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Amway's Vendetta against Critics

 

Amway/Quixtar Lawsuits

Amway v Scheibeler
Stewart v Gooch, Childers et al, Third Amended Complaint, January 2003
Hart v Gooch, Childers et al, First Amended Complaint, January, 2003
Netco v Dunn, Gooch, Childers et al, First Amended Complaint, January, 2003
Hart v Gooch, Childers et al, April 19, 2002
Stewart v Gooch, Childers et al, January 2002
Scheibeler v Harteis, November, 2001
$16 Million in Damages Sought in AMO "Tools" Squabble, August 3, 2000
Canadian Tax Authorities v Distributors, July 14, 2000
IRS v Distributors, June 2, 2000
Fish Deposition
Team Resources v Fish and Andrews
Morrison et al v. Wilson et al, June 22, 2000
Woods v Britt, August 1998
Musgrove v Amway, June 1998
Griffith v Amway, May 1998
Taylor v Duncan, March 1998
Hayden v DiSalvatore
Touchton v Amway, Gooch et al
Lavoie v Yager, January, 1998
Hart v Gooch et al, April 1997
Setzer v Amway, 1985

Like a wounded and dying animal lashing out at anything that moves across its path, Amway seems determined to blame Procter & Gamble, Sidney Schwartz, and other critics for its massive downturn in prosperity.

Sales slipped last year from an "estimated" $7 billion at retail (an imaginary number anyway) to an "estimated" $5.7 billion, a decrease of 19%. Publicly, Amway blames the economic downturns in Asia, and the shutdown in China. But in the US, they're laying off workers in large numbers -- about ten percent -- and offering early retirement to others. (See news articles at http://www.msnbc.com/local/Wood/22123.asp.)

Amway has also embarked on what looks like a vendetta campaign against Procter & Gamble and Sidney Schwartz. As a brief historical recap: In or about April and May 1995, according to court pleadings, Executive Diamond Randy Haugen sent an ill-advised Amvox message through his large organization, claiming that the Procter & Gamble company (P&G) was tied to Satanism. This "rumor" has cropped up many times, and this time P&G decided to sue a number of the distributors who had passed along that message, including Haugen and Amway itself. January, 1996, Sidney Schwartz put up his Amway: The Untold Story website. Schwartz, who was not an Amway distributor, had for several years been acting as a section leader on the CompuServe "Working From Home" forum. Many members visited that forum looking for information about businesses they could run from their homes, and many distributors for Amway and other MLMs visited those forums as well. Schwartz began checking out some of the information that distributors provided in the forum, and found discrepancies between distributors' claims and information he turned up in researching the subject. Eventually the Amway research evolved into his web site. Since then, many other individuals have mounted web sites critical of Amway or other multi-level marketing (MLM) businesses, as is their right.

P&G’s attorneys, when conducting research for their ongoing suit against Amway, found Schwartz' website and contacted him. He provided them with some information, and photocopies of documents. For this they paid him a very modest consulting fee and expenses.

Amway, desperate to blame someone for the adverse publicity coming their way, embarked on a campaign to defame Schwartz, whose only fault was the exercise of his Constitutional right to Freedom of Speech. Amway has steadfastly maintained, despite substantial evidence to the contrary, that P&G paid Schwartz to put up and maintain his site. In August, 1996, Amway filed a countersuit against P&G, alleging that Schwartz' site was a front for P&G. This suit was dismissed in its entirety.

Recently, Amway filed a similar suit in its home-town court, demanding $75,000 in damages and claiming that P&G had financed Schwartz' site and fed him sensitive information. Amway claims on its website:

"The Complaint, filed in Michigan federal court, challenges P&G's once-secret consulting relationship with Mr. Schwartz, who has used the World Wide Web to spread false or misleading information about Amway."

Amway implies that there is something improper in Schwartz' relationship with P&G. What is improper about an individual serving as a consultant to a corporation? It happens all the time! If I, as a business owner, enter into a contract with a client and don't inform Amway of that contract -- even though it's none of their business -- does that make the contract "secret" and therefore wrong? I don't think so! Schwartz had information. P&G wanted the information. Schwartz agreed to provide it to them. Where is the impropriety?

Amway also states, again and again, that Schwartz and the other site owners are presenting false information. Why, then, are Schwartz et al not named as parties to the suit? Schwartz has offered Amway numerous opportunities to point out anything on his site which is false or actionable, and they have not been able to.

The fact that Amway's suit against P&G is so small is a strong indication that it is a "nuisance" suit only, intent on some other purpose than exacting legal redress for imagined wrongs.

Now, it seems, Amway is trying to create some sort of conspiracy theory, with P&G and Schwartz as masterminds. Not content with subpoenaing Schwartz for the third time, Amway has also served subpoenas on five others: Ashley Wilkes, owner of the site Amway Motivational Organizations: The Nightmare Builders, the University of Minnesota, which provides web server space to Wilkes as part of his employment package, Dave Midgett, site owner for The Other Side of the Plan, John Hoagland, who manages the Anti-Amway, Anti-MLM Webring, and Hoagland’s internet service provider, mpinet. The intent of the Amwy v. P&G suit now seems clearer: they are using the suit as a means to intimidate and silence those who have been critical of them. Amway is relying on its deep pockets and unabashed purchase of political influence vs. a few individuals' personal knowledge and convication and admittedly limited personal resources.

On its public website, Amway is once again going after Schwartz and others who crticize Amway. They claim:

"Amway believes those served with subpoenas have participated in or have been party to a coordinated anti-Amway attack subsidized by P&G on the Internet and that they may possess valuable evidence about P&G's dissemination of inflammatory and false information about Amway." [emphasis is mine]

Schwartz maintains steadfastly -- in private communications, on his website, and in legal depositions -- that P&G first approached him long after his website was on the internet. Prior to receiving their subpoenas, neither Midgett, Wilkes, nor Hoagland had any contact with P&G. Is P&G disseminating "inflammatory and false information about Amway," as Amway's website statement claims? I don't know. That's up to the courts to decide. But I have read each of the websites whose owners were subpoenaed, I have exchanged extensive e-mails with them over a period of about 18 months, and while their sites may contain information which Amway considers "inflammatory," it is by no means false.

"Amway prefers to meet its competitors in the open marketplace, not cloaked. . ." Yet Amway, in 1997, embarked on a mission to gag any criticism from its own distributor force. In order to renew a distributorship, each distributor is now required to sign an "Intent to Continue/Business Support Materials Arbitration Agreement," which insists that any disagreement between distributors and their upline or Amway be cloaked in the very secrecy that Amway condemns in the above statement. In fact, Amway has invoked that contract in the very large and damaging Texas lawsuit of Morrison et al v Amway et al, despite the fact that Morrison actively repudiated the agreement and many other parties to the suit never signed it.

Has it never occurred to Amway that there is a reason, found in its own behavior and business conduct, which opens the door for all the criticism? Even a cursory examination of the lawsuits, past and present, filed by distributors against Amway and their upline shows an obvious pattern of impropriety, deception, outright fraud or illegalities perpetrated by "big pin" distributors and ignored by Amway Corp. Amway Corp. itself has paid the largest fine ever -- $45 million -- to the government of Canada for ongoing customs violations. Would Ken Starr have had a case if Bill Clinton had not behaved improperly? Neither would Amway's critics -- myself included -- have any reason to maintain these sites if Amway would clean up its own Augean stable and stop trying to blame us for being the messengers.

More Information About the Subpoenas


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This page updated Feb-17-99