LuLaRoe announces settlement of litigation with State of Washington Attorney General’s Office

Corona, California – February 1, 2021 – Clothing company, LuLaRoe, announced today that it has entered into an agreement to settle litigation initiated by the Office of the Attorney General of the State of Washington. The Attorney General’s Office filed the litigation on January, 23, 2019 in the Superior Court of King County, Washington against LuLaRoe and three individuals. The settlement specifically states that none of the defendants has admitted liability or violation of any laws. The defendants denied, and continue to deny, any wrongdoing, and the settlement releases any and all claims the State of Washington may have had against them. The Superior Court has approved the settlement in the form of a Consent Decree.

The Attorney General’s Office had alleged in its complaint against the defendants that LuLaRoe was operating as an illegal pyramid scheme in violation of the Washington Anti-Pyramid Promotional Scheme Act and that the defendants had engaged in conduct violating the Washington Consumer Protection Act. The settlement was reached after more than 40 depositions had been taken and the State had obtained over 175,000 pages of documents from LuLaRoe. Trial, expected to take place over 12 weeks, had been scheduled to begin on February 16, 2021. In addition, on January 29, 2021, LuLaRoe had filed with the Washington Court of Appeals a petition seeking the Court of Appeals’ review of a Superior Court ruling on the defendants’ lower court motion for judgment on the Attorney General’s Office’s pyramid scheme claim. That petition has been withdrawn as part of the settlement.

Under the terms of the settlement the defendants will pay to the State of Washington $4,750,000 which can be used in the sole discretion of the Attorney General “for costs and reasonable attorney’s fees incurred by Washington in pursuing this matter, monitoring and potential enforcement of this Consent Decree, or for any lawful purpose in the discharge of the Attorney General’s duties.”

Mark Stidham, LuLaRoe’s Chief Executive Officer, said “Given the expenses LuLaRoe incurred in defending this lawsuit, it made sense for LuLaRoe to pay the settlement we agreed upon. Even though we believed we would win the case eventually – whether at trial or on a subsequent appeal – the expense would be enormous and the amount of time senior management would have had to devote to the litigation during the trial would have been a distraction from our business.”

Mr. Stidham also stated “We are proud of what we have accomplished in the State of Washington and nationally by giving entrepreneurs – mostly women – the opportunity to own and operate their own businesses selling our clothing. Since 2016 Washington Independent Fashion Retailers have reported at least $185 million in retail sales to over 180,000 customers. LuLaRoe has paid Washington over $13.5 million in sales tax. The settlement with the Attorney General’s Office allows us to refocus our attention where it should be – on continuing to support our Independent Fashion Retailers across the country, as well as those in the State of Washington. We are excited about the future for LuLaRoe’s Independent Fashion Retailers and for LuLaRoe customers.”

Press Contact:

LuLaRoe Media Center

mediainquiry@lularoe.com

LuLaRoeFebruary 1, 2021