Quixtar/Alticor/Amway sued by IBOs
Crown, Double Diamond, and Diamond

Surfing (8/7/2003) on the Pacer website, the website for the US District Court, I found this brand new suit.

The case was filed on 8/5/2003 in US District Court in Western Missouri. Crown distributor Kenny Stewart, Double Diamond Brig Hart and Diamond distributor Charlie Schmitz accuse Quixtar/Alticor/Amway of Anti-trust violations. These include illegal "group boycott", "allocation of customers", "tying arrangements", and "conspiracy to monopolize" with certain "kingpins" so they could control the Business Support Materials business. Additionally Amway/Alticor/Quixtar is charged with Tortious Interference of existing business relationships.

The complaint (also in webpage format) goes on to describe the systematic conspiracy Quixtar/Alticor/Amway has practiced over the years to the benefit of a few select "kingpins".

Complaint , Exhibit A , Exhibit B , Exhibit C , Exhibit D , Exhibit E

Examples of the allegations include:

110. During the TIF fallout, the Diamond principals of Plaintiffs Nitro, West Palm and U-Can-II were kept out of the loop (not informed or consulted) by Quixtar, even though most TIF Diamonds (and their large downline distributors), were in their downline. When downline distributors of the TIF distributors (the same being downline distributors to Plaintiffs), called Quixtar looking for "leadership," they were referred to Pro Net Diamond distributors - not the Plaintiffs or their principals who were in many instances the next rung in the line of sponsorship. This is so, even though the principals of Nitro, West Palm and U-Can-II remained in active, good standing with Amway.

111. For example, when distributors of TIF distributor (and former Amway distributor) Ron Rummell, a downline distributor of Nitro and West Palm, called Quixtar for guidance, instead of referring these distributors to Ken Stewart of Nitro and West Palm, as would be the ordinary and proper course of action, Larry Harper and other Amway executives referred them to Jimmy Dunn, stating that Stewart "was not in the picture" and "inactive," when Harper knew that was not the case. Similar treatment was given the Harts of U-Can-II. Amway was perpetuating the boycott of Plaintiffs Nitro, West Palm and U-Can-II. Once again, Amway helped facilitate control in and for the kingpins.

112. About this same time (fall 2002), Quixtar responded to the requests of the principal Diamonds of Plaintiffs Nitro, West Palm (Stewart) and U-Can-II (Harts) to be permitted to resume leadership of their downlines in the Amway business (after being boycotted out of the tool and function business), so as to enable the Plaintiffs to attempt to resume their participation in functions and thus access tool sales as well. In letters of October 25, 2002, Quixtar stated:

"[we] have determined at this time, allowing you to service the downline would not be in the best interest of the involved IBOs, Quixtar or the Quixtar business . . .

Furthermore, as a result of the current dispute between you and other IBOs, it is difficult for us to imagine how you could be qualified to bring the requisite harmony, leadership and teamwork that these groups will require. While no one disputes your right to seek redress for your concerns, the manner in which you have chosen to do so has resulted in a very public and acrimonious airing of this dispute. Again, Amway perpetuated the boycott and facilitated control.

113. Similarly, when the successor in interest to Plaintiff Netco, Inc. sought legal recourse against some of the Gooch kingpins and Pro Net for violation of the tool rules, Amway threatened retaliation if she did not dismiss her suit, despite her protests to Quixtar that her disputes did not arise out of the Amway business but out of the "separate and distinct" (using Quixtar's Epema's words) tool business. Again, Amway facilitated control.

114. Abuses in the tool business were not confined to just the Yager and/or Gooch pyramids. The Rules were ignored respecting U-Can-II, Netco and Schmitz Associates while tool and function distributors in the Yager pyramid. On knowledge and belief, the abuses occurred throughout the tool business, including within the Britt and Puryear pyramids.115. On knowledge and belief, Amway was aware of these abuses.

116. On knowledge and belief, when an "Emerald" Amway distributor and a participant within the Puryear tool pyramid declined to go along with the Puryear "system" respecting tools, his Amway distributorship was terminated by and through influence wielded on Amway by the Emerald's upline distributors and/or kingpins.

117. The Emerald's termination from Amway demonstrates once again Amway's intervention into "tool disputes" when it serves the purposes and agendas of the favored and powerful distributors, to-wit: the kingpins. On knowledge and belief, Amway executive Don Bailey advised this Emerald's downline distributors in the Puryear pyramid to file a formal complaint against the Emerald for refusing to buy back tools.

There is much more in the complaint itself.

Mentioned in the suit are excerpts from recordings of Dexter Yager's 1983 Diamond club, which were first made public on this web site in June of 2003.

"On April 5, 1983, Amway brought or permitted its outside counsel, William Abraham from Columbus, Ohio, to talk with Amway Diamonds (high-level Amway distributors and participants in the tool and function business), in the Yager pyramid at a meeting in Miami, Florida. The session was taped. On knowledge and belief, Abraham told the participants at that time:

"We know if we take away your tape income, you'll be bankrupt."

"You don't put the brakes on if you know it's wrong. You put the brakes on if you know the bureaucrats are going to cut your throat."

In order for the tool business to be legal, there is a "rule of reason" you need to follow, which is not a rule of law. This "rule of reason" is that not more than 20% of your total income can be from tools."

 

Additionally there was damaging material from the infamous "Postma" memo.
"On knowledge and belief, in a January 10, 1983 memorandum written by the Amway Executive Vice President, summarizing the Britt and Yager tool systems, the following conclusions were reached:

"There is a major economic force at work with the tool business. Anything that is done by the corporation that will cause conflict or competition with this business could cause a major split. This business will crumble under its own weight . . ."

"Greed. A continuing promise to all Directs in this system is that they will do as well (financially) or better than Diamonds in the system today. This may not always be possible."

"It is not a free enterprise opportunity. A downline Direct is not to compete with an upline Diamond."

"The motivation business is getting larger than expected. None of the major participants really wishes to deal with it in a detail sense. With proper prodding, this business will fail."

The suit also stated: "The tool and function business generates enormous profits. Simply put, the money is not in the Amway business; it is in the hype of the Amway business."