IBO gets "JAMWAYed"!!
JAMS Kangaroo Court judge
"I strongly believe that the great majority of litigants would prefer to be directly involved in the prompt resolution or settlement of their claims so as to avoid the stress and costs of trial. Effective dispute resolution can achieve this goal."
Even after there was already a trial?
"You want control over
the process, confidentiality
At the climactic ending to an 8 year legal ordeal for 21 year Amway/Quixtar distributor Diamond Bruce Anderson is placed in double jeopardy by JAMS/Endispute.
Anderson prevailed in a suit in the 17th Judicial Circuit court in Broward County Florida in June 2003 against double diamond Hal Gooch. Before Anderson prevailed, Amway's arbitrators, JAMS had refused to arbitrate the case. After Gooch loses the dispute, Quixtar lobbies JAMS to retry the case in JAMWAY private court. JAMS later claims jurisdiction and retries the case.
Instead of keeping the $301,000 judgement, which a REAL Florida court with a REAL judge, awarded him, the self appointed JAMWAY kangaroo court judge, Cecily Bond from the arbitration company JAMS/Endispute, reverses the decision in 3 hours and assess a $729,000 judgement against Anderson.
Anderson's closing message to Doug DeVos
|The Quixtar Arbitration
"Fundamentally Unfair and Unconscionable"
|The Quixtar Arbitration
"The Court also finds that any agreement of Plaintiffs to arbitrate under the Amway Rules of Conduct is not valid for a second reason -- unconscionability . . . "
The Honorable Richard E. Door
US District Court
Western District of, Missouri
The story line as best I can construct it from Mr. Anderson's website.
This whole thing should be televised on the Jerry Springer show. We need to get
them all (sans poor
The Amway Video Gold Mine
It all started in the early 1990's with Lee Luster, a videographer, who made "Diamond lifestyle" videos in conjunction with various Diamond distributors. The videos contained popular rock music. The videos were to be sold to all the Amway Diamond wann-a-bees, and to also be shown on the video projection screens at the major Amway functions. Basically the videos were to show the supposed riches the Amway business could supply. The riches in fact came from things like selling these videos and motivational tapes. Mr. Luster first worked for Tim Foley in 1991. Luster was later introduced to Randy Haugen in 1992 and then to Bruce Anderson in January of 1993. After a few run-ins and some information about Luster's checkered past in Las Vegas (article 1, article 2), Luster's services were discontented by Foley, Haugen and Anderson. Luster subsequently went to work for double diamond Hall Gooch in March of 1993 with Luster moving in Gooch's home for about one year. They worked closely together on all the video projects. The videos were a hit. They sold well and they had a big impact at the major functions.
The Baboon Got Shot
In 1994 Gooch and Luster had a falling out for an unknown reason. In the process of this falling-out, Gooch sued Luster on August 17, 1994 in Florida state court for various things. Luster filed an ugly counter claim (text file) against Gooch.
Luster's strong hand against Gooch was his possession of a compromising video from a Gooch African hunting safari where Gooch had shot a black baboon, supposedly a protected species. Luster also had possession of a collection of family videos from Gooch's downline diamonds, which were being used to create all the Diamond Lifestyle videos.
In Luster's complaint it stated that Parker Grabill subsequently made a racist remarks about the dead baboon being Jesse Jackson. According to Luster's complaint, "Gooch then chimed in, and he has fingers and a peeter like a little black boy!!" Who knows what other activity was recorded on this video. It also not known who else was on the hunting safari. I would guess there was much more in the video than what Luster's complaint details. This video is probably the root of the whole 13 year fiasco.
The Gooch v. Luster suit and counter suit were not settled until over 6 years later on November 20, 2000 when a settlement agreement was signed. The settlement agreement was a bit premature as Mr. Gooch's deal included property that did not belong to him. More on this later.
Luster Blows the Whistle
Luster blew the whistle and turned everybody in to the recording industry for the music copyright violations on the Diamond videos. The money making party was over. Why Luster turned them in is unknown. Perhaps it was due to the suit Gooch had filed against him. Given Luster's checked past, it would not surprise me if he wanted to blackmail Gooch to keep it all a secret or to keep the baboon video secret. In 1996 the Recording Industry Association of America (RIAA) and the National Music Publishers Association (NMPA) filed the largest copyright lawsuits in history against Amway and numerous diamond distributors for the illegal usage of popular rock music on the diamond videos. According to a conversation I had with Luster, Amway settled the suits for several million dollars. The recording industry suits officially settled in April of 1998. None of the diamonds wanted their financial information or the Gooch video clip to be made public so it was best to settle before detailed discovery. There were at least 110 copyright violations from Gooch alone. Luster was critical in giving all the copyright violations to the RIAA, and was basically granted immunity by the RIAA in exchange for his help. The RIAA received $9 million, and the NMPA settled their $2.5 million lawsuit for $700,000.
The "Hunt" to Get Luster
In January of 1999 a "hunting party", composed of Bruce Anderson, Randy Haugen, Parker Grabill, Tim Foley, and Hal Gooch, was formed to go get Luster. In the case known as "Foley v. Luster", Luster was sued by the "hunting party" to have Luster indemnify their legal costs from RIAA and NMPA suits. Since Luster got off scott-free, the "hunting party" didn't want Luster to come away without at least a bloody nose and any possibly of getting money from the RIAA for his help. The diamonds also wanted to take any money Luster might have had as punishment for getting them into this fiasco. After all they claim it was Luster's fault the copyrighted music was on the videos. In this suit Anderson, Haugen, and Grabill won, Gooch and Foley lost. Another reason for the "hunting party" against Luster was to provide Gooch cover in the ugly counter claim suit Luster had open. If the "hunting party" won against Luster, they might be able to trade their winnings for Luster's embarrassing suit against Gooch. In April of 1999 Anderson, Haugen, Grabill received a judgement against Luster for $241,000, which was their attorney's fees in the RIAA case. But, Luster didn't have any money. Gooch and Foley lose in this action because they worked together too long and had known that there were copyright infringements.
The Secret Action
On March 17, 2000 Gooch's attorney, McDonald, filed a new case in Broward county, copying Anderson's attorney, Donald Christopher. The action was to seize whatever property Luster owned to settle the judgments from the "Foley v. Luster" case. The demand was $254,000. According to Anderson, only Parker Grabill's signature was used to start the investigation into what assets Luster might have had. Grabill's signature was used since McDonald was also Parker Grabill's attorney and Grabill was loyal to Gooch and in Gooch's downline. Gooch had no legal claim against Luster and could not legally start this action. Since Luster's counter suit against Gooch was a potential asset, it was seized. The implementation of this action was unknown to Anderson and resulted in a "Order for Chose in Action" from judge Berry Seltzer. The "Chose in Action Order" could disarm Luster by seizing his claims and taking ownership of his counter suit against Gooch.
In August of 2000 Anderson's attorney replies to a Gooch request asking how much money Anderson wanted to sell Gooch the Anderson's judgements against Luster. Gooch never replies to their request that they would like their attorney's costs of at least $74,000 reimbursed.
The Ruby Slippers
On September 6th, 2000 unbeknownst to Anderson, but known to all the attorneys involved, the Florida court (judge Seltzer) awarded Anderson, and Haugen a "Order for Chose in Action". This order turns out to be the "ruby slippers" for the whole case. Since Luster has no money, the only thing of value he has is the embarrassing law suit against Gooch. So Anderson and Haugen are substituted in for Luster and they now own the 3 main counts of Luster's suit against Gooch. Any settlement that Luster would win from Gooch would go to Anderson and Haugen. The "Chose in Action" would have allowed Anderson and Haugen to legally take over Luster's suit against Gooch and at the same time make Luster pay the legal fees.
The court sent Donald Christopher (Anderson's attorney), Stephen McDonald (Gooch's/Grabill's attorney), Martin Sperry (Luster's attorney) and Thomas Abrams (Luster's second attorney) copies of the "Chose in Action" order. Parker Grabill however mysteriously does not show up on the Chose in Action Order.
Anderson did not find about the "Chose in Action Order" until preparing for Quixtar arbitration in 2004 after he was sent a CD-ROM with all the case documentation on it. This will not be the first time Anderson's attorney Donald Christopher, is caught intentionally working against his client.
Luster Gets Squeezed Out of the Picture
On August 4th, 2000 Luster's attorneys Sperry and Kashi apply to the court to drop their client. Sperry and Kashi probably run since they know the "Chose in Action Order" is coming and they have no leverage left on Gooch. Luster remarks in a letter to judge Henning that he hasn't been billed for by Sperry or Kashi for the last three years. It might have been that Sperry and Kashi were working on contingency hoping for millions in legal blackmail to keep Gooch's baboon video in the closet. Luster claims that Sperry and Kashi threatened to drop him if he did not settle the Gooch v. Luster case under the terms that their firm wanted.
After the September 6, 2000 "Order for Chose in Action", Luster was disarmed once and for all. Anderson, and Haugen unknowingly own the most important counts of Luster's counter claim against Gooch. If Luster was using the suit to blackmail Gooch about the Baboon video, he can no longer legally get away with it. Luster just had the wind taken out of his sails, and has no options anymore, so they started discussions about a settlement.
On October 19, 2000 Gooch and Luster signed a settlement agreement . Gooch was to pay $20,000 for Luster's attorney fees to Sperry, and to "satisfy" the $241,000 judgements owed Anderson, Haugen and Grabill. In exchange, Luster would drop his suit and return all raw video footage and any copies of videos he had. Gooch would have to deliver to Luster satisfaction of Anderson's claims to finally fulfill the settlement agreement.
Gooch Defaults on the Settlement Agreement
On February 9, 2001 Gooch makes an offer to buy Anderson's and Haugen's judgements for just $10,000. Anderson refuses since his costs were at least $74,000. On February 14, 2001 Parker Grabill registers his claims against Luster with the court as "satisfied". Since Anderson's judgements are still not satisfied five months after the settlement agreement, Gooch is ruled to have breached the settlement agreement with Luster.
Due to Gooch's default, on May 21, 2001 the Florida 17th Judicial Circuit court (judge Henning) awards Luster with a $241,000 judgement against Gooch, which is the same amount Luster owes to Anderson for the judgement.
Also, on May 21, 2001, McDonald, Gooch's lawyer, makes a last minute failed attempt to
annul the default judgement against Gooch. McDonald claims that Luster never made
good on his agreement to:
McDonald was too late and the court did not accept his motion.
Despite the fact that Gooch made hundreds of thousands, if not millions, on all the video sales, he was too greedy or cheap to buy out Anderson's share of the costs ($74,000) to prevent the ensuing fiasco.
Luster and Anderson Stalled Out
At this point Luster owes Anderson and Huagen $241,000 and can't pay. Gooch owes Luster $241,000, and won't pay.
The judgement against Gooch is meaningless unless it is enforced. Luster has no motivation or money to enforce the judgement since he will not keep any of the money. The parties are effectively stalled out. The only one sitting well is Hal Gooch. He hasn't paid Anderson anything and is now rid of the embarrassing Luster counter suit. None of the attorney's own up to the fact that the "Order for Chose in Action" exists and that Anderson could legally collect straight from Gooch. This appears to be the secret conspiracy to stall the whole situation and hopefully just have it die off.
Anderson's Wild Goose Chase
Anderson, not seeing any progress in Luster getting the money from Gooch, and not knowing he actually has the "Chose in Action" oreder, was badly advised by his attorney, Donald Christopher, to seek collections against Gooch in North Carolina in Luster's name and pay for the attorney. Anderson was basically advised to go to North Carolina, get a sheriff and start taking stuff from Gooch's property! This turned out to be a wild goose chase wasting $25,000 as Anderson already possessed the "ruby slippers", which was the "Chose in Action order" in Florida. Not only did the North Carolina action waste a lot of money, it made Anderson look bad in front of the other Quixtar diamonds on the IBOA borad, who would later handle the Quixtar conciliation processes. Gooch escaped collections in North Carolina by posting a bond in Florida in March of 2002.
Anderson's attorney, Donald Christopher, kept Anderson in the dark about the "Chose in Action Order" for 3 1/2 years. Christopher denied knowing about the order, but years later a tale-telling itemization in Christopher's billing for September 11, 2000 was found. The billing noted that Christopher spent six minutes and charged $22.50 for reading the "Chose in Action Order".
Gooch Brings in Quixtar "to Fix Things"
On April 18, 2002 Hal Gooch initiated formal conciliation proceedings with Quixtar. On October 11, 2002 a formal conciliation was scheduled. Bruce Anderson cooperated in the non-binding conciliation under protest, without prejudice to contest the legitimacy of those proceedings, as the matter had nothing to do with Quixtar or the IBO plan. Anderson was crossline from Gooch and had no business in BSM's or product volume with Gooch. Technically there was no reason to ask Quixtar to intervene with conciliation or arbitration since the mater was totally separate from the Quixtar business. On January 22, 2003 the IBOAI members from the formal conciliation cannot make a recommendation as to who is right.
On February 23, 2003 Gooch's attorney, McDonald, files a motion "For Relief From Final Judgement" in the Florida 17th Judicial Circuit court on the argument that Anderson was to give Gooch his judgements for satisfaction against Luster. McDonald now accuses Anderson of breaching a verbal agreement with Gooch ("Gooch pays half and gets everything") and the court should rule that Mr. Anderson should give Gooch the judgements. According to Anderson, there was never any agreement between Gooch and Anderson for the relinquishing of his judgements.
Gooch claims there was an agreement between Gooch and Anderson where Gooch could "use" Anderson's claims against Luster in exchange for Gooch paying 1/2 of the legal fees to pursue Luster. Accordingt to Anderson, Gooch never paid any of the legal fees until the "Foley v. Luster" case was over in May 1999 and the winners were clear. Since Parker Grabill received a $30,000 judgement, they would have to pay their share of the legal costs, or lose Parker's benefits.
Accordingt to Anderson, if there ever was an unwritten agreement, Anderson wanted to be paid at least his remaining cost for the claims (his legal fees in the case "Foley v. Luster") if Gooch wanted to "have" them. Gooch contends that he paid half, about $60,000, so he should get the full benefit of their $240,000 value. There was unfortunately no written contract about any "deal". This is now the sticking point for the rest of the fiasco.
Gooch's logic is something akin to two people splitting the cost of a lottery ticket, and one person only having the right to take all the winnings. It would have been illogical for Anderson to accept such a deal on Gooch's terms since he would always pay half the costs, but never have a right to any of the benefits. No one but a fool would make this kind of a deal.
Anderson's opinion is that the IBOA board put pressure on Haugen, and Haugen got out by giving his claims to Anderson. This left Anderson pitted against Gooch for final settlement of Gooch's and Luster's Florida state actions.
After losing the first two appeals, Gooch finally requested the Florida State Court to stay all proceedings in May of 2003. For the first time in almost two years, Hal Gooch argued that his dispute with Bruce Anderson was somehow a Quixtar related matter that was subject to binding arbitration, and that the Florida State Court should decline to hear any further matters in the case. Gooch can't get satisfaction in a real court, so he will get things fixed in the JAMWAY kangaroo court by pulling strings in Quixtar.
The motion for relief goes to trial on June 23, 2003 in Florida. Anderson claims his attorney, Donald Christopher perjures himself in court when he is asked about Anderson's rights to Luster's settlement, which is the "Chose in Action" that Anderson still did not know existed. McDonald mentions in the trial the issue of mandatory conciliation and the Quixtar arbitration process. This gets judge Henning nervous and she decides not to make a judgement until jurisdiction for arbitration is made by JAMS.
By this time Anderson is out of money and owes Donald Christopher $20,000 for preparing the documentation for the JAMS review. Anderson tells his attorney he is done and wants out. Gooch can have what he wants. Christopher tells him to hang on..... because Christopher still needs to get paid. Surprisingly JAMS/Endispute sends a letter on August 6, 2003 JAMS denying arbitration after an additional $5,000 worth of billing by Christopher for a letter to JAMS
On August 13, 2003, Quixtar chief counsel, Sharon Grider wrote JAMS still endorsing arbitration for the case.
September 2, 2003 - JAMS Says There will be no arbitration!!
Anderson Prevails In a Real Court
On September 2, 2003 based upon the letter from JAMS, stating there will be no arbitration, Judge Henning denies Gooch's motion for relief. Gooch loses in court and now has to pay Anderson $292,000 from Gooch's Hartford Insurance bond in Florida. The check gets cut and Anderson's attorney, Donald Christopher, shaves off $52,000 for himself. Anderson sends Randy Haugen $50,000 of his costs back. Anderson believes the key here is that without the JAMS letter, Christopher would not have gotten paid. Anderson believes the only reasons for the positive letter from JAMS was to assure Christopher's payment and get the case out of judge Henning's court so that JAMS could take over. What results later only reinforces that that suspicion. Haugen later feels sorry for Anderson and sends him a check for $50,000. Later the check is un-collectable and stamped "payment stopped".
The Quixtar Steam Shovel Goes into High Gear
Once Christopher gets paid, JAMS overturns their previous decision not to arbitrate the case, despite the fact a real court already settled the issue. JAMS appoints arbitrator Cecily Bond on October 23, 2003 as arbitrator of the case. Cecily Bond also bills at the rate of $450/hour! No wonder she left public service. She makes a lot more as a private judge, who is not required by JAMS rules to disclose if anyone gives them money to swing a decision.
Anderson's attorney, Donald Christopher fails in his fiduciary duty to file a "Res Judicata" to protect his client from having to try an already settled case again in arbitration. A "Res Judicata" is the civil court equivalent of criminal court's "double jeopardy" rule.
Donald Christopher announces to Anderson that he works for Amway/Quixtar and cannot represent him at the arbitration. This leaves Anderson without experienced representation to challenge the arbitration and for the representation at arbitration. Anderson searches for a new attorney and is recommend attorney Mike McCormick by his upline Randy Haugen, and Jody Victor. McCormick claimed to have earned $1.7 million from the Morrision v. Amway case as he defended Ra-Ji corporation (now Alticor) and Dexter Yager. McCormick commented on all the friends he has at Quixtar. Anderson is concerned that McCormick might also have a conflict of interest with Quixtar and declines his services after $20,000 in billing. Anderson suspects that all the attorneys he has contacted are connected with Amway/Quixtar and are there to waste time and bleed his financial resources. McCormick bills Anderson for 43.3 hour in one day ($8,660). Mike McCormick fails in his fiduciary duty to file a "Res Judicata" to protect his client from having to try an already settled case again in arbitration.
On November 18, 2003 17th Judicial Circuit court in Broward County Florida also awards Anderson $48,760 in attorney's fees and costs in pursuing his collection on Gooch.
YOU MUST ARBITRATE! YOU MUST ARBITRATE!
On December 10, 2003 Cecily Bond from JAMS determines that this dispute is covered by the IBO BSMAA agreement and orders arbitration and assumes jurisdiction. THERE WILL BE ARBITRATION despite the fact that JAMS said previously there would be no arbitration, and the case was already settled in Florida State court.
In January 2004, Anderson found the "Chose in Action" in an email from Gooch's/McDonald's closing arguments of the June 23rd trial. It sat in his email inbox for 7 months until he printed the E-mail to prepare for arbitration. The date stamp has been tampered with. Original version . Here is tampered version faxed from Christopher on 7/9/2003
The Quixtar Steam Shovel Piles On The Dirt
On March 31, 2004 the Jamway Kangaroo court goes into action and Cecily Bond orders Anderson to deposit the remaining $180,000 from Gooch's Bond payment in a saving account for safe keeping with a $5,000 per day fine for non compliance.
On April 30, 2004 the Kangaroo court is held just for 3 hours, and Cecily Bond reverses the Florida 17th Judicial Circuit court decision , which took years to obtain and withstood three appeals. JAMS assess Anderson over $729,000! The verdict changes direction by a net sum of over $1,000,000. Unlike a real court, there is no transcript of the arbitration proceedings.
Donald Christopher offers to come back to work for Anderson, if Anderson signs over the Luster judgements to him as collateral for payment of future legal bills.
On December 3, 2004 Quixtar cuts off the Anderson's income with a garnishment order for a default judgement from Hal Gooch from a Kent County Michigan case No. 04-05849-CZ.
In January 2005 Anderson learns that Gooch's attorney, Mr. West, is working the arbitration on a contingency basis. It is a bit strange for an attorney to work on contingency for cases like these unless he knows it is a sure thing. Maybe Mr. West knows that Mr. Gooch has an a no lose situation in the JAMWAY court.
On February 18, 2005, Goochs' attorneys move to seize and sell Anderson's "independent business" with Quixtar.
On March 10, 2005 Anderson makes an offer to Quixtar to settle the issue. They do not reply and he decides to make the fact public on his web site after March 16.
The Quixtar Steam Shovel Sinks in the Mud
In February, 2005 Anderson files a brief for suggestion of impropriety and attempt to perpetrate a fraud on the Florida 17th Judicial Circuit court and a motion for sanctions. The hearing is scheduled for April, 21, 2005. Nothing positive happens for Anderson in the hearing.
March 26, 2005 Anderson turns everybody in like Luster did with his website: http://www.baron55.com/, after trying to elicit help from Doug DeVos to reign in Quixtar's out of control legal department. When nothing happened, he blew the whistle on the whole affair. A couple of attorneys might get disbarred because of the improprieties he exposes.
On April 1st, 2005 Anderson announces on his site that his Amway/Quixtar business has been sold to Randy Haugen for just $350,000 even though Anderson's annual taxable gross income from tools and Quixtar averaged $330,00/year for the last five years. The money went straight to Gooch. Anderson still in theory owes Gooch $380,000.
Anderson subsequently pays Gooch the remaining money in $250,000 cash by cashing in his retirement funds to get them off his back.
.....and this all because of a dead baboon and a bunch of home videos. There must be more to the baboon and home videos than what is mentioned in Luster's counter suit. The company and JAMS have put their reputation on the line in this cover up. Only time will tell if the whole story comes out in the public. If you have any details write me.
Anderson's more detailed site is at: http://www.baron55.com/ This site was made for the insiders in the case and was not made at first for the general public.
Anderson also has a forum at http://www.baron55.com/phpBB/
"Erin Brockovich" : The Real Story & JAMS