Former CEO’s lawsuit against Dr. Mercola and his brand includes allegations of psychic takeover at Florida company

The former CEO of Dr. Joseph Mercola’s supplement brand — fired in February after the doctor began taking advice from a purported psychic — has sued the brand claiming wrongful termination and breach of a severance contract.

The lawsuit made additional allegations that the psychic advised Mercola to remove Christians from the staff and questioned changes made at the company since the February firings. It also alleged the company is paying the psychic $100,000 every month.

The complaint, filed in Lee County, Florida, where the company is based, called for Mercola’s company, NHP Innovations, to pay former CEO Steve Rye $5 million and cover Rye’s legal costs. The suit contended the $5 million severance was part of Rye’s contract with NHP, the company behind the Mercola brand.

Rye, CEO since 2009, was fired in February along with Chief Business Officer Ryan Boland and Chief Editor Janet Selvig, Mercola’s sister. In an email from the doctor’s address sent before the firings, the executives’ Catholic beliefs were cited as cause for termination.

In videos of Mercola’s consultations with Christopher Johnson, who claims to channel a “high-vibration entity” named “Bahlon,” Johnson and the doctor discuss the evils of Christianity. Johnson also speaks of Rye as opposing Mercola and his plans to bring “joy” to “billions” with a book and a chain of clinics that would, among other things, administer CO2 gas via the rectum.

Related:Dr. Mercola consulted with psychic before axing top executives

The lawsuit named NHP, Dr. Mercola, Johnson and Laura Berry, who was hired as CEO on Rye’s departure. Berry has a documented history working with Johnson and his psychic enterprises dating back to at least 2022.

Requests for comment from NHP and Holland & Knight LLP, the law firm representing Mercola and his brand, resulted in a short statement provided by the law firm: “We continue to be respectful of ongoing matters before the court, we remain confident in our position and pending responsive motion, and we intend to vigorously defend against the over-reaching and meritless claims in this matter.”  The statement was attributed to “Mercola company.”

Citing a compensation agreement that Rye entered with NHP, a motion filed by Holland & Knight’s lawyers maintained the pact was subject to mandatory arbitration and that the claims were improperly filed in court. The attorneys requested that the court "stay" the lawsuit, or put it on pause, until it resolved the motion, and arbitration was completed.

Rye has requested a jury trial.

The lawsuit alleges:

- Rye via a limited liability corporation was granted 10% of NHP in 2019 and Rye’s management agreement with NHP included a $5 million severance provision that was due in June, 120 days after his termination. That payment has not been made.

Related:Mercola CEO's background as lawyer questioned amid exodus of top staff

- In videos sent as “unsecured, publicly available links,” Mercola “relayed significant confidential company information to Johnson, financial and otherwise.”

- A week before he was fired, Rye told Mercola that “terminating employees for not following Mercola’s beliefs was illegal, and that announcing on the Mercola brand website his crusade against the Catholic Church for spreading Christianity would be detrimental for the business.”

- Before she was fired, Selvig, Mercola’s sister, filed a human resources complaint objecting to the “insertion of Bahlon’s anti-Christian teaching into the business.”

- During their sessions, Johnson told Mercola that Rye’s Christian beliefs and opposition to the book and clinic plans was cause for his removal.

- Johnson also told Mercola that the company wouldn’t have to pay Rye’s severance, remarking on video, “there is a way to move things around so you do not have to pay a single dime if you wish,” and that Berry, who was named CEO when Rye and the other executives were fired, could assist in removing Rye without paying severance.

- After taking the CEO post, Berry entered the company into a consulting arrangement with an LLC owned by Johnson, paying that entity $1.2 million yearly in monthly $100,000 payments.

- Since Berry took control, the company’s CFO, CIO, human resources manager, marketing director and “many other personnel” have resigned, and high-ranking positions have been filled by people who had connections to Berry and Johnson but lacked natural products industry experience.

- Projects, spending and new corporate entities established since Berry took the reins have been questionable. Per the lawsuit, “NHP assets have been used for new hires, AI software development, construction buildouts for the new clinics, public relations, writers and editors for new Bahlon and Mercola books — none of which are part of NHP, and instead are part of new entities not under the NHP umbrella.”

- Johnson, as Bahlon, told Dr. Mercola that Rye was embezzling money, and the doctor has repeated that charge without evidence.

While the allegations of religious discrimination and wrongful termination are cited throughout the lawsuit, the primary claim centered on nonpayment of the severance package.

Rye alleged he suffered damages due to discriminatory and retaliatory actions related to “his termination and his objection to the termination of other employees based on their Catholic backgrounds and refusal to adopt an anti-Catholic religious view.” However, the lawsuit acknowledged he cannot file an action under the Florida Civil Rights Act or Title VII of the Civil Rights Act of 1964 until he first files a charge of discrimination with the proper state or federal agency and receives a notice from the agency granting a right to sue.

In the complaint, Rye reserved the right to amend the suit to include those allegations.

After reviewing the lawsuit, Charles Scalise, who practices employment law in Texas and Florida, said the severance package may provide a better payout to Rye than he could expect to receive in a discrimination/wrongful termination claim.

 “I've never seen somebody with a $5 million severance agreement,” Scalise told SupplySide Supplement Journal (formerly known as Natural Products Insider). But in either instance, Scalise said he thinks Mercola, Johnson and the brand face significant challenges if the matter goes to trial.

The nature of the allegations combined with the documentation provided by Mercola’s video sessions with Johnson as Bahlon could hold significant weight with a jury, Scalise remarked.

“If I was defending this, I sure wouldn't want this kind of stuff coming out … how do you explain all this to a jury?” the lawyer asked.

Scalise said he is “amazed that this case hasn't settled.”