Former Amway/Quixtar Distributors Succeed in Appeals Court

by louabbott on April 22, 2010

This is just one legal battle in an ongoing lawsuit brought by former Amway IBOs…

who left to work with another competing company.  This appeal upheld the rights of the distributors, in at least some cases, to avoid arbitration.

Some of the wording in the Appeals Court decision describing Amway’s “Alternative Dispute Resolution” process  are interesting: “tainted,” “unconscionable,” “unenforceable.”

Here are some of the details from The Grand Rapids Press as of April 22, 2010.

SAN FRANCISCO — A lawsuit alleging Amway and its upper level distributors operate an illegal pyramid scheme is headed back to court after an appeals court struck down company efforts to force plaintiffs into arbitration.

A federal appeals court this week upheld a decision from a 2007 lawsuit against Amway that invalidated a requirement that disputes with the company be resolved through a mediation process rather than in court.

The appeals judges agreed with a U.S. Circuit Court decision that said Ada-based Amway’s mandatory “Alternative Dispute Resolution” process was so slanted in the company’s favor that it was “unconscionable.”

The ruling relates to a proposed class-action lawsuit filed in California by three former Amway distributors, which the company refers to as Independent Business Owners.

…While the appellate decision is largely procedural as it relates the overall case, it could be significant because the company has relied on its dispute resolution process to keep some disgruntled distributors and their potentially damaging allegations out of the courts.

“We agree with the district court that the Quixtar ADR agreements are ‘simply too tainted to be saved through minor adjustments,’ and hold that the entire ADR process mandated by those agreements is unconscionable and therefore unenforceable,” the ruling, which was published Tuesday by the U.S. Court of Appeals in San Francisco, read.

The suit by plaintiffs Jeff Pokorny, Larry Blenn, and Kenneth Busiere alleges Amway, which at the time operated under the Quixtar brand name, operated a two-tiered pyramid scheme that resulted in junior level distributors being “scammed” out of millions of dollars.

The suit alleged Amway’s products are priced too high for distributors to resell at a reasonable profit and its system emphasizes recruiting new “downline” distributors over retail sales.

It also says the company and senior level distributors fraudulently induce the junior level to buy business-support materials or “tools” that are supposed to help build a sales business but are almost entirely geared toward recruiting additional distributors.

With the ruling, the suit will be referred back to the U.S. Circuit Court for trial.

For more information on other this and other Amway lawsuits, see Related Posts below

Also, see our Amway Facts, News, and Reviews post.

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{ 3 comments… read them below or add one }

Zach May 22, 2012 at 3:52 pm Thumb up 0 Thumb down 0

how do I find out if I qualify for compensation from lawsuit

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Make Money At Home May 25, 2010 at 11:05 am Thumb up 0 Thumb down 0

Amyway is a great company however, their business model is not for everyone.

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Tex April 22, 2010 at 4:09 pm Thumb up 0 Thumb down 0

Here’s all the details, including a link to the complete ruling: http://texsquixtarblog.blogspot.com/2010/04/did-amway-just-get-hammeredagain.html

Reply

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