This is one of two documented cases (the other is Baker v. Amway) in which Amway Corporation has violated the spirit and/or letter of its own rules in order to take someone's distributorship, or part of their distributorship, away from them.
This one really has to be seen to be believed. The Gommeringers seemed to be living testimonials to the principles of hard work and free enterprise so often preached by Amway's founders. Joining Amway in 1969, the Gommeringers devoted 15 years to building a network of more than 50,000, and attained the level of Crown Direct, the second-highest "pin level" attainable in Amway. When Amway was charged with fraud in 1983 by the Canadian govt., the Gommeringers, believing in the integrity and honesty of DeVos and Van Andel, defended them, despite the fact that their Amway business suffered as a result of the negative publicity. When DeVos and Van Andel plead guilty later that year to criminal fraud, their business was further impacted.
The Gommeringers worked for over a year to overcome the enormous negative effect that the criminal activities of Amway's owners had on their business, only to have Amway Corp. terminate their distributorships over a disputed $87.00 annual renewal fee. (Yup, you read that right.) The Gommeringers, who had relied on Amway's integrity and promises that their Amway business would not be taken from them without just cause and due process, were ruined. It seems very likely that there was something else behind Amway's bizarre and vindictive action, but we'll probably never know; following their usual pattern, Amway settled the case before it could go before a jury and the facts be made public. The only hint we have is a comment made by the Gommeringer's attorney concerning the possibility that the Gommeringers were planning to sell competing products to their downline. Even if this were the case, Amway's own rules clearly state that distributors may sell non-Amway products to those whom they directly sponsor. This rule, in fact, is what allows the "tools" business to exist, despite the fact that the illegal and unethical activities it fosters have caused Amway no end of legal hassles and bad publicity. It's interesting that Amway has done so little to get rid of those distributors who are commiting serious abuses of Amway's rules, but they'll violate their own rules to get rid of distributors who have done nothing wrong.
One issue raised in the Gommeringer case is that of Amway's responsibility (or lack thereof) to conduct itself in an ethical and legal manner. The Gommeringers charged that Amway had damaged their business through its admitted criminal actions in the Canadian fraud case (see count III of the Complaint below). The judge in the case dismissed this count on the grounds that Amway's distributor contract, which includes all rules published in Amway's distributor Code of Conduct, obligates only distributors to act in a legal and ethical manner; Amway Corp. itself has no obligation to its distributors to do the same. How comforting.
Should there be any doubt that the disputed renewal fees were Amway's sole stated reason for terminating a Crown Direct distributorship and financially (and emotionally) ruining these distributors, here is Amway's answer to the charge made in paragraph 16 of Count II below:
"16. Admitted."--Defendant's Answer To Plaintiff's Second Amended Complaint And Demand For Trial By Jury, filed 10/21/87
UNITED STATES DISTRICT COURT
WERNER GOMMERINGER and
ERNA GOMMERINGER, individually
and d/b/a Werna Enterprises and
DANA INTERNATIONAL, INC.,
Plaintiffs,
vs File No.: G85-832-CAl
AMWAY CORPORATION, JUDGE BENJAMIN F. GIBSON
Defendant. SECOND AMENDED COMPLAINT AND
DEMAND FOR TRIAL BY JURY
John C. Buchanan (P-11341)
Carole D. Bos (P-33638)
Lois Marie Ens (P-35706)
Attorneys for Plaintiffs
Buchanan & Bos
Sixth Floor Frey Building
Grand Rapids, Michigan 49503
(616) 458-1224
Grant J. Gruel (P-14443)
Attorney for Defendant
NOW COME plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a Werna Enterprises, and Dana International,
Inc., an Arizona Corporation, by and through their attorneys,
Buchanan & Bos, and for their complaint against defendant, Amway
Corporation (Amway), allege as follows:
GENERAL ALLEGATIONS
l. Plaintiffs Werner and Erna Gommeringer, husband and
wife, are residents of the County of Pima State of Arizona, and at
all relevant times have done business as Werna Enterprises. Dana
International, Inc. is an Arizona corporation incorporated in 1984
and wholly owned and operated by plaintiffs Werner and Erna
Gommeringer.
2. Defendant, Amway Corporation, is a Michigan corporation
maintaining its corporate headquarters and principal place of
business in the Western District, County of Kent, State of Michigan.
3. This Court has jurisdiction of this action pursuant to
28 U.S.C. §1332. Venue is proper pursuant to 28 U.S.C. §1391.
4. On or about April 15, 1969, Werner Gommeringer entered
into an Amway distributorship agreement with Amway of Canada, Ltd., a
wholly owned subsidiary of Amway Corporation, wherein Amway of
Canada, Ltd. authorized Werner Gommeringer to purchase and sell Amway
products through an Amway distributorship.
5. On or about December 1, 1969, Werner Gommeringer and
Amway amended their agreement and added Erna Gommeringer as a
distributor. Thereafter, Werner and Erna Gommeringer did business as
Werna Enterprises.
6. On or about January l, 1973, Werner and Erna
Gommeringer moved to the United States. In March 1973, Werner and
Erna Gommeringer requested Amway's consent to transfer their
distributorship with Amway of Canada, Ltd. to Amway Corporation
(U.S.).
7. In June 1973, Amway Corporation consented to the
transfer and entered into a distributorship agreement with Werner and
Erna Gommeringer wherein Amway Corporation authorized Werner and Erna
Gommeringer to purchase and sell Amway products through their
distributorship.
8. The contract documents between Werner and Erna
Gommeringer and Amway Corporation consisted of "the following: (1)
the SA-88 distributor application form, (2) the Career Manual…
(3) the Direct Distributor Manual…and, (4) where appropriate,
the warehouse authorization form…" (Career Manual, 1980, p.
2-B).
9. On or about May l, 1982, Werner and Erna Gommeringer
acquired a second Amway distributorship from Vic and Mellinda Hayes.
The Gommeringers' first distributorship was then called "Werner and
Erna Gommeringer I" (Amway #3213) and the second distributorship was
called "Werner and Erna Gommeringer II" (Amway #F699).
10. On or about September 26, 1984, Werner and Erna
Gommeringer formed Dana International, Inc., an Arizona corporation,
and with the consent of defendant, Amway Corporation, transferred
their two Werner and Erna Gommeringer distributorships to Dana
International, Inc. Thereafter, the "Werner and Erna Gommeringer I"
distributorship was called "Dana International, Inc. No. I" and the
"Werner and Erna Gommeringer II" distributorship was called "Dana
International, Inc. No. II".
11. Up until April 1985, plaintiffs Werner and Erna
Gommeringer and their company, Dana International, Inc., were
recognized Amway distributors in good standing and were entitled to
(a) purchase, accept and sell Amway products, (b) represent to the
public that they were Amway distributors, (c) sponsor other
distributors, (d) receive from Amway and pay to others bonuses,
awards, and other incentives, (e) attend Amway functions and socials,
(f) receive Amway promotional literature, including, current price
listings, manuals, Amagrams, Newsgrams, etc., and (g) conduct any
further business associated with Amway Corporation which an
authorized distributor would be entitled to conduct under the
contract agreements.
COUNT I
BREACH OF CONTRACT AND DAMAGES RESULTING
FROM THE WRONGFUL TERMINATION OF
PLAINTIFFS' DISTRIBUTORSHIP FRANCHISE
12. Plaintiffs restate and incorporate, by reference, each
and every allegation set forth in Paragraphs 1 through 11 of the
General Allegations as if set out fully herein.
13. In April 1985, Amway Corporation sent Dana
International, Inc. No. I and Dana International, Inc. No. II, by
ordinary mail, two letters dated April 18, 1985 but postmarked
April 24, 1985. Said letters are attached hereto and made a part
hereof as Exhibits A and B.
14. Said letters, which speak for themselves, advise Dana
International, Inc. No. I and Dana International, Inc. No. II that
their distributorships are "terminated".
15. The effective result of Amway sending said letters was
the discontinuance of plaintiffs Werner and Erna Gommeringer's
distributorships known as Dana International, Inc. No. I and Dana
International, Inc. No. II.
16. The sole basis of Amway's discontinuance of the
Gommeringers' distributorships is Amway's claim that plaintiffs
failed to mail their signed "Notice of Intent to Continue" form for
1985 and their $12.00 "Amagram" subscription fee (plus a $4.00 late
fee if sent after December 31, 1984) to Amway.
17. In 1976, Amway, for the first time, unilaterally
inserted into their Career Manual the statement that a distributor
must file a "Notice" form and send in a subscription fee. This was not
part of the contract when the Gommeringers became distributors in
1969 and since it was unilaterally inserted into the Career Manual
was not part of the contract between the Gommeringers and Amway in
1985 when the Gommeringers were terminated.
18. Plaintiffs had, however, mailed Amway their signed
"Notice of Intent to Continue" form and a check for $24.00 to cover
the subscription fee for both distributorships on September 26,
1984. A copy of the signed forms and check register is attached
hereto and made a part hereof as Exhibit C.
19. On April 30, 1985, shortly after receipt of Exhibits A
and B, the Gommeringers requested reinstatement of their
distributorships.
20. Amway refused to reinstate the Gommeringers as
distributors and further refused to (a) recognize the Gommeringers as
Amway distributors, (b) sell or ship Amway products to the
Gommeringers, (c) allow the Gommeringers to represent to the public
that they were Amway distributors, (d) allow the Gommeringers to
sponsor other distributors, (e) pay the Gommeringers bonuses, awards,
and other incentives, (f) allow the Gommeringers to attend any Amway
functions or socials, (g) send the Gommeringers promotional
literature, including current price listings, manuals, Amagrams,
Newsgrams, etc., or (h) allow the Gommeringers to conduct any further
business associated with Amway Corporation which an authorized Amway
distributor would be entitled to conduct under the contract
documents.
21. In consideration for a distributor's many efforts,
tremendous hard work, and extensive investment of time and money in,
among other things, selling Amway products, building and maintaining
for years an extensive Amway distributorship network, sponsoring new
additional distributors, (Business Manual, 1984, p. 28), and creating
a worldwide market need for Amway's products and Amway's
direct-selling businesses, Amway represented and promised:
(a) that distributors have a "substantial
and material property right in their
distributorships" which cannot be
"arbitrarily and improperly" taken away
from them (Career Manual, 1980, p. 2-B);
(b) that a distributorship could only be
terminated if there existed "good and
just cause" which Amway defines as a
"substantial and material breach of the
(contract) between Amway and the
violating distributor." (Direct
Distributor Manual, 1978, p. 2 -J); and
(c) that the termination of a
distributorship for good cause can only
occur after an elaborate due process
hearing and procedure is completed and
that Amway would make "every reasonable
effort to correct the situation rather
than terminate the distributorship".
(Direct Distributor Manual, 1978, p. 2 -J)
22. In order to ensure that the distributor's substantial
and material property right in the distributorship would not be
improperly or arbitrarily terminated or taken away, Amway represented
and promised that full and elaborate due process procedures, the
many steps (of which) are designed to insure every distributor
several opportunities to defend himself (Career Manual, 1980, p.
31-B), would first be followed.
23. The elaborate internal due process procedures include,
among other things, notification of Amway's intent to terminate a
distributorship in writing and sent by certified mail and an
elaborate hearing and appeal process as defined in the contract
documents. ( Direct Distributor Manual, 1978, pp. 2-J, 4-J)
24. Amway further represented and promised to its
distributors that it would assist its distributors in gaining
financial independence and financial security for the whole family
(Business Manual, 1984, p. 50; Career Manual, 1980, pp. 8-A, 1-B),
that the effort the distributors put into building their Amway
distributorships would not be jeopardized by arbitrary changes in
Amway's policy (Business Manual, 1984, p. 4), that a corporate owned
or operated distributorship would have perpetual existence (Business
Manual, 1984, p. 67), that distributors could pass their
distributorships on to their children and successors (Business
Manual, 1984 p. 68), and that no one could deny or deprive the
distributors of what they rightly earned (Career Manual, l980, p.
5-A).
25. Contrary to all of the above promises and
representations made by Amway to plaintiffs and contrary to all of
the above due process procedures as set forth in the contract
documents, Amway improperly, arbitrarily, maliciously, wrongfully and
in complete disregard of the contract and the established due process
procedures, abruptly terminated and discontinued the plaintiffs
distributorships on April 18, 1985.
25. On April 18, l985 when plaintiffs were wrongfully
terminated as herein set forth, plaintiffs had devoted fifteen (15)
consecutive years of their lives to starting, building, and keeping
up their Amway distributorship business, had put a tremendous amount
of time, money, and effort into their Amway business, had invested
and reinvested hundreds of thousands of dollars into their Amway
business and had sponsored and convinced through their
distributorship network more than 50,000 new distributors to become
involved in Amway, all to the monetary benefit of Amway.
27. As a result of plaintiffs' efforts and sacrifices over
the years, plaintiffs had built one of the largest Amway
distributorship networks in the world, had achieved the second
highest level in the Amway awards system as Crown Direct
Distributors, and had made a multi-million dollar business, grossing
by 1982, over 1 million dollars in revenue.
28. As a direct and proximate result of defendant's
improper breach of its contract with plaintiffs, its wrongful and
malicious termination of plaintiffs' distributorships without good
cause and without due process and defendant's refusal to treat
plaintiffs as valid Amway distributors, plaintiffs' entire
multi-million dollar distributorship business was lost literally
overnight.
29. As a direct and proximate result of defendant's
improper actions, as detailed above, plaintiffs are financially
ruined.
30. As a further direct and proximate result of defendant's
improper actions, as detailed above, plaintiffs and plaintiffs'
children and successors who were entitled to expect income from the
Gommeringers' distributorships suffered, and will continue to suffer,
complete loss of plaintiffs' multi-million dollar business, loss of
income, bonuses and compensation to which they would have been
entitled for years to come and loss of their good name, reputation,
business contacts, and financial credit.
31. Although plaintiffs' distributorships have been
terminated and discontinued, and although plaintiffs no longer have
their business or their business income, Amway continues to have
complete benefit of all of plaintiffs' hard work, money, and efforts
as well as the many new distributors plaintiffs brought into Amway.
32. Furthermore, in consideration for getting distributors
to commit themselves and their time, money, and resources to building
an Amway distributorship business within the Amway network, Amway
promised its distributors financial security and permanency in their
distributorships.
33. The nature of the contract between Amway and its
distributors, including the Gommeringers, is such that it is
primarily personal in nature calling for the distributors', and the
distributors families, personal services, energies, emotions,
feelings and mental solicitude.
34. In exchange for this personal commitment and personal
self-sacrificing, the parties contemplated at the time of formation
of the contract that the contract would secure for the distributors a
sense of security, a sense of control over one's financial future and
a sense of enjoyment in working for one's self as an independent
distributor.
35. It is , and was in 1969, therefore, foreseeable and
expected that distributors, especially those who reached the higher
bonus levels such as Crown Direct, would make a total financial
commitment to building the Amway business and placing their financial
wealth on the permanency and security of the Amway system.
36. It is, and was in 1969, also foreseeable to Amway that
taking away a distributor's distributorship after years of hard work
and total financial commitment to building up the business can, and
would, result in not only loss of the business and the monetary
awards flowing therefrom, but also loss of emotional stability and
security since one's future becomes uncertain and unstable without
his or her distributorship.
37. It is, and was in 1969, also foreseeable that at the
time of formation of the contract, because of the personal feelings
which were most deeply involved, breach of the contract would likely
occasion mental distress, anxiety and suffering for reasons that do
not stem only from the pecuniary loss resulting from the breach.
38. It is, and was in 1969, also foreseeable that
deprivation of a committed distributor's distributorship could, and
would, result in tremendous emotional anxiety, frustration and
right, as well as other psychological and physical damages as
related to the foreseeable trauma of losing one's distributorship.
39. As a direct and proximate result of defendant's
improper breach of its contract with plaintiffs, its wrongful,
malicious and intentional termination of plaintiffs' distributorships
without due process and without good cause, and defendant's refusal
to treat plaintiffs as valid Amway distributors, Werner and Erna
Gommeringer did sustain severe mental, emotional, psychological and
physical damages as a result of the sudden and unexpected termination
of their entire Amway business into which they had invested all of
their time, money, effort and resources.
40. All of the above results of Amway's shocking and
outrageous conduct in wrongfully and maliciously terminating
plaintiffs' distributorship s were directly and easily foreseeable to
Amway at the time it entered into its distributorship contract with
the Gommeringers.
WHEREFORE, plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a Werna Enterprise, and Dana International,
Inc., pray for judgment against defendant, Amway Corporation, first
for breach of contract and damages in whatever amount they are found
to be entitled to for wrongful termination of their distributorship
franchise and second, Werner and Erna Gommeringer, individually, pray
for damages for mental, psychological, emotional and physical
distress and injury resulting from the shocking and outrageous
conduct of defendant in wrongfully terminating their distributorship
franchise.
COUNT II
TORTIOUS MISCONDUCT AND DAMAGES RESULTING
FROM AMWAY'S FRAUDULENT MISREPRESENTATIONS
41. Plaintiffs hereby restate and incorporate, by
reference, each and every allegation set forth in Paragraphs 1
through 11 of the General Allegations and Paragraphs 12 through 40 of
Count I as if set out fully herein.
42. Defendant, Amway Corporation, in order to induce
plaintiffs into becoming Amway distributors and further induce them
into building, expanding and maintaining their distributorships, made
material and significant representations and promises to the
plaintiffs, to wit: that distributors had a substantial and material
property right in their distributorships which could not be taken
away from them or terminated without due process and good cause.
43. Defendant's representations and promises are and were
false for the reason that a distributor, according to Amway's present
claim and defense to Count I, could be terminated without good cause
and without due process procedures if said distributor failed to file
a Notice of Intent form and send Amway an Amagram subscription fee
once a year.
44. On April 18, l985 Amway terminated plaintiffs'
distributorships.
45. The sole basis of Amway's discontinuance of the
Gommeringers' distributorships is Amway's claim that plaintiffs
failed to mail their signed "Notice of Intent to Continue" form for
1985 and their $12.00 "Amagram" subscription fee (plus a $4.00 late
fee if sent after December 31, 1984) to Amway.
46. It is, therefore, Amway's position that the mere
failure to file a $12.00 subscription fee and send in a signed
"Notice" form can, and will, result in loss of a distributor's entire
distributorship without due process and without good or just cause.
47. Defendant knew that its promises and representations
were false at the many times defendant made such promises and
representations since defendant knew that it could, if it so desired,
take away a distributor's entire business if he failed to send in his
signed "Notice" form and check for $12.00.
48. Defendant made such promises and representations with
the intent that distributors, including plaintiffs, would act and
rely upon those promises and representations and that distributors,
including plaintiffs, would be induced into entering into an Amway
distributorship franchise contract, would spend years of their lives
building it and making it profitable to Amway, would invest and
reinvest their money into the franchise, and would sponsor many, many
more new, additional distributors who, likewise, would build a
business and make it profitable to Amway.
49. Plaintiffs acted and relied upon defendant's said
representations and promises and became Amway distributors in 1969
and continued for fifteen years on the reliance and belief that they
had a substantial property right in their distributorships and that
defendant could not take their distributorships away improperly or
unjustly without good cause and without due process procedures as
indicated by Amway in the contract documents.
50. In 1976, Amway, for the first time, unilaterally
inserted into their Career Manual the statement that a distributor
must file a "Notice" form and send in a subscription fee. This was
not part of the contract when the Gommeringers became distributors in
1969 and since it was unilaterally inserted into the Career Manual
was not part of the contract between the Gommeringers and Amway in
1985 when the Gommeringers were terminated.
51. By inserting this statement, Amway intentionally
created a trap (assuming that it imposed a contractual obligation)
for unsuspecting distributors so that Amway could terminate a
distributor's distributorship without having a good or valid reason
and without first affording the aggrieved distributor an opportunity
to defend himself.
52. Amway went even further in attempting to trap and
deceive its distributors and through its conduct and words and the
Notice form itself, induced, misled and lulled distributors into a
false belief that filing their forms late would only result in a
$4.00 late fee.
53. Amway's conduct and words indicated to all
distributors, including the Gommeringers, that filing late was of
little or no consequence whatsoever and that timely filing the
"Notice" form was a rather insignificant, unimportant detail which
even Amway did not strictly enforce.
54. Yet, Amway's present position--that failure to timely
file will result in termination of a distributor's entire business--
gives Amway a means of causing a distributor to "technically" breach
his contract and thus allow Amway to ignominiously pull the
distributor's business away from him whenever it so desires.
55. The Gommeringers fully relied on Amway's
misrepresentation, fraud and deceitful practices and believed that
they could only be terminated for good and just cause and with due
process and upon that reliance built and maintained for over fifteen
years their multi-million dollar distributorship franchise so that
they could pass it on to their children and successors.
56. Pursuant to defendant's misrepresentations, fraud, and
deceitful practices, Amway "terminated" plaintiffs' entire
multi-million dollar distributorship business without good or just
cause and without any due process procedures whatsoever.
57. As a direct and proximate result of defendant's
improper actions, as detailed above, plaintiffs have lost their
entire multi-million dollar business and are financially ruined.
58. As a direct and proximate result of defendant's
improper actions, as detailed above, plaintiffs and plaintiffs'
children and successors who were entitled to expect income from the
Gommeringers' distributorships suffered , and will continue to suffer,
complete loss of their multi-million dollar business, loss of income,
bonuses and compensation to which they would have been entitled to
for years to come and loss of their good name, reputation, business
contacts, and financial credit.
59. As a further and direct and proximate result of
defendant's intentional and malicious termination of plaintiffs'
distributorship business and defendant's refusal to treat plaintiffs
as valid Amway distributors, Werner and Erna Gommeringer did sustain
severe mental, emotional, psychological and physical damages as a
result of the sudden and unexpected termination of their entire Amway
business in which they invested all of their time, money, and
resources.
WHEREFORE, plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a. Werna Enterprises, and Dana International,
Inc., pray for judgment against defendant, Amway Corporation, for
tortious and fraudulent misrepresentation and damages in whatever
amount they are found to be entitled, first for loss of their
distributorship franchise and loss of their income, bonuses and
compensation and, second, Werner and Erna Gommeringer, individually
pray for damages for mental, psychological, emotional and physical
distress and injury resulting from the shocking and outrageous
conduct and fraudulent misrepresentations made by defendant, Amway
Corporation, and relied upon by plaintiffs.
COUNT III
BREACH OF CONTRACT AND LOSS OF PROFITS
FOR THE YEARS 1983 THROUGH 1985 RESULTING
FROM AMWAY'S FAILURE TO CONDUCT ITS
BUSINESS IN AN HONEST AND ETHICAL MANNER
60. Plaintiffs restate and incorporate, by reference, each
and every allegation set forth in Paragraphs 1 through 11 of the
General Allegations, Paragraphs 12 through 40 of Count I and
Paragraphs 41 through 59 of Count II as if set out fully herein.
61. In consideration for the distributors', including
plaintiffs', promise to operate their Amway franchises ethically,
morally, honestly, and with a high standard of integrity as set forth
in the contract documents of the Code of Ethics and Rules of Conduct,
Amway likewise promised and agreed that it too would conduct its
business in an ethical and moral fashion and with a high standard of
integrity .
62. Defendant has represented to its distributors,
including plaintiffs, that its business is built on a tradition of
ethical business standards and integrity and that Amway has always
taken great pride in the honesty, integrity, and standards of
excellence that are an integral part of the World of Amway.
63. Amway has further represented that Messrs. Van Andel and
DeVos "have unquestioned integrity" (Career Manual, 1980, p. 3-B).
64. As part of the Rules of Conduct imposed upon a
distributor and likewise adhered to by Amway, Amway and its
distributors have always been forbidden to "engage in any deceptive
or unlawful trade practice" or "any illegal or unlawful business
activity." (Business Manual, 1984, pp. 69-70).
65. Amway recognized that "nothing harms your image more
than breaking the law" and that its and its distributors' actions
affect the entire Amway network and Amway sales and profits (Business
Manual, 1984, p. 99).
66. In 1965, unknown to Amway distributors and contrary to
all of Amway ' s promises and representations that it would obey the
law, act morally, ethically and honestly and conduct its business
with unquestioned integrity, Amway willfully devised and implemented
a scheme to cheat the Canadian government of certain customs duties
by submitting dummy invoices regarding products shipped to Canada.
67. Said scheme was unknown to the Gommeringers in 1969
when they became Amway distributors and remained undetected for many,
many years even while the Gommeringers invested all their money, time
and effort into building up their distributorships.
68. From the early seventies and up until late 1982, Amway
sales continued to climb steadily, regardless of national economic
conditions, and the Gommeringers' business likewise climbed.
69. In late 1982, however, news of the fraud Amway
perpetrated upon the Canadian government began to surface by way of
the news media.
70. In early 1983, the Canadian government formally charged
Amway Corporation, Amway of Canada, Ltd. and Amway's top four
executive officers, including Messrs. Rich DeVos and Jay Van Andel, of
criminally defrauding the Canadian government of millions of dollars.
71. As more news of Amway's illegal activities became
public, defendant's distributors, including plaintiffs, experienced
drastic business setbacks as a result of their inability to sell
Amway product, inability to sponsor new Amway distributors,
inability to maintain current sales volumes, and inability to down
play the bad press of and negative reaction to Amway's fraud.
72. Consequently, as a result of the charge of fraud
against Amway and its top executives, for the first time since the
beginning of Amway and the beginning of the Gommeringers' business,
the Gommeringers' sales fell off and growth which was steady up to
that point dramatically halted.
73. Throughout all the time that news of Amway's activities
was being publicized, Amway and its executives promised and
represented on a number of occasions that they were innocent and that
they would be fully vindicated for this crime through the judicial
process.
74. The Gommeringers, pursuant to their belief that Amway
and its executives operated their business honestly, ethically,
morally and with a high degree of integrity, continued to defend
Amway and its products, its company, its executives and trusted Amway
and its co-founders when they said that they were innocent and had
not violated any laws.
75. Contrary to Amway's promises and representations, on
November 10, 1983, Amway Corporation and Amway of Canada, Ltd. plead
guilty to criminal charges of defrauding the Canadian government of
over $28 million from February 5, 1965 through January 31, 1980.
76. Pursuant to Amway ' s admission of guilt, Amway
Corporation was ordered to pay a fine of $20 million and Amway of
Canada, Ltd. was ordered to pay a fine of $5 million.
77. After Amway's plea of guilty and admission of fault,
1984 sales for Amway distributors, including the Gommeringers,
continued to plummet and the Gommeringers were unable to sponsor as
many new distributors as they had in the past, forcing them, as well
as all other distributors, to attempt as best they could to keep
their Amway business together and make it work.
78. In 1885, after the Gommeringers spent over a year of
tremendous hard work in an attempt to overcome the enormous negative
side effects of Amway's admission of guilt, and just as the
Gommeringers were able to see the fruit of their labor and the bad
press Amway continually received began to subside, Amway wrongfully
and maliciously terminated the Gommeringers' distributorships.
79. Contrary to Amway's promises and representations that
it would act honestly, ethically, morally and with a high standard of
integrity, as indicated above, Amway breached the contract by
committing a major fraud upon the Canadian government which Amway
admitted cheated the Canadian government out of millions of dollars.
80. As a direct consequence of the commission and admission
of this fraud, Amway distributors, including the plaintiffs, suffered
tremendous losses during the years 1983, 1984, and 1985 in terms of
lost income, bonuses and sales and the inability to sponsor new
distributors.
WHEREFORE, plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a Werna Enterprises, and Dana International,
Inc., pray for judgment against defendant, Amway Corporation, for
breach of contract and damages in whatever amount they are found to
be entitled to for loss of profits for the years 1983 through 1985
resulting from Amway's dishonest, immoral, unethical, and criminal
conduct of defrauding the Canadian government of millions of dollars.
COUNT IV
BREACH OF CONTRACT AND LOSS OF PROFITS
FOR THE YEARS 1975 THROUGH 1985 RESULTING
FROM AMWAY'S FAILURE TO PROPERLY IMPLEMENT
AN INCOME PRESERVATION PLAN
81. Plaintiffs restate and incorporate, by reference, each
and every allegation set forth in Paragraphs 1 through 11 of the
General Allegations, Paragraphs 12 through 40 of Count I, Paragraphs
4l through 59 of Count II and Paragraphs 60 through 80 of Count III
as if set out fully herein.
82. In June 1975, Amway Corporation represented to its
distributors, including plaintiffs, that it had implemented a new
"Income Preservation" Plan for its distributors.
83. Under the Income Preservation Plan, Amway promised that
a distributor's income would be protected "from the eroding affects
(sic) of inflation" with "inflation insurance" and that if inflation
persisted "in whatever degree" the distributors' Amway income would
"increase accordingly." (Amagram, Vol. 16, No. 3)
84. Amway further promised and represented that the
compensation which Amway pays to its distributors in the form of
bonuses and incentives would be adjusted according to inflation.
85. Contrary to Amway's promises and representations, Amway
did not implement the Income Preservation Plan as represented and/or
did not implement an Income Preservation Plan which kept "distributor
income in step with price increases" or in "pace with dollar
inflation". (Direct Distributor Manual, 1976, p. 2-B)
86. As a direct and proximate result of Amway's breach of
contract in failing to implement an Income Preservation Plan as
promised and represented and/or implement a Plan that would
accomplish what Amway promised and represented it would, all
distributors, including the plaintiffs, lost and did not receive
tremendous amounts of profits and bonuses to which they were entitled
and which were promised for the years 1975 through 1985.
WHEREFORE, plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a Werna Enterprises, and Dana International,
Inc., pray for judgment against defendant, Amway Corporation, for
breach of contract and damages in whatever amount they are found to
be entitled to for the loss of profits and bonuses for the years 1975
through 1985 resulting from Amway's failure to properly implement an
Income Preservation Plan as promised by defendant.
COUNT V
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
AND DAMAGES RESULTING FROM AMWAY'S EXTREME
AND OUTRAGEOUS CONDUCT TOWARD PLAINTIFFS
87. Plaintiffs hereby restate and incorporate, by
reference, each and every allegation set forth in Paragraphs 1
through 11 of the General Allegations, Paragraphs 12 through 40 of
Count I, Paragraphs 41 through 59 of Count II, Paragraphs 60 through
80 of Count III and Paragraphs 81 through 86 of Count IV as if set
out fully herein.
88. Sometime in 1984, Amway set out to publicly embarrass,
humiliate and degrade the Gommeringers and intentionally cause them
severe emotional distress and anxiety.
89. Amway's conduct was intended to frustrate the
Gommeringers, ostracize them and debilitate their efforts to build
and sustain their Amway business.
90. To accomplish its malicious intentions, Amway did the
following:
(a) refused the Gommeringers numerous privileges and
perquisites which the Gommeringers had already worked hard for
and rightfully earned;
(b) disinvited or revoked the Gommeringers invitation or
refused to allow them to participate in several high-level
functions which are considered by the distributors to be Amway's
public recognition of, approval of and reward for the work,
efforts and commitment of the invited guest, such as the
executive Diamond Club Hong Kong trip, the 1984 Regional
Leadership Meeting, the Enterprise Yacht trip to Peter Island and
the Hawaiian trip.
(c) incited other Amway distributors to file formal
complaints against the Gommeringers in the form of "419s" and to
reveal information about the Gommeringers which could be used
against them;
(d) discredited and undermined the Gommeringers' leadership
by speaking against the Gommeringers at Amway rallies and
functions.
91. All of Amway's conduct had the intended effect of
humiliating, harassing, degrading, and undermining the Gommeringers'
hard work and efforts in building their distributorship business and
making it successful.
92. Amway's extreme and outrageous conduct toward the
Gommeringers was intentional, malicious and spiteful.
93. Throughout l984 and l985, Amway continued to harass and
offend the Gommeringers on numerous occasions culminating in the
Gommeringers' distributorships being terminated in April 1985 and
telling the world of Amway that it made the Gommeringers "an example"
of what happens to you if you disagree with Amway.
94. As a result of Amway's outrageous conduct described
above, plaintiffs have suffered and continue to suffer severe
emotional distress, anguish and anxiety which has resulted in bodily
harm and injuries.
WHEREFORE , plaintiffs, Werner and Erna Gommeringer,
individually and d/b/a Werna Enterprises, and Dana International,
Inc., pray for judgment against defendant, Amway Corporation, for
intentional infliction of emotional distress, anguish and anxiety and
compensatory, punitive and exemplary damages in whatever amount they
are found to be entitled to for mental, psychological, emotional and
physical injury resulting from Amway's shocking and outrageous
conduct.
BUCHANAN & BOS
Attorneys for Plaintiffs
Dated August 17, 1987