Heckart v. Amway Superior Court,
Pierce County, Washington, 1985.
This is the case referred to in the 12/9/91 Forbes article, The Power of Positive Inspiration:
"In 1985 two distributors sued Bill Britt, Dexter Yager and Amway Corp. among others in the state of Washington, alleging they were 'brainwashed' into purchasing enormous amounts of motivational materials. The case was settled out of court in 1988, but a gag order was placed on the court records and participants in the case."
IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF PIERCE MICHAEL and DARLENE HECKART, ) husband and wife, ) ) N0. 85 2 01841 4 ) Plaintiffs, ) COMPLAINT ) vs. ) ) AMWAY CORPORATION, a Michigan ) corporation; DEXTER YAGER and ) BIRDIE YAGER, husband and ) wife; WILLIAM BRITT and ) MARGRET BRITT, husband and ) wife; REX RENFROW and BETTY JO ) RENFROW, husband and wife; and ) JAMES BROOKS and BETTY JEAN ) BROOKS, husband and wife, ) ) Defendants. ) ) COME NOW the above-named plaintiffs and by way of claim state: DESCRIPTION OF THE PARTIES I. Plaintiffs Michael and Darlene Heckart reside as a marital community in Gig Harbor, Pierce County, Washington. II. Defendant Amway Corporation is a Michigan corporation doing business in Pierce County, Washington. III. Defendants Dexter Yager and Birdie Yager are a marital community residing in Pineville, North Carolina. All acts herein- after alleged to have been performed by Dexter Yager were done dividually and on behalf of his marital community and as a presentative and agent of Amway Corporation. IV. Defendants William Britt and Margret Britt reside as a marital community in Chapel Hill, North Carolina. All acts hereinafter alleged to have been performed by William Britt were done individually and on behalf of the marital con~unity and as an agent and representative of Amway Corporation. V. Defendants Rex Renfrow and Betty Jo Renfrow reside as a marital community in Fairfax Station, Virgina. All acts herein- after alleged .to have been performed by Rex Renfrow were done individually and on behalf of the marital community and as an agent and representative of Amway Corporation. V. Defendants Rex Renfrow and Betty Jo Renfrow reside as a marital community in Fairfax Station, Virgina. All acts herein- after alleged to have been performed by Rex Renfrow were done individually and on behalf of the marital community and as an agent and representative of Amway Corporation. VI. Defendants James Brooks and Betty Jean Brooks reside as a marital conmmunity in Olympia, Thurston County, Washington. All acts hereinafter alleged to have been done by James Brooks were performed individually and on behalf of the marital community and as an agent and representative of Amway Corporation. VII. Plaintiffs are informed and believe and therefore allege that at all times herein mentioned, each of the defendants was acting as the agent, employee and joint venturer of each and all of the remaining defendants and as an agent of the Amway Corporation and were acting within the course and scope of said agency employment and joint venture during their dealings with plaintiffs and the acts hereinafter alleged. VIII. Plaintiffs pray for leave of the Court to grant additional party defendants should it later develop that parties other than the defendants named are also liable to plaintiffs, in whole or in part, for the injuries and damages sustained. JURISDICTION IX. All of the above defendants carried on business in Pierce County which directly affected residents of Pierce county includ- ing plaintiffs herein. Jurisdiction and venue are properly vested in this court. DESCRIPTION OF EVENTS FORMING THE BASIS OF THE ACTION FIRST CAUSE OF ACTION FRAUD/MISREPRESENTATION X. During the winter of 1980 plaintiffs were contacted by representatives of Amway Corporation who informed them of an opportunity to earn money operating their own business selling Amway Corporation products. Plaintiff, Michael Heckart, a dis- abled veteran of the United States Army became extremely inter- ested in the business and inquired as to how he could learn more. XI. Michael Heckart and his wife Darlene subsequently attended a seminar at the Rodeway Inn in Tacoma, Pierce County, Washington at which defendant James Brooks made a presentation which he referred to as the Amway Plan. Plaintiffs were informed that by following the plan they would begin making a minimum steady income and that after two years they would be making a great deal of money. Plaintiffs were further informed that they would become extremely wealthy if they followed the Amway plan. Plaintiffs were informed that they should begin purchasing tapes and books explaining how to become successful through Amway, that they should set up meetings with friends and relatives at which members of Amway would show the plan, that they should begin using Amway products and that they should begin attending seminars and rallies spon- sored by the "Yager line" which plaintiffs were told was an Amway line. XII. In the ensuing months plaintiffs became increasingly involved in Amway Corporation. In accordance with the instructions that they had been given they began purchasing, listening to and reading the "tools" ( tapes, books, brochures, etc . ) recommended and sold to them, began attending seminars and rallies sponsored by the Yager line and contacted friends and relatives to show the plan in their home. XIII. Plaintiffs were told by defendants that the Yager line was different from the rest of the Amway lines and that it was a "sponsoring and management" line rather than a retail line. As plaintiffs' involvement continued and as they met defendants Yager, Britt and Renfrow and got to know these defendants and defendants Brooks this statement was reiterated many times by each of the defendants. Plaintiffs were told that they were not to follow the regular Amway materials and not to listen to regular Amway tapes but rather were to purchase and listen to tapes and materials which had been prepared specially by and for the "Yager line.” XIV. During this time defendants made continual representations that plaintiffs would become extremely wealthy and falsely repre- sented that other members of the Yager line had become extremely rich through sponsoring and management. Plaintiffs were contin- ually extorted to spend their money on materials prepared spe- cially for the Yager line and to ignore the AmWay tools. They were told that they did not need to worry about selling the Amway products but that they would become Wealthy solely through spon- sorship. XV. The Amwway plan as proposed by defendants particularly appealed to plaintiffs as Michael Heckart was a disabled veteran and needed employment within the home. Further, plaintiff was additionally particularly vulnerable to defendants’ solicitations and misrepresentations due to psychological problems he had suffered as a result of his military experience. XVI. As plaintiffs continued with Amway they were continually told by defendants to spend their money on Yager line products and to attend Yager line seminars they were additionally told that defendants were not making any money on sale of the Yager line products and "tools". Defendants repeatedly told plaintiffs that they would become extremely wealthy if they followed defendants recommendations and the plan and continually exhibited signs of great wealth and explained to plaintiffs that defendants had become wealthy through exactly the plan that they were represent- ing to plaintiffs. The manner in which defendants cajoled and exhorted plaintiffs to spend their money on the Yager line pro- ducts effectively "brainwashed" plaintiffs and psychologically induced them to stay with the plan in the hope of obtaining great wealth and to continue to do as defendants requested. XVII. Plaintiffs followed the recommended plan for four years working full time on the plan and doing everything that was recommended to them. Plaintiffs lost thousands of dollars follow- ing the recommended plan and eventually wound up selling their home at defendants' recommendation. Finally, plaintiffs were forced into bankruptcy, lost their home, property and possessions, and suffered great humiliation, embarrassment and emotional distress. XVIII. In approximately August of 1983 plaintiffs began to realize that a fraud had been committed upon .them and that the represen- tations made to them were not true. Defendants had misrepresented the Amway plan and the wealth that was available by following the "Yager line" plan. XIX. Through the actions and statements as aforesaid defendants misrepresented the Amway plan to plaintiffs, made continued misrepresentations about the benefits that could be gained through the plan and the manner in which the benefits could be gained and made additional misrepresentations to induce plaintiffs to con- tinue putting money into Amway and the Yager line. The misrepre- sentations were made with knowledge that they were false and that plaintiffs would not benefit as promised and with the intent to deprive plaintiffs of their money. These misrepresentations were material and were justifiably relied upon by plaintiffs resulting in serious emotional and economic damage to plaintiffs. SECOND CAUSE OF ACTION NEGLIGENCE XX. Plaintiffs hereby reallege paragraphs I through XIX as though set forth herein. Defendant Am~way Corporation failed to properly supervise defendants and take appropriate action to insure that defendants were properly presenting the Amway plan. Such failure breached a duty of reasonable care owed to plaintiffs and resulted in signi- ficant general and special damages to plaintiff. XXII. At the time plaintiffs began to realize that the Yager line had misrepresented the Amway program they contacted Amway and alerted them to this fact. Notwithstanding such notification Amway failed to investigate or take any action to remedy the situation or to remedy the damage caused to plaintiffs. By such failure defendant Amway Corporation breached a duty of reasonable care owed to plaintiffs and resulting in substantial general and special damages to plaintiff. XXIII. By the actions above alleged all of the named defendants, and each of them, intentionally or, alternatively, negligently misrep- resented Amway Corporation to plaintiffs and breached a duty of reasonable care owed to plaintiffs in continuing to exhort plain- tiffs to put their money into Amway Corporation and in continuing to promise plaintiffs great wealth and in failing to disclose the true percentage of distributors who actually achieved the earn- ings, profits or sales.which defendants promised that plaintiffs could achieve . THIRD CAUSE OF ACTION MISREPRESENTATION OF POTENTIAL EARNINGS XXIV. Plaintiffs hereby reallege paragraphs I through XIX of the first cause of action and paragraphs XX through XXII of the second cause of action as though set forth herein. XXV. Defendants and each of them misrepresented the past, present or future profits, earnings and sales from participation in Amway. XXVI. Defendants and each of them represented by implication, by use of hypothetical examples and otherwise that plaintiffs would arn and achieve a stated amount of profits and earnings and/or sales in excess of the average profits, earnings or sales of Amway distributors and failed to disclose in any manner whatsoever the average profits, earnings or sales or the percent of distributors who actually achieve the profits, earnings or sales that defen- dants represented that plaintiffs would earn. XXVII. Such misrepresentations and failure to disclose were in direct violation of the written order of the Federal Trade Commis- sion issued on May 8th, 1979 and were violative of the laws of the State of Washington. XXVIII. The conduct of the defendants as aforesaid and as stated throughout this complaint provides plaintiffs with a claim for punitive damages under the applicable laws of the State of Michigan as well and general, special and treble damages pursuant to Washington law. FOURTH CAUSE OF ACTION BUSINESS OPPORTUNITY FRAUD ACT XXIX. Plaintiffs hereby reallege paragraphs I through XIX of the first cause of action, paragraphs XX through XXIII of the second cause of action and paragraphs XXIV through XXVIII of the third cause of action as though set forth herein. By the actions and failure to disclose as aforesaid defen- dants made untrue and misleading statements of material fact, and omissions of material fact, in connection witn an offer of a business opportunity in Washington State and engaged in actions and conduct designed to defraud plaintiffs and which operated as a fraud and/or deceit upon plaintiffs and other persons. XXXI. Such conduct constitutes a violation of RCW 19.110 et seq., the Washington Business Opportunities Frauds Act, and entitles plaintiffs to attorney's fees, costs and treble damages in amounts to be proven at the time of trial. FIFTH CAUSE OF ACTION WASHINGTON CONSUMER PROTECTION ACT XXII. Plaintiffs hereby reallege paragraphs I through XIX of the first cause of action, paragraphs XX through XXII of the second cause of action, paragraphs XXIV through XXVIII of the third cause of action and paragraphs XXIX through XXXI as though set forth herein. XXXIII. The conduct of defendants as alleged herein further consti- tutes an unfair act or practice in the conduct of trade or com- merce in violation of RCW 19.86.090, the Washington Consumer Protection Act entitling plaintiffs to treble damages and a reasonable attorneys fee. WHEREFORE, plaintiffs pray for judgment against defendants as follows: 1. For general and special damages in an amount to be proven at the time of trial but currently alleged to be in excess $1,000,000.00 against defendants and each of them resulting from defendants fraud, misrepresentations, negligence and statu- tory violations as aforesaid; 2. For treble damages pursuant to the Washington Business Opportunities Fraud Act and the Washington Consumer Protection Act and exemplary and punitive damages as allowed by the common law of Michigan and/or Washington; 3. For attorneys fees and costs in the amount of $15,000 if this action is uncontested and an additional amount to be set by the court if this action is contested pursuant to RCW 19.86.090 , 19.110.130 or otherwise; 4. For such other and further relief as the court deems just. DATED this 29 day of March, 1985. Gordon, Thomas, Honeywell Malanca, Peterson & Daheim Attorneys for Plaintiffs