This section contains the nature of the case and procedural background.

P produces and markets nutritional and cosmetic goods. Ds are former Melaleuca contractors who reside in Ontario, Canada. Ds entered into an Independent Marketing Executive Agreement (IMEA) with P in September 1999 and became 'independent marketing executives.' Ds were eligible to receive commissions and bonuses for 'buying' P's products and for enrolling new independent marketing executives with P. P pays its marketing executives monthly, 'contingent upon whether they were in good standing throughout that entire month.' To remain in good standing, Ds must comply with the IMEA, which contains a non-compete clause and several provisions dealing with competition and solicitation. It was a violation to recruit a Melaleuca Customer or Marketing Executive to participate in another business venture. Violation of any provision of this Policy 20 constituted a Marketing Executive's voluntary resignation and cancellation of his/her Independent Marketing Executive Agreement, effective as of the date of the violation, and the forfeiture by the Marketing Executive of all commissions or bonuses payable for and after the calendar month in which the violation occurred. Ds received their last check from P in October 2008 for September 2008 commissions. Sometime in 2008, Ds had become involved with P's competitor, Max International, and began enrolling P customers in Max programs while still receiving P commissions. In November 2008, Ds ended their relationship with P. After its relationship with Ds ended, P learned of the breach. P sued seeking an injunction and damages. P filed a motion for summary judgment, arguing that under Policy 20 of the IMEA, it was entitled to a return of commissions paid out to Ds from the time they first violated the IMEA in June 2008. Ds claimed that Policy 20 was unenforceable. After P filed a motion for reconsideration, the district court granted P's motion and entered judgment in its favor. Ds were ordered to pay $23,856.71 CDN, with interest. The court found that because Policy 20 simply excused Melaleuca from performing, it was not an illegal penalty. Ds appealed.

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