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LITIGATION
3 Months Ended
Mar. 31, 2012
LITIGATION [Abstract]  
LITIGATION
NOTE 7: LITIGATION
 
Business Arbitration and Litigation

Marinova Pty. Limited v. Mannatech, Incorporated & Mannatech (International) Limited, Case No. 50-122-T-00635-09, International Centre for Dispute Resolution, a division of the American Arbitration Association

On December 10, 2009, Marinova Pty. Limited ("Marinova") filed a Notice of Arbitration and Statement of Claim with the International Centre for Dispute Resolution, which is a division of the American Arbitration Association, against the Company and its subsidiary, Mannatech (International) Limited. Marinova's claims stem from the parties' April 27, 2007 purchase agreement. Through the purchase agreement, Marinova agreed to sell and the Company agreed to buy set quantities of glyconutrient powder that the Company uses to manufacture some of its products. Marinova claimed that the Company breached the purchase agreement by not buying the specified quantities of Marinova's product and by prematurely terminating the agreement.  Marinova further claimed, based on the Company's alleged breach of contract, that Marinova suffered lost profits damages in the amount of $6,500,000, as well as attorneys' fees and costs.  The Company subsequently filed an answer and counterclaim, seeking damages in the amount of $618,750, representing the price paid for alleged non-conforming product.

On March 16, 2012, the Company and Marinova entered into a binding settlement agreement that fully disposes of the claims and controversies between them.  Pursuant to the settlement agreement, Mannatech withdrew the $618,750 in claimed damages and made a one-time payment of $2,600,000 to Marinova, which has been recorded in the December 31, 2011 financial statements.  The settlement also includes a full release of both parties and a covenant not to sue.

Ray Gebauer vs. Mannatech, Incorporated, Case SA-CV-11-1255-DOC, United States District Court, Central District of California

On August 22, 2011, Ray Gebauer, an individual, filed suit against the Company in the Central California district of the United States District Court.  The plaintiff, a former associate, alleged breach of contract, breach of fiduciary duty, discrimination and fraud in connection with the termination of his associate agreement with the Company in 2007.

Mr. Gebauer never sought to have the Company served with the complaint and, in 2012, the Company learned that the Court entered an Order Dismissing Civil Action on December 29, 2011.  The Company considers the matter closed.

Bradley E. Bagge vs. Mannatech Incorporated, Craig Hermanson et al., Case 12-80828 DSD/AJB, United States District Court, District of Minnesota

On April 3, 2012, Bradley E. Bagge, an individual, filed suit against the Company in the Minnesota district of the United States District Court.  The plaintiff asserts that he has an interest in several associate positions of the Company, and alleges that another associate and an "investor group" have fraudulently usurped his interests in said associate positions and deprived him of the commissions and bonuses associated therewith.  The plaintiff asserts RICO Act and identity theft claims, and further asserts that the Company is complicit in the conduct of the other defendants.

While this action was instituted in early April, the Company has yet to be formally served.  Upon being served the Company will retain counsel and vigorously respond to the allegations of the plaintiff.   The Company considers this to be a dispute between the plaintiff and the other defendants for control of the associate positions, and will take such action as the Court requires with respect to payment of commissions during the pendency of the case.  The likelihood of an unfavorable outcome is uncertain at this time.

Product Liability Litigation

Susan Chon vs. Mannatech, Inc. dba Mannatech Dietary Supplements; Eun-Sook Cho; Gina Park; Good News Acupunture/Couples Acupuncture, Case No. BC460029, Los Angeles County Superior Court

On April 21, 2011, Susan Chon, an individual, filed suit against the Company in Los Angeles County Superior Court.  The plaintiff is one of the Company's former associates and has alleged sustaining injuries and enduring complications from breast cancer as the result of taking Ambrotose®, one of the Company's products.  The plaintiff also alleges that co-defendants En-Sook Cho, Gina Park and Good News Acupuncture represented to her that the Ambrotose® product cured serious medical problems.  Unspecified damages are sought against all defendants.

On March 1, 2012, the parties engaged in a private mediation session, and a settlement was reached resolving all outstanding issues between the parties in the amount of $200,000, $79,000 of which is covered by the Company's insurer.  On March 19, 2012, the parties executed and filed a motion to dismiss the litigation with the court.  The Company now considers this matter closed.

Litigation in General

The Company has incurred several claims in the normal course of business. The Company believes such claims can be resolved without any material adverse effect on its consolidated financial position, results of operations, or cash flows.

The Company maintains certain liability insurance; however, certain costs of defending lawsuits are not covered by or are only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to cover certain claims in whole or in part. The Company accrues costs to defend itself from litigation as they are incurred or as they become determinable.

The outcome of litigation is uncertain, and despite management's views of the merits of any litigation, or the reasonableness of the Company's estimates and reserves, the Company's financial statements could nonetheless be materially affected by an adverse judgment. The Company believes it has adequately reserved for the contingencies arising from the above legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. While it is not possible to predict what liability or damages the Company might incur in connection with any of the above-described lawsuits, based on the advice of counsel and management review of the existing facts and circumstances related to these lawsuits, and related legal fees, the Company has accrued $0.1 million as of March 31, 2012 for these matters, which is included in accrued expenses in its Consolidated Balance Sheet.