Quixtar Crown and Double Diamond Terminated

"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 . . . "

"It is this Court’s opinion that the procedure utilized by Defendants to screen, train and ultimately hand-pick their panel of arbitrators does not come close to passing any reasonable test of fairness and neutrality required for a legitimate arbitration proceeding."

"Although this court has found that none of the Plaintiffs have submitted to arbitration, the court also finds that, in the alternative, arbitration with pre-selected JAMS arbitrators as presently set up by Defendants is unconscionable."

Quixtar suspended Hart's and Stewart's Quixtar products business on September 15, 2003 after their separate business entities (Nitro and U-can-II) dealing in tools filed suit against Quixtar/Alticor for anti-trust allegations in August of 2003.  According to the suit Hart was terminated for violations of the April 7, 2004 implemented "Non-Compete Rule 6.5"  The reason for Stewart's termination was not listed in the suit. 

"22.  The purported reason given by Quixtar for this suspension of compensation and benefits to the Plaintiffs was the filing of the 2003 Federal Court Action by non-parties hereto against the Defendants herein.  Quixtar demanded that the Plaintiffs cause the 2003 Federal Court Action to be dismissed.  In separate letters to each of the Plaintiffs dated September 15, 2003, Quixtar stated in part:

Quixtar will escrow all monies owed by Quixtar to [the IB] and will set those funds off against damages your continued federal lawsuit in Missouri has caused and continues to cause Quixtar.

23.  Plaintiffs herein are not, and never were, parties to the 2003 Federal Court Action.

24. Quixtar took the position in the 2003 Federal court Action that the plaintiffs therein (non-parties hereto) were compelled to arbitrate their claims under the Amway arbitration provision codified in Rule 11.5 of the Amway/Quixtar Rules of Conduct implemented January 1, 2988.

25.  on September 18, 2003, Judge Miles Sweeney, Circuit Judge of Greene county, Missouri, ruled in other cases not involving these parties, that the Amway arbitration provision set forth in rule 11.5 is procedurally and substantively unconscionable and, therefore, unenforceable. 

28.  On September 16, 2005, the Honorable Richard E. Dorr in the 2003 Federal Court Action issued his ruling denying the defendants' motion to compel arbitration, and further holding that the plaintiffs therein did not agree to arbitration and that the Amway arbitration procedure codified in Rule 11.5 is procedurally and substantively unconscionable and, therefore, unenforceable. "

Quixtar has filed an appeal with the 8th circuit court for Judge Dorr's ruling.   

In Count I, the suit asks for Declaratory Judgment from the court for a detemination and declaration that Quixtar Rule 6.5 is unenforceable and otherwise null and void, at least respecting any Amway/Quixtar distributor or former distributor who was a distributor at the time the new rule was implemented.  The distributors contend that this rule was offered on a "take it or leave" basis just as the implementation of the mandatory arbitration agreement.

The various counts of the suit claim breach of contract, breach of duty of good faith and fair dealing and conversion.

The suit asks:

a)  For declaratory judgment to nullify Quixtar Rule 6.5 (non-compete)

b) For actual damages

c) For exemplary damages to deter Defendants and other from similar conduct

d) For costs

e) For other relief as the Court shall deem just and proper. 

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