Amway/Britt/Yager Lawsuit
Beckie Pack
It's amazing what people will sue for nowadays.
Just think, they probably couldn't handle their own jobs, so they look
elsewhere for a business. When they find out that developing an Amway
business takes a lot of work and isn't just a get rich quick scheme, they
shy away and blame it on everyone else.
Funny how people work that way, eh?
Sidney Schwartz
* *
**** ATTENTION: CURRENT AND FORMER AMWAY DISTRIBUTORS ****
* *
**********************************************************
A class action suit was filed in U.S. District Court, Eastern District of
Pennsylvania, on July 20, 1994, naming Dexter Yager, Bill Britt, and Amway
Corp and the defendants. The plaintiffs representing the class are John and
Stacy Hanrahan, Brian Bohrer, and Mark and Lori Mensack. The list of
allegations includes:
* Misrepresentations concerning potential incomes.
* Misrepresentations concerning Amway's affiliations ("joint
ventures").
* The coerced sale of motivational materials.
* Customer allocation and price fixing in connection with defendant's
motivational materials
(See articles below for more information.)
The specific counts are:
Count I: Against Britt and Yager and Amway for violation of the
Sherman act.
Counts II & III: Against Britt and Yager for violation of the RICO
(racketeering) act.
Count IV: Against Amway for aiding and abetting violation of the
RICO act.
Count V: Against Britt and Yager for fraud.
Count VI: Against Britt and Yager for negligent misrepresentation.
In the way of relief, the plaintiffs are seeking treble damages, additional
and consequential damages suffered by plaintiffs and the Class, punitive
damages, and an order enjoining Britt and Yager to cease and desist their
fraudulent, coercive and anticompetitive practices.
The plaintiffs are demanding a jury trial.
Any current or former distributors in either the Britt or Yager groups who
would like more information, and/or would like to become a member of this
class action suit, please contact John and Stacy Hanrahan at:
PO Box 468
Springfield, PA 19064
(610) 544-8530
Please do not call the court to ask for a copy of the lawsuit. Due to the
large number of requests, they are no longer mailing out copies.
****************************************************************************
NOTE: If you are currently a distributor you DO NOT have to quit in order to
become a member of the class action. It is your legal right to do so, and
Amway Corp. is prohibited by law from taking any action against any
distributors solely because they have decided to take part in this lawsuit.
If your upline tries to intimidate or coerce you via Amvox messages or any
other means, they are likewise leaving themselves open to legal action.
****************************************************************************
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>From "The Legal Intelligencer," August 2, 1994
Vendors File Class Action Suit Against Amway
Delaware County--Five former Amway vendors have filed a class-action suit
against the company and two regional distributors, saying the distributors
grossly exaggerated the profitability of selling Amway products and forced
them to buy their motivational materials.
Attorneys James J. Rohn, Karen Scheller and Judson A. Aaron of Conrad
O'Brien Gellman & Rohn and Joseph C. Kohn and Robert J. LaRocca, of Kohn
Nast & Graf, filed the antitrust and racketeering suit on behalf of John and
Stacy Hanrahan of Springfield, Mark and Lori Mensack of Erie and Brian
Bohrer of West Point, N.Y.
In the suit, the five say that distributors William Britt of Carson City,
Nev., and Dexter Yager of Charlotte, N.C., built a "vast Amway sales
organization through "fraud and restraint of competition."
They claim that neither Amway, Britt nor Yager told them that Amway
distributors make an average of $65 a month and never informed them about
the "considerable business expenses" in building a distributorship.
The suit says that Amway knew Britt and Yager lied to distributors, but did
nothing to stop them.
"It was in Amway's self-interest to permit such practices to continue, and
although Amway has been aware of such practices for years, Amway has never
terminated the distributorships of defendants Britt and/or Yager," the suit
says.
The suit also says that Amway is a "pyramid scheme" that allows distributors
to profit from the sales of vendors beneath them. Amway vendors make money
only when they recruit several vendors below them to sell products, the suit
says.
Britt and Yager are at the top of two pyramids, the suit claims, and have
used their position to force their so-called "down-line" distributors to buy
their motivational materials and attend their motivational conferences.
The suit says that Britt and Yager make most of their money from selling
motivational materials. Their down-line vendors cannot buy materials from
anyone else, the suit says, and the two have "strictly controlled" the
resale prices for the materials. The case has been assigned to Senior U.S.
District Judge J. William Ditter, Jr.
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>From "Time Out," August 10-17 1994
Amway Faces Class Action
Two distributors of the Amway Corporation, the multi-billion dollar multi-
level marketing company which was the subject of a "Time Out" investigation
earlier this year (June 22-29) have been served with a class action
complaint in the Pennsylvania District Court by five former distributors.
The corporation, which sells a wide range of household good and products
through a network of more than two million independent distributors around
the world, is named in the 40-page complaint, along with two of its top
distributors--know as "black hats"--Dexter Yager and Bill Britt. The
complaint alleges that the latter two have built their vast sales
organizations through the perpetration of fraud and restraint of competition
and that Amway, while fully aware of this, had taken no action to halt such
practices.
The lawsuit alleges that:
* Britt and Yager misrepresented to potential distributors the level of
earnings they could expect to achieve by becoming involved with Amway and
also the amount of time it would take to achieve such earnings
* Britt and Yager misrepresented the affiliation between Amway and other
large corporations, giving the impression that the companies were involved
in profitable business relationships with Amway.
* Britt and Yager coerced distributors into purchasing motivational
materials in the form of books and audio cassette tapes and falsely
represented to distributors that they would be unable to build and maintain
successful Amway distributorships without the purchase of such materials.
The action further alleges on each count that at all times, Amway was aware
of and encouraged such practices by Britt and Yager and that it was in
Amway's economic self-interest to permit such practices to continue.
As a class action, the lawsuit represents not just the five named former
distributors but also any other former or current distributors dating back
to the time when the action is deemed to have begun--in this case January
1990. Amway is expected to contest the action.
"Time Out's" article investigated similar allegations which have emerged
from some of the corporations 73,000 British distributors and also examined
evidence that, while Amway itself is not a cult, the techniques used by high
level distributors such as Britt, Yager and their British counterparts to
motivate and recruit people into the network often displayed alarming
similarities to those used by cults.
In her book on cults, "Dangerous Persuaders," published by Penguin Australia
in March, author Louise Samways states: "Increasingly, Amway is adopting
similar tactics to many cults in order to attract recruits then to keep them
involved and committed to the cause... extremely large gatherings are held
regularly and at these many techniques used by traditional cults are
employed to reinforce values and enhance commitment, for instance
confessions, success sharing and singing. Participants are expected to
conform to strict dress codes, jacket and tie for men, smart dress and
jackets for women."
The lawsuit, if successful, would indicate that there has been direct
involvement and cooperation between the Amway Corporation and its senior
distributors, though it would only be at the end of the case, which is
expected to take at least a year to come to trial, that such a link could be
proved.
=====================================================================
(From the complaint filed in the lawsuit)
Misrepresentations Concerning Potential Incomes
18. At all times relevant hereto, defendants Britt and Yager routinely and
intentionally misrepresented to plaintiffs the amount of profits Amway
distributors could realistically expect to earn, which misrepresentations
included by were not limited to:
(a) statements that grossly exaggerated the profitability of Amway
distributorships;
(b) representations that as Amway distributors plaintiffs could expect to
earn tens of thousands and even hundreds of thousands of dollars, when in
fact defendants know that during the relevant time period the average
monthly gross income for active Amway distributors was approximately $65;
(c) representations that plaintiffs' recruiting and sponsoring efforts would
result in geometrical increases in the number of Amway distributors in
plaintiffs' downlines, when in truth Amway distributors are unlikely to
recruit and sponsor substantial numbers of other distributors or earn
substantial profits from the efforts of their downline distributors;
(d) representations that as Amway distributors plaintiffs would earn
substantial profits in only a few months; and
(e) representations that plaintiffs would earn substantial profits by
working on only a part-time basis as Amway distributors.
19. In addition to the aforesaid material misrepresentations, at all times
relevant hereto defendants Britt and Yager intentionally failed to disclose
material facts to plaintiffs, which material omissions included but were not
limited to:
(a) defendant's failure to advise plaintiffs of the substantial business
expense involved in building and maintaining a profitable Amway
distributorship;
(b) defendants' failure to advise plaintiffs of the substantial investment
of time required to build and maintain a profitable Amway distributorship;
(c) defendants' failure to advise plaintiffs of the high turnover rate
prevalent among Amway distributors;
(d) defendants' failure to advise plaintiffs that they were likely to earn
profits comparable to the average gross income for active Amway
distributors, which during the relevant time period was approximately
$65.00.
Misrepresentations Concerning Amway's Affiliation
22. In order to induce persons to become Amway distributors, at all times
relevant hereto defendants Britt and Yager falsely represented to plaintiffs
that Amway distributors are involved in profitable business relationships--
variously described as, inter alia, "joint partnerships," "network
marketing," and "joint ventures"--with major corporations, including Fortune
500 companies. Defendants represented that plaintiffs could expect to reap
substantial financial benefits as a result of the aforementioned business
relationships with numerous major companies.
24. Contrary to defendants' aforementioned representations, plaintiffs were
not involved with other companies in any profitable business relationships,
nor did they benefit financially from any "joint ventures," "partnerships,"
"network marketing," or other such business relationships in which Amway may
have been involved.
25. By their aforesaid misrepresentations, defendants intentionally
distorted the true nature of the Amway distributorship and overstated the
financial value of the Amway distributorship. In truth, by entering into
their Amway distributorships Amway distributors simply acquired the right
to sell Amway products and sponsor other distributors.
26. Plaintiffs entered into their Amway distributorships in reliance upon
defendant's misrepresentations that Amway distributors are involved in and
reap substantial financial benefits from business relationships with
numerous companies as described hereinabove.
The Coerced Sale of Motivational Materials
27. Defendants Britt and Yager have created their own independent
businesses that publish motivational materials, such as books and audio
cassette tapes, and that organize and promote motivational rallies for Amway
distributors throughout the United States. Through their independent
businesses, defendants Britt and Yager sell vast quantities of motivational
materials to their respective downline distributors and hold rallies
throughout the United States that their downline distributors must pay to
attend.
28. Defendants Britt and Yager derive a substantial portion of their incomes
not from the sale of Amway products, but from the sale of motivational
materials to persons in their downlines and from the money earned through
their rallies.
29. At all times relevant hereto, defendants Britt and Yager regularly
represented to plaintiffs that their success as Amway distributors was
contingent upon the purchase of defendants Britt and Yager's motivational
materials, and that without such materials plaintiffs would be unable to
build and maintain successful Amway distributorships. Defendants Britt and
Yager further represented to plaintiffs that they should purchase only those
motivational materials produced and/or distributed by defendants Britt and
Yager.
30. At all times relevant hereto, defendants Britt and Yager further
represented to plaintiffs that they should purchase a weekly supply of
defendants' motivational audio tapes through a tape-of-the-week program that
defendants Britt and Yager described as the "standing order" tape program
and, moreover, defendants represented that such weekly purchases of
defendants' audio tapes we essential to plaintiff's success as Amway
distributors.
31. At all times relevant hereto, defendants Britt and Yager further
represented to plaintiffs that their regular attendance at the motivational
rallies organized and promoted by defendants was essential to plaintiffs'
success as Amway distributors.
32. In fact, the motivational materials produced and/or distributed by
defendants Britt and Yager and the motivational rallies organized and
promoted by defendants Britt and Yager were unnecessary to the success of
Amway distributors, and plaintiffs all lost money as Amway distributors
despite their purchase of said materials and attendance at said rallies.
Customer Allocation and Price Fixing in Connection with Defendants'
Motivational Materials
35. At all times relevant hereto, defendants Britt and Yager allocated
customers for their motivational materials in the following way: Defendant
Britt regularly represented to distributors in his downline that their
success as Amway distributors was contingent upon their purchasing only
those motivational materials distributed by defendant Britt, and that
distributors in defendant Britt's downline should not purchase motivational
materials distributed by others. Similarly, defendant Yager regularly
represented to distributors in his downline that their success as Amway
distributors was contingent upon their purchasing only those motivational
materials distributed by defendant Yager, and that distributors in defendant
Yager's dowlnine should not purchase motivational materials distributed by
others.
36. In reliance upon defendants' representations, plaintiffs and members of
the Class in defendant Britt's downline purchase only those motivational
materials distributed by defendant Britt, and plaintiffs and members of the
Class in defendant Yager's downline only those motivational materials
distributed by defendant Yager.
37. At all times relevant hereto, defendants Britt and Yager fixed the
prices charged for their motivational materials by strictly controlling the
resale price of their motivational audio tapes, such that at all times
relevant hereto the resale price charged for motivational audio tapes
distributed by defendant Britt was the same or substantially the same as the
resale price charged for motivational audio tapes sold by defendant Yager.
39. Defendant Britt and Yager's aforementioned practices of customer
allocation and price fixing in connection with the sale of their
motivational materials had the effect of preventing plaintiffs and members
of the class of availing themselves of legitimate motivational materials and
sales aids produced by third parties.
[-------------------------------------------------------------------------]
[ Sidney Schwartz * Beaverton, OR * schw...@teleport.com ]
[-------------------------------------------------------------------------]
CVK
Since Amway reports that the vast majority of those who sign up and try it
only make $65 per month (gross) or less, then I'd sure have to agree with
you that it isn't a get rich quick deal. Doesn't seem to come close to a
get rich ever one, either... other than some tiny percent way at the top.
And, since Amway tells us that most of these will eventually quit, then it
seems that most of those who get involved have found something rather
dissatisfying with it and not worth the trouble.
It's interesting to note that the same folks in Amway who like to chant
things about being so "positive" all the time, suddenly level sour
accusations of "lazy" at their former colleagues like this, rather than
face the overwhelming evidence that something's just wrong with it...
since Amway shows us that this is clearly the case for most.
Funny how it works that way, eh?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
cvko...@halcyon.com | Virtualoso Marketizing
Sidney Schwartz
>These whiners probably just couldn't handle people saying no to them.
>It's amazing what people will sue for nowadays.
Do you know them, or anything about them? I thought not. I do, so I'll
relieve your considerable ignorance a bit. What they couldn't handle was
their upline continually lying to them and interfering in their personal
lives. They made repeated attempts to bring the problems to the attention
of Amway Corp., and were repeatedly ignored. It was only at that point that
they decided to pursue other means of exposing and correcting the problems,
including this lawsuit. They are spending a great deal of their own time
and money on this suit which, if it is successful, will benefit a great
many other people besides themselves, and will gain them nothing more
personally than what they lost in the first place.
>Just think, they probably couldn't handle their own jobs, so they look
>elsewhere for a business. When they find out that developing an Amway
>business takes a lot of work and isn't just a get rich quick scheme, they
>shy away and blame it on everyone else.
Actually, John Hanrahan owned his own successful business (doors and
windows, I believe) long before getting suckered into Amway, and still does,
and no doubt makes more than 99.9% of the Amway losers who brag about how
rich they're going to be and end up with empty pockets and a surprised look
on their faces. And your ass-umptions about their Amway experience and why
they left are, like most most statements based solely on ignorance, are
incorrect.
>Funny how people work that way, eh?
Funny (not really) how some bitter, vindictive loudmouths will publically
spout nonsense about someone they know nothing about, eh?