Something strange happened recently….Amway lost a lawsuit! Cue the Rocky soundtrack. The little guy won this fight. In a lawsuit filed against another MLM in 2010, Amway ultimately ended up losing after a full jury trial. Amway alleged that a competing MLM (bHIP) was interfering with Amway’s relationships with its distributors. The jury decided differently. Check out the press release below. In most of these cases, they never reach a jury. They’re normally settled out of court (like in the Amway / Pokorny case) or litigated in confidential arbitration (where distributors normally lose). This is very interesting news and appears to be a clear victory for the pro-distributor movement. Stay tuned on this one. It’s likely far from over…
BHIP TRIUMPHS IN TWO YEAR LEGAL BATTLE WITH AMWAY CORP.
The dispute between bHIP and Amway began in September 2010 after Amway obtained an order from a Texas State Court outside the presence of bHIP counsel requiring it to cease all business activities with Casey Combden and any distributor sponsored by Mr. Combden into the bHIP opportunity.
After expedited discovery a Collin County Texas Court heard evidence and arguments of counsel. Following a five hour hearing the Court dissolved the temporary order and determined that a temporary injunction was not warranted.
Amway dismissed the state court action and re-filed their claims of tortuous interference with a contract, business relations and prospective business relations as well as assertions that bHIP misappropriated, stole, or converted Amway’s trade secrets (limited Line of Sponsorship Information).
In the federal court filing, Amway also added a claim for false advertising of the business opportunity and products of bHIP under the Lanham Act. Amway claimed that Mr. Combden joined bHIP in violation of his distributor contract with Amway, and that bHIP induced him to do so. Further, Amway claimed that the distributor agreement that Mr. Combden signed in 1989 incorporated the Amway Rules of Conduct which were amended in 2004 to include a covenant not to compete.
Mr. Combden and others testified they were not aware the non-compete was added. bHIP urged that an independent contractor should not be allowed to be sued based upon an agreement to which they have no real input or right to object. Additionally, if Mr. Combden was not aware of the contract, bHIP could not be expected to be aware of it. bHIP also made the case that names and contact information of people that Mr. Combden had long standing relationships with were not Amway’s trade secrets.
The contact information of people sponsored into a business is developed by the independent distributors, not the company. bHIP stood firmly on its philosophy that the time, energy and money spent to develop a leader in a company entitles that distributor to advise those individuals of other opportunities in which they may be involved. When this matter was initially filed in state court, it did not include an allegation of false advertising under the Lanham Act.
Amway claimed that bHIP improperly induced distributors to join bHIP and sell bHIP products rather than Amway products. Amway claimed that bHIP over stated its financial strength as a company and stated that its products made medical claims about benefits they provided other than providing the consumer with energy. Relying on information from its manufacturers, bHIP provided two documents to a limited audience as educational materials concerning theingredients in the products, not the products themselves.
After hearing seven days of testimony from nineteen witnesses, the jury heard closing arguments from counsel for both sides and deliberated. The jury returned a verdict unanimously in favor of bHIP which resulted in the entry of a judgment that Amway take nothing on its claims.
When asked about his thoughts on the two year ordeal, Founder and CEO Terry LaCore said
“In life there is right and wrong. Sometimes, no matter how painful, you need to stand up for what is right.” It is bHIP’s desire that the network marketing industry renews its beliefs in the value that an independent distributor brings. “Without each and every distributor working on behalf of the company and selling its products, there would be no company for them to be tied to.” said Terry LaCore.
For more information, please contact:
Jenifer L. Grace
General Counsel bHIP Global, Inc.
Melissa, Texas 75454