Vendors File Class Action Suit Against Amway Delaware County

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.