Source: 4/23/2010

Amway Quixtar Loses Court Ruling

Amway Quixtar lost a federal court dispute Wednesday to 3 junior independent business owners over an arbitration agreement that Amway makes its IBOs sign when they become distributors. The agreement was described as "unconscionable and unenforceable," according to the Ninth Circuit Court of Appeals. The arbitration agreement essentially forces distributors to reconcile legal disputes privately instead of filing lawsuits in court.

The independant business owners succeeded in challenging Quixtar's policy which now makes it possible to sue the company in a court of law, which is the aim of the IBOs as they claim that Amway's Quixtar is a pyramid scheme.

Having agreed with the lower court, The Ninth Circuit Court of Appeals said Quixtar's arbitration process is "simply too tainted to be saved through minor adjustments because it is so permeated with unconscionable provisions."

In a written response from Quixtar, the company left the following statement:

Today's ruling on the arbitration section of the Quixtar contract was expected. The Ninth Circuit historically has been skeptical of contract arbitration.

The decision is merely a procedural step on a long road to trial. In fact, the original motion ruling that Quixtar appealed in this case was written more than two years ago. Since that time, concerns about the arbitration process have been fully addressed.

We remain confident that a full and fair hearing will validate our view that the allegations in this suit are without merit.

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