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This is the blog where leaders come to learn with NY Times, Wall St. Journal, USA Today, Money & Business Weekly best selling co-author of Launching a Leadership Revolution - Orrin Woodward.
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Monday, May 26
Quixtar Rules Held Unenforceable - Mike McCormick
by
Orrin Woodward
on Mon 26 May 2008 08:30 AM EDT
Ronald Reagan had a great statement, "The facts are pesky things." No matter how Amway/Quixtar tries to spin it - federal judges look at facts. The facts are on the side of the distributors in their numerous disputes with Amway and Quixtar. How many secret arbitrations are currently ongoing where Quixtar is attempting to prohibit people from competing against them? How can Quixtar attempt to uphold a contract that has been ruled uneforceable 5 times in 4 separate states. The following article is from Mike McCormick. Mike has been friends with Randy Haugen for years and is one of the top notch lawyers helping out former Quixtar IBO's in their attempt to be free of Quixtar harassment. Mike is an excellent resource as he has worked extensively with Amway/Quixtar and the IBOAI board in the past. Mike was also present on August 9th and saw the behavior of the Amway/Quixtar managers upfront and personally. Here is his analysis of the recent Texas decision on the Amway/Quixtar contract. It is time that Amway/Quixtar admits that it made some mistakes and settle this for the good of their business, the good of former IBO's and the good of current IBO's. Perhaps some Christian men like Dexter Yager, Bill Britt, or Jim Dornan, all on Amway's Founders Council will step in and talk some sense into Amway management. God Bless, Orrin Woodward
Quixtar’s Rules of Conduct Held Unenforceable
On Friday, May 23, 2008, the Federal Court for the Eastern District of Texas ruled that the Quixtar Rules of Conduct are unenforceable because they are on their face illusory. Simmons et. al. v. Quixtar. Citing the fact that Rule 1 of the Rules of Conduct reserve in the Corporation the right to change or amend the rules at any time, the court held that on their face the Rules are but an illusion that cannot be enforced.
The court relied heavily on the Fifth Circuit Court of Appeals decision issued in February, 2008 in the case of Morrison et. al. v Quixtar, et. al., wherein the court, reviewing facts related to the arbitration clause of the Rules of Conduct as the clause existed in 1997, similarly concluded that because the Rules of Conduct permitted Amway to alter or amend the contract at any time for any reason, the contract was unenforceable. Both the Fifth Circuit and the Eastern District of Texas rejected Quixtar’s argument that Quixtar must run all changes by its trade association, the IBOAI (formerly the ADA), and concluded that the Rules are clear on their face and on their face reserve the right of amendment, alteration and change to the Corporation itself, rendering the Rules of Conduct unenforceable.
During the hearing, Judge Bush alerted the parties that he would be deciding which issues remained and would actually be tried. He announced that there would be no breach of contract issues tried because the contract was illusory and unenforceable. Only non contract claims (currently damage claims grounded in tort) would be tried. Therefore, the non competition clause, the data management rule, the non solicitation rule and any other rules set forth in the unenforceable Rules of Conduct are outside the scope of claims for which Quixtar could recover. To quote the court,
The Court’s reasoning applies to the Rules of Conduct and Amway’s (Quixtar’s) ability to unilaterally change the rules of the game. The 1998 contract before the Court in Morrison provided that “Amway reserves to itself the sole right to adopt, amend, modify, supplement or rescind any or all of these Rules, as necessary with respect to Rules enforcement.
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Amway acknowledges that from time to time the contents of its various documents may be changed. Although it represents it will present such changes to the distributor board, final decision making authority rests with Amway (Quixtar). Quixtar admits that the preface to its Rules of Conduct has not materially changed since 1998.
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A promise is illusory if it does not commit the promisor to perform. Alex Sheshunoff Mgm’t Servs., L.P. v. Johnson, 206 S.W. 3d 644 (Tex. 2006).
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Quixtar has left itself ample “wiggle” room by providing that it may modify the Rules of Conduct as it sees fit. The same provision appears to have been before the Circuit in Morrison.
Because the language in the contract in Morrison was identical to the language at issue before the Eastern District of Texas Court, the Court declared the language to be unenforceable. Interestingly, the Morrison court declared that there was no material difference between the laws of Texas and the laws of Michigan (Quixtar’s forum of choice) on this point. Therefore, any IBO fearing the enforcement of Quixtar’s rules against him or her, under either Texas law or Michigan law, can take comfort that Quixtar is on precarious legal ground in pursuing enforcement of its illusory contract. To quote the Morrison court on this point,
As did the district court, 49 F. Supp. 2d at 533-34, we make that determination based on Texas law, which is the law of the forum, there having been no showing that the law of any other arguably more appropriate state materially differs in respect to the present issue.
The Simmons decision comes on the heels of two other decisions striking down all or some of the Rules of Conduct. On March 3, 2008, in Campbell, et. al. v. Quixtar, the Superior Court of White County in Georgia declared the noncompetition clause unenforceable, finding that its breadth “takes one’s breath away.” Similarly, on March 31, 2008, in Pokorny et. al. v. Quixtar et. al., the Federal Court for the Northern District of California held the Rules of Conduct to be unenforceable. As the Fifth Circuit concluded in Morrison, the California federal court concluded that there was no material difference between California and Michigan law on the relevant points of law, and applied California law arguing that the forum state, California, had a public interest in addressing the issues.
As a result of all of these decisions, any IBO fearing repercussions from Quixtar by virtue of engaging in an MLM concurrently with their Quixtar business or within the six month non competition period or the two year non solicitation period can take comfort that at least three district courts and one Federal Court of Appeals has concluded that the Rules of Conduct are unenforceable.
All of these developments are consistent with the public policy against the restraint of trade that accompanies over-broad contractual provisions like those contained in the Quixtar Rules of Conduct, especially when applied to independent contractors, as opposed to employees. Perhaps Quixtar will consider changing its operation in such a way that attracts its distributors to stay through the merits of its compensation plan rather than the fear of suit if the IBO chooses to leave.
Mike McCormick
Sunday, May 25
Amway/Quixtar's Illusory Contract Provisions
by
Orrin Woodward
on Sun 25 May 2008 07:50 AM EDT
More news from the Amway/Quixtar Team front. I have believed from the beginning - even before I received my informal legal education - that the Amway/Quixtar non-compete and non-solicitation clauses secretly slipped into the distributor contracts were unconscionable. It seems that every judge who hears both sides of the argument agrees with the distributors and not with Amway/Quixtar. With the latest ruling from Honorable Judge Don Bush in Texas - it is five judges in four separate states who have ruled on different portions of the Amway/Quixtar contract being unconscionable, invalid, or illusory. How much longer does Amway/Quixtar plan on fighting this Quixotic adventure against the basic principles of contract law? This should have been settled before the first lawsuit and only required a little statesmanship from the Amway/Quixtar managers.
Let me supply an analogy to explain what an illusory contract is that I believe is very similar to what Amway/Quixtar has attempted with their contract. If you bought a car from a dealership and don't pay cash you will have to sign a contract with terms to buy the car over so many years. You buy a car and sign a contract and begin faithfully paying the monthly bill. After the contract terms are up, you decide you will buy a new car from a new dealership. No big deal since you have followed the terms of your contract and have followed it in full. To your surprise, you get a threatening letter from the first dealership stating that you are not allowed to buy or even look at any other dealership. You tell them that was not in your contract and you have paid the contract in full and are going to buy a car from another maker and dealership. The first dealership then sends you a copy of your contract with the first provision that states the dealership reserves the right to change the contract at will and will inform you when they do. The dealership tells you they changed the contract and you now have a non-purchase and non-shopping clause in your contract. You insist that you never agreed or signed a contract with that garbage wording. They tell you that you must follow your contract and they have plenty of lawyers to force you to. You are horrified that you are bound to clauses that you never agreed to and the only argument the dealership retorts with is that you signed it and should have had a lawyer present. The dealership states that by publishing the new terms of the contract in the Dealership News (that you have never read!) - that this is sufficient for them to change the contract at will. This would be a prototypical example of an illusory contract!
In order to be a valid contract - both parties must sign a agree to follow the provisions. By placing a provision in the contract that allows Amway/Quixtar to change the contract at will - it makes the whole contract illusory. What is the use of signing anything since it can be changed at anytime? It binds the distributor but does not bind Amway/Quixtar. The Amway/Quixtar lawyers are not ignorant of Contract Law 101, so my assumption is they placed this clause in the contract to change it as they see fit to control the distributors. I am a business man and do not do business this way. When I sign a contract I expect it to bind both sides and never would sign nor teach others to sign a contract with this invalid and illusory provision. This was the moral dillemma the IBOAI Board faced and 40% of the Board did something about it. When the Devos & Van Andel families changed the contract from Quixtar to Amway and said they would force all Quixtar IBO's to join Amway - I realized that Amway/Quixtar fully intended to enforce the added illusory contract provisions that were stacked in Amway's favor. This is against standard contract law and why it has been rejected by 5 judges in 4 states. Something had to be done in my opinion - I refused to represent values and behaviors that ran against the core principles that I teach and desire to model in my life.
This has been the bone of contention since the dispute began. I do not feel it is moral for a company to force people to get into Amway against their will. We never agreed to non-competes and signed a Quixtar contract with no non-competes. How can you force all the these people to have non-competes and get on the Amway train without a choice? We live in America not communist East Germany and it is time that the Devos and Van Andel families tear down this illusory wall! I ask that you quit threatening former IBO's just because you have more money and desire power and control over their futures. It simply isn't right and no amount of bullying by your Amway/Quixtar lawyers will change my mind.
I humbly but firmly request that the leader of the Devos and Van Andel families step up to the plate and do the right thing. Admit that the contract is illusory and leave the former IBO's alone. They do not want to be in business with you and you should not and cannot force them to be against their wills. I am surprised that Dexter Yager, Bill Britt, Jim Dornan, Joe Markiewicz, John Crowe, Dave Dussault and the IBOAI are not insisting that the illusory contract provisions be changed.
Doug and Steve, this is not a publicity stunt. I am sincerely asking you to stop your lawsuit crazy lawyers and read the contract yourself. I don't believe you would recommend your own families to sign a contract with illusory provisions so why are you suing me because my conscience will not allow me to recommend potential distributors sign illusory contracts? I tried to reason with your management team of Jim Payne and Mike Mohr, but was terminated for not backing down on the moral issue of the unconscionable and illusory provisions.
We are firm in our belief that 'right makes might' and we will not back down on the sacred issue of our God given American rights. Doug Devos tear up this illusory contract and compete in free enterprise like your dad - Rich Devos - taught in Selling America! God Bless, Orrin Woodward
Friday, May 23
It's All in Your Thinking
by
Orrin Woodward
on Fri 23 May 2008 08:16 AM EDT
Just did an article on the password side of the Team website on attitude and thinking. It's not what happens to you, but how you think about what happens to you that makes all the difference. If you have a MonaVie Team subscription, you can read it in the blog section. Chris and I will be blogging daily on the Team website and will stop in here once a week. Have a great day! God Bless, Orrin Woodward
Thursday, May 22
MonaVie Meditteranean Cruise
by
Orrin Woodward
on Thu 22 May 2008 07:07 PM EDT
Look at this website! What a fantastic company I represent in MonaVie. When you go out and do the work (I recommend 20 personals in each binary leg) and go Black Diamond - MonaVie will give you a once in a lifetime cruise every year! People dream of a cruise like this once in a lifetime, but MonaVie provides exotic trips around the world to all of its Black Diamonds and above. We are excited to be going on this cruise and invite you to go Black Diamond to come next time. We know you can do it. Laurie and I, Chris and Terri, and Tim and Amy are all taking our children as part of their history lessons. I never had a history class like this when I was growing up. Just one of the many perks for leading teams. God Bless, Orrin Woodward
Barcelona, Spain
Barcelona is located in the northeastern part of Spain, 90 miles south of the French border. People from all around the world enjoy visiting this city for its individuality, cultural interest, and physical beauty. When Hans Christian Andersen visited in 1862, he remarked that Barcelona was the "Paris of Spain." You're likely to agree. The city is a major cultural center with a fascinating history. Everywhere are archives, libraries, museums, and buildings of interest, plus superb examples of modernist and Art Nouveau décor and architecture.
Nice (Villefranche), France
Villefranche is your gateway to the one-of-a-kind French Riviera, home to Monte Carlo, Cannes, and Nice. Shaded by jagged mountains touching deep-blue shores, Villefranche offers sunny beaches, sophisticated resort cities, quaint red-roofed villages, and spectacular views.
Florence (Livorno), Italy
Livorno, in the Tuscan region of Italy, is ideally situated for exploring some of the most beautiful cities in Italy, including Florence and Pisa. Florence is most noted as the birthplace of the Renaissance. Highlights include impressive piazzas and an incomparable fifteenth-century skyline, sure to offer charm and an unforgettable experience.
Rome (Civitavecchia), Italy
Civitavecchia is the gateway to all the magnificence of the ancient city of Rome. Whether it's the Forum, the Sistine Chapel, the Pantheon, or St. Peter's Basilica that sparks your interest and intellect, Rome is home to a lifetime's worth of historical, architectural, and spiritual sites. Depending on traffic, the drive from Civitavecchia to Rome takes approximately an hour and a half.
Naples, Italy
Naples is not only picturesque; it's also one of the world's greatest cultural centers, filled with extraordinary works of art and architecture in the classical Greek and Roman styles. Several interesting tours are available of the city itself and the fascinating places that lie just outside of Naples. While you're in the area, you'll want to visit Pompeii, one of the most famous excavation sites in the world. A thriving city 1,900 years ago, it was devastated by the eruption of Mount Vesuvius in 79 A.D. when 30 feet of volcanic ash and pumice stone covered it.
Santorini, Greece
They say that the sunsets in Santorini are the best in the world. From the Caldera you can see breathtaking views of the volcano and neighboring islands, and to the east, miles of dark sandy or pebbled beaches. Everywhere you look, you will see small domed churches and remnants of days gone by. As you pull into the harbor, you will be awestruck by the 1,000-foot-high cliffs that rise from the sea.
Athens, Greece
High above pulsating modern Athens, the serene Acropolis reigns as it has for 25 centuries. Gaze on the timeless majesty of the marble-columned Parthenon. Down in the city, snap a photo of the colorfully costumed Evzone guards at Constitution Square or go shopping for silver jewelry, bright flotaki rugs, and other souvenirs.
Dubrovnik, Croatia
The massive city walls of Dubrovnik enclose tall medieval houses and marble-paved squares. Inside the walls lie hidden treasures like the Sponza Palace with its elegant courtyard and elaborate stone carvings; the Church of St. Blaise;the cloister of the 14th century Franciscan Monastery; and Stradun, the city’s main thoroughfare.
Venice, Italy
A city of beauty and art, Venice boasts the world-famous Grand Canal, which is lined with old palaces of the Venetian aristocracy; for centuries the gondola, a flat-bottomed boat propelled by a single oar, was the most common method of transportation in Venice. Saint Mark’s Square is the center of the city and its most popular tourist area. At the eastern end of Saint Mark’s Square lie Saint Mark’s Cathedral and Doge’s Palace, the two most imposing structures in Venice. In the rear of the Doge’s Palace is the famous Bridge of Sighs, which connected the palace with public prisons and was the route by which prisoners were taken to and from the judgment hall.
Wednesday, May 21
Port St. Lucie Bay Fishing
by
Orrin Woodward
on Wed 21 May 2008 07:58 AM EDT
Captain Bill caught and released this big boy snook right underneath our dock. Who wants to get free and go fishing? God Bless, Orrin Woodward
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