FranchisePick.com reports that the EEOC has won a $20 Million discrimination lawsuit against Pure Weight Loss (formerly LA Weight Loss) despite the fact the company went into bankruptcy in January, 2008 (see The EEOC Celebrates $20M Victory Over Non-Existent Company)
In a nutshell, the EEOC has won $20 million and other “significant relief” on behalf of workers who were never hired by Pure Weight Loss (formerly LA Weight Loss), which closed its 400 locations earlier this year. Thanks to this landmark victory by the EEOC, the male employees who were never hired will be entitled to $16 million in back pay for work they never performed, and will now be offered positions in the company that no longer exists.
The EEOC becomes Creditor #100,001.
The closing of Pure Weight Loss (formerly LA Weight Loss) left thousands of customers cheated out of prepaid services and left employees nationwide jobless. With more than 100,000 creditors and liabilities at $10 million to $50 million, Pure Weight Loss filed for Chapter 7 bankruptcy. Shortly thereafter, the Attorney General of PA sued for fraud and moved to seize both corporate and personal assets of the company and its founder, Vahan Karian.
According to the EEOC, Pure Weight Loss discriminated against male applicants, having denied them the same opportunity to receive pre-Christmas pink slips and bounced paychecks like their female cohorts. In its battle against employment injustice, the EEOC is not fazed by a small obstacle such as the non-existence of the employer.
Did Pure Weight Loss Close Because of the EEOC?
The EEOC originally sued L.A. Weight Loss Centers, Inc. (LAWL) in February 2002 under Title VII of the 1964 Civil Rights Act, alleging that the company “engaged in a pattern or practice of disparate treatment against men in its recruiting, hiring, and assignment of employees.” On September 6, 2007, an EEOC press release announced “A federal court has ruled that the U.S. Equal Employment Opportunity Commission (EEOC) may proceed to trial with its class sex discrimination lawsuit against L.A. Weight Loss Centers, Inc. (LAWL) on behalf of qualified male applicants nationwide.”
The judge’s decisive rejection of LAWL’s motions to dismiss the case indicated that the EEOC case, which included “discriminatory admissions by various high-level LAWL officials,” was strong.
Three months later, Pure Weight Loss announced it was closing all 400 centers nationwide and laying off all employees, male and female.
Could it be that Vahan Karian’s LA Weight Loss knew this judgement was coming all along, and decided to change its name to Pure Weight Loss and shut down all its center shortly thereafter because it knew the EEOC was going to win?
There’s more to this story than meets the eye.
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.
Here is the press release issued by the office of PA Attorney General Tom Corbett December 12, 2008:
Attorney General Corbett announces $700,000 consumer protection agreement with Pure Weight Loss Inc.
HARRISBURG – Attorney General Tom Corbett today announced a more than $700,000 consumer protection agreement with Pennsylvania-based Pure Weight Loss Inc. addressing more than 3,500 complaints involving non-delivery of weight loss products or services to consumers from Pennsylvania and several other states.
Corbett said a consent decree has been reached with Pure Weight Loss, Inc., of Horsham, PA (formerly known as L.A. Weight Loss Centers, Inc.), along with the company’s owner and president, Vahan Karian.
Corbett said the agreement requires the payment of $500,000 to the Pennsylvania Office of Attorney General, for distribution to consumers who pre-paid for products and services that were not delivered and who filed valid complaints with the Attorney General’s Health Care Section.
Additionally, the agreement sets aside $200,000 in a secure fund, which will be used to provide restitution to consumers who filed claims in the U.S. Bankruptcy Court case involving Pure Weight Loss. Corbett said this money will be turned over to the Bankruptcy Trustee for distribution to consumers who have filed proofs of claim with the bankruptcy court.
Corbett explained that the Attorney General’s Health Care Section began receiving complaints about Pure Weight Loss in December 2007, shortly after the company announced plans to close more than 400 weight loss centers across the country. The company halted operations on January 4th, 2008, and filed for bankruptcy shortly after that, leaving thousands of consumers without access to weight loss products and services that they had pre-purchased.
Corbett said that the majority of the consumers who contacted the Attorney General’s Office had purchased contracts lasting a year or more, paying as much as $2,000 for “lite bars” and other food items that were never delivered. Following the closure announcement in December 2007, consumers were instructed by Pure Weight Loss to pick up products from their stores prior to January 4, 2008, or file a claim for refunds – but many consumers failed to receive either refunds or the products and services they had purchased.
Corbett said that in addition to the $700,000 payment from Karian and Pure Weight Loss to fund consumer restitution, the Pennsylvania Office of Attorney General is also working with authorities from the states of New York and Maryland to recover additional funds for consumers from those states.
Both New York and Maryland require weight loss centers to post security bonds intended to protect consumers against losses, and all complaints involving consumers from those states will be turned over to authorities in New York and Maryland as claims against those security bonds – allowing the remaining funds to be distributed to consumers from Pennsylvania and other states.
Corbett said that efforts are underway to verify all the consumer claims that have been filed with the Attorney General’s Health Care Section. Bank and credit card records are also being obtained to determine the exact amount of credit card charge-backs, stop-payment orders or partial refunds that may already have been paid to some consumers. Corbett said the final distribution amount for each consumer will be calculated when the review of that financial information is complete.
It is anticipated that partial refund distribution will begin in early 2009 for eligible consumers who have already filed complaints with the Attorney General’s Health Care Section.
Refund distribution for consumers who filed proofs of claim with the U.S. Bankruptcy Court will take place at the conclusion of the bankruptcy case involving Pure Weight Loss.
The consent agreement was filed in Commonwealth Court, in Harrisburg, Pennsylvania, by Deputy Attorney General Timothy E. Gates of the Attorney General’s Health Care Section.
I was in contact with the PA Attorney General’s office last week. They are actively investigating the closing and subsequent bankruptcy of Pure Weight Loss and the actions of Pure Weight Loss CEO Vahan Karian (aka Vahan Karabajakian).
If you were a member or employee of Pure Weight Loss, and have lost money or were otherwise injured by their abrupt closure and unethical business practices (no matter where you reside) you are urged to fill out a complaint with the office of the PA Attorney General. You may just get your money back, yet!
Here is the message from the Attorney General:
The Pennsylvania Office of Attorney General has been involved in the Pure Weight Loss case since January, 2008. Please use the following link to review our press release detailing our consumer protection lawsuit against PWL and the company’s owner:
PWL, based in Horsham, PA, filed for bankruptcy shortly after the business ceased operating, January. The bankruptcy case, along with our consumer protection lawsuit, are both still actively working through the state court system and federal bankruptcy court.
We continue to encourage consumers who believe they suffered losses because of PWL’s actions to use the following link to access the online complaint for our Health Care Section (That is the section of our office handling this case):
At the very least, you’ll have the satisfaction of knowing that you helped bring Mr. Karian to justice, and helped the PA Attorney General send the message that they will not tolerate this kind of mistreatment against consumers.
WHAT DO YOU THINK? SHARE A MESSAGE BELOW.
He took your money, but not your spirit. Tell CEO Vahan Karian – and the world – how the closing of Pure Weight Loss affected you financially & emotionally. Whether he’s on the golf course or at dinner at the club, we’ll make sure the gets your message. And we’ll copy the media and the PA Attorney General as well!
[Your email won't be shown or shared. No profanity or threatening language, please. Share your ideas for creative delivery options. Please support this site by visiting our advertisers or donating to the Dear Vahan Delivery Fund! Now... remind the millionaire whose money he's enjoying.]