dave Longaberger died in 1999. A combination of bad economic times and changing consumer tastes sent sales from a peak of $1 billion in 2000 to about $100 million in 2014. Several rounds of layoffs occurred.
After falling behind by more than $800,000 to various local taxing entities for fees related to the company’s iconic “Big Basket” headquarters, the basketmaker vacated the building in July 2016 and was served with foreclosure documents. In December 2017, the Big Basket was sold to a Cantonbased developer.
The Frazeysburg campus of the Longaberger Co. has also been vacated, and the company has retreated to its roots in Dresden.
JRJR Networks, meanwhile, has suffered its own problems.
In addition to dealing with lawsuits over unpaid bills, the company has repeatedly been late in filing its quarterly earnings reports and its annual report with the SEC. On Thursday, the company told the SEC it would again fail to meet the extension granted by the New York Stock Exchange for filing three of its quarterly reports from last year.
The company’s stock was trading at 13.5 cents per share at the end of the day Friday, well off from the company’s initial offering share price of $15.80. Its market cap was $6.06 million.