Amway/Quixtar Bankrupts Morrison


Amway/Quixtar Bankrupts Morrison JAMs Arbitration awards Amway & Kingpins $6,452,913.10
In the first Amway arbitration case to be made public, Joe Morrison and Co. learn "its not nice to sue mother Amway", especially when Amway hand picks and trains their arbitrators.
Judge Melinda Harmon	Just one day after Judge Melinda Harmon (US District court for the southern district of Texas) denied the Morrison's challenge of the $6.5 million arbitration award to Amway and the Kingpins, Judge Robert Dorr from the US District Court for Western Missouri ruled Amway's arbitration agreement in the Nitro case as procedurally and substantive unconscionable, and was unenforceable Contrary to Judge Dorr's remarks, harshly criticizing Amway's unfair arbitration agreement, Judge Harmon saw nothing wrong with the arbitration agreement and rubber stamped the JAMs arbitration award of $6,452,913.10 against the Morrisons. According to Judge Dorr, Amway has never lost in arbitration, with the exception of a few counterclaims.
JAMs Private Judge - Ann Gifford	In Judge Harmon's memorandum opinion , Judge Harmon upheld the JAMs arbitration award since: the Morrisons knew Amway and the "Amway Distributor's Association" would "train" the arbitrators and did not object to it at the time the Amway arbitration procedure was previously challenged in Texas and was upheld in the Griffith case. their arbitrator, Ann Gifford, was not present at the May 2003 JAMs arbitrator orientation program, which was presented as evidence in the Nitro case, on which Judge Dorr ruled. the Morrisions did not attempt to show any misconduct on the part of the arbitrator, Gifford.
The two cases have subtle differences, on which each judge focused. The Morrison case was filed on behalf of Amway distributor businesses whereas the Nitro case was filed on behalf of non-Amway distributor tools corporations. The Morrison case was basically complete and was only challenging a completed arbitration. Judges typically rubber stamp arbitration awards. The Nitro case was still in its beginning and challenging Amway's request to use arbitration. The Morrisons had the bad luck that their case was so old (1998) and that Quixtar's arbitration agreement was previously upheld by some Texas courts in the Griffith case. The Nitro case had the benefit that the plaintiffs, the tools businesses of crown Kenny Stewart and double diamond Brig Hart, had never signed the Amway arbitration agreement. Additionally Judge Dorr went out of his way to note the unfairness of the "take it or leave the business" options the Quixtar Arbitration agreement demanded of existing distributors at the time the arbitration agreement was forced on all distributors. I think Judge Dorr's decision will not have any impact on cases already in arbitration, but I think it can have a big impact on any new cases, especially for distributors who were in the business before the BSMAA was put into effect. It is rather ironic that JAMs-Endispute claims arbitration can cut the costs and time in obtaining judgements but yet this case lasted almost 8 years and cost much more than $6.5 million to litigate. It is interesting to note that JAMs judges are all too likely to award the winning party their legal costs (ie. loser pays) (see Quixtar JAMs Anderson) yet their public colleagues in most situations avoid awarding the winners their legal costs like the plague. It is yet another example of not biting the hand that feeds you. Public judges need to make sue that frivolous suits are not scared off by the potential judgements to the winners so that their attorney buddies will always have steady work. Private court judges through arbitration need to make sure potential litigants are scared away by the thought of losing and the thought of also having to pay the costs of the sure bet winner. JAMs awarded Amway $4,521,437. Don Wilson and WOW were awarded $881,909.59. Dexter Yager's Internet Services Co. was awarded $535,130. Randy Haugen was awarded $293,969.87. John Sims was awarded $146,984.93. Dexter Yager was awarded $73,492.46. After the judgement award, the Morrisons filed for bankruptcy . In a release from Quixtar it was written: Quixtar's dispute resolution process has again been affirmed in the first ever dispute to be filed over the fairness of the arbitration process adopted in 1997 by Quixtar and the IBOAI trade organization. In Morrison et al v. Quixtar et al, United States District Judge Melinda Harmon denied plaintiff's motion to vacate an arbitration award of over $6 million to the defendants and entered final judgement confirming that award. The arbitrator's award rejected all of plaintiff's claims, completely vindicating defendants. Quixtar arbitration has now been judicially recognized on nine occasions in five states as being aligned with the sound public policy behind the Federal Arbitration Act which provides for the speedy? and cost-effective? resolution of many types of business disputes that could burden the civil justice system in the United States. Judge Harmon's detailed Opinion makes it clear, again, that Quixtar's arbitration agreement and process are fair and are enforced using the same legal principles as all other contracts. The decision in Morrison was unsealed this week, but was actually issued the day before a recent Missouri court decision in Nitro et al v. Quixtar et al. This latest decision should ease any distrust caused by self-serving public statements made by Nitro's lawyer. Quixtar has filed an appeal in the Nitro case and remains confident that its arbitration process, now affirmed in many courts and appeals, will also be affirmed in the Nitro appeal. Sincerely, Jim Payne I wonder if Jim Payne read Judge Dorr's memorandum? back to the home page