LAW OFFICES GORDON, THOMAS, HONEYWELL MALANCA, PETERSON & DAHEIM P.L.L.C. 2200 FIRST INTERSTATE PLAZA POST OFFICE BOX 1157 TACOMA, WASHINGTON 98401-1157 (206) 572-5050 - FACSIMILE (206) 572-4516
SUPERIOR COURT OF THE STATE OF WASHINGTON
FOR KING COUNTY
GARY TAYLOR and KATHY TAYLOR, husband and wife,
Plaintiffs,
vs.
AMWAY CORPORATION, a foreign corporation; SAMIR THAPIT and THERESA D.
ATTALAH, a married couple; BRADLEY and JULIE DUNCAN, a married couple;
WORLD WIDE GROUP, L.L.C., a Washington Limited Liability Company; ATTALAH
MOTIVATION, INC., a Washington Corporation, ATTALAH ENTERPRISES, INC., a
Washington Corporation, ATTALAH INTERNATIONAL, INC., a Washington
Corporation, DUNCAN INTERNATIONAL, INC., a Washington Corporation, DUNCAN
MOTIVATION, INC., a Washington Corporation, Defendants.
NO. 98-2-15585-0 SEA
FIRST AMENDED COMPLAINT FIRST AMENDED COMPLAINT
COME NOW the plaintiffs, above-named
and by way of claim state: PARTIES Plaintiffs Kathy Taylor and
Gary Taylor are a married couple, residing in King County, Washington.
Defendant Amway Corporation is a foreign corporation, doing business
in King County, Washington. Defendants Samir Thapit and Theresa
D. Attalah are a married couple, residing in King County, Washington.
Attalah Motivation, Inc., Attalah Enterprises, Inc., Attalah International,
Inc., are all Washington corporations, are owned and operated
by Samir Thapit and Theresa D. Attalah and conduct business in
King County, Washington, (hereinafter referred to as "Defendants
Attalah"). The defendants Bradley D. and Julie Duncan, a
married couple, are residents of King County, Washington. Duncan
International, Inc. and Duncan Motivation, Inc. are owned and
operated by Bradley D. and Julie Duncan and conduct business in
King County, Washington, (hereinafter referred to as "Defendants
Duncan"). Defendant World Wide Group, L.L.C. is a Washington
Limited Liability Company, doing business in King County, Washington.
(Hereinafter referred to as "World Wide".)
JURISDICTION AND VENUE All acts and omissions of the defendants
occurred in King County, Washington, within the jurisdiction of
the above-entitled court.
FACTUAL ALLEGATIONS Amway manufactures and distributes a wide
variety of consumer household products which it sells nationwide
through hundreds of thousands of distributors.
The Amway sales plan is a pyramid type scheme, whereby any purchase
or sale of Amway goods by a distributor financially benefits not only Amway,
but also those Amway distributors who occupy higher levels in the Amway
distributorship pyramid. In Amway parlance, those who occupy positions
below a distributor in his or her branch of the pyramid are called the
distributor's "downline." These persons who occupy positions above a
distributor in his branch of the network are called the "Distributor's
upline." In order to earn significant profits as an Amway distributor,
one must develop a sizeable downline organization by recruiting and
sponsoring other distributors into the Amway sales organization.
Amway sells, distributes, or otherwise supplies for a valuable
consideration goods through independent agents or distributors at
different levels, wherein such distributors may recruit other
distributors and wherein commissions, cross-commissions, bonuses,
refunds, discounts, dividends, or other considerations in the program
are or may be paid as a result of the sale of such goods or services or
the recruitment, actions, or performances of additional participant distributors.
World Wide operates a pyramid type business which "supports" Amway
distributors in the development of their downline, by mandating the sale of
World Wide's "motivational" books, audio tapes, video tapes and other written
materials. World Wide is operated for the profit of its principles who occupy
the highest levels within the Amway business. The principles in World
Wide derive the vast majority of their profits as Amway distributors
from the sales of World Wide's motivational material and from holding
"motivational meetings" for which they mandate that those downline in
their business attend and for which World Wide and the upline receive
compensation.
World Wide is responsible for a substantial amount of Amway's sales and
wields considerable influence at Amway's corporate headquarters in Ada, Michigan.
Defendants Duncan and Attalah are Amway distributors within the World
Wide organization.
Defendants Duncan and Attalah have created their own businesses which
publish and/or distribute motivational materials, such as books, audio
cassette tapes and video cassette tapes, and that organize and promote
motivational rallies for Amway distributors throughout the United States.
Through these businesses, defendants World Wide, Duncan and Attalah
sell vast quantities of motivational materials to their respective downline
distributors and hold rallies throughout the United States that their
downline distributors are required to pay to attend.
Defendants Duncan and World Wide derive a substantial portion of their
income from the sale of non-Amway motivational materials to persons in
their downlines and from the money earned through their motivational rallies.
In order to earn significant profits as an Amway distributor and a
World Wide member, one must develop a sizeable downline by recruiting and
sponsoring other distributors into "the business." Individuals who are
recruited into the business are never told by Amway and World Wide
that the enormous wealth that upline Diamonds, Executive Diamonds,
Double Diamonds and Crowns flagrantly display in meetings to induce
new members into joining is only the result of exploiting those downline
recruits into purchasing, on a standing order basis, cassette tape, video
tapes and books and by requiring those recruits to pay to attend rallies
and meetings known as major events or face ostracism.
In 1991 Kathy Anderson Taylor began an Amway business under the
sponsorship of Chris and Peggy Werenka and within the defendants'
organizations. As a direct result of Kathy Taylor's enormous investment
of time and energy into this business, she attained "Gold Direct" status
in a relatively short amount of time.
At no time prior to her involvement in the Amway business, was she
told by the Defendants World Wide, Attalah or Duncan that the sale of business
support materials and the attendance at meetings was not only required and
necessary to attain the enormous wealth these defendants claimed to have
attained through their Amway businesses, but that the sale of
these materials constituted an unlawful pyramid scheme. The
plaintiffs had no idea that she was being granted a license within
the defendants' organizations to solicit new licensees for the
further promotion of the defendants' illegal scheme.
Defendants World Wide, Duncan and Attalah regularly represented or
caused to be represented to plaintiffs that their success as Amway
distributors was contingent upon the purchase of motivational materials
published and/or distributed by defendants World Wide, Duncan and
Attalah and attendance at meetings sponsored by them, and that
without such materials and attendance at meetings, plaintiffs would be
unable to build and maintain a successful Amway distributorship.
Defendants World Wide, Duncan and Attalah further represented or
caused to be represented to plaintiffs that they should purchase only
those motivational materials produced and/or distributed by
defendants World Wide, Duncan and Attalah.
Defendants World Wide, Duncan and Attalah further represented to
plaintiffs that they should purchase and require their downline
distributors to purchase a weekly supply of defendants' motivational
audio tapes through a "standing order" tape-of-the-week program
that defendants World Wide, Duncan and Attalah describe as the
"S.O.T." program. Moreover, defendants represented that such weekly
purchases of defendants' audio tapes were essential to plaintiffs' success
as an Amway distributor and to the success of their downline distributors.
Defendants told plaintiffs on numerous occasions if other distributors in
either their up or downline, stopped ordering tapes, books or attending
the defendants' profitable rallies, that they were to "cut out like cancer" these
distributors from their social lives.
Defendants World Wide, Duncan and Attalah further represented to
plaintiffs that the only way plaintiffs could be successful Amway
distributors and could create successful Amway distributors downline
from them was to buy motivational and promotional materials prepared
by defendants World Wide, Duncan and Attalah, to pay to attend meetings
and conferences sponsored by them, and to recruit and sponsor other
distributors.
At all times relevant hereto, Amway was aware that the aforesaid
misrepresentations regarding defendants World Wide, Duncan and Attalah
regarding motivational materials and motivational rallies were being made to
Amway distributors, and that in practice, sales of such materials within the
World Wide organization were consistently being conducted in violation of
Amway's rules, including, without limitation, Section B, Rule 4.
It was in Amway's economic self-interest to permit such
misrepresentations and rules violations to continue, and although
Amway had been made aware of such practices for years, Amway
has never terminated the distributorships of Duncan or Attalah,
or made any credible effort to halt their practices in violation of
Amway's rules.
In reliance upon the misrepresentations of defendants World Wide,
Duncan and Attalah, plaintiffs purchased, and caused their downline to
purchase large quantities of defendants World Wide, Duncan and
Attalah's motivational materials and attend defendants' motivational
rallies.
In addition to the foregoing, defendants Duncan and Attalah, with the
knowledge of World Wide and Amway, engaged in a regular practice of
plaintiffs' downlines, cutting out the plaintiffs from the organization they had
built.
On various occasions, defendants herein sold or caused the sale of
Amway and non-Amway products directly to plaintiffs' downline distributors,
thereby interfering with plaintiffs' distributorship relationships.
On numerous occasions, with the full knowledge of World Wide, Duncan
and Amway, defendants Attalah disparaged plaintiffs to plaintiffs' downline
distributors in an effort to interfere with plaintiffs' downline distributorship
relationships and to isolate plaintiffs from upline support.
In mid-1993, one of plaintiffs' downlines, Roger Connolly, was being
"counseled" by Samir Attalah concerning his Amway business. In
violation of Amway rules, Samir Attalah used his influence and status
to pressure Mr. Connolly into taking out a $20,000 loan so that he could
invest that sum of money in a land development scheme. Mr. Attalah
represented to Mr. Connolly that he was investing money into the scheme and
guaranteed his investment and return. Mr. Attalah never disclosed
that he was to receive twenty percent (20%) for each investment solicited.
At or about the same time Mr. Attalah also used his influence and status
in World Wide and Amway to pressure other downlines to Kathy Taylor,
including, but not limited to, Patrick Schultz.
In early to mid-1995, Mr. Connolly and Mr. Schultz were informed by
Mr. Attalah that their investments had "gone bad." Mr. Attalah never
informed them that he had actually made money off of their investments.
In early 1993, Samir Attalah began dating and having sexual relations
with one of the plaintiffs' downline sponsors, a 19-year-old woman. This
relationship lasted until August of 1993 when Mr. Attalah's intentions to
continue a sexual relationships with her in private while courting other
women in public became clear. Disgusted with Mr. Attalah, this
young woman stopped attending meetings and dropped out of the
plaintiffs' business. Mr. Attalah was confronted by the plaintiffs about
this relationship, but Mr. Attalah assured her that her business would
not be affected.
In late 1995 and early 1996, defendants Attalah began to undermine the
authority and status of Chris and Peggy Werenka, by making false and
defamatory statements in an effort to force the Werenkas to give up their
lucrative Amway business for the benefit of defendants Attalah and Duncan.
In late 1995 and early 1996, after Mr. Attalah became aware that Ms.
Taylor knew about his failed business dealings with Ms. Taylor's downline
sponsors, defendants Attalah, Duncan and World Wide engaged in a
campaign of defamatory statements to individuals in Ms. Taylor's
Amway business in an effort to undermine her status and authority
as an Amway distributor for the ultimate purpose of enriching
defendants Attalah, Duncan and World Wide.
During 1996, defendants Attalah, Duncan and World Wide, began
encouraging distributors who were downline from Ms. Taylor to write letters
concerning trivial and picayune faults with the operation of Ms. Taylor's
business in an effort to cause Amway to take her business away.
On numerous occasions between 1993 and 1995, defendants Attalah, Duncan
and World Wide represented that they had the authority, political connections
and clout within Amway to cause Ms. Taylor to lose her business.
In February of 1996, Ms. Taylor met with defendants Attalah and
Duncan for the purpose of resolving differences. At this meeting, Ms. Taylor
revealed that she was having difficulty trusting defendants Attalah, because
of slanderous statements made about the Werenkas and the inappropriate
solicitation of investments from Mr. Connolly and Mr. Schultz.
Ms. Taylor also communicated with Amway officials including, at a
minimum, Ron Mitchell, Amway's manager for "Business Conduct and Rules
Division" about Mr. Attalah's solicitation of sexual favors from one of her young
downline distributors and the outrageous solicitation of investments with two of
her other downline distributors.
At no time did Amway, the Duncans or World Wide ever investigate these
instances of Mr. Attalah's abuse of authority, but instead, relied on his
allegations that she was destroying the very business she had built up.
Defendants Attalah, Duncan and World Wide caused Ms. Taylor's
business to be taken away by Amway on November 26, 1996.
In the wake of losing her business, defendants Attalah refused to
repurchase goods and promotional materials they were obligated to repurchase, and
failed to pay her monies that she was owed for work she had performed.
FIRST CAUSE OF ACTION:
INTENTIONAL INTERFERENCE WITH BUSINESS EXPECTANCY
Defendants, and each of them, intentionally interfered with contractual
relations or business expectancy between plaintiffs and their downline
distributors. Plaintiffs had numerous invalid contractual relationships and business
expectancies with its distributors. Defendants had knowledge of these relationships
or expectancies. Defendants wrongfully and intentionally interfered with those
relationships or expectancies for personal financial gain, resulting in damage
to the plaintiffs.
SECOND CAUSE OF ACTION:
VIOLATION OF THE CHAIN DISTRIBUTOR'S LAW
Defendants, and each of them, engaged in a "chain distributor's
scheme" as defined in RCW 19.102.010 in violation of RCW 19.102.020.
THIRD CAUSE OF ACTION:
CRIMINAL PROFITEERING
Defendants, and each of them, engaged in criminal profiteering, in
violation of RCW 9A.82.100 by committing theft, extortion and
trafficking in stolen property.
Defendants, and each of them, engaged in a pattern of criminal
profiteering by committing these crimes over a period of one year, in
violation of RCW 9A.82.100.
Defendants, and each of them, committed the offense of leading
organized crime by intentionally organizing, managing, directing and
supervising the extortion of the plaintiffs with the intent to engage in
a pattern of criminal profiteering activity, in violation of RCW 9A.82.060.
Defendants, and each of them, knowingly received proceeds derived,
directly or indirectly, from a pattern of criminal profiteering activity and
used those proceeds in the operation of their respective businesses in
violation of RCW 9A.82.080.
FOURTH CAUSE OF ACTION:
VIOLATION OF THE UNFAIR BUSINESS PRACTICES/
CONSUMER PROTECTION ACT
Defendants, and each of them, have engaged in unfair methods of
competition and unfair or deceptive acts or practices in the conduct of their
businesses, in violation of RCW 19.86.020.
Defendants' unfair business practices affect public interest because,
among other things, they were committed in the course of defendants'
businesses, the activities were part of a pattern or generalized course of
conduct, they were repeated acts by the defendants and a real or substantial
potential for repetition by the defendants.
As a result of defendants' actions, plaintiffs have sustained harm to
their property.
FIFTH CAUSE OF ACTION:
CONVERSION
Defendants willfully interfered, without lawful justification, with
plaintiffs' business proceeds, thereby depriving plaintiffs of possession.
Defendants' conduct constitutes conversion.
DAMAGES
As a direct and proximate result of defendants' conduct, plaintiffs
have suffered damages in an amount that will be proven at the time of trial, and has
incurred costs of investigation, attorney's fees and costs of suit. Additionally,
plaintiffs are entitled to a civil penalty and multiple damages under Washington law.
WHEREFORE, plaintiffs pray as follows:
1. For such damages to plaintiffs as may be proven at the time of trial;
2. For civil penalties and multiple damages as permitted under
Washington law;
3. For reasonable attorneys' fees;
4. For reasonable investigative costs;
5. For costs of suit; and
6. For such other and further relief as this Court deems just and
equitable.
RESPECTFULLY SUBMITTED this _____ day of July, 1998.
GORDON, THOMAS, HONEYWELL, MALANCA,
PETERSON & DAHEIM, P.L.L.C.
Attorneys for Plaintiffs
By
James B. Meade
WSBA No. 22852
Attorneys for
This page was last updated on Aug-28-98