The following court document is an admission by an Amway double diamond disributor that the majority of his income is generated from the sale of non-Amway-produced-or-approved motivational materials and meetings. It is also an admission that high-level distributors are raiding each other's motivational businesses out of unbridled lust for bigger pieces of the motivation pie.
UNITED STATES DISTRICT COURT MIDDLE DISTRICT FLORIDA JACKSONVILLE DIVISION
BRIG HART and LITA HART, ) Filed U-CAN-II, INC. and ) 97 APR-8 PM 4:19 Brig HART ENTERPRISES, INC., ) ) Plaintiffs, ) CASE NO. ) 97-349-CIV-J-20B v. ) ) AMWAY CORPORATION; ) A JURY TRIAL DEXTER YAGER, individually and ) IS DEMANDED d/b/a INTERNET SERVICES ) CORPORATION; RICHARD SETZER, ) INJUNCTIVE RELIEF individually and d/b/a ) IS SOUGHT SETZER INTERNATIONAL, INC.; HAROLD ) GOOCH, Jr., individually ) and d/b/a GOOCH SUPPORT SYSTEMS, INC.; ) WILLIAM CHILDERS, individually ) and d/b/a TNT of CHARLOTTE, INC.; ) ANGELO DAMICO, individually and ) d/b/a DAMICO INTERNATIONAL; ) TIM FOLEY, individually and ) d/b/a FOLEY CO.; JAMES D. ) HAYES, JR., individually ) and d/b/a FREEDOM EXPRESS, INC.; ) CARLOS M. MARIN, JR., individually and ) d/b/a MARIN ASSOCIATES, INC.; ) JOE RODRIQUEZ, ) ) Defendants. )
COMPLAINT
Plaintiffs Brig and Lita Hart, U-Can-II, Inc. and Brig Hart Enterprises, Inc. bring this Complaint against the Defendants for damages, injunctive relief and an accounting. For their Complaint, Plaintiffs allege as follows:
INTRODUCTION
Brig and Lita Hart (referred to herein alternately as "Plaintiffs" or "the Harts") are Amway distributors. Over a period of 18 years, they have built a domestic and international network of over 200,000 independent down-line distributors (the "Hart Network"), achieving the coveted "Double Diamond" status in the Amway Corporation. The Hart Network is extremely valuable to the Harts as a means of selling Amways products. And, equally important, it serves as a ready market for the Harts sale of Amway-related motivational and training tapes, books, and other selling aids, known in Amway as "business support materials", or more colloquially, "tools." It also allows the Harts to sponsor various Amway-related rallies, seminars and weekend conferences that are attended by large numbers of distributors in the Hart Network. Many high-level distributors, such as the Harts, sell business support materials and sponsor functions through corporations, such as U-Can-II, ancillary to the distributors independent Amway business. Amway encourages the provision of business support materials to distributors and has adopted rules to regulate their sale. The Harts obtain the business support materials primarily from Defendant InterNET Services Corporation ("InterNET"). The backbone of the business support materials business are audio recordings of presentations given at functions sponsored by high-level Amway distributors such as the Harts. The Harts routinely provide InterNET with such audio recordings, which are the original sources from which many of the business support materials sold by InterNET are produced. . This lawsuit arises out of a series of unlawful actions by Defendants Richard Setzer and William Childers, both of whom are fellow Amway distributors "up-line" to the Harts and both of whom have achieved a status in Amway at least as high as the "Diamond" level. The suit also arises because of unlawful actions by various distributors "down-line" to the Harts, including Defendants Angelo DAmico, James D. Hayes, Carlos M. Marin, Jr., and Joe Rodriquez. Acting alone and in concert, these "Distributor Defendants" are, and have been, profiting directly from the sale of business support materials to various members of the Hart Network without respecting the "lines of sponsorship" that have formed the foundation of Amways distribution system since the companys inception. Over a period of time the Distributor Defendants have engaged in an illegal attempt to circumvent or squeeze the Harts out of their distribution system so that these Defendants can sell business support materials to members of the Hart Network without compensating the Harts, as these Defendants otherwise are contractually obligated to do. The Distributor Defendants conduct represents a wrongful and illicit scheme to misappropriate for themselves the Harts share of the income generated by the huge number of down-line distributors that the Harts meticulously have built through a fervent dedication to Amways original principles of partnership, integrity, personal worth, achievement and personal responsibility. Amways own written rules -- which expressly govern the activities at the heart of this Complaint -- refer to such a course of conduct as "an unwarranted and unreasonable interference in the business of other Amway distributors." (Section B, Rule 4, Rules of Conduct of Amway Distributors). . The Distributor Defendants activities violate long-standing contractual obligations that govern the relationship of the parties; the Racketeer Influenced and Corrupt Organizations Act ("RICO"); the Sherman Antitrust Act; and various other statutes. In addition, the Distributor Defendants activities give rise to liability under various common law causes of action. In total, the Distributor Defendants ruthless pursuit of the Harts business enterprise, and interference with the Harts relationships with their distributors, have deprived the Harts of tens of millions of dollars in revenues. This case is intended to remedy and stop these wrongful actions. . Broadly speaking, the Distributor Defendants have engaged in a pattern and practice of unfair and illegal business dealings, in at least four respects: a. Defendants Setzer, Setzer International, Inc., Childers, and TNT of Charlotte, Inc., have conspired to slowly eliminate Plaintiffs from the business support materials distribution chain by directly providing these materials to distributors in Plaintiffs domestic and international Amway network without Plaintiffs permission. The conspiracy has as its purpose the elimination of the Plaintiffs participation in the business so that these Defendants can avoid compensating Plaintiffs for sales of business support materials to the Hart Network. These actions violate each of these Defendants agreements with Amway, which agreements prohibit distributors from selling such materials outside of Amways lines of sponsorship. These actions also violate the course of dealing and implied contractual obligations that have been formed in the distribution network for such materials; b. On information and belief, as part of the conspiracy, Defendants Setzer, Setzer International, Inc., Childers, and TNT of Charlotte, Inc., have provided Plaintiffs with incomplete and false statements of the volume of business support materials sold to distributors in the Hart Network, and have refused to account to Plaintiffs for the volume of business support materials provided to distributors in the Hart Network. By engaging in these fraudulent and misleading actions, these Defendants have tricked Plaintiffs into accepting compensation -- or substantially less compensation than is due -- for the volume of business that these Defendants have engaged in with distributors in the Hart Network. c. Defendants DAmico, Hayes, Marin, and Rodriquez, individually and on behalf of Defendants DAmico International, Freedom Express, Inc., and Marin Associates, Inc., acquiesced in and facilitated the circumvention of the Hart Network line of sponsorship and agreed to boycott Plaintiffs in the market for business support materials by conspiring and agreeing implicitly and/or explicitly with Defendants Setzer and Childers that none of the Distributor Defendants would purchase or sell business support materials from or to Plaintiffs. d. Defendant Childers has refused to fairly and adequately compensate Plaintiffs for their marketing efforts and ticket sales in conjunction with "major functions", which are Amway-related events held throughout the country drawing tens of thousands of Amway distributors. Childers conduct violates an implied contract that is based upon a course of dealing -- and other equitable theories of law -- and that arises out of the parties business arrangements regarding past major functions. . Each of the Distributor Defendants in this action is or was a participant in the above described conspiracy and/or scheme to commit unlawful business practices through fraudulent and tortious activity. . The Distributor Defendants continuing scheme was, and is, violative of the Federal Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. A7 1961 et. seq.) and the Sherman Antitrust Act (15 U.S.C. A7 1). These Defendants individual actions were, and are, violative of Florida common law tort and contract principles. . Plaintiffs have been injured as a result of the Defendants conduct, and will continue to be injured, unless it is stopped. In this action, Plaintiffs seek to recover tens of millions of dollars of lost revenues, injunctive relief to prevent future injury and an accounting. . Amway has been named in this action solely for purposes of injunctive relief compelling Amway to enforce its rules regarding business support materials. No monetary damages are being sought against Amway in this Complaint. . Defendants Yager, InterNET, Gooch, Gooch Support Systems, Inc., Foley, and Foley Co., Inc. have been named in this action solely for purposes of injunctive relief compelling these Defendants to comply with their contractual obligations and other duties regarding business support materials. In addition, Plaintiffs have named Yager, InterNET, Foley, and Foley Co. for purposes of obtaining and equitable accounting from these defendants. No monetary damages are being sought against Yager, InterNET, Gooch, Gooch Support Systems, Inc., Foley, and Foley Co., Inc. in this Complaint.
JURISDICTION AND VENUE
. Jurisdiction over this action is based on the existence of federal questions in this case (28 U.S.C. A7 1331), inasmuch as claims are asserted under laws of the United States -- the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. A7 1961 et. seq. and Section 1 of the Sherman Antitrust Act (15 U.S.C. A7 1). This Court has supplemental jurisdiction over Plaintiffs state law claims (28 U.S.C. A7 1367). . Venue is proper in this Court as the Defendants conduct business in the State of Florida and in this judicial district, a number of the Defendants reside in this district and a substantial part of the events giving rise to the causes of action on which this Complaint is based occurred within this judicial district (28 U.S.C. A7 1391(b) and 18 U.S.C. A7 1965).
PARTIES
. Brig and Lita Hart are a married couple. They are both citizens of the State of Florida, residing in St. Johns County. The Harts conduct business in the State of Florida and the United States through two corporations, U-Can-II, Inc. and Brig Hart Enterprises, Inc. Both corporations are incorporated under the laws of the State of Florida, and have at all times been in good standing and duly authorized to transact business in Florida. . Defendant Amway Corporation ("Amway") is a privately held Michigan corporation with its principal place of business in Ada, Michigan. Amway is one of the largest direct-selling companies in the world. More than 2.5 million distributors merchandise Amways products on a person-to-person basis through a multi-level marketing network in more than 70 countries and territories. Amway conducts business in the State of Florida and is subject to suit in Florida. . Defendant Dexter Yager ("Yager") is a citizen of the State of Florida. Yager is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant InterNET Services Corporation, Inc. (as referred to previously, "InterNET"). On information and belief, InterNET is organized and existing under the laws of the State of North Carolina, with its principal place of business at 12201 Steele Creek Road, Charlotte, North Carolina 28273. InterNET is in the business of manufacturing and selling Amway-related business support materials for use by Amway distributors, and of organizing seminars, rallies and major functions, attended by Amway distributors. Yager and InterNET conduct business in the State of Florida and are subject to suit in Florida. . Defendant Richard Setzer ("Setzer") is a citizen of the State of South Carolina. Setzer is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant Setzer International, Inc. ("Setzer International"). On information and belief, Setzer International is organized and existing under the laws of the State of South Carolina, with its principal place of business at 3089 South Highway 14, Greer, South Carolina 29650. Setzer International is in the business of purchasing and re-selling business support materials for use by Amway distributors, and of organizing seminars, rallies, and major functions, attended by Amway distributors. Setzer and Setzer International conduct business in the State of Florida and are subject to suit in Florida. . Defendant Harold Gooch, Jr. ("Gooch") is a citizen of the State of North Carolina. Gooch is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant Gooch Support Systems, Inc. On information and belief, Gooch Support Systems, Inc. is organized and existing under the laws of the State of North Carolina, with its principal place of business at 6 Curtis Court, Thomasville, North Carolina 27360. Gooch Support Systems, Inc. is in the business of purchasing and re-selling business support materials for use by Amway distributors, and of organizing seminars, rallies, and major functions, attended by Amway distributors. Gooch and Gooch Support Systems, Inc. conduct business in the State of Florida, and are subject to suit in Florida. . Defendant William Childers ("Childers") is a citizen of the State of Florida. Childers is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant TNT of Charlotte, Inc. ("TNT"). On information and belief, TNT is organized and existing under the laws of the State of North Carolina, with its principal place of business at 7005 Shannon Willow Road, Charlotte, North Carolina 28266. TNT is in the business of purchasing and re-selling business support materials for use by Amway distributors, and of organizing seminars, rallies, and major functions, attended by Amway distributors. Childers and TNT conduct business in the State of Florida and are subject to suit in Florida. . Defendant Angelo DAmico ("DAmico") is a citizen of the State of Florida. DAmico is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant DAmico International, Inc. ("DAmico International"). On information and belief, DAmico International is organized and existing under the laws of the State of Florida, with its principal place of business at 11560 Old Saint Augustine Road, Suite 4, Jacksonville, Florida 32258. DAmico International is involved in the business of purchasing and re-selling business support materials for use by Amway distributors, and of organizing seminars, rallies, and major functions, attended by Amway distributors. DAmico and DAmico International conduct business in the State of Florida and are subject to suit in Florida. . Defendant Tim Foley ("Foley")is a citizen of the State of Florida. Foley is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant Foley , Inc. ("Foley "). On information and belief, Foley is organized and existing under the laws of the State of Florida, with its principal place of business at 11541 Lane Park Road, Tavares, Florida 32778-9674. Foley is involved in the business of selling Amway products to Amway distributors and the general public. Foley is also in the business of purchasing and re-selling business support materials for use by Amway distributors, and of organizing seminars, rallies, and major functions, attended by Amway distributors. Foley and Foley conduct business in the State of Florida and are subject to suit in Florida. . Defendant James D. Hayes, Jr. ("Hayes") is a citizen of the State of Florida. Hayes is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant Freedom Express, Inc. ("Freedom Express"). On information and belief, Freedom Express is organized and existing under the laws of the State of Florida, with its principal place of business at 1797 Old Moultrie Road, #101, St. Augustine, Florida. Hayes is involved in the business of purchasing and re-selling business support materials for use by Amway distributors. Hayes and Freedom Express conduct business in the State of Florida and are subject to suit in Florida. . Defendant Carlos M. Marin, Jr. ("Marin"), is a citizen of the State of Florida. Marin is a distributor of Amway products and is involved in the promotion of Amway distributorships. He conducts business through Defendant Marin Associates, Inc. ("Marin Associates"). On information and belief, Marin Associates is organized and existing under the laws of the State of Florida, with its principal place of business at 7205 NW 19th Street, Suite 300, Miami, Florida. Marin is involved in the business of purchasing and re-selling business support materials for use by Amway distributors. Marin and Marin Associates conduct business in the State of Florida and are subject to suit in Florida. . On information and belief, Defendant Joe Rodriquez ("Rodriquez"), is a citizen of the State of Florida. Rodriquez is a distributor of Amway products and is involved in the promotion of Amway distributorships. He is involved in the business of purchasing and re-selling business support materials for use by Amway distributors. Rodriquez conducts business in the State of Florida and is subject to suit in Florida. On information and belief, Rodriquez, like the other Amway distributors engaged in the support materials business, uses a related corporate entity to help conduct such business. Plaintiffs intend to amend this Complaint, adding such entity as a defendant, once Plaintiffs discover the name of that company.
NATURE OF SPECIFIC CLAIMS
. Plaintiffs bring claims against the Defendants to recover damages and obtain equitable relief on the following specific grounds: (1) Plaintiffs have suffered and continue to suffer damages as a result of the Distributor Defendants entering into and executing a combination and/or conspiracy -- in violation of the Federal Racketeer Influenced and Corrupt Organizations Act and the Sherman Antitrust Act -- to misappropriate Plaintiffs business support materials network by creating distributor relationships directly with one another in violation of agreements that require Plaintiffs participation in any such distributor arrangements; by misrepresenting to Plaintiffs that Plaintiffs were being fairly compensated for those distributor relationships that the Distributor Defendants formed; by boycotting Plaintiffs in the purchase and sale of business support materials; and by engaging in other tortious and actionable conduct as described below; (2) Plaintiffs have suffered and continue to suffer contract-related damages as a result of Setzer, Childers and DAmicos willful breaches of their contracts with Amway Corporation. Specifically, Setzer, Childers, and DAmico have breached Rule 4 of Section B of the Rules of Conduct for Amway Distributors, which prohibits Amway distributors from selling business support materials to Amway distributors whom he or she did not personally sponsor into the Amway multi-level marketing network. In addition, Setzer, Childers, and DAmico have breached express and implied agreements that were created through written and oral communications and through a course of dealing and the business practices of the parties in this action and the distributors in the Amway network at issue in this case; (3) Plaintiffs have suffered and continue to suffer damages as a result of Setzer, Childers and DAmicos tortious interference with Plaintiffs business relations with Diamond-level distributors in the Harts multi-level marketing Amway network and the related network for the sale of business support materials; (4) Plaintiffs have suffered and continue to suffer damages as a result of DAmico, Hayes, Marin and Rodriquezs inducement of Setzer and Childers to breach Setzer and Childers Amway distributor agreements and the implied contractual agreements among the distributors in the Amway network to which the Harts belong -- specifically Rule 4 of Section B of the Rules of Conduct for Amway Distributors as applied through the parties course of dealing and business practices -- by cutting Plaintiffs out of business support materials sales to the Hart Network; (5) Plaintiffs have suffered and continue to suffer damages as a result of the Distributor Defendants conspiracy to boycott Plaintiffs in the market for Amway-related business support materials by agreeing not to adhere to or enforce Rule 4 as applied through the parties course of dealing and business practices -- thus turning all distributors who purchase business support materials from InterNET into competitors in the business support materials market -- and by agreeing to not purchase or sell business support materials from or to the Plaintiffs; and (6) Plaintiffs are entitled to injunctive relief against Amway to compel Amway to enforce its business conduct rules, which prohibit Amway distributors from unreasonably and tortiously interfering with the business of other Amway distributors for personal financial gain, and prohibit distributors from selling business support material except through the line of sponsorship. Plaintiffs are also entitled to injunctive relief against the other Defendants to force their compliance with these rules and the other obligations they accepted in becoming Amway distributors.
FACTUAL ALLEGATIONS
Amways Distributor Network . Amway is a business engaged principally in the sale of consumer products and services. Through its employees and more than 2.5 million distributors, Amway engages in over $6.5 billion worth of sales a year, consisting of both products manufactured by Amway and other companies. . Amways distributor network was -- and still is -- created by active distributors sponsoring new distributors into the business. Distributors earn income directly from the sale of Amways products as well as performance incentives based on the sales volume of individuals they have sponsored into the Amway business. . Amways distributor network is sometimes referred to as a multi-level marketing plan. In the United States, this network consists of hundreds of thousands of Amway distributors linked together through lines of sponsorship consisting of "up-line" and "down-line" distributors. . The "up-line" of an Amway distributor is comprised of that distributors recruiter or "sponsor," that recruiters recruiter, and so on "up the line" of distributors. The "down-line" of an Amway distributor is comprised of individuals that the particular distributor recruits, the recruited individuals recruits, and so on "down the line" of recruited distributors. Every Amway distributor has the opportunity, through these arrangements, to build and maintain a "business within a business", forming an independent business network from which the independent distributor can profit. Respect for a distributors line of sponsorship is an essential component of that business and is the foundation upon which the business acquires its value. Distributor Relations . The Amway business is based on two fundamental concepts: merchandising and sponsoring. . In the Amway Business Reference Manual, Amway encourages its distributors to build their networks by starting with a list of those having a close personal relationship to them -- friends, neighbors, and relatives. (Business Reference Manual at p. 17). . One of the essential and enduring standards by which the Amway business is operated is "Partnership". Amway is built on the concept of partnership, beginning with the partnership between its founders and continuing with the concept of partnership among the founders, the distributors and Amways employees. Amway represents that the partnership concept means building trust and confidence within the distributor network. . Amway presents the Amway distributor organization as a unique association of people known for its high level of teamwork, commitment and communication. Indeed, an Amway distributors up-line sponsor is required to work closely to train the distributor and his or her recruits. Amway states that a recruits fellow distributors are available to help the recruit introduce others to the business and to assist the recruit as he or she expands their business. . Amway promotes and sells to its distributors a voice-mail communication system known as "Amvox Network Voice Messaging" or "Amvox by Voice-Tel". Amway encourages the use of this system to foster communication among its distributors, foster trust, confidence, and the partner relationship among its distributors, to promote the Amway business, and to recruit Amway distributors. This system utilizes the telephone lines of interstate commerce. . Amway distributors and their recruits are encouraged to, and often do, develop a confidential relationship of friendship, trust and confidence. Indeed, distributors are encouraged to bring their problems, including personal problems, to their Amway sponsors and others in their up-line distribution chain. Business Support Materials . In addition to the profits distributors earn from sales of Amways products, certain mid-level and high-level distributors obtain revenue (and profits) from the sale of Amway-related products -- books, cassette tapes, selling aids, videotapes, flip-charts, etc. -- called "business support materials". These materials are used by distributors to help train and motivate their down-line distributors. Although the great majority of these materials are not manufactured or distributed by Amway, Amway has recognized the existence of this aspect of the business and has promulgated various rules regulating the manufacture, sale and distribution of these business support materials. These rules require the sale of these materials to follow a distribution system that is parallel to the lines of sponsorship used to sell Amway products. For some distributors, including Plaintiffs, the sale of business support materials produces revenues far exceeding the revenues generated from the sale of Amways consumer goods. Amway Rules . The conduct and business dealings of Amway distributors are governed by various rules promulgated by Amway, including but not limited to the following: a. Amways Sales and Marketing Plan, and the terms of its contracts with individual distributors, including the Distributor Defendants; b. Amways Code of Ethics, Rules of Conduct, and other various rules, prohibitions, regulations, and requirements promulgated by Amway; c. Amways Business Reference Manual and Business Compendium, which detail the rules and standards of conduct required of Amway distributors; d. Violations of these rules can result in Amway disciplinary action, such as censure, admonishment, reprimand, penalties, suspension or removal of certain rights and/or privileges, including termination of the Amway distributorship. . The terms and conditions of Amways binding contractual relationships with its distributors are set forth in (1) the Amway distributor application form (SA-88); (2) the Intent to Continue Form (SA-469); (3) the Amway Business Compendium (SA-1500); (4) the Business Reference Manual (SA-3145); (5) the Direct Distributor Addendum (SA-6589); and (6) the Warehouse Ordering Authorization form (SA-150). . The Amway Business Compendium and the Business Reference Manual contain Amways Code of Ethics and Rules of Conduct for distributors. The Introduction to the Rules of Conduct of Amway Distributors explicitly provides that "The Rules are designed to preserve the benefits available to all independent distributors under the Amway Sales and Marketing Plan." . The Code of Ethics and Rules of Conduct represent written agreements binding every distributor to a unitary contractual framework on which every Amway distributor is required to operate his or her business. In the section entitled "Amways Commitment to You", contained in the introductory chapter to Amways Business Reference Manual, Amway explains the integral role its Code of Ethics and Rules of Conduct play in each distributors business: Amway prescribes a Code of Ethics and Rules of Conduct to guide every distributors. As an integral part of the Amway Sales and Marketing Plan, these rules help ensure that everyone has the same opportunity to build a successful Amway business through a balance of sponsoring and merchandising. Pride in their system of rules and ethics is a main reason some distributors are so committed to their Amway business. . Section B of The Rules of Conduct of Amway Distributors sets forth the requirements to remain a distributor. Rule 4 of Section B was written to govern business support materials sold by Amway distributors. It provides, in pertinent part that: No Amway distributor who personally sells products other than AMWAY products, who personally sells literature or sales aids not produced by Amway, or who sells services (e.g., tax services, insurance, et cetera) will induce another Amway distributor whom he or she does not personally sponsor to sell such products, literature, sales aids, or services, nor shall he or she sell such products, literature, sales aids, or services to any Amway distributor except those personally sponsored by him or her. Rule 4 also explains that the purpose of this prohibition is to protect Amway distributors from less ethical distributors who may be enticed to take advantage of their peers hard-work in building a successful distributor network: Amway distributors may engage in selling activities related to non-Amway- approved or non-Amway produced products and services if they personally desire to do so, but they may not take advantage of their knowledge of, or association with, other Amway distributors, especially those not personally sponsored by them, to promote and expand their non-Amway business. To do so constitutes an unwarranted and unreasonable interference in the business of other Amway distributors. A primary purpose of Rule 4 is to prevent an up-line distributor from "going around" a down-line distributor to sell business support materials directly to the down-lines down-line distributors, and to prevent a down-line distributor from "going around" his or her up-line to purchase business support materials from the up-lines up-line. In other words, Rule 4 prohibits distributors from cutting out or boycotting a distributor in the "middle" of the line of sponsorship, dividing his or her, profits between his or her up-line and down-line distributor(s). . Section I of The Rules of Conduct of Amway Distributors is entitled "business support materials", and provides that distributors who sell such products must comply with the Rules of Conduct of Amway Distributors: Some distributors offer for sale to other distributors in their line of sponsorship a variety of non-Amway produced sponsoring and merchandising aids such as audio and video tapes, literature, and flip-charts ("business support materials" or "Materials"). Such Materials are entirely optional and distributors who choose to sell or distribute such Materials must comply with these Rules. . The Amway Rules of Conduct provide that for violations of the Rules, a distributor may be subject to, among other penalties, a written admonishment, compensatory remedies, imposition of censure, revocation of the right to sponsor, withholding of bonus monies, suspension of distributor rights and termination. . By signing the Amway Distributor Application, Amway distributors expressly agree to comply with the Amway Sales and Marketing Plan, Code of Ethics and Rules of Conduct as they are amended and published from time to time in official Amway literature. . Amway and each Amway distributor incorporates by reference the contents of the Amway Business Reference Manual (SA-3145) or Amway Business Compendium (SA- 1500), the Direct Distributor Manual (SA-6589) or Direct Distributor addendum, if applicable, and Warehouse Ordering Authorization (SA-150), if applicable, into their Amway Distributor Application agreement. Course of Dealing Under Rule 4 44. Over time, a course of dealing and set of practices has shaped how Rule 4 is followed at Amway. Since not all distributors participate in the tool business, it is accepted that the line of sponsorship for purposes of selling business support materials includes only those distributors who actively participate in the tool business and who are at certain levels in the Amway organization. In addition, from time to time certain distributors have agreed to allow slight departures from a strict adherence to Rule 4 to facilitate direct shipments of business support materials to down-line distributors and for other reasons. In each such instance, the modification has been pursuant to a specific agreement, voluntarily made, and the distributors right to renumeration from the sales of business support materials has been, or was supposed to be, protected. . Amway is aware of this course of dealing and of these practices and has acquiesced in and accepted them. The dealings or practices under Rule 4 are fully consistent with the core objective of Rule 4 -- to protect a distributors investment in his or her down-line network for purposes of selling business support materials. Antitrust Exception for Amway . In the 1970s, the Federal, Trade Commission ("FTC") investigated Amway to determine, among other things, whether the Amway multi-level marketing structure was a pyramid scheme in violation of the Antitrust laws. . The Federal Trade Commission determined that Amway was not an illegal pyramid scheme. In reaching its decision, the FTC relied upon several rules contained in the Rules of Conduct for Amway Distributors. . As part of its investigation, the FTC examined Amways "cross-group selling" rule, which requires Amway distributors to purchase all of their "AMWAY products and literature supplies from or through their own sponsor unless there is a servicing agreement between direct distributors." (Rules of Conduct, Section B, Rule 3).The cross-group selling rule is -- for purposes of the sale of Amway products -- the equivalent of the Rule 4 prohibition on selling non-Amway products, including Amway-related business support materials, to distributors whom the selling distributor does not personally sponsor. . The FTC concluded that the cross-group selling rule was not an unreasonable restraint of trade, but found that if the "restraints in the cross-group selling . . . rule[] were horizontally agreed to or induced, rather than vertically imposed by Amway on its distributors, the agreements would probably be illegal per se as horizontal divisions of market. . Rule 4 of Section B of the Rules of Conduct for Amway Distributors -- like the cross-group selling rule -- is imposed by Amway as a term of every distributors agreement. As long as distributors abide by Rule 4, the materials business, like Amways consumer products business, is legal. The Distributor Defendants, however, have begun to form horizontal divisions of the business support materials market -- ignoring Rule 4 as applied through the distributors course of dealing and business practices. When these horizontal agreements are used to engage in a group boycott, as these Defendants are doing, the agreements constitute violations of the antitrust laws. The Relationship of the Parties . The Plaintiffs and the Distributor Defendants are all members of one of Amways largest multi-level distributor networks (hereinafter referred to as "the Amway Network"). Yager is one of the distributors at the top of the Amway Network, which consists of hundreds of thousands of domestic and international distributors. . In the Amway Network line of sponsorship, Yager is up-line from Gooch, Gooch is up-line from Childers and Childers is up-line from the Harts. . Continuing down the Amway line of sponsorship, the Harts are up-line from DAmico and DAmico is up-line from non-party James Nealis ("Nealis").Nealis is up-line from Hayes. . The Harts are up-line from Foley in a branch of the Hart Network separate from the branch containing DAmico and Hayes networks. In the "Foley branch" of the Hart Network, non-party Steve Woods ("Woods") is up-line from Foley, Foley is up-line from Marin, and Marin is up-line from Rodriquez in the line of distribution. . The portion of the Amway Network involving the parties in this suit and the relevant non-parties can be graphed as follows: Yager | Setzer | Gooch | Childers | ------Brig and Lita Hart------ | | non-party Woods DAmico | | Foley non-party Nealis | | Marin Hayes | Rodriquez . Yager takes advantage of his position at the top of the Amway Network to schedule various Amway-related conferences, seminars, rallies, and major functions, and to record these events and provide the cassette tape recordings as business support materials to distributors in the Amway Network. . Yager derives a substantial portion of his income from the sale of business support materials down the lines of distribution in the Amway Network. On information and belief, over 70% of Yagers Amway-related income is derived from the sale of business support materials, constituting $40,000,000.00 per . Amway recognized the value of the materials-side of the Amway business more than 14 years ago. Rich De Vos, one of the original Amway founders, in January 1983, in a tape series entitled "Directly Speaking", addressed the issue of major distributors earning more revenue from the materials business than from the Amway business itself and expressed concern that certain disreputable distributors would not recognize the lines of sponsorship: [W]e accept the fact that motivation is vital to this business. Good, honest motivation is important to the business. But, it must be motivation that builds the business -- not become a business in itself . . . . And, some of you have made it a business unto itself. (Directly Speaking, Rich De Vos, Amway Cassette Series VAL-2150, Side A). . The business support materials produced and sold by Yager and InterNET, although Amway-related, are non-Amway products. Thus, these materials are within the meaning of -- and subject to -- Rule 4 of Section B of the Rules of Conduct of Amway Distributors. . Through courses of dealing among the distributors in the Amway Network and through their past business practices, the parties have agreed to adhere to Rule 4 on a "Diamond-to-Diamond" basis in the market for business support materials. In other words, the distributors in the Amway Network who participate in the materials business have agreed that those distributors who have achieved the "Diamond" status or higher in the Amway business shall adhere to Rule 4 by not "going around" other Diamonds in the Amway lines of sponsorship. . Amway distributors achieve the "Diamond" status by sponsoring six qualified groups that qualify at the maximum Performance Bonus level during at least six months of the fiscal year. The Harts, Yager, Gooch, Foley, non-parties Nealis and Woods, and all the Distributor Defendants have achieved at least the Diamond status in Amway. . All distributors above and below the Harts in the distribution line for business support materials -- whether or not they have achieved the Diamond status -- understand and recognize the implied agreements to adhere to Rule on a Diamond-to-Diamond basis. . In accordance with Rule 4 and the parties implied agreements, the Diamond- to-Diamond line of distribution begins with Yager and continues to Setzer. Setzer International is obligated to provide business support materials only to the Diamond immediately below him -- Gooch. Gooch is then to provide the materials to Childers and Childers, in turn, to the Harts. . Continuing down the Amway Network distribution line, under Rule 4 and the parties implied agreements, DAmicos source for business support materials is contractually limited to the Diamonds directly above him in the distribution line -- the Harts. DAmico is to then sell business support materials only to the Diamond directly below him in the line of distribution -- non-party Nealis. Nealis then sells the materials to Hayes, the Diamond directly below Nealis in the line of distribution. . In a separate branch of the Hart Network, the Harts are non-party Woods immediate up-line Diamond in the business support materials line of distribution. Likewise, under Rule 4 and the parties implied agreements, Woods serves as Foleys immediate up-line Diamond, and Foley serves as Marins immediate up-line Diamond. Marin, in turn, serves as Rodriquezs immediate up-line Diamond in the line of distribution for business support materials. . Thus, Rule 4 of the Rules of Conduct of Amway Distributors and the parties course of dealing and business practices limit the Diamond-to-Diamond sales flow of non-Amway products, including InterNET business support materials, to the following distribution method: Yager V Setzer V Gooch V Childers V ------Brig and Lita Hart------ V V non-party Woods DAmico V V Foley non-party Nealis V V Marin Hayes V Rodriquez . For several years the Defendants followed the distribution structure mandated by Rule 4 and the distributors implied agreements, applying Rule 4 on a Diamond-to-Diarnond basis as shown in the flow-chart above or making alternative arrangements satisfactory to the Diamonds in the Amway Network. Actions Giving Rise to Suit Setzer, DAmico, Hayes, Marin and Rodriquezs Violations of Rule 4 . Upon information and belief, Yager, individually and on behalf of InterNET, and Setzer and Setzer International agreed that Setzer and Setzer International would directly distribute to certain distributors in the Hart Network -- in violation of Rule 4 and Setzers other contractual duties -- business support materials that Yager and InterNET previously had agreed would be sold through the Harts and their company, U-Can-II. The effect of this agreement was to circumvent the Harts in violation of Rule 4. . Setzer and Setzer International have been providing business support materials to DAmico, Hayes, Marin and Rodriquez, all of whom are distributors in the Hart Network. In addition, DAmico has assisted Setzer in providing business support materials to Hayes in violation of Rule 4. But, these Defendants have refused to account to U-Can-II for the volume of business support materials purchased by DAmico, Hayes, Marin and Rodriquez. In most cases, Yager, InterNET, Setzer, and Setzer International have refused to pay Plaintiffs anything for the volume of business support materials purchased by DAmico, Hayes, Marin and Rodriquez. . Plaintiffs have notified Amway, Yager and Setzer that they do not consent to Setzers continued violation of Rule 4 and the distributors implied contracts, and that they do not consent to DAmico, Hayes, Marin and Rodriquezs involvement in Setzers violations of these agreements. These Defendants continue to ignore Plaintiffs demands that Setzer, DAmico, Hayes, Marin and Rodriquez discontinue their wrongful actions. . Yager, InterNET, Setzer, Setzer International, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin Associates, and Rodriquez have not provided Plaintiffs with an accounting of the sales of support materials to DAmico, Hayes, Marin and Rodriquez and Plaintiffs cannot determine the amount of compensation they are owed for Setzer and Setzer Internationals actions. Childers Violations of Rule 4 . Upon information and belief, Yager, individually and on behalf of InterNET, and Childers and TNT agreed that Childers and TNT would directly distribute to certain distributors in the Hart Network -- in violation 6f Rule 4 and Childers other contractual duties -- business support materials that Yager and InterNET previously had agreed would be sold through Plaintiffs and their company, U-Can-II. The effect of this agreement was to circumvent the Harts in violation of Rule 4. Childers and TNT represented that they would provide invoice statements to Plaintiffs, which statements would show the volume of materials these distributors purchased. In addition, these Defendants represented that they would pay Plaintiffs compensation based on the volume of materials that distributors in the Hart Network purchased. Childers and TNT made these representations by, among other things, the United States phone lines and the United States mail. . Childers and TNT have been providing business support materials to Foley. But, upon information and belief, Childers and TNT have misrepresented to U- Can-II the volume of business support materials purchased by Foley. And, based upon these misrepresentations, Childers and TNT have not paid Plaintiffs the full amount of compensation for the volume of support materials purchased by distributors in the Hart Network. . Childers has purported to compensate Plaintiffs for selling business support materials to Foley and Foley in violation of Rule 4 and the distributors implied agreements. On information and belief, Yager, InterNET, Childers, TNT, Foley, and Foley have not, however, provided Plaintiffs with an accounting of Childers sales to Foley and Foley so that Plaintiffs can determine the amount of money they are owed for Childers sales to Foley in violation of Rule 4 and the distributors implied agreements. Childers Major Functions . Childers, individually and on behalf of TNT, holds major functions throughout the country, drawing tens of thousands of Amway distributors. . Plaintiffs have marketed and promoted Childers major functions, encouraging the distributors in the Hart Network to attend. In addition, Plaintiffs have sold tickets to Childers major functions to the distributors in the Hart Network. . In violation of a course of dealing that has arisen through the past business practices between high-level distributors who sponsor major events -- including Childers -- and other distributors who have achieved at least the Diamond level in Amway -- including the Harts -- Childers has refused to properly compensate Plaintiffs for the number of distributors in the Hart Network that Plaintiffs have sent to Childers major functions. Amway . Plaintiffs repeatedly have notified Amway of the Distributor Defendants violations of Rule 4 of Section B of the Rules of Conduct of Amway Distributors. Yet, Amway has refused to enforce Rule 4. . On information and belief, Amway refuses to enforce Rule 4 against the Distributor Defendants for fear that Yager and his down-line distributors will leave the Amway System, which would significantly harm Amway. Conspiracy Among Distributor Defendants . Setzer and Childers conspired to cut Plaintiffs out of the Amway-related business support materials business by engaging in improper, fraudulent or illegal conduct. . On information and belief, in furtherance of and as part of their conspiracy, Setzer and Childers developed business relations with, among others, DAmico, Hayes, Foley, Marin and Rodriquez -- all of whom are in the Hart Network -- and invited, among others, DAmico, Hayes, Marin and Rodriquez, to join their conspiracy to cut Plaintiffs out of the Amway- related business support materials business. . On information and belief, in furtherance of and as part of the conspiracy, Setzer, Setzer International, Childers and TNT misrepresented to Plaintiffs the volume of materials that Childers and Setzer were directly distributing to distributors in the Hart Network. . In furtherance of and as part of the conspiracy, Setzer, Setzer International, Childers and TNT misrepresented to Plaintiffs the amount of profits they were making on business support materials, and specifically on materials Setzer and Childers directly distributed to distributors in the Hart Network. . In furtherance of and as part of the conspiracy, Childers induced Plaintiffs to allow TNT to directly distribute business support materials to distributors in the Hart Network in exchange for purported compensation that was to be based upon the volume of business support materials that TNT supplied to distributors in the Hart Network. . On information and belief, in furtherance of and as part of the conspiracy, Childers and TNT provided false and incomplete invoice statements to the Plaintiffs, which statements understated the volume of business support materials purchased by the distributors in the Hart Network. . On information and belief, in furtherance of and as part of the conspiracy, DAmico, Hayes, Marin and Rodriquez also misrepresented to and/or concealed from Plaintiffs the volume of business support materials purchased by certain distributors in the Hart Network. . By utilizing the business and personal relationships developed through their direct provision of business support materials to distributors in the Hart Network, Setzer and Childers, implicitly and explicitly conspired with one another and with, among others, DAmico, Hayes, Marin and Rodriquez to boycott Plaintiffs business support materials business by agreeing that Setzer and Childers would cut Plaintiffs out of the Amway-related business support materials market by refusing to provide Plaintiffs with business support materials and/or by engaging in unfair business practices with the purpose of misappropriating the Hart Network for the sale of business support materials. . On information and belief, Setzer and Childers may have enlisted in some way Yager and InterNETs assistance in furthering the Distributor Defendants conspiracy.
COUNT I VIOLATION OF CIVIL RICO BY THE DISTRIBUTOR DEFENDANTS
. Plaintiffs reallege and incorporate by reference Paragraphs I through 88 above as if they were set forth fully herein. . Setzer, Childers, DAmico, Hayes, Marin and Rodriquez are "persons" as that term is defined in 18 U.S.C. A7 1961. . The association-in-fact of Setzer International, TNT, DAmico International, Freedom Express, Marin Associates, and the company operated by Rodriquez, in the business support materials line of distribution in the Amway Network is an "enterprise" as that term is defined in 18 U.S.C. A7 1961. This enterprise is engaged in and affects interstate commerce. . In violation of 18 U.S.C. A7 1962(c), Setzer, Childers, DAmico, Hayes, Marin and Rodriquez as persons associated with an enterprise participated in the affairs of the enterprise through a pattern of racketeering activity consisting of wire fraud (18 U.S.C. A7 1343) and mail fraud (18 U.S.C. A7 ). On information and belief, these Defendants participation in the affairs of the enterprise consisted of -- among other things to be proven at trial -- the following: a. guiding, managing, directing or otherwise exercising control over the affairs of the enterprise; b. fraudulently misrepresenting to, and/or concealing from, Plaintiffs the volume of business support materials that Setzer and Childers directly provided to distributors in the Hart Network so as to further the enterprises purpose of misappropriating Plaintiffs Amway-related materials business; c. using the United States telephone system to communicate false and misleading information to Plaintiffs in order to further the purposes of the enterprise; and d. using the United States mail system to communicate false and misleading information to Plaintiffs in order to further the purposes of the enterprise. . On information and belief, the pattern of racketeering activity that Setzer, Childers, DAmico, Hayes, Marin and Rodriquez have engaged in consists of wire fraud (18 U.S.C. A7 1343) and mail fraud (18 U.S.C. A7 1341). The Distributor Defendants have perpetrated the fraud through direct telephone communications, the Amvox telephone voice mail system, and the United States mail system, pursuant to and for the purpose of executing these Defendants scheme to defraud the Plaintiffs by communicating false and fraudulent information, including but not limited to the following: a. statements that fraudulently represented that the Distributor Defendants were abiding by the prohibition -- in Rule 4 of Section B of the Rules of Conduct for Amway distributors as applied by the distributors through their implied agreements -- against selling business support materials to any Amway "Diamond" distributor who is not directly below the Defendants in the distribution line; b. statements that fraudulently represented that certain payments made by TNT and Setzer International were proper compensation for the volume of business support materials that these Defendants were directly distributing to certain distributors in the Hart Network; c. statements that fraudulently represented the profits Setzer, Setzer International, Childers, and TNT were making on the distribution of certain business support materials so as to conceal the Distributor Defendants scheme to cut Plaintiffs out of the network by directly distributing business support materials to distributors in the Hart Network; and d. statements and omissions made by all Distributor Defendants that fraudulently represented and/or concealed the volume of business support materials that Setzer International, and TNT provided to certain distributors in the Hart Network. . On information and belief, the pattern of wire and mail fraud that Setzer, Childers, DAmico, Hayes, Marin and Rodriquez have engaged in includes, among other things, the following: a. direct telephone communications to Plaintiffs and their agents, made by and caused to be made by Setzer and Childers, regarding their compliance with Rule 4 of Section B of the Rules of Conduct for Amway distributors and the distributors implied contracts regarding adherence to Rule 4 on a Diamond-to-Diamond basis; b. numerous mailings of InterNETs business support materials to the Hart Network of Amway distributors, which mailings were made by and caused to be made by Setzer, Setzer International, Childers, and TNT; c. numerous mailings to Plaintiffs and their agents, which mailings were made by and caused to be made by Setzer, Setzer International, Childers, and TNT, regarding the volume of Amway-related business support materials that these Defendants were directly distributing to certain distributors in the Hart Network; and d. numerous direct telephone communications to Plaintiffs and their agents, made by and caused to be made by the Distributor Defendants, regarding the volume of Amway-related business support materials that Setzer, Setzer International, Childers, and TNT were directly distributing to certain distributors in the Hart Network. . The Distributor Defendants participation in the affairs of the enterprise through a pattern of racketeering activity have continued throughout the relevant time period, and threatens to continue into the future with the same pattern of repetition, posing a threat of continuing harm to Plaintiffs business and property. . Plaintiffs have been injured and continue to be injured in their business and property -- both in their Amway business and in their Amway-related business support materials distribution business -- by reason of the Distributor Defendants foregoing pattern of racketeering activity in violation of 18 U.S.C. A7 1962(c) in an amount exceeding $50,000,000.00. Plaintiffs are entitled to recover this sum, additional damages proven at trial of this matter, treble the amount of these damages, plus costs, interest and reasonable attorneys fees from the Distributor Defendants for their RICO violations.
COUNT II CONSPIRACY TO VIOLATE CIVIL RICO BY THE DISTRIBUTOR DEFENDANTS
. Plaintiffs reallege and incorporate by reference Paragraphs 1 through 96 above as if they were set forth fully herein. . On information and belief, in violation of 18 U.S.C. A7 1962(d), Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin Associates, and Rodriquez conspired to violate 18 U.S.C. A7 1962(c). Specifically, these Defendants agreed to commit predicate acts of mail and wire fraud described in 11 9394 of this Complaint with knowledge that such arts were part of a pattern of racketeering activity. . On information and belief, the RICO conspiracy was composed of Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin Associates, and Rodriquez, and had as its objective the destruction of Plaintiffs Amway-related business support materials business and the misappropriation of the Hart Network of Amway distributors so that these Defendants could continue and perpetuate the conspiracy for their own financial gain. . On information and belief, in furtherance of the RICO conspiracy, Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin Associates, and Rodriquez communicated to Plaintiffs and their agents false and fraudulent information and/or failed to disclose and omitted material information, including but not limited to the following: a. statements that fraudulently represented that the Distributor Defendants were abiding by the prohibition -- in Rule 4 of Section B of the Rules of Conduct for Amway distributors as applied by the distributors through their implied agreements -- against selling business support materials to any Amway "Diamond" distributor who is not directly below the Defendants in the distribution line; b. statements that fraudulently represented that certain payments made by Setzer, Setzer International, Childers, and TNT were proper compensation for the volume of business support materials that these Defendants were directly distributing to certain distributors in the Hart Network; c. statements that fraudulently represented the amount of profits Setzer, Setzer International, Childers, and TNT were making on the distribution of business support materials so as to conceal their scheme to cut Plaintiffs out of the network by directly distributing business support materials to distributors in the Hart Network; and d. statements and omissions made by the Distributor Defendants that fraudulently represented and/or concealed the volume of business support materials that InterNET, Setzer International, and TNT provided to the distributors in the Hart Network. . The RICO conspiracy threatens to continue into the future with a threat of repetition, posing a threat of continuing harm to Plaintiffs business and property. . Plaintiffs have been injured and continue to be injured in their business and property -- both in their Amway business and in their Amway-related business support materials distribution business -- by reason of the Distributor Defendants foregoing RICO conspiracy in violation of 18 U.S.C. 1962(d) in an amount exceeding $50,000,000.00. Plaintiffs are entitled to recover this sum, additional damages proven at trial of this matter, treble the amount of these damages, plus costs, interest and reasonable attorneys fees from the Distributor Defendants for their RICO violations.
COUNT III BREACH OF CONTRACT
. Plaintiffs reallege and incorporate by reference Paragraphs I through 102 above as if they were set forth fully herein. First Claim Against Setzer . Pursuant to the various agreements between Setzer and Amway, including the Amway Distributor Application, the Amway Business Reference Manual and the Amway Business Compendium, Setzer agreed not to sell business support materials to any Amway distributor whom he does not personally sponsor. Setzer also agreed not to entice or solicit another Amway distributor whom he does not personally sponsor to sell business support materials. . Pursuant to the various implied agreements between Setzer and the other distributors above and below the Harts in the Amway Network, Setzer agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway -- including the Harts -- to sell business support materials to down-line distributors in the Amway Network. . Despite his contractual obligations, Setzer, individually and on behalf of Setzer International, in February 1994 enticed and solicited DAmico -- a distributor in the Hart Network -- to order his business support materials from Setzer rather than from the Harts. Setzer has been selling business support materials directly to DAmico and DAmico International since 1994 and continues to sell such materials to DAmico and DAmico International. Setzer has engaged in this wrongful action despite the presence of the Harts, Childers, and Gooch -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and DAmico in the Amway Network line of distribution. . Setzers inducement of DAmico to purchase and sell business support materials and Setzers sale of business support materials to DAmico breaches Setzers contract with Amway and his implied contracts with the other distributors, including the Plaintiffs, in the line of distribution. . Setzer and Amway explicitly provided in their various agreements, and specifically in the Rules of Conduct contained in the Amway Business Reference Manual and the Amway Business Compendium, that all Amway distributors are third-party intended beneficiaries of Setzers agreements with Amway. For instance, the Introduction to the Rules of Conduct of Amway Distributors provides that the "Rules are designed to preserve the benefits available to all independent distributors under the Amway Sales and Marketing Plan." . The Harts are members of the group of "all independent distributors" of Amway who are intended beneficiaries of Setzers agreement with Amway. . Plaintiffs have been damaged by Setzers breach of his obligations under his agreements with Amway in an amount exceeding $50,000,000-00 and are entitled to recover this sum, additional damages proven at trial of this matter, plus costs and interest from Setzer and Setzer International for this breach of Setzers agreement with Amway. . Plaintiffs have been damaged by Setzers breach of his obligations under his agreements with Amway in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages to be proven at trial of this matter, plus costs and interest from Setzer and Setzer International for this breach of Setzers agreements with Amway. Second Claim Against Setzer . Sometime within the last year, Setzer, individually and on behalf of Setzer International, also induced Marin -- a distributor in the Hart Network -- to order business support materials directly through Setzer rather than from the Harts. Setzer has been selling business support materials directly to Marin and continues to sell such materials to Marin and Marin Associates. Setzer has engaged in this wrongful action despite the presence of the Harts, Gooch, Childers, Foley, and non-party Woods -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and Marin in the distribution line. . Setzers inducement of Marin to directly purchase business support materials and Setzers sale of business support materials to Marin breaches Setzers contract with Amway and his implied contracts with the other distributors in the line of distribution, including the Plaintiffs. . Plaintiffs have been damaged by Setzers breach of his obligations under his agreements with Amway in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages to be proven at trial of this matter, plus costs and interest from Setzer and Setzer International for this breach of Setzers agreement with Amway. Claim Against Setzer and DAmico . Pursuant to the various agreements between DAmico and Amway, including the Amway Distributor Application, the Amway Business Reference Manual and the Amway Business Compendium, DAmico agreed not to sell business support materials to any Amway distributor whom he does not personally sponsor. DAmico also agreed not to entice or solicit another Amway distributor whom he does not personally sponsor to sell business support materials. . Pursuant to the various implied agreements between DAmico and the other distributors above and below the Harts in the Amway Network, DAmico agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway -- including the Harts -- to sell business support materials to down-line distributors in the Amway Network. . DAmico and Amway explicitly provided in their various agreements, and specifically in the Rules of Conduct contained in the Amway Business Reference Manual and the Amway Business Compendium, that all Amway distributors are third-party intended beneficiaries of DAmicos agreements with Amway. For instance, the Introduction to the Rules of Conduct of Amway Distributors provides that the "Rules are designed to preserve the benefits available to all independent distributors under the Amway Sales and Marketing Plan." . The Harts are members of the group of "all independent distributors" of Amway who are intended beneficiaries of DAmicos agreement with Amway. . Despite their contractual obligations, sometime in January 1997, Setzer and DAmico, individually and on behalf of their respective companies, Setzer International and DAmico International, induced Hayes -- a distributor in the Hart Network -- to directly purchase business support materials from Setzer through DAmico. Setzer and DAmico have been selling business support materials to Hayes and Freedom Express, since January 1997 and continue to sell such materials to Hayes and Freedom Express. Setzer and DAmico have engaged in this wrongful action despite the presence of the Harts, Childers, Gooch, and non-party Nealis -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and DAmico, and Hayes in the Amway Network line of distribution. . Setzer and DAmicos inducement of Hayes to directly purchase business support materials and Setzer and DAmicos sale of business support materials to Hayes breaches these Defendants contracts with Amway and their implied contracts with the other distributors in the line of distribution, including the Plaintiffs. . Plaintiffs have been damaged by Setzer and DAmicos breaches of their obligations under their agreements with Amway in an amount to be proven at trial of this matter, and are entitled to recover this sum, plus costs and interest from Setzer, Setzer International, DAmico and DAmico International for these breaches of Setzer and DAmicos agreements with Amway. Claim Against Childers . Pursuant to the various agreements between Childers and Amway, including the Amway Distributor Application, the Amway Business Reference Manual and the Amway Business Compendium, Childers agreed not to sell business support materials to any Amway distributor whom he does not personally sponsor. Childers also agreed not to induce another Amway distributor whom he does not personally sponsor to sell business support materials. . Pursuant to the various implied agreements between Childers and the other distributors above and below the Harts in the Amway Network, Childers agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway -- including the Harts -- to sell business support materials to down-line distributors in the Amway Network. . Despite his contractual obligations, Childers, individually and on behalf of Defendant TNT, has induced and continues to induce Foley -- an Amway distributor in the Hart Network -- to purchase business support materials directly through Childers. Childers has been selling business support materials to Foley and Foley and continues to sell such materials to Foley and Foley Childers has engaged in this wrongful action despite the presence of the Harts and non-party Woods -- all of whom have at least achieved a Diamond status in Amway -- between Childers and Foley in the Amway Network line of sponsorship. . Childers inducement of Foley to purchase business support materials and Childers sale of business support materials to Foley breaches Childers contract with Amway and his implied contracts with the other distributors in the line of distribution, including the Plaintiffs. . Childers and Amway explicitly provided in their various agreements, and specifically in the Rules of Conduct contained in the Amway Business Reference Manual and the Amway Business Compendium, that all Amway distributors are third-party intended beneficiaries of Childers agreements with Amway. For instance, the Introduction to the Rules of Conduct of Amway Distributors provides that the "Rules are designed to preserve the benefits available to all independent distributors under the Amway Sales and Marketing Plan." . The Harts are members of the group of "all independent distributors" of Amway who are intended beneficiaries of Childers agreement with Amway. . Plaintiffs have been damaged by Childers breach of his obligations under his agreements with Amway in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages proven at trial of this matter, plus costs and interest from Defendant Childers and TNT for this breach of Childers agreement with Amway.
COUNT IV BREACH OF IMPLIED CONTRACT
. Plaintiffs reallege and incorporate by reference Paragraphs 1 through 128 above as if they were set forth fully herein. . Rule 4 of the Rules of Conduct of Amway Distributors imposes a multilevel marketing structure for the acquisition and re-sale of business support materials from the top of an Amway Networks line of distributors down through to the bottom of the line of distributors. . For several years, the Distributor Defendants recognized and respected the distribution structure that Rule 4 imposed in the business support materials market on a Diamond-to-Diamond basis. Through a course of dealing and through business practices over this period of time, business and distributor relationships were formed and implied agreements for the distribution and sale of business support materials were created along network lines between Diamond-level distributors in the Amway Network. Pursuant to these implied agreements, the Amway distributors agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway to sell business support materials to down-line distributors in the Amway Network. . The Defendants are each aware of the various implied agreements among the distributors in the Amway Network for distribution of business support materials. First Claim Against Setzer . Pursuant to the various implied agreements described above, Setzer agreed not to sell InterNETs business support materials outside the lines of the Amway Network, except on a Diamond-to-Diamond basis. . Despite his contractual and other obligations, Setzer, individually and on behalf of Setzer International, in 1994 enticed and solicited DAmico -- an Amway distributor in the Hart Network -- to purchase InterNETs business support materials directly through Setzer. Setzer has been selling these materials to DAmico and DAmico International, since 1994 and continues to sell such materials to DAmico and DAmico International. Setzer has engaged in this wrongful action despite the presence of the Harts, Childers and Gooch -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and DAmico in the Amway Network line of sponsorship. . Setzers inducement of DAmico to purchase InterNETs business support materials and Setzers sale of such materials to DAmico breaches Setzers implied agreements with the distributors in the Amway Network, including the Harts. . Plaintiffs have been damaged by Setzers breach of his obligations under his agreements with the distributors in the Amway Network in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages proven at trial of this matter, plus costs and interest from Setzer and Setzer International for this breach of Setzers agreements. Second Claim Against Setzer . Despite his contractual obligations, Setzer, individually and on behalf of Setzer International, within the last year, induced Marin -- an Amway Distributor in the Hart Network -- to purchase InterNETs business support materials directly through Setzer. Setzer has been selling these materials to Marin and Marin Associates and continues to sell such materials to Marin and Marin Associates. Setzer has engaged in this wrongful action despite the presence of the Harts, Gooch, Childers, Foley, and non-party Woods -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and Marin in the distribution line. . Setzers inducement of Marin to purchase InterNETs business support materials and Setzers sale of such materials to Marin breaches Setzers implied agreements with the distributors in the Amway Network, including the Harts. . Plaintiffs have been damaged by Setzers breach of his obligations under his agreements with the distributors in the Amway Network in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages proven at trial of this matter, plus costs and interest from Setzer and Setzer International for this breach of Setzers agreements. Claim Against Setzer and DAmico . Pursuant to the various implied agreements described above, DAmico also agreed not to sell InterNETs business support materials outside the lines of the Amway Network, except on a Diamond-to-Diamond basis. . Despite their contractual obligations, Setzer and DAmico, individually and on behalf of their companies, Setzer International and DAmico International, in January 1997, induced Hayes -- an Amway distributor in the Hart Network -- to purchase InterNETs business support materials from Setzer through DAmico. Setzer and DAmico have been selling these materials to Hayes and Defendant Freedom Express, since January 1997 and continue to sell such materials to Hayes and Freedom Express. Setzer and DAmico have engaged in this wrongful action despite the presence of the Harts, Childers, Gooch, and non-party Nealis -- all of whom have at least achieved a Diamond status in Amway -- between Setzer and DAmico, and Hayes, in the Amway Network line of sponsorship. . Setzer and DAmicos inducement of Hayes to purchase InterNETs business support materials and Setzer and DAmicos sale of such materials to Hayes breathes Setzer and DAmicos implied agreements with the distributors in the Yager Network, including the Harts. . Plaintiffs have been damaged by Setzer and DAmicos breathes of their obligations under their agreements with the distributors in the Amway Network in an amount to be proven at trial of this matter, and are enti to recover this sum, plus costs and interest from Setzer, Setzer International, DAmico and DAmico International for breaches of Setzer and DAmicos agreements. Claim Against Childers . Pursuant to the various implied agreements described above, Childers agreed not to sell InterNETs business support materials to distributors outside the lines of the Amway Network, except on a Diamond-to-Diamond basis. . Despite his contractual obligations, Childers, individually and on behalf of TNT has induced Foley -- an Amway distributor in the Hart Network -- to purchase InterNETs business support materials from Childers. Childers has been selling these materials to Foley, individually and on behalf of Foley Co. and continues to sell such materials to Foley and Foley Childers has engaged in this wrongful action despite the presence of the Harts and non-party Woods -- all of whom have at least achieved a Diamond status in Amway -- between Childers and Foley in the Amway Network line of distribution. . Childers inducement of Foley to purchase InterNETs business support materials and Childers sale of such materials to Foley breaches Childers implied agreements with the distributors in the Amway Network, including the Harts. . Plaintiffs have been damaged by Childers breach of his obligations under his agreements with the distributors in the Amway Network in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages proven at trial of this matter, plus costs and interest from Childers and TNT for this breach of Childers agreements. Quantum Meruit Claims Against Distributor Defendants . Throughout the course of the Parties relationships, the Distributor Defendants have urged Plaintiffs to "advertise" their business support materials and to encourage down-line distributors in the Hart Network to purchase InterNET products. Plaintiffs are entitled to be compensated for these sales efforts under the doctrine of quantum meruit, as well as under the implied agreements described above.
COUNT V TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS
. Plaintiffs reallege and incorporate by reference Paragraphs I through 148 above as if they were set forth fully herein. . Amways multi-level marketing structure creates a network of business relationships between a distributor and his or her up-line sponsor, the up- line sponsors sponsor, and so forth, forming an up-line of distributors. Likewise, the Amway structure creates a network of business relationships between a distributor and his or her down-line recruits, the down-line recruits recruits, and so forth, forming a valuable down-line of distributors. These business networks result from investment of time, money and effort over a lengthy period of time by a distributor and are extremely valuable assets. . Rule 4 of the Rules of Conduct of Amway Distributors imposes an identical multi-level marketing structure for the acquisition and re-sale of non-Amway products from the top of a line of distributors down through to the bottom of the line of distributors. . Through a course of dealing and past business practices among the distributors in the Amway Network, Rule 4 has been applied to impose this distribution structure on a Diamond-to-Diamond basis through the line of distribution in the Amway Network. . Various business relationships exist in the line of distribution for business support materials. The Harts currently have, or have had, business relationships with their up-line and down-line Diamond-level distributors in the line of distribution for business support materials. . The Defendants are each aware of the various business relationships existing among the distributors in the network for distribution of business support materials. First Claim Against Setzer . Setzer, individually and on behalf of Setzer International, willfully induced DAmico and DAmico International to sever their business relationships with the Plaintiffs by inducing DAmico and DAmico International to purchase business support materials through Setzer and Setzer International in violation of Rule 4 of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis through the parties course of dealing and past business practices. . Plaintiffs have been damaged by Setzers tortious conduct in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages to be proven at trial of this matter, sufficient punitive damages to deter Setzer and Setzer International from similar future conduct, plus costs and interest from Setzer and Setzer International. Second Claim Against Setzer . Setzer, individually and on behalf of Setzer International, willfully induced Marin and Marin Associates to sever their business relationships with the Plaintiffs and with Foley and Foley , by inducing Marin and Marin Associates to purchase business support materials through Setzer and Setzer International in violation of Rule 4 of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis through the parties course of dealing and past business practices. . Plaintiffs have been damaged by Setzers tortious conduct in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages to be proven at trial of this matter, sufficient punitive damages to deter Setzer and Setzer International from similar future conduct, plus costs and interest from Setzer and Setzer International. Claim Against Setzer and DAmico . Setzer and DAmico, individually and on behalf of their companies, Setzer International and DAmico International, willfully induced Hayes and Freedom Express to sever their business relationships with the Plaintiffs by inducing Hayes and Freedom Express to purchase business support materials from Setzer and Setzer International through DAmico and DAmico International in violation of Rule 4 of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis through the parties course of dealing and business practices. . Plaintiffs have been damaged by Setzer and DAmicos tortious conduct in an amount to be proven at trial of this case, and are entitled to recover this sum, sufficient punitive damages to deter Setzer, Setzer International, DAmico, and DAmico International from similar future conduct, plus costs and interest from Setzer, Setzer International, DAmico, and DAmico International. Claim Against Childers . Childers, individually and on behalf of TNT, willfully induced Foley and Foley to sever their business relationships with the Plaintiffs by continuing to induce Foley and Foley to purchase business support materials through Childers and TNT in violation of Rule 4 of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis through the parties course of dealing and past business practices. . Plaintiffs have been damaged by Childers tortious conduct in an amount exceeding $50,000,000.00 and are entitled to recover this sum, additional damages to be proven at trial of this matter, sufficient punitive damages to deter Childers and TNT from similar future conduct, plus costs and interest from Childers and TNT.
COUNT VI TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS
. Plaintiffs reallege and incorporate by reference Paragraphs I through 162 above as if they were set forth fully herein. DAmico . DAmico, at all times relevant to this Complaint, was aware that Setzer had executed various agreements with Amway and had formed various implied agreements with Amway distributors -- including the Harts -- for the distribution of business support materials. DAmico was also aware that pursuant to those agreements, Setzer had agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway to sell business support materials to other distributors down the Amway line of sponsorship. . Despite his knowledge of Setzers contractual obligations, DAmico, individually and on behalf of DAmico International, willfully and intentionally procured a breach of Setzers agreements with Amway and the Amway distributors participating in the business support materials business -- including the Harts -- by purchasing business support materials from Setzer. DAmico continues to purchase business support materials from Setzer and Setzer International. . Plaintiffs have been damaged by DAmicos tortious interference with Setzers agreements with Amway and his implied agreements with the Amway distributors in the Amway Network -- including the Harts -- for the distribution of business support materials, in an amount to be proven at trial of this case, and are entitled to recover this sum, sufficient punitive damages to deter DAmico and DAmico International from similar future conduct, plus costs and interest from these Defendants for tortiously interfering with Setzers agreements. Hayes . Hayes, at all times relevant to this Complaint, was aware that Setzer and DAmico had executed various agreements with Amway and had formed various implied agreements with Amway distributors -- including the Harts -- for the distribution of business support materials. Hayes was also aware that pursuant to those agreements, Setzer and DAmico had agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway to sell business support materials to other distributors down the Amway line of sponsorship. . Despite his knowledge of Setzer and DAmicos contractual obligations, Hayes, individually and on behalf of Freedom Express, willfully and intentionally procured breaches of Setzer and DAmicos agreements with Amway and the support materials business -- including the Harts -- by purchasing business support materials from Setzer through DAmico. Hayes continues to purchase business support materials from Setzer and Setzer International through DAmico and DAmico International. . Plaintiffs have been damaged by Hayes tortious interference with Setzer and DAmicos agreements with Amway and their implied agreements with the Amway distributors -- including the Harts -- for the distribution of business support materials, in an amount to be determined at trial of this case, and are entitled to recover this sum, sufficient punitive damages to deter Hayes and Freedom Express from similar future conduct, plus costs and interest from these Defendants for tortiously interfering with Setzer and DAmicos agreements. Marin and Rodriquez . Marin and Rodriquez, at all times relevant to this Complaint, were aware that Setzer had executed various agreements with Amway and had formed various implied agreements with Amway distributors -- including the Harts -- for the distribution of business support materials. Marin and Rodriquez were also aware that pursuant to those agreements, Setzer had agreed not to "go around" another distributor who has at least achieved the Diamond status in Amway to sell business support materials to other distributors down the Amway line of sponsorship. . Despite their knowledge of Setzers contractual obligations, Marin and Rodriquez, individually and on behalf of Marin & Associates and a company to be named by Plaintiffs through amendment, willfully and intentionally procured a breach of Setzers agreements with Amway and the Amway distributors participating in the business support materials business -- including the Harts -- by agreeing that they would approach Setzer and procure Setzers sale of business support materials to Marin. Marin continues to purchase business support materials from Setzer and Setzer International. . Plaintiffs have been damaged by Marin and Rodriquezs tortious interference with Setzers agreements with Amway and his implied agreements with the Amway distributors in the Amway Network -- including the Harts -- for the distribution of business support materials, in an amount to be proven at trial in this case, and are entitled to recover this sum, sufficient punitive damages to deter these Defendants from similar future conduct, plus costs and interest from these Defendants for tortiously interfering with Setzers agreements.
COUNT VII VIOLATION OF THE SHERMAN ANTITRUST ACT
. Plaintiffs reallege and incorporate by reference Paragraphs I through 172 above as if they were set forth fully herein. . The unreasonable restraint of trade alleged herein occurred in the market for Amway-related business support materials for use in training and motivating Amway distributors in the Amway Network. . Yager takes advantage of his position near the top of the Amway Network to organize and hold Amway rallies, seminars, and major functions. Yager, individually and on behalf of InterNET, records, and obtains recordings of, these events and produces cassette tapes and videos for sale to Amway distributors in the Amway Network. . InterNET is the primary manufacturing source for the Amway-related business support materials that the Harts -- and all other distributors down-line from Yager in the Amway Network -- purchase for re-sale to other distributors in the Amway Network. . Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin & Associates, and Rodriquez have refused to recognize and abide by the distribution arrangement imposed on the sale of InterNETs business support materials by Rule 4 of Section B of the Rules of Conduct for Amway Distributors, as applied on a Diamond-to- Diamond basis in accordance with the parties course of dealing and past business practices. . The Distributor Defendants refusal to recognize and abide by this distribution arrangement creates a market structure for the sale of business support materials in which the Plaintiffs are horizontal competitors of Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin & Associates, and Rodriquez for InterNETs business support materials. . Competition in the market for business support materials was unreasonably restrained by the Distributor Defendants agreement, combination, and/or conspiracy to -- as a group -- boycott Plaintiffs in this market. . Although InterNET has in the past offered to directly provide the Plaintiffs with business support materials, the Plaintiffs are contractually prohibited from "going around" Setzer and Childers to purchase materials from InterNET. Thus, Plaintiffs only source for InterNET business support materials is their immediate up-line Diamond -- Childers. . Thus, Childers agreement, combination, and/or conspiracy with the other Distributor Defendants to boycott Plaintiffs in the market for InterNET business support materials threatens to eliminate Plaintiffs from this market. . The Distributor Defendants have engaged, and are engaging, in a group boycott of Plaintiffs in the market for business support materials for the purpose of, among other things, misappropriating and taking-over the Harts business support materials network. . The Distributor Defendants agreement, combination, and/or conspiracy to engage in a group boycott of Plaintiffs in the Amway-related business support materials market constitutes a combination or conspiracy that unreasonably restrains, hinders, frustrates, suppresses, and eliminates competition in the market for Amway-related business support materials in the Amway Network. . The Distributor Defendants agreement, combination, and/or conspiracy to engage in a group boycott of Plaintiffs in the Amway-related business support materials market is ongoing and the group boycott continues today. . The Distributor Defendants agreement to engage in a group boycott of Plaintiffs in the Amway-related business support materials market constitutes an unreasonable restraint of interstate trade and commerce -- a per se violation of Section I of the Sherman Act. . On information and belief, the Distributor Defendants agreement, combination, and/or conspiracy to engage in a group boycott of Plaintiffs in the Amway-related business support materials market has enabled some of the Distributor Defendants to fix the prices for Amway-related business support materials in the nationwide and international Amway Network and has had a substantial and adverse effect on interstate commerce. . Plaintiffs have been damaged and continue to be damaged by the Distributor Defendants above-described illegal group boycott of Plaintiffs in the market for Amway-related business support materials in an amount exceeding $50,000,000.00. Plaintiffs are entitled to recover this sum, additional damages proven at trial of this matter, treble the amount of all damages, plus costs, interest and reasonable attorneys fees from Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin & Associates, and Rodriquez for their antitrust violations.
COUNT VIII VIOLATION OF FLORIDA DECEPTIVE AND UNFAIR TRADE PRACTICES ACT
. Plaintiffs reallege and incorporate by reference Paragraphs I through 187 above as if they were set forth fully herein. . The Distributor Defendants actions described above in this Complaint constitute unfair methods of competition, unconscionable acts and practices, and unfair and deceptive acts and practices in the conduct of the Amway- related business support materials business in violation of Florida Statute A7 501.201 et seq. . Plaintiffs have been damaged by the Distributor Defendants deceptive and unfair trade practices in an amount exceeding $50,000,000.00. Plaintiffs are entitled to recover this sum, additional damages to be proven at trial of this matter, plus costs, interests, and reasonable attorneys fees from the Distributor Defendants for their deceptive and unfair trade practices.
COUNT IX BREACH OF FIDUCIARY DUTY AGAINST SETZER AND CHILDERS
. Plaintiffs reallege and incorporate by reference Paragraphs 1 through 190 above as if they were set forth fully herein. . The relationship of Amway personal direct distributor and distributor, and the relationship between an Amway distributor and those who the distributor helps train and counsel in his or her down-line network is a relationship of trust and confidence. In the network, the distributor-sponsor acquires influence over the distributor-recruits and is in a position of superior knowledge and information. These relationships of trust and confidence impose fiduciary obligations upon an Amway distributor. . At the time the Harts were recruited to become Amway distributors, and throughout their time as active distributors, they made their decision to become and continue as distributors based in large part on their reliance on the representations made by their direct up-line distributors, Setzer and Childers. Among the representations these Defendants made, are the following: a. that Amway follows certain ethical guidelines and rules, which are imposed by contract upon each distributor, and which Setzer and Childers were committed to following; b. that Setzer and Childers were committed to abiding by Rule 4 of Section B of the Rules of Conduct of Amway Distributors -- which prohibits an Amway distributor from selling non-Amway products to another Amway distributor whom he or she does not personally sponsor as applied on a Diamond-to-Diamond basis in accordance with a course of dealing and past business practices recognized by all distributors in the Amway Network; c. that Setzer and Childers would treat Plaintiffs fairly in the business support materials business by compensating Plaintiffs for all sales of business support materials to distributors in the Hart Network; d. that Setzer and Childers are committed to Amways "partnership" principle and that Plaintiffs could place their trust and confidence in these Defendants; and e. that Setzer and Childers are committed to Amways principles of teamwork, commitment, and communication. . Setzer and Childers, individually and on behalf of Setzer International and TNT, have abused and betrayed Plaintiffs trust and confidence by, among other things: a. seeking to acquire and take-over Plaintiffs Amway-related business support materials business by violating Rule 4 of Section B of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis in accordance with the parties course of dealing and past business practices; b. fraudulently inducing Plaintiffs to allow these Defendants to continue to directly service certain distributors in the Hart Network with InterNETs business support materials; c. on information and belief, misrepresenting the volume of business support materials distributed to distributors in the Hart Network by Setzer and Childers; and d. agreeing and/or conspiring with DAmico, Hayes, Marin and Rodriquez, and their respective companies, to engage in an illegal group boycott of Plaintiffs in the market for Amway-related business support materials. . Setzer and Childers actions described above and throughout this Complaint constitute breaches of their fiduciary duties to the Plaintiffs and are tortious conduct separate and independent from their contractual breaches alleged above. . Plaintiffs have been damaged and continue to be damaged by Setzer and Childers breaches of their fiduciary duties to Plaintiffs in an amount exceeding $50,000,000.00. Plaintiffs are entitled to recover this sum, additional damages proven at trial of this matter, sufficient punitive damages to deter Setzer, Setzer International, Childers, and TNT from similar future conduct, plus costs, interest and reasonable attorneys fees from these Defendants for their breaches of fiduciary duties.
COUNT X ACCOUNTING AGAINST YAGER, SETZER, CHILDERS, DAMICO, FOLEY, HAYES, MARIN AND RODRIQUEZ
. Plaintiffs reallege and incorporate by reference Paragraphs 1 through 196 above as if they were set forth fully herein. Yager, Setzer, DAmico, Hayes, Marin, and Rodriquez . On information and belief, Yager and Setzer may have agreed that Setzer would directly distribute InterNET business support materials to DAmico, Hayes, Marin and Rodriquez, without Plaintiffs authorization and approval, and in direct violation of Rule 4 as applied on a Diamond-to-Diamond basis in accordance with the parties course of dealing and past business practices. . On information and belief, Setzer, DAmico, Hayes, Marin and Rodriquez have concealed the true volume of business support materials sales to DAmico, Hayes, Marin and Rodriquez so as to avoid paying Plaintiffs compensation for sales of business support materials to these distributors in the Hart Network. In addition, Yager and InterNET have not informed Plaintiffs of the volume of business support materials that DAmico, Hayes, Marin and Rodriquez purchased from Setzer and Setzer International. . Plaintiffs remedy at law for the actions of Setzer, DAmico, Hayes, Marin and Rodriquez is inadequate because, without an accounting, Plaintiffs are unable to determine the precise amount of money these Defendants owe them. . While Plaintiffs are aware that they have been damaged in the tens of millions of dollars by these Defendants conduct, the precise damages cannot be asserted because of the complexity and uncertainty of the detailed calculations that would have to be made without the benefit of an accounting from these Defendants. Accordingly, Plaintiffs demand an accounting from Yager, InterNET, Setzer, Setzer International, DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin & Associates, and Rodriquez of the volume of business support materials sold and distribut by Yager, InterNET, Setzer and Setzer International to DAmico, DAmico International, Hayes, Freedom Express, Marin, Marin & Associates, and Rodriquez. Yager, Childers, and Foley . On information and belief, Yager and Childers may have agreed that Childers would continue to directly distribute InterNET business support materials to Foley without Plaintiffs authorization or approval and in direct violation of Rule 4 of the Rules of Conduct of Amway Distributors as applied on a Diamond-to-Diamond basis in accordance with the parties course of dealing and past business practices. . On information and belief, Childers has concealed the true volume of business support materials sales to Foley so as to avoid paying Plaintiffs proper compensation for distributing business support materials to Foley. In addition, Yager, InterNET, Foley, and Foley have not informed Plaintiffs of the volume of business support materials that Foley purchased from Childers and TNT. . Plaintiffs remedy at law for Childers actions is inadequate, because without an accounting, Plaintiffs are unable to determine the precise amount of money that Childers and TNT owe them. . While Plaintiffs are aware that they have been damaged in the tens of millions of dollars by Childers and TNTs conduct, the precise damages cannot be ascertained because of the complexity and uncertainty of the detailed calculations that would have to be made without the benefit of an accounting from these Defendants, Yager, InterNET, Foley, and Foley Accordingly, Plaintiffs demand an accounting from Yager, InterNET, Childers, TNT, Foley, and Foley of the volume of business support materials sold and distributed by Childers and TNT to Foley and Foley
COUNT XI INJUNCTIVE RELIEF
. Plaintiffs reallege and incorporate by reference Paragraphs 1 through 205 above as if they were set forth fully herein. . Amway has an obligation to enforce its agreements with the other Defendants, and specifically, to enforce the prohibition -- in Rule 4 of the Rules of Conduct for Amway Distributors -- that distributors not sell non-Amway products to distributors whom they do not personally sponsor. A failure by Amway to enforce this rule undermines both the value of Plaintiffs tool business support and consumer products businesses. It also introduces chaos into the lines of sponsorship, thereby injuring Plaintiffs in their ability to retain existing distributors and recruit new distributors. . As parties to, and third-party intended beneficiaries of, Amways various contracts with its network of distributors, Plaintiffs are entitled to an injunction from the Court that compels Amway to abide by its contractual commitments. . Plaintiffs are also entitled to an Order from the Court that compels Yager, Gooch, Foley, and the Distributor Defendants to abide by their contractual commitments to Amway, and to Plaintiffs as third-party intended beneficiaries to those contracts and as parties to the various implied agreements between the parties, which agreements provide that Rule 4 will be applied to the distribution network for business support materials on a Diamond-to-Diainond basis. . If Amway allows Yager, Gooch, Foley, and the Distributor Defendants to violate Rule 4 of the Rules of Conduct for Amway Distributors as applied on a Diamond-to-Diamond basis, Plaintiffs will continue to suffer immediate and irreparable injury, loss, and damage. . While Plaintiffs bring this action to remedy past violations of Rule 4 of the Rules of Conduct of Amway Distributors, Plaintiffs have no adequate remedy at law to prohibit future violation of Rule 4 by Yager, Gooch, Foley, and the Distributor Defendants. . If a preliminary injunction is granted, the injury, if any, to Amway, Yager, Gooch, Foley, and the Distributor Defendants, from forcing them to comply with contractual obligations they bargained for, will be minimal. . WHEREFORE, Plaintiffs pray for relief as follows: . Judgment in their favor and against the Distributor Defendants jointly and severally in an amount exceeding $50,000,000 plus additional damages to be proven at trial, treble the amount of these damages, and costs, interest and attorneys fees pursuant to Count I of the Complaint; . Judgment in their favor and against the Distributor Defendants jointly and severally in an amount exceeding $50,000,000 plus additional damages to be proven at trial, treble the amount of these damages, and costs, interest and attorneys fees pursuant to Count II of the Complaint; . Judgment in their favor and against Setzer and Setzer International in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count III of the Complaint; . Judgment in their favor and against DAmico and DAmico International in an amount to be proven at trial of this case, including costs and interest pursuant to Count III of the Complaint; . Judgment in their favor and against Childers and TNT in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count III of the Complaint; . Judgment in their favor and against Setzer and Setzer International in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count IV of the Complaint; . Judgment in their favor and against DAmico and DAmico International in an amount to be proven at trial of this case, including costs and interest pursuant to Count IV of the Complaint; . Judgment in their favor and against Childers and TNT in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count IV of the Complaint; . Judgment in their favor and against Setzer and Setzer International in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count V of the Complaint; . Judgment in their favor and against Setzer and Setzer International for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count V of the Complaint; . Judgment in their favor and against DAmico and DAmico International in an amount to be proven at trial of this case, including costs and interest pursuant to Count V of the Complaint; . Judgment in their favor and against DAmico and DAmico International for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count V of the Complaint; . Judgment in their favor and against Childers and TNT in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs and interest pursuant to Count V of the Complaint; . Judgment in their favor and against Childers and TNT for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count V of the Complaint; . Judgment in their favor and against DAmico and DAmico International in an amount to be proven at trial of this case, including costs and interest pursuant to Count VI of the Complaint; . Judgment in their favor and against DAmico and DAmico International for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count VI of the Complaint; . Judgment in their favor and against Hayes and Freedom Express in an amount to be proven at trial of this case, including costs and interest pursuant to Count VI of the Complaint; . Judgment in their favor and against Hayes and Freedom Express for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count VI of the Complaint; . Judgment in their favor and against Marin, Marin and Associates, and Rodriquez in an amount to be proven at trial in this case, including costs and interest pursuant to Count VI of the Complaint; . Judgment in their favor and against Marin, Marin Associates, and Rodriquez for punitive damages in an appropriate amount to deter these Defendants from the conduct complained of in Count VI of the Complaint; . Judgment in their favor and against the Distributor Defendants jointly and severally in an amount exceeding $50,000,000 plus additional damages to be proven at trial, treble the amount of these damages, and costs, interest and attorneys fees pursuant to Count VII of the Complaint; . Judgment in their favor and against the Distributor Defendants jointly and severally in an amount exceeding $50,000,000 plus additional damages to be proven at trial and costs, interest and attorneys fees pursuant to Count VIII of the Complaint; . Judgment in their favor and against Setzer in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs, interest and attorneys fees pursuant to Count IX of the Complaint; . Judgment in their favor and against Setzer for punitive damages in an appropriate amount to deter this Defendant from the conduct complained of in Count IX of the Complaint; . Judgment in their favor and against Childers in an amount exceeding $50,000,000 plus additional damages to be proven at trial, including costs, interest and attorneys fees pursuant to Count IX of the Complaint; . Judgment in their favor and against Childers for punitive damages in an appropriate amount to deter this Defendant from the conduct complained of in Count IX of the Complaint; . That this Court issue an Order requiring Yager, InterNET, Setzer, Setzer International, Childers, TNT, DAmico, DAmico International, Marin, Marin & Associates, Rodriquez, Foley, and Foley to provide an accounting of the volume of business support materials that Yager, InterNET, Setzer, Setzer, Setzer International, Childers, and TNT have distributed to distributors in the Hart Network pursuant to Count XI of the Complaint; . That, if necessary and requested by Plaintiffs, this Court issue a preliminary injunction, pursuant to Count XI of the Complaint, ordering Amway to enforce the terms of its contracts with Amways distributors, specifically the prohibition -- contained in Rule 4 of the Rules of Conduct for Amway Distributors -- against distributors selling non-Amway products to other distributors whom they did not personally sponsor; . That, if necessary and requested by Plaintiffs, this Court issue a preliminary injunction, pursuant to Count XI of the Complaint, ordering Yager, Gooch, Foley and the Distributor Defendants to abide by the terms of their agreements with Amway and the distributors in the Amway Network, specifically rule 4 of the Rules of Conduct for Amway Distributors as applied on a Diamond-to-Diamond basis; . An injunction against continued wrongful conduct of the defendants where appropriate; . A trial by jury; and . Such other and further relief as may be just and proper. This 8th day of April, 1997 ROGERS and HARDIN Petel W. Schniider Trial Counsel Georgia Bar No. Kevin E. Broyles Georgia Bar No.9 International Tower, Peachtree Center Peachtree Street, NE Atlanta, Georgia 30303 (404) 522-4700