GRAND RAPIDS, Mich. (WOOD) - A federal judge has ruled against Amway Corp. in a class-actioncomplaint filed by 27 former salespeople, or independent businessowners.
The ruling says Amway must stop forcing its one-timedistributors into arbitration over disputes between the twoparties.
The independent distributors had filed a complaint againstAmway asking the court to stop Quixtar, Amway's e-commercebusiness, from "harassing and intimidating plaintiffs ... withrepetitive arbitrations asserting trumped up violations ofQuixtar's unilaterally-enacted ... trade secret rules."
According to the complaint, when potential independentbusiness owners, or IBOs, start up with Quixtar, they sign aregistration form that lists the company's rules for engaging in"arbitration" as a means of resolving disputes.
But the court ruled the agreement to arbitrate did not extendto "post-termination disputes involving former IBOs who are nolonger operating an Amway 'Independent Business.' "
United States District Court Judge Bruce Jenkins furtherdecided "the public interest is also advanced by preventing partiesfrom wielding their arbitration processes as a weapon to harass ...and ultimately bankrupt their opponents."
The former IBOs had argued "Quixtar had undertaken thisabusive litigation strategy to bankrupt former Quixtar distributorsand to coerce them into abandoning the lawful pursuit ofindependent businesses as distributors of MonaVie, LLC."
The lead plaintiffs, George and Jill Guzzardo of Ironwood,are former Quixtar IBOs now affiliated with TEAM, a motivationaltools and training organization founded by former Quixtar IBOsOrrin Woodward and Chris Brady. The Guzzardos now are distributorsfor MonaVie, a Salt Lake City-based "multilevel marketing company."
The federal court ruling is the latest development in a longstring of legal fights between Amway and a group of breakawaydistributors. The Ada-based director sales giant has fought to keepthe former IBOs from using Quixtar sales and training material intheir own businesses.
24 Hour News 8 reached Amway spokeswoman Kate Makled earlyMonday evening. After a conversation with company lawyers, Makledcould say only that the "company did receive notice of the rulingand is looking at its options."
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