 I decided
to see if Pacer had a new Amway/Quixtar
related suits. Well it just so happens I found a new one that was between
Quixtar and numerous high level distributors, who were also working with another MLM,
Oasis Lifesciences. It appears they have now turned to the Federal Courts system
with a complaint  since
they don't think that the JAMS arbitration process is truly neutral. On December
2, 2005 Quixtar filed a JAMS
arbitration complaint for injunctive relief against Mark and Patricia Middleton and
forty-five others. The complaint alleges violations of various Quixtar
rules of conduct, specifically Quixtar's new rule 6.5, which is the non compete rule,
implemented in April of 2004. Rules are regularly added or changed without approval
of, or negotiation by existing low level, non IBOA board level distributors. IBOA
board member/distributors do however review the rules changes with the company. The non
compete rule was added in 2004, years after many of these distributors started their
businesses.
The complaint states that all the respondents were still Quixtar IBOs and were also
participating in the Oasis LifeScience multilevel marketing program. Oasis is also a
supplier of vitamins, herbal and nutritional supplements using multilevel marketing.
Each of the respondents has had their "independent
business" suspended.
Quixtar asks JAMS for immediate injunctive
relief against Diamonds Middletons, Emeralds Juloviches, Diamonds
Pares, Emerlads Plumlees, Emeralds Smiths, Stephans, Streeters, and Emeralds Troutmans on
December 19th, 2005.while the issues are sorted out. Among other issues Quixtar
wants the respondents enjoined from competing with Quixtar. So much for Quixtar and
Amway's dedication to "Free Enterprise"! Quixtar touts the free
enterprise banner, as long as they are not the ones having competition brought against
them!
On January 12th the respondents Middleton and others file a motion to disqualify JAMS
since the arbitrators are hand selected by Quixtar and are not in a position to yield an
unbiased decision. The motion states that JAMS arbitrators are also shareholders of
JAMS and, in that capacity have a financial incentive to maintain JAMS' contract with
Quixtar, which can only accomplished if Quixtar continues to receive favorable results in
JAMS arbitrations. The Middletons motion cites Judge Dorr's decision from the
United States District Court for the Western District of Missouri where the Quixtar/JAMS
arbitration process is both procedurally and substantively unconscionable for numerous
reasons including:
- Quixtar requires all IBO's to sign the JAMS arbitration provision in a "take it or
leave it manner" and "negotiation of the arbitration clause [is] unheard
of".
- The "procedure utilized by [Quixtar] to screen, train and ultimately handpick their
panel of arbitrators [from JAMS] does not come close to passing any reasonable test of
fairness and neutrality required for a legitimate arbitration preceding."
- The method of screening and training of JAMS arbitrators "was designed to produce a
very favorable view of [Quixtar]" and thereafter "after personal
interviews" Quixtar would "pick the final panel of arbitrators from which all
arbitrators for Amway disputes would be chosen".
- Of Particular significance is the fact that Quixtar never loses in JAMS arbitrations.:
" Also telling is the fact that [Quixtar has] never lost in arbitration, with
exception of a few counterclaims."
- JAMS arbitration's are procedurally flawed because of favoritism to Quixtar, with the
federal court ruling that , when Quixtar is the defendant, "the process takes much
longer than when they are the Plaintiffs in arbitration, and longer than JAMS
arbitration's in general" and because there is no guarantee to discovery in the
Quixtar arbitration rules, "it is for the arbitrator to choose if discovery should be
allowed."
- The federal court has already found JAMS arbitration process to be such as to
"undermine the neutrality of the proceedings" resulting in a process that is
"both unreasonable and unfair."
In contrast to Judge Door's ruling, Quixtar’s arbitration process has been upheld
by 10 different courts in five states
 Richard E. Neville, an
arbitrator from JAMS, who did not participate in the controversial Quixtar training
program outlined in the Nitro case, denied on Feb 10, 2006 the Middletons motion to disqualify JAMS .
On February 23rd, 2006 the Middletons filed
in
the United States District Court Northern District of Florida for declaratory judgement
or, to compel arbitration before a neutral arbitration body (somebody other than JAMS) and
for request for emergency stay of the temporary injunction granted to Quixtar by JAMS.
The Middletons want to the court to declare that the dispute is not
subject to arbitration or to at least have it heard before a neutral arbitrator.
On March 1, 2006 Judge Stephan P. Mickle ordered that the Middleton complaint be dismissed and to compel arbitration.
Here are a very interesting things I noted from the suit:
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