A B C D E F G H 1 J K L M N O P Q R S T U V W MEMBER RECRUITING RATES PER QUARTER YEAR 2018 2019 2020 2021 2022 QUARTER QTR 1 QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 QTR 3 QTR 4 QTR1 QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 QTR 3 QTR 4 AVERAGE Recruits 886 753 567 570 740 1,080 579 152 1,360 1,192 1,027 1,430 1,956 1,706 734 316 301 381 380 267 Members 20,085 18,752 17,200 16,501 15,741 15,843 14,942 13,828 13,408 12,712 12,589 12,675 15,719 17,659 15,196 12,575 11,497 10,484 9,281 8,831 Recruit Rat 4% 4% 4% 4% 5% 7% 4% 3% 10% 9% 8% 11% 12% 10% 5% 3% 3% 4% 4% 3% 6%THE CASE: Vitamins and More, LLC is a multi-level marketing (MLM) company incorporated on March 1, 2011. Vitamins and More (VM) sells proprietary vitamins and health supplements that they compound in their own facility. In addition to vitamins, they sell special blends focusing on specific health benefits. Popular blends include Weight Loss Magic, Pain Relief, Concentration, and High Energy, to name a few. Under an MLM model, "members" earn commissions from their own sales as well as from sales made by members they recruit. Recruited members become part of the recruiter's "downline." In this model, the initial recruiter continues to grow her downline as the people she recruited go out and recruit people, who go out and recruit people, who go out and recruit people, etc. When you become a member of VM, you are required to buy an introductory package, which includes full-sized bottles of the most popular vitamins and blends. This introductory package is intended for the member to use to get to know the products. It's expected that the member will then purchase future products for personal use. Additionally, the member will take orders from customers and fulfill those orders themselves by ordering the product from VM and delivering it or shipping it to customers directly. Alternatively, the member can have the customer order the product online using the member's ID, which allows the member to receive commission on the products purchased by the customer. Because VM takes care of the delivery in these cases, VM deducts a delivery charge from the member's commission for sales placed online. Several VM members have started a competing company, Good Health, Inc. VM is suing Good Health and the individual owners of Good Health for breach of contract. Specifically, all members of VM sign a contract saying they will not recruit any VM members to any other MLM company- whether or not the company directly competes with VM. Approximately 120 VM members are currently members at Good Health, and VM is claiming that Good Health improperly recruited these members. THE ASSIGNMENT: You have been retained as the expert witness for the defendant in this case, Good Health. Please answer the following questions. 1. You can subpoena documents from the plaintiff. What data should you obtain from Vitamins and More? Be specific about the level of detail you need and explain why you need t. 2. What lost profit calculation methods are you considering using? Why are you considering his/these methods? Explain why this method(s) is appropriate. 3. Refer to Appendix A for this assignment. The plaintiff's expert has produced this table as part of his calculations. Do you see any possible problems with the data? What could have caused the issue(s). 4. Calculate your own recruiting rate. Explain any changes you made to the data and why. Is it materially different from the plaintiff's expert's calculation? Explain. Note: Recruits plus existing members do not equal existing members in the next quarter because it is not unusual to have people decide MLM is not for them and leave