Quixtar distributor's removal from suit surprises law firm

By David DeKok
The Patriot-News
Thursday, August 16, 2007

A Denver law firm says the withdrawal of a Lower Paxton Twp. Quixtar Inc. distributor as a plaintiff in a lawsuit filed last week against the multilevel marketing firm over its business practices came as a surprise.

Fred Harteis, president of Harteis International at 7955 Jonestown Road, has been a top distributor for Quixtar or its better-known corporate cousin Amway Corp. of Ada, Mich., for many years. Alticor Inc. is the parent company of both firms.

"Fred Harteis was involved in many conversations with us in the previous weeks concerning the state of the current Quixtar business, the pricing of its products and Quixtar's coming transformation," attorney D.J. Poyfair said on behalf of the firm Shughart, Thomson & Kilroy.

Harteis did not respond yesterday to a request for comment on the law firm's statement. His lawyer, Rick Abraham in Columbus, Ohio, said any implication that Harteis told the law firm he would be a plaintiff in the suit is "completely inaccurate."

Abraham has represented several Amway or Quixtar distributors over the years.

Abraham said he has no idea whether Harteis had conversations with the Denver law firm as described by Poyfair. The lawsuit seeks to have a federal court declare that noncompete and nonsolicitation clauses signed by Quixtar distributors are illegal and unenforceable. Such a court order would enable Quixtar distributors to cut their ties with the company, which they describe in the lawsuit as "an illegal recruitment pyramid scheme," and enable them to sign up immediately with other multilevel marketing firms selling similar products.

"Quixtar's products cannot be retailed because they are hopelessly overpriced," the lawsuit claims. "Quixtar knows its products are nearly impossible to sell, and that its business opportunity is therefore not viable except as an illegal recruitment pyramid." The lawsuit contends that the DeVos and Van Andel families, who control Alticor, Amway and Quixtar, require that all Quixtar products be priced to distributors at three times cost. This is known as the "Jay Factor" after the late Jay Van Andel, a co-founder of Amway, and makes normal retail sales next to impossible, the lawsuit claims.

Alticor yesterday denied that Quixtar is an illegal pyramid scheme and said it meets the legal requirements laid down by the Federal Trade Commission in a 1979 case involving Amway.

"If the complainants built their business in a way that led them to believe Quixtar was not following the rules, that lends insight into why we terminated them," an Alticor spokeswoman said.

Alticor contends it terminated business relationships with plaintiffs in the lawsuit. The plaintiffs, in a statement yesterday, said they resigned Aug. 9 and filed the lawsuit after failing to persuade Quixtar to modify its business practices.

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