Amway: The Untold Story: Hanrahan Lawsuit

 

               IN THE UNITED STATES DISTRICT COURT

              FOR THE EASTERN DISTRICT OF PENNSYLVANIA



JOHN and STACY HANRAHAN,               :      CIVIL ACTION N0.

129 Kent Road                          :        94-4615

Springfield, Pennsylvania 19064,       :

                                       :

         and                           :

                                       :

BRIAN BOHRER,                          :

649 Montroyale Drive                   :

Erie, Pennsylvania 16504,              :

                                       :

         and                           :

                                       :

MARK and  LORI  MENSACK,               :

523H South Moore Loop                  :

West Point, New York 10996,            :

                                       :      JURY TRIAL DEMANDED

on behalf of themselves and all        :

others simirlarly situated,            :

                                       :

              Plaintiffs,              :

                                       :

         v.                            :

                                       :

WILLIAM BRITT, individually and        :      CLASS ACTION

t/a, d/b/a AMERICAN MULTIMEDIA,        :

INC.; BRITT MOTIVATION, INC.;          :

BRITT LEASING, INC.; BRITT             :

MANAGEMENT, INC.; BRITT                :

RESOURCES, INC.; EXECUTIVES            :

UNLIMITED, INC.; EXECUTIVE             :

PLANNERS,  INC.,                       :

2533 N. Carson Street                  :

Carson City, Nevada 89706,             :

                                       :

         and                           :

                                       :

DEXTER YAGER, individually and         :

t/a, d/b/a YAGER ENTERPRISES;          :

DEXTER R. YAGER, SR. &  FAMILY      :

ENTERPRISES, INC.; D &  B YAGER     :

ENTERPRISES, INC.; DEXTER YAGER        :

SECURITIES, INC.; DEXTER YAGER         :

MOTIVATION, INC., INTERNET             :

SERVICES CORPORATION; INTERNET         :

SERVICES, INC.; INTERNATIONAL          :

COMMUNICATION CORPORATION OF           :

AMERICA; YAGER RESORT PROPERTIES,      :

INC.; DREAMBUILDERS REVIEW,            :

12201 Steele Creek Road                :

Charlotte, North Carolina 282?3,       :

                                       :

         and                           :

                                       :

AMWAY CORPORATION, INC.,               :

7575 East Fulton Road                  :

Ada, Michigan 49355,                   :

                                       :

              Defendants.              :





CLASS ACTION COMPLAINT



	Plaintiffs, John and Stacy Hanrahan, Mark and Lori Mensack 

and Brian Bohrer (hereinafter "plaintiffs"), on behalf of 

themselves and all others similarly situated, for their complaint 

allege as follows:



	l. This is a class action brought to remedy defendants' 

violations of the Sherman Act, 15 U.S.C. § l, the Racketeer 

Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et 

seq., and state common law arising from defendants' efforts to 

build their vast Amway sales organizations through the 

perpetration of fraud and restraint of competition. The 

fraudulent, deceitful and coercive behavior of defendants, as 

described herein, continues to cause substantial injury to the 

members of the Class, for which the Class seeks monetary and 

injunctive relief.





I. PARTIES



	2. Plaintiffs John and Stacy Hanrahan are individuals and 

citizens of the Commonwealth of Pennsylvania residing at 129 Kent 

Road, Springfield, Pennsylvania 19064, who were distributors of 

products marketed by the Amway Corporation from in or about 

January 1992 through in or about August 1992.



	3. Plaintiffs Mark and Lori Mensack are individuals and 

citizens of the state of New York residing at 523H South Moore 

Loop, West Point, New York 10996, who were distributors of 

products marketed by the Amway Corporation from in or about April 

1991 through in or about August 1992.



	4. Plaintiff Brian Bohrer is an individual and citizen of 

the Commonwealth Pennsylvania residing at 649 Montroyale Avenue, 

Erie, Pennsylvania 16504, who was a distributor of products 

marketed by the Amway Corporation from in or about July 1992 

through in or about February 1993.



	5. Defendant William Britt ("Britt"), individually and t/a, 

d/b/a American Multimedia, Inc., Britt Motivation, Inc., Britt 

Leasing, Inc., Britt Management, Inc., Britt Resources, Inc., 

Executives Unlimited, Inc. and Executive Planners, Inc., is a 

distributor of Amway products who is involved in the promotion of 

Amway distributorships, the distribution of Amway products, the 

production and distribution of motivational materials for use by 

Amway distributors, the sale of motivational materials to Amway 

distributors, and the organization of motivational rallies for 

attendance by Amway distributors.



	6. Defendant Dexter Yager ("Yager"), individually and t/a, 

d/b/a Yager Enterprises, Dexter R. Yager, Sr. &  Family 

Enterprises, Inc., D &  B Yager Enterprises, Inc., Dexter Yager 

Securities, Inc., Dexter Yager Motivation, Inc., Internet 

Services Corporation, Internet Services, Inc., International 

Communications Corporation of America, Yager Resort Properties, 

Inc. and Dreambuilders Review, is a distributor of Amway products 

who is involved in the promotion of Amway distributorships, the 

distribution of Amway products, the production and distribution 

of motivational materials for use by Amway distributors, the sale 

of motivational materials to Amway distributors, and the 

organization of motivational rallies for attendance by Amway 

distributors.



	7. Defendant Amway Corporation, Inc. ("Amway") is a 

corporation which is engaged in the manufacture, distribution and 

sale of Amway products, and the promotion of Amway 

distributorships.





II. JURISDICTION AND VENUE



	8. This Court has jurisdiction over this action under 28 

U.S.C. § 1331, as this action arises under the laws of the 

United States, and has supplemental jurisdiction over the state 

law claims under 28 U.S.C. § 1367.



	9. Venue properly lies in the Eastern District of 

Pennsylvania pursuant to 28 U.S.C. 1391(b) because this is the 

judicial district in which a substantial part of the events or 

omissions giving rise to the claim occurred, and defendants do 

business in the Commonwealth of Pennsylvania in this judicial 

district.



	10. By the acts, conduct, combination, conspiracy, schemes 

and other wrongs complained of herein, defendants directly and 

indirectly used the means and instrumentalities of interstate 

commerce.





III. FACTUAL STATEMENT



	11. Amway manufactures a wide variety of consumer household 

products which it sells nationwide through hundreds of thousands 

of distributors.



	12. The Amway sales plan is a pyramid type scheme, whereby 

any purchase or sale of Amway goods by a distributor financially 

benefits not only Amway, but also those Amway distributors who 

occupy higher levels in the Amway distributorship pyramid. In 

Amway parlance, those who occupy positions below a distributor in 

his or her branch of the pyramid are called the distributor's 

"downline." In order to earn significant profits as an Amway 

distributor, one must develop a sizeable downline by recruiting 

and sponsoring other distributors into the Amway sales 

organization.



	13. Plaintiffs and members of the Class all became Amway 

Distributors by entering into Distributorship Agreements with 

Amway, whereby they acquired the right to sponsor new Amway 

distributors, and to sell Amway products primarily to their 

sponsored distributors.



	14. Defendant Britt occupies a position at the top of his 

own Amway distributorship pyramid. Defendant Britt runs his own 

vast Amway distributorship network comprised of tens of thousands 

of downline distributors and, upon information and belief, earns 

millions of dollars annually through his Amway business 

organization. Plaintiffs John and Stacy Hanrahan and Brian Bohrer 

were Amway distributors in the downline of defendant Britt.



	15. Defendant Yager occupies a position at the top of his 

own Amway distributorship pyramid. Defendant Yager runs his own 

vast Amway distributorship network comprised of tens of thousands 

of downline distributors and, upon information and belief, earns 

millions of dollars annually through his Amway business 

organization. Plaintiffs Mark and Lori Mensack were Amway 

distributors in the downline of defendant Yager.



	16. Defendants Britt and Yager's wrongful conduct, as 

described herein, was carried out by and through defendants' 

business organizations, which organizations are comprised of and 

include defendants individually, the various corporations and 

entities through which defendants conduct their respective 

businesses, and the employees, agents and representatives of 

defendants' respective business organizations.



	17. The success of defendants Britt and Yager is integral to 

the success of defendant Amway, as Amway directly benefits 

financially from the sponsorship of each Amway distributor within 

the Britt and Yager organizations, and from the sale of Amway 

products by and to each Amway distributor within the Britt and 

Yager organizations.





Misrepresentations Concerning Potential Earnings



	18. At all times relevant hereto, defendants Britt and Yager 

routinely and intentionally misrepresented to plaintiffs the 

amount of profits Amway distributors could realistically expect 

to earn, which misrepresentations included by were not limited 

to:



		(a) statements that grossly exaggerated the 

profitability of Amway distributorships;



		(b) representations that as Amway distributors 

plaintiffs could expect to earn tens of thousands and even 

hundreds of thousands of dollars, when in fact defendants know 

that during the relevant time period the average monthly gross 

income for active Amway distributors was approximately $65;



		(c) representations that plaintiffs' recruiting and 

sponsoring efforts would result in geometrical increases in the 

number of Amway distributors in plaintiffs' downlines, when in 

truth Amway distributors are unlikely to recruit and sponsor 

substantial numbers of other distributors or earn substantial 

profits from the efforts of their downline distributors;



		(d) representations that as Amway distributors 

plaintiffs would earn substantial profits in only a few months; 

and



		(e) representations that plaintiffs would earn 

substantial profits by working on only a part-time basis as Amway 

distributors.



	19. In addition to the aforesaid material 

misrepresentations, at all times relevant hereto defendants Britt 

and Yager intentionally failed to disclose material facts to 

plaintiffs, which material omissions included but were not 

limited to:



		(a) defendant's failure to advise plaintiffs of the 

substantial business expense involved in building and maintaining 

a profitable Amway distributorship;



		(b) defendants' failure to advise plaintiffs of the 

substantial investment of time required to build and maintain a 

profitable Amway distributorship;



		(c) defendants' failure to advise plaintiffs of the 

high turnover rate prevalent among Amway distributors;



		(d) defendants' failure to advise plaintiffs that they 

were likely to earn profits comparable to the average gross 

income for active Amway distributors, which during the relevant 

time period was approximately $65.00.



	20. At all times relevant hereto, Amway was aware of and 

encouraged the aforesaid material misrepresentations, and Amway 

was further aware that the aforesaid material facts were not 

being disclosed to Amway distributors. It was in Amway's economic 

self-interest to permit such practices to continue, and although 

Amway has been aware of such practices for years Amway has never 

terminated the distributorships of defendants Britt and/or Yager.



	21. Contrary to defendants' misrepresentations that 

plaintiffs would reap significant profits as Amway distributors, 

upon which misrepresentations plaintiffs relied to their 

detriment, plaintiffs all lost money as Amway distributors.





Misrepresentations Concerning Amway's Affiliation



	22. In order to induce persons to become Amway distributors, 

at all times relevant hereto defendants Britt and Yager falsely 

represented to plaintiffs that Amway distributors are involved in 

profitable business relationships--variously described as, inter 

alia, "joint partnerships," "network marketing," and "joint 

ventures"--with major corporations, including Fortune 500 

companies. Defendants represented that plaintiffs could expect to 

reap substantial financial benefits as a result of the 

aforementioned business relationships with numerous major 

companies.



	23. At all times relevant hereto, Amway was aware of and 

encouraged the aforesaid misrepresentations regarding Amway's 

affiliation. It was in Amway's economic self-interest to permit 

such misrepresentations to continue being made to Amway 

distributors, and although Amway has been aware of such practices 

Amway has never terminated the distributorships of defendants 

Britt and/or Yager.



	24. Contrary to defendants' aforementioned representations, 

plaintiffs were not involved with other companies in any 

profitable business relationships, nor did they benefit 

financially from any "joint ventures," "partnerships," "network 

marketing," or other such business relationships in which Amway 

may have been involved.



	25. By their aforesaid misrepresentations, defendants 

intentionally distorted the true nature of the Amway 

distributorship and overstated the financial value of the Amway 

distributorship. In truth, by entering into their Amway 

distributorships Amway distributors simply acquired the right to 

sell Amway products and sponsor other distributors.



	26. Plaintiffs entered into their Amway distributorships in 

reliance upon defendant's misrepresentations that Amway 

distributors are involved in and reap substantial financial 

benefits from business relationships with numerous companies as 

described hereinabove.





The Coerced Sale of Motivational Materials



	27. Defendants Britt and Yager have created their own 

independent businesses that publish motivational materials, such 

as books and audio cassette tapes, and that organize and promote 

motivational rallies for Amway distributors throughout the United 

States. Through their independent businesses, defendants Britt 

and Yager sell vast quantities of motivational materials to their 

respective downline distributors and hold rallies throughout the 

United States that their downline distributors must pay to 

attend.



	28. Defendants Britt and Yager derive a substantial portion 

of their incomes not from the sale of Amway products, but from 

the sale of motivational materials to persons in their downlines 

and from the money earned through their rallies.



	29. At all times relevant hereto, defendants Britt and Yager 

regularly represented to plaintiffs that their success as Amway 

distributors was contingent upon the purchase of defendants Britt 

and Yager's motivational materials, and that without such 

materials plaintiffs would be unable to build and maintain 

successful Amway distributorships. Defendants Britt and Yager 

further represented to plaintiffs that they should purchase only 

those motivational materials produced and/or distributed by 

defendants Britt and Yager.



	30. At all times relevant hereto, defendants Britt and Yager 

further represented to plaintiffs that they should purchase a 

weekly supply of defendants' motivational audio tapes through a 

tape-of-the-week program that defendants Britt and Yager 

described as the "standing order" tape program and, moreover, 

defendants represented that such weekly purchases of defendants' 

audio tapes we essential to plaintiff's success as Amway 

distributors.



	31. At all times relevant hereto, defendants Britt and Yager 

further represented to plaintiffs that their regular attendance 

at the motivational rallies organized and promoted by defendants 

was essential to plaintiffs'success as Amway distributors.



	32. In fact, the motivational materials produced and/or 

distributed by defendants Britt and Yager and the motivational 

rallies organized and promoted by defendants Britt and Yager were 

unnecessary to the success of Amway distributors, and plaintiffs 

all lost money as Amway distributors despite their purchase of 

said materials and attendance at said rallies.



	33. At all times relevant hereto, Amway was aware that the 

aforesaid misrepresentations regarding defendants Britt and 

Yager's motivational materials and motivational rallies were 

being made to Amway distributors. It was in Amway's economic 

self-interest to permit such misrepresentations to continue being 

made to Amway distributors, and although Amway has been aware of 

such practices for years Amway has never terzninated the 

distributorships of defendants Britt and/or Yager.



	34. In reliance upon the misrepresentations of defendants 

Britt and Yager, plaintiffs purchased massive quantities of 

defendants Britt and Yager's motivational materials and attended 

defendants Britt and Yager's motivational rallies, all of which 

contributed significantly to the financial loss sustained by 

plaintiffs.





Customer Allocation and Price Fixing in Connection with 

Defendants' Motivational Materials



	35. At all times relevant hereto, defendants Britt and Yager 

allocated customers for their motivational materials in the 

following way: Defendant Britt regularly represented to 

distributors in his downline that their success as Amway 

distributors was contingent upon their purchasing only those 

motivational materials distributed by defendant Britt, and that 

distributors in defendant Britt's downline should not purchase 

motivational materials distributed by others. Similarly, 

defendant Yager regularly represented to distributors in his 

downline that their success as Amway distributors was contingent 

upon their purchasing only those motivational materials 

distributed by defendant Yager, and that distributors in 

defendant Yager's dowlnine should not purchase motivational 

materials distributed by others.



	36. In reliance upon defendants' representations, plaintiffs 

and members of the Class in defendant Britt's downline purchase 

only those motivational materials distributed by defendant Britt, 

and plaintiffs and members of the Class in defendant Yager's 

downline only those motivational materials distributed by 

defendant Yager.



	37. At all times relevant hereto, defendants Britt and Yager 

fixed the prices charged for their motivational materials by 

strictly controlling the resale price of their motivational audio 

tapes, such that at all times relevant hereto the resale price 

charged for motivational audio tapes distributed by defendant 

Britt was the same or substantially the same as the resale price 

charged for motivational audio tapes sold by defendant Yager.



	38. At all times relevant hereto, Amway was aware of and 

encouraged defendants Britt and Yager's aforesaid practices of 

customer allocation and price fixing in connection with the sale 

of their motivational materials, and it was in Amway's economic 

self-interest to permit such practices to continue. Indeed, 

although Amway has been aware of Britt and Yager's aforesaid 

activities for years, Amway has never terminated the 

dstributorships of defendants Britt and/or Yager.



	39. Defendant Britt and Yager's aforementioned practices of 

customer allocation and price fixing in connection with the sale 

of their motivational materials had the effect of preventing 

plaintiffs and members of the class of availing themselves of 

legitimate motivational materials and sales aids produced by 

third parties.





IV.   CLASS ACTION ALLEGATIONS



	40. Plaintiffs bring this action, on behalf of themselves 

and all others similarly situated, as a class action pursuant to 

Rule 23(a) and Rule 23(b)(3) of the Federal Rules of civil 

Procedure, on behalf of the following class :



all persons in the United States who, since January of 1990, 

have been or are Amway distributors and have been or are in 

the sales organizations or downlines of defendants William 

Britt and/or Dexter Yager, excluding from the proposed Class 

the defendants herein, any entity in which the defendants 

have a controlling interest, and the officers and directors, 

affiliates, legal representatives, heirs, successors, or 

assignees of the defendants or their officers and directors.



	41. A class action is superior to other available methods 

for the fair and efficient adjudication of this controversy since 

the members of the Class are so numerous and their residence so 

widespread that joinder of all members is impracticable.



	42. This action satisfies the requirements for class 

certificatiort under Federal Rules of Civil Procedure 23(a)(1)-

(4) and 23 (b)(3), in that:



		(a) The Class is so numerous that the individual 

joinder of all members is impracticable under the standard of 

Fed. R. Civ. P. 23 (a)(1). While the exact number of class 

members is unknown to plaintiffs at this time, it is known to 

defendants and is ascertainable by appropriate discovery, and 

plaintiffs are informed and believe that the Class includes 

thousands of members.



		(b) Common questions of law and fact exist as to all 

members of the Class, and predominate over any questions which 

affect only individual members of the Class. These common 

questions of law and fact include:



			i) whether defendants violated the Sherman Act by 

engaging in an unreasonable restraints of trade in connection 

with the sale of defendants' motivational materials to plaintiffs 

and members of the Class through defendants' practices of 

customer allocation and price fixing;



			ii) whether defendants violated RICO by conducting 

the affairs of an enterprise through a repeated and continuing 

pattern of wire and mail fraud, in connection with the promotion 

of Amway distributorships, the sale of motivational materials and 

the promotion of motivational rallies to plaintiffs and members 

of the Class;



			iii) whether Amway aided and abetted defendants 

Britt and Yager's RICO violations;



			iv) whether defendants violated state common law 

as alleged herein in connection with the promotion of Amway 

distributorships, the sale of motivational materials and the 

promotion of motivational rallies to plaintiffs and members of 

the Class;



			v) whether defendants misrepresented the amount of 

profits plaintiffs and members of the Class could expect to earn 

as Amway distributors and/or the financial success plaintiffs and 

members of the Class could expect to achieve as Amway 

distributors;



			vi) whether defendants misrepresented the 

financial benefits plaintiffs and members of the Class could 

expect to reap from Amway's purported affiliations with other 

major companies, and/or whether defendants misrepresented that as 

Amway distributors plaintiffs and members of the Class would 

become involved in profitable business relationships with major 

companies other than Amway;



			vii) whether defendants fraudulently represented 

to plaintiffs and members of the Class the need to purchase 

defendants' motivational materials and attend defendants' 

motivational rallies in order to succeed as Amway di stributors;



			viii) whether the aforesaid acts and/or omissions 

of defendants, as directed towards plaintiffs and members of the 

Class, were done fraudulently;



			ix) the amount of revenues and profits obtained by 

defendants attributable to defendants' misconduct;



			x) the appropriate nature of classwide equitable 

relief; and



			xi) whether the members of the Class have 

sustained damages as a result of defendants' wrongdoing and, if 

so, what is the proper measure and appropriate formula to be 

applied in determining such damages.



		(c) Plaintiffs' claims are typical of the claims of the 

members of the Class, since plaintiffs entered into their Amway 

distributorships, maintained their Amway distributorships, 

purchased defendants' motivational materials, and attended 

*defendants' motivational rallies in reliance upon fraudulent 

misrepresentations made by or caused to be made by defendants, 

thereby suffering damages. Plaintiffs and members of the Class 

sustained damages arising out of defendants' common course of 

conduct in violation of federal and state laws as complained of 

herein. The losses of each member of the Class were caused 

directly by defendants' wrongful conduct in violation of federal 

and state common law and statutory law as alleged herein.



		(d) Plaintiffs will fairly and adequately protect the 

interests of the members of the Class. Plaintiffs have no 

interests which are antagonistic to the interests of the Class.



		(e) Plaintiffs have retained counsel who are 

experienced in class action litigation and complex litigation 

involving claims of consumer fraud and violations of the 

antitrust and racketeering laws.



		(f) The issues which affect plaintiffs and members of 

the Class in common predominate over any issues which affect the 

interests of individual Class members.



		(g) A class action is superior to any other available 

methods for the fair and efficient adjudication of this 

controversy under Fed. R. Civ. P. 23(b)(3) since individual 

joinder of all members of the Class is impracticable. 

Furthermore, the cost and burden to the court system of 

adjudication of such individualized litigation would be 

substantial.





V. CLAIMS FOR RELIEF



COUNT I

[Against Defendants Britt and Yager and Amway

For Violation of the Sherman Act, 15 U.S.C. § 1]



	43. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 42 hereof, and 

further allege as follows.



	44. The unreasonable restraint of trade alleged herein 

occurred in the market for motivational materials and sales aids 

for use in the marketing of consumer household products.



	45. Competition in the market for motivational materials and 

sales aids for use in the marketing of consumer household 

products was unreasonably restrained by defendants Britt and 

Yager's practices of allocating customers for and fixing the sale 

prices of their motivational materials, including but not 

necessarily limited to cassette audio tapes.



	46. Defendants Britt and Yager engaged in an illegal scheme 

to allocate customers for their motivational materials, as set 

forth in more detail in paragraphs 27 through 39 hereinabove, 

whereby defendant Britt used fraudulent and coercive conduct to 

compel his downline distributors to purchase only those 

motivational materials produced and/or distributed by the Britt 

organization, and whereby defendant Yager used similarly 

fraudulent and coercive conduct to compel his downline 

distributors to purchase only those motivational materials 

produced and/or distributed by the Yager organization.



	47. Defendants Britt and Yager's scheme to allocate 

customers for their motivational materials constituted a 

combination or conspiracy that unreasonably restrained, hindered, 

frustrated, suppressed and eliminated competition in the market 

for motivational materials and sales aids for use in the 

marketing of consumer household products.



	48. Defendants Britt and Yager's unlawful scheme to allocate 

customers for their motivational materials began at least as 

early as January of 1990 and continues today.



	49. The object of defendants Britt and Yager's combination 

or conspiracy to allocate customers for their motivational 

materials was to control customer markets for their motivational 

materials by restricting the supply of motivational materials to 

their downline distributors, and by employing fraudulent and 

coercive tactics to ensure that distributors in defendant Britt's 

downline purchased only those motivational materials produced 

and/or distributed by defendant Britt, and that distributors in 

defendant Yager's downline purchased only those motivational 

materials produced and/or distributed by defendant Yager.



	50. Defendants Britt and Yager's unlawful scheme to allocate 

customers for their motivational materials constituted an 

unreasonable restraint of interstate trade and commerce in 

violation of Section 1 of the Sherman Act.



	51. At all times relevant hereto, defendant Amway had 

knowledge of and participated in defendants Britt and Yager's 

combination or conspiracy to allocate customers for their 

motivational materials. Amway encouraged and permitted such 

practices to continue, as it was in Amway's economic self- 

interest to permit such practices to continue, and indeed Amway 

has never terminated the distributorships of Defendants Britt 

and/or Yager.



	52. Defendants Britt and Yager further engaged in an illegal 

scheme to fix the prices charged for their respective 

motivational materials, as set forth in more detail in paragraphs 

27 through 39 hereinabove, whereby defendants Britt and Yager 

fixed the same or substantially the same sale price for the 

cassette audio tapes produced and/or distributed by defendants 

Britt and Yager.



	53. Defendants Britt and Yager's scheme to fix the prices 

charged for their respective motivational materials constituted a 

combination or conspiracy that unreasonably restrained, hindered, 

frustrated, suppressed and eliminated competition in the market 

for motivational materials and sales aids for use in the 

marketing of consumer household products.



	54. Defendants Britt and Yager's unlawful scheme to fix the 

prices charged for their respective motivational materials began 

at least as early as January of 1990 and continues today.



	55. The object of defendants Britt and Yager's combination 

or conspiracy to fix the prices charged for their motivational 

materials was to control customer markets for their motivational 

materials by restricting the supply of motivational materials to 

their downline distributors, and by ensuring that distributors in 

their respective downlines purchased only those motivational 

materials produced and/or distributed by each de f endant.



	56. Defendants Britt and Yager's unlawful scheme to fix the 

prices charged for their motivational materials constituted an 

unreasonable restraint of interstate trade and commerce 

inviolation of Section 1 of the Sherman Act.



	57. The effect of defendants Britt and Yager's combination 

or conspiracy to allocate customers and fix prices was to ensure 

that plaintiffs purchase substantial quantities of defendants' 

motivational materials, and to deprive plaintiffs of the 

opportunity to avail themselves of motivational and sales 

training materials from other sources outside of the combination 

or conspiracy.



	58. At all times relevant hereto, defendant Amway had 

knowledge of and participated in defendants Britt and Yager's 

combination or conspiracy to fix prices charged for their 

motivational materials. Amway encouraged and permitted such 

practices to continue, as it was in Amway's economic self- 

interest to permit such practices to continue, and Amway has 

never terminated the distributorships of defendants Britt and/or 

Yager.



	59. Defendants' illegal practices of allocating customers 

and fixing prices in connection with the nationwide distribution 

and sale of their motivational materials had a substantial and 

adverse effect on interstate commerce.



	60. Plaintiffs and members of the Class were damaged by the 

aforesaid illegal practices of allocating customers and fixing 

prices for their motivational materials in an amount in excess of 

$100,000, in that plaintiffs and members of the Class expended 

significant amounts of money on unwanted and unnecessary 

motivation materials distributed by defendants, and were further 

deprived of the opportunity to avail themselves of motivational 

and sales training materials produced and distributed by third 

parties which could have assisted them in developing their Amway 

distributorships. Plaintiffs and the Class are entitled to 

recover from defendants Britt, Yager and Amway treble damages, 

costs and attorneys' fees as a result of the aforesaid violation 

of the Sherman Act.





COUNT II

[Against Defendants Britt and Yager

for Violation of RICO, 18 U.S.C. § 1962(c)]



	61. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 60 hereof, and 

further allege as follows.



	62. Defendants Britt and Yager are "persons" as that term is 

defined in 18 U.S. C. § 1961.



	63. The association-in-fact of defendant Amway and its 

network of Amway distributors is an "enterprise" as that term is 

defined in 18 U.S. C. § 1961, which is engaged in and affects 

interstate commerce.



	64. In violation of 18 U.S.C. § 1962 (c), defendants Britt 

and Yager, as persons associated with the aforesaid enterprise, 

participated in the affairs of the enterprise through a pattern 

of racketeering activity consisting of wire fraud, 18 U.S.C. § 

1343, and mail fraud, 18 U.S.C. § 1341. Defendants' participation 

in the affairs of the enterprise consisted of their guiding, 

managing, directing or otherwise exercising some control over the 

affairs of the enterprise. Through acts of mail and wire fraud 

these two individuals, William Britt and Dexter Yager, 

participated in the affairs of the RICO enterprise, which was 

comprised of a large international corporation (Amway) and its 

vast network of hundreds of thousands of individual distributors. 

The cloak of legitimacy provided to defendants Britt and Yager by 

this seemingly legitimate enterprise afforded said defendants 

access to and influence over huge numbers of Amway distributors, 

thus enabling defendants Britt and Yager to execute their scheme 

to defraud plaintiffs and members of the Class, as described at 

length herein.



	65. Defendants Britt and Yager's pattern of racketeering 

activity, which consisted of mail and wire fraud, was perpetrated 

through direct telephone communications, the Amvox telephone 

voice mail system and the mails, pursuant to and for the purpose 

of executing defendants'scheme to defraud plaintiffs and members 

of the Class by communicating false and fraudulent information, 

including but not limited to:



		(a) statements that fraudulently represented the amount 

of profits plaintiffs could expect to earn as Amway distributors;



		(b) statements that fraudulently represented that 

plaintiffs'success as Amway distributors was contingent upon 

purchasing substantial quantities of the motivational materials 

produced and/or distributed by defendants Britt and Yager,



		(c) statements that fraudulently represented that 

plaintiffs'success as Amway distributors was contingent upon 

attending motivational rallies organized and promoted by 

defendants Britt and Yager; and



		(d) statements that fraudulently represented that Amway 

distributors were involved in profitable business relationships 

with other major companies, as described in paragraphs 22 through 

26 herein.



	66. Defendants Britt and Yager's patterns of mail and wire 

fraud included but were not necessarily limited to:



		(a) numerous direct telephone communications to inter 

alia, plaintiffs and members of the Class, made by and caused to 

be made by defendants Britt and Yager, regarding Amway and 

defendants' Amway sales organizations;



		(b) numerous messages communicated over the Amvox 

telephone voice mail system to, inter alia, plaintiffs and 

members of the Class, which telephone voice mail communications 

were made by and caused to be made by defendants Britt and Yager, 

regarding Amway and defendants' Amway sales organizations;



		(c) numerous mailings of defendants Britt and Yager's 

motivational materials to, inter alia, plaintiffs and members of 

the Class, which mailings were made by and caused to be made by 

defendants Britt and Yager;



		(d) numerous mailings of defendants Britt and Yager's 

publications to, inter alia, plaintiffs and members of the Class, 

which publications included but were not necessarily limited to 

Dreambuilders Review, Dreambuilders Newsletter and Dreambuilders 

Review Magazine;



		(e) numerous mailings of documents to, inter alia, 

plaintiffs and members of the Class, which mailings included but 

were not necessarily limited to travel itineraries and 

confirmations, pursuant to the organization and promotion of 

defendants Britt and Yager's motivational rallies; and



		 (f) numerous mailings of Amway publications, including 

but not necessarily limited to the Amagram magazine.



	67. Defendants Britt and Yager's participation in the 

affairs of the enterprise through a pattern of racketeering 

activity commenced no later than January of 1990, continued 

throughout the relevant time period, and projects into the future 

with a threat of repetition, posing a threat of continuing harm 

to the businesses and property of members of the Class.



	68. Plaintiffs and members of the Class were injured in 

their business or property by reason of defendants' foregoing 

pattern of racketeering activity in violation of 18 U.S.C. § 1962 

(c), in an amount in excess of $100,000. Plaintiffs and the Class 

are entitled to recover from defendants Britt and Yager treble 

damages, costs and attorneys' fees as a result of defendants' 

RICO violations.





COUNT III

[Against Defendants Britt and Yager

for Violation of RICO, 18 U.S.C. § 1962(d)]



	69. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 68 hereof, and 

further allege as follows.



	70. Defendants Britt and Yager are "persons" as that term is 

defined in 18 U.S.C. § 1961.



	71. The association-in-fact of defendant Amway and its 

network of Amway distributors is an "enterprise" as that term is 

defined in 18 U.S.C. § 1961, which is engaged in and affects 

interstate commerce.



	72. In violation of 18 U.S.C. § 1962(d), defendants Britt 

and Yager conspired to violate 18 U.S.C. § 1962(c), in that 

defendants Britt and Yager agreed to commit the aforesaid 

predicate acts of mail and wire fraud with knowledge that such 

acts were part of a pattern of racketeering activity. Through the 

aforesaid acts of mail and wire fraud these two individuals, 

William Britt and Dexter Yager, participated in the affairs of 

the RICO enterprise, which was comprised of a large international 

corporation (Amway) and its vast network of hundreds of thousands 

of individual distributors. The cloak of legitimacy provided to 

defendants Britt and Yager by this seemingly legitimate 

enterprise afforded said defendants access to and influence over 

huge numbers of Amway distributors, thus enabling defendants 

Britt and Yager to execute their scheme to defraud plaintiffs and 

members of the Class, as described at length herein.



	73. The RICO conspiracy was composed of defendants Britt and 

Yager and had as its objective the sponsorship of persons into 

the Amway organization and the maintenance of persons as Amway 

distributors, in order that defendants could further, continue 

and perpetuate the conspiracy for their own financial gain.



	74. The aforesaid RICO conspiracy commenced no later than 

January of 1990, continued throughout the relevant time period, 

and projects into the future with a threat of repetition, posing 

a threat of continuing harm to the businesses and property of 

members of the Class.



	75. In furtherance of the RICO conspiracy, defendants Britt 

and Yager communicated to plaintiffs and members of the Class 

false and fraudulent information, including but not limited to:



		(a) statements that fraudulently represented the amount 

of profits plaintiffs could expect to earn as Amway distributors;



		(b) statements that fraudulently represented that 

plaintiffs'success as Amway distributors was contingent upon 

purchasing substantial quantities of the motivational materials 

produced and/or distributed by defendants Britt and Yager;



		(c) statements that fraudulently represented that 

plaintiffs'success as Amway distributors was contingent upon 

attendin motivational rallies organized and promoted by 

defendants Britt and Yager;



		(d) statements that fraudulently represented that Amway 

distributors were involved in profitable business relationships 

with other major companies.



	76. Plaintiffs and members of the Class were injured in 

their business or property by reason of defendants' foregoing 

RICO conspiracy in violation of 18 U.S.C. 1962(d), in an  amount 

in excess of $100,000. Plaintiffs and the Class are entitled to 

recover from defendants Britt and Yager treble damages, costs and 

attorneys' fees as a result of defendants' RICO violations.





COUNT IV

[Against Defendant Amway for Aiding and Abetting

Violation of RICO, 18 U.S.C. § 19 61 et seq.]



	77. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 76 hereof, and 

further allege as follows.



	78. Defendant Amway is a "person" as that term is defined in 

18 U.S.C. § 1961.



	79. At all times relevant hereto Amway was aware of the 

aforementioned pattern of racketeering activity, consisting of 

wire and mail fraud, that was perpetrated pursuant to and for the 

purpose of executing defendants Britt and Yager's scheme to 

defraud plaintiffs and members of the Class by communicating 

false and fraudulent information, including but not limited to:



		(a) statements that fraudulently represented the 

profits Amway distributors couldexpect to earn;



		(b) statements that fraudulently represented that the 

success of Amway distributors was contingent upon purchasing 

substantial quantities of the motivational materials produced and 

Jor distributed by defendants Britt and Yager;



		(c) statements that fraudulently represented that the 

success of Amway distributors was contingent upon attending 

motivational rallies organized and promoted by defendants Britt 

and Yager; and



		(d) statements that fraudulently represented that Amway 

distributors were involved in profitable business relationships 

with other major companies.



	80. At all times relevant hereto Amway has been aware of 

complaints by Amway distributors that they have been injured 

financially and in their family and personal lives as a result of 

the aforementioned pattern of racketeering activity perpetrated 

by defendants Britt and Yager, and it was in Amway's economic 

self-interest to permit such activity to continue. Indeed, 

although Amway has been aware of Britt and Yager's aforesaid 

activities for years, Amway has never terminated the 

distributorships of defendants Britt and/or Yager.



	81. In allowing the pattern of racketeering activity of its 

distributors, defendants Britt and Yager, to continue, Amway 

financially benefits, in that AmWay earns substantial profits 

from the sale of Amway products by and to distributors in 

defendants' Britt and Yager's downlines.



	82. Amway has aided and abetted the pattern of racketeering 

activity perpetrated by its distributors, defendants Britt and 

Yager, by giving substantial assistance to said defendants, in 

that at all times relevant hereto Amway associated itself with 

the business activities of defendants Britt and Yager and 

permitted defendants Britt and Yager to associate themselves with 

Amway.



	83. Plaintiffs and members of the Class were injured in 

their business or property by reason of defendant Amway's aiding 

and abetting of the foregoing pattern of racketeering activity in 

violation of 18 U.S.C. § 1962 (c) and (d), in an amount in excess 

of $100,000. Plaintiffs and the Class are entitled to recover 

from Amway treble damages, costs and attorneys' fees as a result 

of defendants' RICO violations.





COUNT V

[Against Defendants Britt and Yager for Fraud]



	84. Plaintiffs, on behalf of themselves and all others

similarly situated, reallege, as if fully set forth, each and

ever y allegation contained in paragraphs 1 through 83 hereof, 

and

further allege as follows.



	85. Defendants made knowing and fraudulent 

misrepresentations to plaintiffs by misrepresenting the amount of 

profits Amway distributors could expect to earn, and the amount 

of time in which Amway distributors could expect to earn such 

profits, which fraudulent misrepresentations are set forth in 

more detail in paragraphs 18 through 21 hereinabove.



	86. Defendants knowingly and fraudulently misrepresented to 

plaintiffs that Amway distributors were involved in profitable 

business relationships with numerous major companies, variously 

described as, inter alia, "joint partnerships," "network 

marketing," and "joint ventures," through which business 

relationships plaintiffs could expect to reap substantial 

financial benefits, as set forth in more detail in paragraphs 22 

through 26 herein above.



	87. Defendants knowingly and fraudulently misrepresented to 

plaintiffs that their recruiting efforts would result in 

geometric increases in the number of distributors in their 

downlines, and that such geometric increases would occur in a 

relatively short period of time.



	88. Defendants knowingly and fraudulently misrepresented to 

plaintiffs that they could earn substantial profits as Amway 

distributors by working only on a part-time basis.



	89. Defendants failed to disclose to plaintiffs the high 

turnover rate prevalent among Amway distributors.



	90. Defendants failed to disclose to plaintiffs the 

substantial business expense and time involved in building and 

maintaining a profitable Amway distributorship.



	91. Defendants failed to disclose to plaintiffs that they 

were in fact likely to earn profits comparable to the average 

income for Amway distributors.



	92. Defendants made the aforesaid misrepresentations of 

material fact, and failed to disclose the aforesaid material 

facts, intending that plaintiffs become Amway distributors.



	93. But for the aforesaid fraudulent representations upon 

which plaintiffs justifiably relied to their detriment, and but 

for the aforesaid omissions of material facts, plaintiffs would 

not have entered into or maintained their Amway distributorships.



	94. Defendants knowingly and fraudulently misrepresented to 

plaintiffs that their success as Amway distributors was 

contingent upon the purchase of motivational materials produced 

and/or distributed by defendants.



	95. Defendants knowingly and fraudulently misrepresented to 

plaintiffs that their success as Amway distributors was 

contingent upon attending defendants' motivational rallies.



	96. Defendants made the aforesaid misrepresentations of 

material fact intending that plaintiffs purchase defendants' 

motivational materials and expend money to attend defendants' 

motivational rallies in the belief that such expenditures were 

necessary to plaintiffs'success as Amway distributors.



	97. But for the aforesaid misrepresentations of material 

fact, upon which plaintiffs justifiably relied to their 

detriment, plaintiffs would not have purchased substantial 

quantities of defendants' motivational materials and would not 

have expended significant amounts of money traveling to and 

attending defendants' motivational rallies, which motivational 

materials and rallies were in fact unnecessary to 

plaintiffs'success as Amway distributors.



	98. Plaintiffs, in justifiable reliance upon defendants' 

fraudulent representations, were damaged in an amount in excess 

of $100,000, in that plaintiffs entered into their unprofitable 

Amway distributorships and expended significant amounts of money 

on unwanted and unnecessary motivation materials and rallies. 

Plaintiffs and the Class are entitled to recover from defendants 

Britt and Yager compensatory damages unitive damages, costs and 

attorneys' fees and such other relief as this Court deems just.





COUNT VI

[Against Defendants Britt and Yager for

Negligent Misrepresentation]



	99. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 98 hereof, and 

further allege as follows.



	100. Defendants failed to exercise reasonable care in 

communicating information to plaintiffs concerning the amount of 

profits which Amway distributors could expect to earn, the amount 

of time in which Amway distributors could expect to earn such 

profits, Amway's affiliation with other entities, and the need to 

purchase defendants' motivational materials and attend 

defendants' motivational rallies, which misrepresentations are 

set forth in more detail in paragraphs 18 through 39 herein 

above.



	101. In addition to the aforesaid negligent 

misrepresentations, defendants negligently failed to disclose to 

plaintiffs the high turnover rate prevalent among Amway 

distributors, the substantial business expense and time involved 

in building and maintaining a profitable Amway distributorship, 

and that plaintiffs could expect earnings comparable to the 

average earnings of Amway distributors.



	102. Plaintiffs, in justifiable reliance upon defendants' 

negligent representations, were damaged in an amount in excess of 

$100,000, in that plaintiffs entered into their unprofitable 

Amway distributorships and expended significant amounts of money 

on unwanted and unnecessary motivation materials and rallies. 

Plaintiffs and the Class are entitled to recover from defendants 

Britt and Yager compensatory damages, costs and attorneys' fees 

and such other relief as this Court deems just. 





COUNT VII

[Equitable (Injunctive and/or declaratory) Relief]



	103. Plaintiffs, on behalf of themselves and all others 

similarly situated, reallege, as if fully set forth, each and 

every allegation contained in paragraphs 1 through 102 hereof, 

and further allege as follows:



	104. Based upon the facts set forth above, plaintiffs, on 

behalf of themselves and all others similarly situated, request 

the following equitable relief:



		(a) That a judicial determination and declaration be 

made of the rights of plaintiffs and Class members and the 

responsibilities of the defendants; and



		(b) That defendants be enjoined to cease and desist all 

practices described in the FACTUAL STATEMENT section of this 

Class Action Complaint relating to the unlawful, fraudulent, 

coercive and anticompetitive practices described herein.





VI. DEMAND FOR A JURY TRIAL



	105. Plaintiffs demand a jury trial for themselves and the 

Class on all claims so triable.





VII. PRAYER FOR RELIEF



	WHEREFORE, the representative plaintiffs, on behalf of 

themselves and all others similarly situated, pray for judgment 

against defendants as follows:



	l. An order confirming the class certification of the Class 

and appointing plaintiffs and their counsel to represent the 

Class;



	2. For treble damages and/or equitable relief under the 

Sherman Act, the Racketeer Influenced Corrupt Organizations Act 

and state common law as alleged herein;



	3. For any additional and consequential damages suffered by 

plaintiffs and the Class;



	4. For punitive damages against defendants for fraud in an 

amount sufficient to punish defendants and deter others from 

similar wrongdoings;



	5. For attorneys' fees;



	6. For pre- and post- judgment interest;



	7. For cost of suit; and



	8. For such other and further relief as this Court may deem 

just and proper.





Respectfully submitted,



James J. Ron, Esquire			Joseph C. Kohn

Pa. I.D. No. 21636			Pa. I.D. No. 36565

Karen M. Scheller, Esquire		Robert J. La Rocca, Esquire

Pa. I.D. No. 25751			Pa. I.D. No. 26203

Judson A. Aaron, Esquire		Kohn, Nast &  Graf, P.C.

Pa. I.D. No. 63794			2400 One Reading Center

Conrad 0'Brien Gellman			1101 Market Street

  &  Rohn, P.C.				Philadelphia, PA 19107

1515 Market Street, l6th Floor		(215) 238-1700

Philadelphia, PA 19102-1916

(215) 864-9600

					ATTORNEYS FOR PLAINTIFFS

					AND THE CLASS




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