HERE IS APPEALS COURT CASE AGAINST AMWAY
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NEWSFLASH: Amway Corporation’s Independent Business Owner agreements are declared “unconscionable” under California law
In Pokorny v. Quixtar, Inc. --- F.3d ---- (9th Cir.2010), the 9th Circuit Court of Appeals upheld a trial court order denying a motion to dismiss by Amway Corporation, which is being sued by two of its former Independent Business Owners (“IBOs”) for allegedly operating an illegal pyramid scheme.
In response to the lawsuit, Amway filed an unsuccessful motion to dismiss, trying to force the IBOs to private arbitration as agreed to when the IBOs signed up with Amway. The court ruled against Amway because it found Amway’s agreements with the IBOs to be both procedurally and substantively “unconscionable” under California law.
First, in finding that Amway’s agreements are procedurally unconscionable, the court noted that Amway is a large corporation doing business throughout the United States, it occupies a “superior bargaining position” to that of its IBOs, the IBOs do not “individually participate” in the negotiation of the terms of the agreements, and the agreements are presented to the IBOs on a “take-it-or-leave-it basis.”
Second, in finding that Amway’s agreements are substantively unconscionable, the appellate court focused on the lack of mutuality in the terms of the agreement as well as a confidentiality provision in the agreement.
On the lack of mutuality issue, the court noted that Amway unilaterally requires its IBOs to submit any claims against Amway to an informal dispute resolution process before proceeding to arbitration, which unfairly hampers its IBOs by subjecting them to “an employer-controlled dispute resolution mechanism” that provides Amway with a “free peek” at the IBOs case against it.
Furthermore, on the confidentiality issue, according to Amway’s agreements, IBOs are forever barred from disclosing to anyone the basis for their claims against Amway, the evidence supporting such claims, or the outcome of any arbitration. This prevents other IBOs from building cases and places Amway in a “far superior legal posture.”
As a result of this case, Amway now has to defend itself in court rather than before a private arbitrator. It also will likely have to revise its IBO agreements so that this case cannot be used against it as precedent in future cases.
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AMWAY AMAZING AT $8.2 BILLION 2008 PLUS BEATS UK LAWSUIT
ADA TOWNSHIP Feb 09 PR release — The global economic meltdown of 2008 apparently had more Amway Global representatives pounding the pavement for vitamins, cosmetics and other products.
The Ada Township-based direct-selling giant had a record $8.2 billion in sales in 2008, co-founder Rich DeVos told The Press on Friday after a topping-off ceremony at Helen DeVos Childrens Hospital.
The figure represents a 15 percent increase from the $7.1 billion in sales reported for 2007. The privately held company, which doesn’t release profitability figures, expects to make an official statement regarding its sales next week, a spokeswoman said.
The improved sales came after Amway launched a marketing spree reintroducing the brand to many consumers through partnerships with Tina Turner, John Tesh, soccer star Ronaldinho and others. The company retired the Quixtar brand, which it used for online sales in the United States and Canada.
News of the big gain followed an announcement Thursday that a Court of Appeals decision in Great Britain upheld the dismissal of government claims against Amway operations there. The company implemented major changes to its business model in the U.K. and other markets after being accused of misrepresenting earnings potential of its distributors and pushing sales of motivational tools over products.
U.K. GOVERNMENT APPEALS AMWAY CIVIL LAWSUIT!
10 June 2008 -- The Secretary of State for Business, Enterprise and Regulatory Reform for the U.K. has appealed the lawsuit Amway won in lower court to a higher court! Rod Cook Ur Editor Note: This is nuts! A Bureaucrat out of control? Amway made draconian changes in the U.K. and remodeled their whole operation, plus initiated massive corporate training. Now, John Hutton (Secretary of State for Business) can't let go - because of ego?
AMWAY WINS CIVIL LAWSUIT BY U.K. GOVERNMENT
May 2008 - Rod Cook, Editor's Note: Congratulations to Amway - Alticor for winning. We published the great uproar over Amway banning the sale of motivation and training material in the U.K. Now all that is approved for use is Amway Corporate training and materials. That was a big step in winning this case.
The United Kingdom judge dismissed government claims against Amway operations in the U.K., saying major reforms in 2007 fixed Amway faults that favored selling training materials over products and misrepresented earnings.
The U.K. "Federal" judge in the Amway case started out by expressing his belief Amway allowed "misrepresentations" of its business by U.K. Distributors in years past and failed to take strong action about misrepresentations. He then wrote the new reformed Amway business model is, "fully formulated, comprehensive, open and transparent and capable of effective and ongoing implementation without supervision."
The U.K. Judge’s ruling clears Amway UK, a part of Alticor Inc., of the threat of being shut down in Amway's oldest international market. Amway has a 100 employees in the UK and about 10,000 distributors on board. In a communiqué, Alticor President Doug DeVos and Chairman Steve Van Andel said the ruling was not a "pop-the-champagne victory." "This is a reminder that the marketplace and regulators hold us to the highest standards. We have an obligation to meet those standards - and we intend to do so," they wrote. Amway – Alticor spokesman Rob Zeiger said the ruling was a "solid validation" of reforms in the United States and abroad. "The company takes the action seriously and continues to review business practices around the world to avoid such regulatory threats in the future," Zeiger said from the U.K.
### Rod
AMWAY DEFENDING CIVIL LAWSUIT BY U.K. GOVERNMENT
Editors Note: This is a serious matter to all MLM Companies! The outcome could set standards for the entire European Common Market for all MLM – Network Marketing Companies (bad). That would hurt your MLM - Network Marketing Company in Europe. The Books and CD business ran by Diamonds is also under attack even though it is not part of Amway (good). Also note that the UK Government’s position is all sales should come from end consumers (bad). In all we had better be cheering for Amway in this case.
Amway, had 39,000 Distributors in Britain during 2005-06, is defending an attack by John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform for the U.K. Amway in the UK is accused by the Government of being “inherently objectionable”, of operating as a "lottery" and of trading unlawfully. The UK Government claims that only 10 per cent of Amway’s distributors make a profit and only 6 per cent sell a single item of the group’s products. The government says, the company overstates potential earnings and that its main activity is recruiting not selling products.
Amway’s solicitor (lawyer) David Chivers, QC, told the court that Amway is a legitimate multilevel marketing company and not an illegal “money circulation scam. Chivers said before the court, “In a multilevel marketing scheme, the promoter provides goods for sale and no money is generated until someone sells something. Amway told the court that Amway would not recruit any further agents until its distributors average earnings data are published. Amway also stated that spending on training material should be reasonable (Death of Books and Tapes sideline business by Diamonds?). Subject: Amway - Alticor - Quixtar
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