Quixtar distributors hope judge halts lawsuit

By Barton Deiters
The Grand Rapids Press
August 21, 2007

GRAND RAPIDS -- Sporting dark suits, red ties and stickers stating "I got burned," a throng of Quixtar distributors gathered outside the downtown courthouse in the pouring rain.

But after 2 1/2 hours of negotiations in the 10th floor chambers of Circuit Court Judge Paul Sullivan on Monday, the only thing the silent protesters got was a hefty dry cleaning bill.

Lawyers emerged from the chambers and announced in a jointly written statement that Sullivan had made no ruling on the request and Quixtar would take no action until after a hearing scheduled before Sullivan on Wednesday. Essentially, a two-day truce.

A group of so-called independent business operators, known as IBOs, who distribute Amway goods filed a request for a temporary restraining order to keep the company from essentially firing them as of 5 p.m. Monday.

Group wants suit delayed
Claiming hundreds of Quixtar IBOs could have their incomes eliminated or severely reduced, a group of eight filed the request asking Sullivan to halt the termination until a case determining whether Quixtar is acting legally can be heard.

Earlier this month, a federal suit was filed in California by a group of distributors led by Orrin Woodward, of Grand Blanc, a co-founder of TEAM -- which stands for Together Everyone Achieves More, a large group of Quixtar distributors. Others involved in the suit include leaders of groups called Legacy and Team 5K.

The suit alleges Quixtar knowingly operates as an "illegal internal-consumption recruiting pyramid" by focusing on selling overpriced products only to its own distributors, or IBOs. In doing so, the suit says, IBOs only are capable of making money by continually recruiting new IBOs who also buy products, for which "upline" IBOs receive commission-like bonuses. This is the first major public dust-up since promises Alticor Inc. made in June to reform its business as it re-adopts the Amway name over the next 18 to 24 months.

Quixtar is the name the Amway direct sales operation adopted in the United States. Quixtar told its higher-level distributors that they had to choose sides, either going with it or the group of distributors it claims is violating its agreement not to compete with Quixtar. Those who did not sign what the suit calls a "loyalty agreement" with Quixtar were told they were to be terminated or suspended by close of business Monday. Quixtar lawyer Edward Bardelli and distributors' attorney Leo Clark refused to comment on the case until after Wednesday's hearing. The distributors and Quixtar representatives also are being instructed not to talk about the case.

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