III. FACTS A. P&G's Conspiracy with Sidney Schwartz 11. P&G has been a behind-the-scenes sponsor of the rogue web site "Amway: The Untold Story" that foments hate rhetoric about Amway, its employees, and its distributors. Defendant Schwartz, a paid consultant of P&G, is the author of this web site (hereafter "P&G/Schwartz web site"), which has been devoted to making malicious attacks against Amway. The P&G/Schwartz web site also provides links to other Internet sites that make similar attacks on Amway. In fact, these links on the P&G/Schwartz web site are regularly updated when new sites come to Schwartz's attention. 12. P&G and Schwartz have conspired to damage Amway's business by broadcasting vulgar, false, and defamatory statements about Amway, its officers, its business practices, and its products on the P&G/Schwartz web site. For example, Schwartz falsely accuses Amway of being a cult and of "screwing people over. Schwartz falsely accuses Amway employees of lying and cheating. Schwartz falsely alleges that Amway systematically violates the Constitutional rights of its distributors and that it operates as an illegal "pyramid scheme." The P&G/Schwartz web site lacks objectivity and is replete with false statements, half-truths, and distortions, all of which are calculated to paint Amway in a false and negative light. 13. Schwartz's irresponsible statements were plainly calculated to taint Amway's image and cause it to lose goodwill, to encourage consumers to boycott Amway products, to discourage distributors from selling these products, and, in some cases, to discourage individuals from remaining Amway distributors and from becoming Amway distributors.

14. P&G has actively and covertly participated in the ongoing smear campaign against Amway in several ways. For example, P&G secretly provided Schwartz with several boxes of documents, with the full knowledge that Schwartz would use this information in misleading fashion on his web site to unfairly attack Amway. P&G knew, or should have known, that some of the information it provided to Schwartz was wrongfully taken from Amway. Nevertheless, P&G provided this information to Schwartz, well aware that Schwartz would misuse it on his web site. P&G also actively participated in the smear campaign against Amway by issuing a false and misleading press release relating to a lawsuit that P&G brought against Amway in Texas.

15. P&G has also secretly provided financial support for Schwartz's hate campaign. For example, P&G has retained Schwartz as a "consultant" and has paid him an hourly fee. P&G has borne certain of Schwartz's expenses associated with his malicious web site.

16. P&G attempted to conceal its illicit sponsorship of Schwartz's web site. When Amway attempted to discover the extent of P&G's relationship with Schwartz, P&G hired attorneys in several states to try and thwart Amway's efforts to get the truth about P&G and Schwartz. P&G also secretly hired and paid for Schwartz's attorney to give Schwartz the false appearance of independence. This legal maneuvering was ultimately unavailing.

17. P&G has encouraged, paid for, and otherwise assisted, aided and abetted, and conspired with Schwartz in his malicious attacks against Amway with the intent and effect of interfering with Amway's prospective and actual business relationships with independent distributors of Amway products and consumers of Amway products. A number of individuals either quit their distributorships or declined to form a distributorship in the first instance as a result of P&G's underhanded tactics.

18. P&G knew, or should have known, from a mere perusal of Schwartz's web site that the malicious misinformation disseminated from the web site, as well as the links to other similar sites, would cause individuals to quit their Amway distributorships or decline to form distributorships. The following are a few examples of communications Schwartz claimed to have received from third parties and posted on his web site during 1996:

a. "Hi, Thank you for being here!! I almost got into the business this week, but after reading the 'tools scam' part of your page alot [sic] of things are starting to make sense. Can you recommend any other readings so i [sic] can really feel good about bailing out of this potential nightmare. Thanks for your help!" (March 1996)

b. "Sidney, I am (was) literally hours away from signing up. Have downloaded everything on your site - printing it now, will read tonight with my wife. I have already seen enough validation of my concerns about unanswered questions to say that we probably won't jump in. Thank you for our efforts and for the help it will provide to us! :)" (April 1996)

c. Wow are they persistant. [sic]! I'm out 150.00. 1 keep trying to avoid them but they find me. Can't wait to show them the list of anti-amway sites. That'II throw them for a loop in this small town! I'm glad i found your site, I was beginning to think something was wrong with me." (July 1996)

d. "You gave me the back up a year ago to resist the effort of friends to join. I gave them your page address and 50 pages of output. I have not had the courage to ask how they are doing for fear of another 10-day solicitation. I notice that Amway has instructed the sheep to flood the web with Amway politically correct information. The numbers just do not add up - estimated this twenty years ago, and with your data it's proven." (September 1996)

19. Amway has learned from its distributors that these were not simply idle boasts. One Amway distributor in South Carolina lost substantial business when in March of 1996 an Amway distributor in his organization printed off pages of negative, false, and misleading information from this web site and distributed those pages to other distributors in that organization. The South Carolina Amway distributor had a growing and successful distributorship at the time. Unfortunately, after the printed pages of negative, false, and misleading information from this web site were distributed to Amway distributors in his organization, those Amway distributors became inactive and/or quit their distributorships. As a result, the South Carolina Amway distributor's business was drastically reduced causing a decrease in monthly income.

20. As another example of the damage caused by the P&G/Schwartz web site, in September of 1996 another Amway direct distributor in New York lost business after a distributor in his organization printed off in excess of 50 pages of negative, false, and misleading information about Amway from the P&G/Schwartz web site.

21. The New York Amway direct distributor had spent substantial time and effort in developing a new distributor's business since bringing the distributor into the business in July of 1996. Indeed, no less than 14 personal meetings and appointments were held with the new distributor or business prospects for the new distributor's business.

22. As a result, at least three other Amway distributorships grew out of these initial contacts.

23. In September 1996, however, the newly sponsored Amway distributor visited the P&G/Schwartz web site and printed off over 50 pages of negative, false, and misleading information about Amway. Some of the false information claimed that Amway and the distributor business was a religious cult and that distributors only made money by selling motivational tapes at inflated prices.

24. After the new distributor printed this information, he met with the New York Amway direct distributor and gave him a copy of these pages. Plainly, the new distributor was devastated by the false information from the P&G/Schwartz web site.

25. Thereafter, the new distributor lost interest in the business, would not attend meetings, return phone calls, or actively pursue his business. Other newly sponsored distributors who were shown the pages of information from the P&G/Schwartz web site dropped out or became inactive. As a result, business volume drastically decreased.

26. Moreover, since that time, the New York Amway direct distributor has lost numerous business prospects after these prospects received information that, upon information and belief, came from the P&G/Schwartz web site.

27. Still another example comes from another Amway distributor in South Carolina who lost numerous distributors and distributor prospects after negative, false, and misleading information from the P&G/Schwartz web site was printed and circulated throughout his Amway organization in September 1996.

28. In August, this South Carolina Amway distributor had contacted an old baseball buddy and his wife about becoming Amway distributors. The potential distributors were an energetic, motivated couple who were excellent business prospects and were anxious to start a distributorship.

29. Over the course of the next few weeks, the new Amway distributors contacted numerous friends about the business and began placing orders for their new business.

30. Other Amway distributor prospects in this group had agreed to hold a meeting at the new Amway distributors' home to discuss the Amway business opportunity with various business prospects. Prior to the meeting, however, this couple obtained and printed pages of negative, false, and misleading information from the P&G/Schwartz web site. They then distributed the stack of misinformation to numerous people in the group. The negative information convinced the prospects that the distributorship was a scam in which no money was made selling Amway products and distributors only made money by forcing people to buy various business support materials and motivational tapes.

31 As a result of the P&G/Schwartz web site material, all of the new Amway prospects and new Amway distributors in the group dropped out of the business, causing lost profits and business opportunities.

32. Subsequently, on numerous occasions this South Carolina Amway distributor made presentations to prospects who were initially very interested but who later lost interest after reading negative, false, and misleading information about Amway that, upon information and belief, came from the P&G/Schwartz web site.

33. The P&G/Schwartz web site continued to boast through 1997 of the success of its attacks on Amway. The following are some additional examples (there are many more) of electronic mail posted on the P&G/Schwartz web site during 1997:

a. "Great Page!!!!, I have been approched [sic] by Amway disturbutors [sic]. I told these guys I wanted to know more about the Law Suite, and they hesitated to let me do so. I told them I needed to know the truth before I got in, and guess what! I've found it! Thanks for the Info. Only the really 'sharp' ones will do their homework before investing $$$!" (April 1997)

b. "Your site is INVALUABLE in the information it provides. My wife and I were shown the plan today and had all but committed to Amway. I told my friend (?) that I would read the 'overnight' kit and do a bit of additional research. WOW! I had fallen for the smooth approach and promise of future riches. I'm feeling a bit sheepish that I didn't recognize its flaws sooner (My Master's Degree didn't help a bit there). You have save me the cost of a 'kit' if not untold hundreds or thousands of dollars. I can only speculate if my friend is brainwashed and believe's in what he's doing, or if he's wiser than that and knows that he's got to push a huge amount of motivational tools to make it to 'emerald' or whatever the hell it is. Either way, I'm going to test the friendship by giving him this website address and insist that he read its contents." (May 1997)

c. "Great information on your page. I live in Bermuda where there is a heavy Amway presence. During the last three weeks, I have attended two Amway presentations and I was impressed with the 'pitch' But a few things did not seem right and after some further checking I came across your page and it answered all of the questions I had about Scam.. um I mean Amway." (July 1997)

This page updated Jul-26-99