Most antitrust claims against Amway survive

A federal judge refuses to dismiss seven counts of price fixing, conspiracy and other charges distributors brought.

The Kansas City Star/December 22, 2006
By Dan Margolies

Plaintiffs in a massive antitrust action against Amway Corp. overcame another hurdle this week in their long quest to get their case heard by a jury.

A federal judge on Monday refused to dismiss all but one of eight counts against the company, finding that the plaintiffs’ allegations were legally sufficient to support claims of price fixing, conspiracy and other charges.

U.S. District Judge Richard E. Dorr agreed to dismiss only a civil racketeering claim, ruling that it failed to establish “a pattern of racketeering activity.”

“We are obviously pleased with the ruling,” said Kansas City lawyer Dan Boulware, who represents several Amway distributors, including Nitro Distributing Inc. of Springfield and two distributors in St. Joseph. “All of our claims survived with the exception of the racketeering claim, which was a new claim we had recently added, and the judge kept the door open for that.”

Boulware said that he intended to refile the racketeering claim.

Amway, now known as Alticor Inc., said it was “pleased” that the court had rejected the plaintiffs’ “misguided effort to sensationalize the case with its unfounded (racketeering) claims.”

“The court decided that it would be premature to dismiss Nitro’s remaining claims for alleged violations of the antitrust laws and various common law torts,” the company said in a news release. “The court noted that, at this early stage of the proceeding, it was legally required to accept Nitro’s unproven allegations as true.

“Alticor is confident that, as the litigation proceeds and Nitro is unable to produce evidence to support its claims, Nitro’s misguided claims will be dismissed before trial.”

The case, which was filed in mid-2003 in the U.S. District Court for the Western District of Missouri, has been closely watched by Amway distributors nationwide. Most recently, a federal appeals court upheld Dorr’s rejection of Amway’s request to send the case to arbitration.

The lawsuit contends that Amway exaggerates the profits to be made selling its products and pressures distributors into buying its motivational materials. It alleges that a handful of “kingpins” — those who bought into Amway early on — control thousands of down-line distributors and make most of their money by selling them the motivational materials, known as the “tool and function” business.

The lawsuit says that distributors are misled into thinking they can attain great wealth by selling Amway products. It says distributors can only become wealthy by participating in the motivational business, but very few succeed.

The case is scheduled to go to trial in early 2008.