Quixtar battle lines drawn

By Chris Knape and Shandra Martinez
Grand Rapids Press
August 23, 2007
GRAND RAPIDS -- In the war over the future of Amway Corp., Kent County Circuit Judge Paul Sullivan's courtroom is where the first battle will be decided.

Arguments were expected to continue this morning in lawsuits filed to keep several former distributors for Quixtar, the name for Alticor Inc.'s Amway business in the United States, from disclosing confidential information as part of what the company and a distributors' association claim is a smear campaign.

Ada Township-based Alticor and the Independent Business Owners International Association filed suit to prevent former high-profile distributors Orrin Woodward and Chris Brady, among others, from releasing information they say could cause irreparable harm to Quixtar and other distributors, known as IBOs.

Sullivan heard arguments for more than three hours Wednesday afternoon.

The cases spawned from Quixtar's dismissal of at least 15 IBOs after the company said they refused to fall in line with its business rules.

The IBOs then filed suit in California, alleging Quixtar's noncompete clauses, part of those rules, were invalid as an illegal pyramid scheme.

The lawsuit claims Quixtar relies almost solely on internal consumption of its products by its IBOs.

The suit alleges a pyramid scheme because, in order to make money, IBOs must continually recruit people for their "downline," for which higher level IBOs receive commission-like payments.

Wearing stickers proclaiming "Burned by QUIXTAR!," distributors supporting Woodward, Brady and others showed they could take the heat, protesting for hours in 90-degree temperatures.

Rallying at the courthouse
The predominantly male crowd of hundreds of distributors, mostly in dark suits with red ties, lined the sidewalk in front of the Kent County Courthouse, creating a gauntlet of support for the defendants.

The crux of Quixtar's arguments against Woodward, Brady and their organization called TEAM (which stands for Together Everyone Achieves More) focused on noncompete agreements all IBOs must sign.

Quixtar attorneys said the agreement prevents the former IBOs from tapping their networks of IBOs for other
ventures or to sell motivational products.

Stephen Turner, the Independent Business Owners International Association's attorney, argued Woodward, Brady and four other high-level IBOs had breached pledges and contracts in which they swore not to divulge what happens at association board meetings. He is seeking an injunction to prevent further dissemination of confidential information.

The defense attorneys argued the California case would decide whether Quixtar's confidentiality agreements are valid. They claimed there was not enough evidence to show the company would be irreparably harmed without the temporary injunctions they are requesting.
In the IBOIA case, defense attorney John Anding argued the group was trying to squelch free speech and the information the association called confidential was already in the public domain.

Arguments were slated to resume at 8:30 this morning. Both sides declined comment.

Even the crowd of supportive IBOs, a group not known for being shy about talking, was coached to smile but not to applaud or cheer -- or speak to the news media.

After arrival of the defendants, most of the crowd followed into the building, creating a logjam. About 70 people filed into the courtroom and another 200 filled a jury-assignment room, where the court hearing was simulcast.

Several people walked around with walkie-talkies, coordinating the show of support. The supporters drove in from as far as Detroit and northern Michigan.

Distributors show support
The legal battle isn't about money for the former high-level distributors but about looking out for people on their team, said distributors standing across from the courthouse.
"We are here because we believe in them," said one distributor from Rockford, who declined to give his name.
A mother of five who came with her children in tow, said her loyalty ran deep for Woodward, of Grand Blanc, a co-founder of TEAM.
Quixtar "has changed our whole family's life. I know God sent this person Orrin to us through this business," she said.

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