### Amway: The Untold Story

Gommeringer v. Amway

Gommeringer v. Amway Corporation, U.S. District Court, Western District of Michigan, Southern Division, 9/85
This is one of two documented cases (the other is Baker v. Amway) in which Amway Corporation has violated the spirit and/or letter of its own rules in order to take someone's distributorship, or part of their distributorship, away from them.

This one really has to be seen to be believed. The Gommeringers seemed to be living testimonials to the principles of hard work and free enterprise so often preached by Amway's founders. Joining Amway in 1969, the Gommeringers devoted 15 years to building a network of more than 50,000, and attained the level of Crown Direct, the second-highest "pin level" attainable in Amway. When Amway was charged with fraud in 1983 by the Canadian govt., the Gommeringers, believing in the integrity and honesty of DeVos and Van Andel, defended them, despite the fact that their Amway business suffered as a result of the negative publicity. When DeVos and Van Andel plead guilty later that year to criminal fraud, their business was further impacted.

The Gommeringers worked for over a year to overcome the enormous negative effect that the criminal activities of Amway's owners had on their business, only to have Amway Corp. terminate their distributorships over a disputed $87.00 annual renewal fee. (Yup, you read that right.) The Gommeringers, who had relied on Amway's integrity and promises that their Amway business would not be taken from them without just cause and due process, were ruined. It seems very likely that there was something else behind Amway's bizarre and vindictive action, but we'll probably never know; following their usual pattern, Amway settled the case before it could go before a jury and the facts be made public. The only hint we have is a comment made by the Gommeringer's attorney concerning the possibility that the Gommeringers were planning to sell competing products to their downline. Even if this were the case, Amway's own rules clearly state that distributors may sell non-Amway products to those whom they directly sponsor. This rule, in fact, is what allows the "tools" business to exist, despite the fact that the illegal and unethical activities it fosters have caused Amway no end of legal hassles and bad publicity. It's interesting that Amway has done so little to get rid of those distributors who are commiting serious abuses of Amway's rules, but they'll violate their own rules to get rid of distributors who have done nothing wrong.

One issue raised in the Gommeringer case is that of Amway's responsibility (or lack thereof) to conduct itself in an ethical and legal manner. The Gommeringers charged that Amway had damaged their business through its admitted criminal actions in the Canadian fraud case (see count III of the Complaint below). The judge in the case dismissed this count on the grounds that Amway's distributor contract, which includes all rules published in Amway's distributor Code of Conduct, obligates only distributors to act in a legal and ethical manner; Amway Corp. itself has no obligation to its distributors to do the same. How comforting.

Should there be any doubt that the disputed renewal fees were Amway's sole stated reason for terminating a Crown Direct distributorship and financially (and emotionally) ruining these distributors, here is Amway's answer to the charge made in paragraph 16 of Count II below:

> "16. Admitted."

> --Defendant's Answer To Plaintiff's Second Amended Complaint And Demand For Trial By Jury, filed 10/21/87

`UNITED STATES DISTRICT COURT`

`WESTERN DISTRICT OF MICHIGAN`
`SOUTHERN DIVISION`

`WERNER GOMMERINGER and`
`ERNA GOMMERINGER, individually`
`and d/b/a Werna Enterprises and`
`DANA INTERNATIONAL, INC.,`

`Plaintiffs,`

`vs File No.: G85-832-CAl`

`AMWAY CORPORATION, JUDGE BENJAMIN F. GIBSON`

`Defendant. SECOND AMENDED COMPLAINT AND`
`DEMAND FOR TRIAL BY JURY`

`John C. Buchanan (P-11341)`
`Carole D. Bos (P-33638)`
`Lois Marie Ens (P-35706)`
`Attorneys for Plaintiffs`
`Buchanan & Bos`
`Sixth Floor Frey Building`
`Grand Rapids, Michigan 49503`
`(616) 458-1224`

`Grant J. Gruel (P-14443)`
`Attorney for Defendant`

`NOW COME plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a Werna Enterprises, and Dana International,`
`Inc., an Arizona Corporation, by and through their attorneys,`
`Buchanan & Bos, and for their complaint against defendant, Amway`
`Corporation (Amway), allege as follows:`

`GENERAL ALLEGATIONS`

`l. Plaintiffs Werner and Erna Gommeringer, husband and`
`wife, are residents of the County of Pima State of Arizona, and at`
`all relevant times have done business as Werna Enterprises. Dana`
`International, Inc. is an Arizona corporation incorporated in 1984`
`and wholly owned and operated by plaintiffs Werner and Erna`
`Gommeringer.`

`2. Defendant, Amway Corporation, is a Michigan corporation`
`maintaining its corporate headquarters and principal place of`
`business in the Western District, County of Kent, State of Michigan.`

`3. This Court has jurisdiction of this action pursuant to`
`28 U.S.C. §1332. Venue is proper pursuant to 28 U.S.C. §1391.`

`4. On or about April 15, 1969, Werner Gommeringer entered`
`into an Amway distributorship agreement with Amway of Canada, Ltd., a`
`wholly owned subsidiary of Amway Corporation, wherein Amway of`
`Canada, Ltd. authorized Werner Gommeringer to purchase and sell Amway`
`products through an Amway distributorship.`

`5. On or about December 1, 1969, Werner Gommeringer and`
`Amway amended their agreement and added Erna Gommeringer as a`
`distributor. Thereafter, Werner and Erna Gommeringer did business as`
`Werna Enterprises.`

`6. On or about January l, 1973, Werner and Erna`
`Gommeringer moved to the United States. In March 1973, Werner and`
`Erna Gommeringer requested Amway's consent to transfer their`
`distributorship with Amway of Canada, Ltd. to Amway Corporation`
`(U.S.).`

`7. In June 1973, Amway Corporation consented to the`
`transfer and entered into a distributorship agreement with Werner and`
`Erna Gommeringer wherein Amway Corporation authorized Werner and Erna`
`Gommeringer to purchase and sell Amway products through their`
`distributorship.`

`8. The contract documents between Werner and Erna`
`Gommeringer and Amway Corporation consisted of "the following: (1)`
`the SA-88 distributor application form, (2) the Career Manual...`
`(3) the Direct Distributor Manual...and, (4) where appropriate,`
`the warehouse authorization form..." (Career Manual, 1980, p.`
`2-B).`

`9. On or about May l, 1982, Werner and Erna Gommeringer`
`acquired a second Amway distributorship from Vic and Mellinda Hayes.`
`The Gommeringers' first distributorship was then called "Werner and`
`Erna Gommeringer I" (Amway #3213) and the second distributorship was`
`called "Werner and Erna Gommeringer II" (Amway #F699).`

`10. On or about September 26, 1984, Werner and Erna`
`Gommeringer formed Dana International, Inc., an Arizona corporation,`
`and with the consent of defendant, Amway Corporation, transferred`
`their two Werner and Erna Gommeringer distributorships to Dana`
`International, Inc. Thereafter, the "Werner and Erna Gommeringer I"`
`distributorship was called "Dana International, Inc. No. I" and the`
`"Werner and Erna Gommeringer II" distributorship was called "Dana`
`International, Inc. No. II".`

`11. Up until April 1985, plaintiffs Werner and Erna`
`Gommeringer and their company, Dana International, Inc., were`
`recognized Amway distributors in good standing and were entitled to`
`(a) purchase, accept and sell Amway products, (b) represent to the`
`public that they were Amway distributors, (c) sponsor other`
`distributors, (d) receive from Amway and pay to others bonuses,`
`awards, and other incentives, (e) attend Amway functions and socials,`
`(f) receive Amway promotional literature, including, current price`
`listings, manuals, Amagrams, Newsgrams, etc., and (g) conduct any`
`further business associated with Amway Corporation which an`
`authorized distributor would be entitled to conduct under the`
`contract agreements.`

`COUNT I`

`BREACH OF CONTRACT AND DAMAGES RESULTING`
`FROM THE WRONGFUL TERMINATION OF`
`PLAINTIFFS' DISTRIBUTORSHIP FRANCHISE`

`12. Plaintiffs restate and incorporate, by reference, each`
`and every allegation set forth in Paragraphs 1 through 11 of the`
`General Allegations as if set out fully herein.`

`13. In April 1985, Amway Corporation sent Dana`
`International, Inc. No. I and Dana International, Inc. No. II, by`
`ordinary mail, two letters dated April 18, 1985 but postmarked`
`April 24, 1985. Said letters are attached hereto and made a part`
`hereof as Exhibits A and B.`

`14. Said letters, which speak for themselves, advise Dana`
`International, Inc. No. I and Dana International, Inc. No. II that`
`their distributorships are "terminated".`

`15. The effective result of Amway sending said letters was`
`the discontinuance of plaintiffs Werner and Erna Gommeringer's`
`distributorships known as Dana International, Inc. No. I and Dana`
`International, Inc. No. II.`

`16. The sole basis of Amway's discontinuance of the`
`Gommeringers' distributorships is Amway's claim that plaintiffs`
`failed to mail their signed "Notice of Intent to Continue" form for`
`1985 and their $12.00 "Amagram" subscription fee (plus a $4.00 late`
`fee if sent after December 31, 1984) to Amway.`

`17. In 1976, Amway, for the first time, unilaterally`
`inserted into their Career Manual the statement that a distributor`
`must file a "Notice" form and send in a subscription fee. This was not`
`part of the contract when the Gommeringers became distributors in`
`1969 and since it was unilaterally inserted into the Career Manual`
`was not part of the contract between the Gommeringers and Amway in`
`1985 when the Gommeringers were terminated.`

`18. Plaintiffs had, however, mailed Amway their signed`
`"Notice of Intent to Continue" form and a check for $24.00 to cover`
`the subscription fee for both distributorships on September 26,`
`1984. A copy of the signed forms and check register is attached`
`hereto and made a part hereof as Exhibit C.`

`19. On April 30, 1985, shortly after receipt of Exhibits A`
`and B, the Gommeringers requested reinstatement of their`
`distributorships.`

`20. Amway refused to reinstate the Gommeringers as`
`distributors and further refused to (a) recognize the Gommeringers as`
`Amway distributors, (b) sell or ship Amway products to the`
`Gommeringers, (c) allow the Gommeringers to represent to the public`
`that they were Amway distributors, (d) allow the Gommeringers to`
`sponsor other distributors, (e) pay the Gommeringers bonuses, awards,`
`and other incentives, (f) allow the Gommeringers to attend any Amway`
`functions or socials, (g) send the Gommeringers promotional`
`literature, including current price listings, manuals, Amagrams,`
`Newsgrams, etc., or (h) allow the Gommeringers to conduct any further`
`business associated with Amway Corporation which an authorized Amway`
`distributor would be entitled to conduct under the contract`
`documents.`

`21. In consideration for a distributor's many efforts,`
`tremendous hard work, and extensive investment of time and money in,`
`among other things, selling Amway products, building and maintaining`
`for years an extensive Amway distributorship network, sponsoring new`
`additional distributors, (Business Manual, 1984, p. 28), and creating`
`a worldwide market need for Amway's products and Amway's`
`direct-selling businesses, Amway represented and promised:`

`(a) that distributors have a "substantial`
`and material property right in their`
`distributorships" which cannot be`
`"arbitrarily and improperly" taken away`
`from them (Career Manual, 1980, p. 2-B);`

`(b) that a distributorship could only be`
`terminated if there existed "good and`
`just cause" which Amway defines as a`
`"substantial and material breach of the`
`(contract) between Amway and the`
`violating distributor." (Direct`
`Distributor Manual, 1978, p. 2 -J); and`

`(c) that the termination of a`
`distributorship for good cause can only`
`occur after an elaborate due process`
`hearing and procedure is completed and`
`that Amway would make "every reasonable`
`effort to correct the situation rather`
`than terminate the distributorship".`
`(Direct Distributor Manual, 1978, p. 2 -J)`

`22. In order to ensure that the distributor's substantial`
`and material property right in the distributorship would not be`
`improperly or arbitrarily terminated or taken away, Amway represented`
`and promised that full and elaborate due process procedures, the`
`many steps (of which) are designed to insure every distributor`
`several opportunities to defend himself (Career Manual, 1980, p.`
`31-B), would first be followed.`

`23. The elaborate internal due process procedures include,`
`among other things, notification of Amway's intent to terminate a`
`distributorship in writing and sent by certified mail and an`
`elaborate hearing and appeal process as defined in the contract`
`documents. ( Direct Distributor Manual, 1978, pp. 2-J, 4-J)`

`24. Amway further represented and promised to its`
`distributors that it would assist its distributors in gaining`
`financial independence and financial security for the whole family`
`(Business Manual, 1984, p. 50; Career Manual, 1980, pp. 8-A, 1-B),`
`that the effort the distributors put into building their Amway`
`distributorships would not be jeopardized by arbitrary changes in`
`Amway's policy (Business Manual, 1984, p. 4), that a corporate owned`
`or operated distributorship would have perpetual existence (Business`
`Manual, 1984, p. 67), that distributors could pass their`
`distributorships on to their children and successors (Business`
`Manual, 1984 p. 68), and that no one could deny or deprive the`
`distributors of what they rightly earned (Career Manual, l980, p.`
`5-A).`

`25. Contrary to all of the above promises and`
`representations made by Amway to plaintiffs and contrary to all of`
`the above due process procedures as set forth in the contract`
`documents, Amway improperly, arbitrarily, maliciously, wrongfully and`
`in complete disregard of the contract and the established due process`
`procedures, abruptly terminated and discontinued the plaintiffs`
`distributorships on April 18, 1985.`

`25. On April 18, l985 when plaintiffs were wrongfully`
`terminated as herein set forth, plaintiffs had devoted fifteen (15)`
`consecutive years of their lives to starting, building, and keeping`
`up their Amway distributorship business, had put a tremendous amount`
`of time, money, and effort into their Amway business, had invested`
`and reinvested hundreds of thousands of dollars into their Amway`
`business and had sponsored and convinced through their`
`distributorship network more than 50,000 new distributors to become`
`involved in Amway, all to the monetary benefit of Amway.`

`27. As a result of plaintiffs' efforts and sacrifices over`
`the years, plaintiffs had built one of the largest Amway`
`distributorship networks in the world, had achieved the second`
`highest level in the Amway awards system as Crown Direct`
`Distributors, and had made a multi-million dollar business, grossing`
`by 1982, over 1 million dollars in revenue.`

`28. As a direct and proximate result of defendant's`
`improper breach of its contract with plaintiffs, its wrongful and`
`malicious termination of plaintiffs' distributorships without good`
`cause and without due process and defendant's refusal to treat`
`plaintiffs as valid Amway distributors, plaintiffs' entire`
`multi-million dollar distributorship business was lost literally`
`overnight.`
`29. As a direct and proximate result of defendant's`
`improper actions, as detailed above, plaintiffs are financially`
`ruined.`

`30. As a further direct and proximate result of defendant's`
`improper actions, as detailed above, plaintiffs and plaintiffs'`
`children and successors who were entitled to expect income from the`
`Gommeringers' distributorships suffered, and will continue to suffer,`
`complete loss of plaintiffs' multi-million dollar business, loss of`
`income, bonuses and compensation to which they would have been`
`entitled for years to come and loss of their good name, reputation,`
`business contacts, and financial credit.`

`31. Although plaintiffs' distributorships have been`
`terminated and discontinued, and although plaintiffs no longer have`
`their business or their business income, Amway continues to have`
`complete benefit of all of plaintiffs' hard work, money, and efforts`
`as well as the many new distributors plaintiffs brought into Amway.`

`32. Furthermore, in consideration for getting distributors`
`to commit themselves and their time, money, and resources to building`
`an Amway distributorship business within the Amway network, Amway`
`promised its distributors financial security and permanency in their`
`distributorships.`

`33. The nature of the contract between Amway and its`
`distributors, including the Gommeringers, is such that it is`
`primarily personal in nature calling for the distributors', and the`
`distributors families, personal services, energies, emotions,`
`feelings and mental solicitude.`

`34. In exchange for this personal commitment and personal`
`self-sacrificing, the parties contemplated at the time of formation`
`of the contract that the contract would secure for the distributors a`
`sense of security, a sense of control over one's financial future and`
`a sense of enjoyment in working for one's self as an independent`
`distributor.`

`35. It is , and was in 1969, therefore, foreseeable and`
`expected that distributors, especially those who reached the higher`
`bonus levels such as Crown Direct, would make a total financial`
`commitment to building the Amway business and placing their financial`
`wealth on the permanency and security of the Amway system.`

`36. It is, and was in 1969, also foreseeable to Amway that`
`taking away a distributor's distributorship after years of hard work`
`and total financial commitment to building up the business can, and`
`would, result in not only loss of the business and the monetary`
`awards flowing therefrom, but also loss of emotional stability and`
`security since one's future becomes uncertain and unstable without`
`his or her distributorship.`

`37. It is, and was in 1969, also foreseeable that at the`
`time of formation of the contract, because of the personal feelings`
`which were most deeply involved, breach of the contract would likely`
`occasion mental distress, anxiety and suffering for reasons that do`
`not stem only from the pecuniary loss resulting from the breach.`

`38. It is, and was in 1969, also foreseeable that`
`deprivation of a committed distributor's distributorship could, and`
`would, result in tremendous emotional anxiety, frustration and`
`right, as well as other psychological and physical damages as`
`related to the foreseeable trauma of losing one's distributorship.`

`39. As a direct and proximate result of defendant's`
`improper breach of its contract with plaintiffs, its wrongful,`
`malicious and intentional termination of plaintiffs' distributorships`
`without due process and without good cause, and defendant's refusal`
`to treat plaintiffs as valid Amway distributors, Werner and Erna`
`Gommeringer did sustain severe mental, emotional, psychological and`
`physical damages as a result of the sudden and unexpected termination`
`of their entire Amway business into which they had invested all of`
`their time, money, effort and resources.`

`40. All of the above results of Amway's shocking and`
`outrageous conduct in wrongfully and maliciously terminating`
`plaintiffs' distributorship s were directly and easily foreseeable to`
`Amway at the time it entered into its distributorship contract with`
`the Gommeringers.`

`WHEREFORE, plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a Werna Enterprise, and Dana International,`
`Inc., pray for judgment against defendant, Amway Corporation, first`
`for breach of contract and damages in whatever amount they are found`
`to be entitled to for wrongful termination of their distributorship`
`franchise and second, Werner and Erna Gommeringer, individually, pray`
`for damages for mental, psychological, emotional and physical`
`distress and injury resulting from the shocking and outrageous`
`conduct of defendant in wrongfully terminating their distributorship`
`franchise.`

`COUNT II`

`TORTIOUS MISCONDUCT AND DAMAGES RESULTING`
`FROM AMWAY'S FRAUDULENT MISREPRESENTATIONS`

`41. Plaintiffs hereby restate and incorporate, by`
`reference, each and every allegation set forth in Paragraphs 1`
`through 11 of the General Allegations and Paragraphs 12 through 40 of`
`Count I as if set out fully herein.`

`42. Defendant, Amway Corporation, in order to induce`
`plaintiffs into becoming Amway distributors and further induce them`
`into building, expanding and maintaining their distributorships, made`
`material and significant representations and promises to the`
`plaintiffs, to wit: that distributors had a substantial and material`
`property right in their distributorships which could not be taken`
`away from them or terminated without due process and good cause.`

`43. Defendant's representations and promises are and were`
`false for the reason that a distributor, according to Amway's present`
`claim and defense to Count I, could be terminated without good cause`
`and without due process procedures if said distributor failed to file`
`a Notice of Intent form and send Amway an Amagram subscription fee`
`once a year.`

`44. On April 18, l985 Amway terminated plaintiffs'`
`distributorships.`

`45. The sole basis of Amway's discontinuance of the`
`Gommeringers' distributorships is Amway's claim that plaintiffs`
`failed to mail their signed "Notice of Intent to Continue" form for`
`1985 and their $12.00 "Amagram" subscription fee (plus a $4.00 late`
`fee if sent after December 31, 1984) to Amway.`

`46. It is, therefore, Amway's position that the mere`
`failure to file a $12.00 subscription fee and send in a signed`
`"Notice" form can, and will, result in loss of a distributor's entire`
`distributorship without due process and without good or just cause.`

`47. Defendant knew that its promises and representations`
`were false at the many times defendant made such promises and`
`representations since defendant knew that it could, if it so desired,`
`take away a distributor's entire business if he failed to send in his`
`signed "Notice" form and check for $12.00.`

`48. Defendant made such promises and representations with`
`the intent that distributors, including plaintiffs, would act and`
`rely upon those promises and representations and that distributors,`
`including plaintiffs, would be induced into entering into an Amway`
`distributorship franchise contract, would spend years of their lives`
`building it and making it profitable to Amway, would invest and`
`reinvest their money into the franchise, and would sponsor many, many`
`more new, additional distributors who, likewise, would build a`
`business and make it profitable to Amway.`

`49. Plaintiffs acted and relied upon defendant's said`
`representations and promises and became Amway distributors in 1969`
`and continued for fifteen years on the reliance and belief that they`
`had a substantial property right in their distributorships and that`
`defendant could not take their distributorships away improperly or`
`unjustly without good cause and without due process procedures as`
`indicated by Amway in the contract documents.`

`50. In 1976, Amway, for the first time, unilaterally`
`inserted into their Career Manual the statement that a distributor`
`must file a "Notice" form and send in a subscription fee. This was`
`not part of the contract when the Gommeringers became distributors in`
`1969 and since it was unilaterally inserted into the Career Manual`
`was not part of the contract between the Gommeringers and Amway in`
`1985 when the Gommeringers were terminated.`

`51. By inserting this statement, Amway intentionally`
`created a trap (assuming that it imposed a contractual obligation)`
`for unsuspecting distributors so that Amway could terminate a`
`distributor's distributorship without having a good or valid reason`
`and without first affording the aggrieved distributor an opportunity`
`to defend himself.`

`52. Amway went even further in attempting to trap and`
`deceive its distributors and through its conduct and words and the`
`Notice form itself, induced, misled and lulled distributors into a`
`false belief that filing their forms late would only result in a`
`$4.00 late fee.`

`53. Amway's conduct and words indicated to all`
`distributors, including the Gommeringers, that filing late was of`
`little or no consequence whatsoever and that timely filing the`
`"Notice" form was a rather insignificant, unimportant detail which`
`even Amway did not strictly enforce.`

`54. Yet, Amway's present position--that failure to timely`
`file will result in termination of a distributor's entire business--`
`gives Amway a means of causing a distributor to "technically" breach`
`his contract and thus allow Amway to ignominiously pull the`
`distributor's business away from him whenever it so desires.`

`55. The Gommeringers fully relied on Amway's`
`misrepresentation, fraud and deceitful practices and believed that`
`they could only be terminated for good and just cause and with due`
`process and upon that reliance built and maintained for over fifteen`
`years their multi-million dollar distributorship franchise so that`
`they could pass it on to their children and successors.`

`56. Pursuant to defendant's misrepresentations, fraud, and`
`deceitful practices, Amway "terminated" plaintiffs' entire`
`multi-million dollar distributorship business without good or just`
`cause and without any due process procedures whatsoever.`

`57. As a direct and proximate result of defendant's`
`improper actions, as detailed above, plaintiffs have lost their`
`entire multi-million dollar business and are financially ruined.`

`58. As a direct and proximate result of defendant's`
`improper actions, as detailed above, plaintiffs and plaintiffs'`
`children and successors who were entitled to expect income from the`
`Gommeringers' distributorships suffered , and will continue to suffer,`
`complete loss of their multi-million dollar business, loss of income,`
`bonuses and compensation to which they would have been entitled to`
`for years to come and loss of their good name, reputation, business`
`contacts, and financial credit.`

`59. As a further and direct and proximate result of`
`defendant's intentional and malicious termination of plaintiffs'`
`distributorship business and defendant's refusal to treat plaintiffs`
`as valid Amway distributors, Werner and Erna Gommeringer did sustain`
`severe mental, emotional, psychological and physical damages as a`
`result of the sudden and unexpected termination of their entire Amway`
`business in which they invested all of their time, money, and`
`resources.`

`WHEREFORE, plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a. Werna Enterprises, and Dana International,`
`Inc., pray for judgment against defendant, Amway Corporation, for`
`tortious and fraudulent misrepresentation and damages in whatever`
`amount they are found to be entitled, first for loss of their`
`distributorship franchise and loss of their income, bonuses and`
`compensation and, second, Werner and Erna Gommeringer, individually`
`pray for damages for mental, psychological, emotional and physical`
`distress and injury resulting from the shocking and outrageous`
`conduct and fraudulent misrepresentations made by defendant, Amway`
`Corporation, and relied upon by plaintiffs.`

`COUNT III`

`BREACH OF CONTRACT AND LOSS OF PROFITS`
`FOR THE YEARS 1983 THROUGH 1985 RESULTING`
`FROM AMWAY'S FAILURE TO CONDUCT ITS`
`BUSINESS IN AN HONEST AND ETHICAL MANNER`

`60. Plaintiffs restate and incorporate, by reference, each`
`and every allegation set forth in Paragraphs 1 through 11 of the`
`General Allegations, Paragraphs 12 through 40 of Count I and`
`Paragraphs 41 through 59 of Count II as if set out fully herein.`

`61. In consideration for the distributors', including`
`plaintiffs', promise to operate their Amway franchises ethically,`
`morally, honestly, and with a high standard of integrity as set forth`
`in the contract documents of the Code of Ethics and Rules of Conduct,`
`Amway likewise promised and agreed that it too would conduct its`
`business in an ethical and moral fashion and with a high standard of`
`integrity .`

`62. Defendant has represented to its distributors,`
`including plaintiffs, that its business is built on a tradition of`
`ethical business standards and integrity and that Amway has always`
`taken great pride in the honesty, integrity, and standards of`
`excellence that are an integral part of the World of Amway.`

`63. Amway has further represented that Messrs. Van Andel and`
`DeVos "have unquestioned integrity" (Career Manual, 1980, p. 3-B).`

`64. As part of the Rules of Conduct imposed upon a`
`distributor and likewise adhered to by Amway, Amway and its`
`distributors have always been forbidden to "engage in any deceptive`
`or unlawful trade practice" or "any illegal or unlawful business`
`activity." (Business Manual, 1984, pp. 69-70).`

`65. Amway recognized that "nothing harms your image more`
`than breaking the law" and that its and its distributors' actions`
`affect the entire Amway network and Amway sales and profits (Business`
`Manual, 1984, p. 99).`

`66. In 1965, unknown to Amway distributors and contrary to`
`all of Amway ' s promises and representations that it would obey the`
`law, act morally, ethically and honestly and conduct its business`
`with unquestioned integrity, Amway willfully devised and implemented`
`a scheme to cheat the Canadian government of certain customs duties`
`by submitting dummy invoices regarding products shipped to Canada.`

`67. Said scheme was unknown to the Gommeringers in 1969`
`when they became Amway distributors and remained undetected for many,`
`many years even while the Gommeringers invested all their money, time`
`and effort into building up their distributorships.`

`68. From the early seventies and up until late 1982, Amway`
`sales continued to climb steadily, regardless of national economic`
`conditions, and the Gommeringers' business likewise climbed.`

`69. In late 1982, however, news of the fraud Amway`
`perpetrated upon the Canadian government began to surface by way of`
`the news media.`

`70. In early 1983, the Canadian government formally charged`
`Amway Corporation, Amway of Canada, Ltd. and Amway's top four`
`executive officers, including Messrs. Rich DeVos and Jay Van Andel, of`
`criminally defrauding the Canadian government of millions of dollars.`

`71. As more news of Amway's illegal activities became`
`public, defendant's distributors, including plaintiffs, experienced`
`drastic business setbacks as a result of their inability to sell`
`Amway product, inability to sponsor new Amway distributors,`
`inability to maintain current sales volumes, and inability to down`
`play the bad press of and negative reaction to Amway's fraud.`

`72. Consequently, as a result of the charge of fraud`
`against Amway and its top executives, for the first time since the`
`beginning of Amway and the beginning of the Gommeringers' business,`
`the Gommeringers' sales fell off and growth which was steady up to`
`that point dramatically halted.`

`73. Throughout all the time that news of Amway's activities`
`was being publicized, Amway and its executives promised and`
`represented on a number of occasions that they were innocent and that`
`they would be fully vindicated for this crime through the judicial`
`process.`

`74. The Gommeringers, pursuant to their belief that Amway`
`and its executives operated their business honestly, ethically,`
`morally and with a high degree of integrity, continued to defend`
`Amway and its products, its company, its executives and trusted Amway`
`and its co-founders when they said that they were innocent and had`
`not violated any laws.`

`75. Contrary to Amway's promises and representations, on`
`November 10, 1983, Amway Corporation and Amway of Canada, Ltd. plead`
`guilty to criminal charges of defrauding the Canadian government of`
`over $28 million from February 5, 1965 through January 31, 1980.`

`76. Pursuant to Amway ' s admission of guilt, Amway`
`Corporation was ordered to pay a fine of $20 million and Amway of`
`Canada, Ltd. was ordered to pay a fine of $5 million.`

`77. After Amway's plea of guilty and admission of fault,`
`1984 sales for Amway distributors, including the Gommeringers,`
`continued to plummet and the Gommeringers were unable to sponsor as`
`many new distributors as they had in the past, forcing them, as well`
`as all other distributors, to attempt as best they could to keep`
`their Amway business together and make it work.`

`78. In 1885, after the Gommeringers spent over a year of`
`tremendous hard work in an attempt to overcome the enormous negative`
`side effects of Amway's admission of guilt, and just as the`
`Gommeringers were able to see the fruit of their labor and the bad`
`press Amway continually received began to subside, Amway wrongfully`
`and maliciously terminated the Gommeringers' distributorships.`

`79. Contrary to Amway's promises and representations that`
`it would act honestly, ethically, morally and with a high standard of`
`integrity, as indicated above, Amway breached the contract by`
`committing a major fraud upon the Canadian government which Amway`
`admitted cheated the Canadian government out of millions of dollars.`

`80. As a direct consequence of the commission and admission`
`of this fraud, Amway distributors, including the plaintiffs, suffered`
`tremendous losses during the years 1983, 1984, and 1985 in terms of`
`lost income, bonuses and sales and the inability to sponsor new`
`distributors.`

`WHEREFORE, plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a Werna Enterprises, and Dana International,`
`Inc., pray for judgment against defendant, Amway Corporation, for`
`breach of contract and damages in whatever amount they are found to`
`be entitled to for loss of profits for the years 1983 through 1985`
`resulting from Amway's dishonest, immoral, unethical, and criminal`
`conduct of defrauding the Canadian government of millions of dollars.`

`COUNT IV`

`BREACH OF CONTRACT AND LOSS OF PROFITS`
`FOR THE YEARS 1975 THROUGH 1985 RESULTING`
`FROM AMWAY'S FAILURE TO PROPERLY IMPLEMENT`
`AN INCOME PRESERVATION PLAN`

`81. Plaintiffs restate and incorporate, by reference, each`
`and every allegation set forth in Paragraphs 1 through 11 of the`
`General Allegations, Paragraphs 12 through 40 of Count I, Paragraphs`
`4l through 59 of Count II and Paragraphs 60 through 80 of Count III`
`as if set out fully herein.`

`82. In June 1975, Amway Corporation represented to its`
`distributors, including plaintiffs, that it had implemented a new`
`"Income Preservation" Plan for its distributors.`

`83. Under the Income Preservation Plan, Amway promised that`
`a distributor's income would be protected "from the eroding affects`
`(sic) of inflation" with "inflation insurance" and that if inflation`
`persisted "in whatever degree" the distributors' Amway income would`
`"increase accordingly." (Amagram, Vol. 16, No. 3)`

`84. Amway further promised and represented that the`
`compensation which Amway pays to its distributors in the form of`
`bonuses and incentives would be adjusted according to inflation.`

`85. Contrary to Amway's promises and representations, Amway`
`did not implement the Income Preservation Plan as represented and/or`
`did not implement an Income Preservation Plan which kept "distributor`
`income in step with price increases" or in "pace with dollar`
`inflation". (Direct Distributor Manual, 1976, p. 2-B)`

`86. As a direct and proximate result of Amway's breach of`
`contract in failing to implement an Income Preservation Plan as`
`promised and represented and/or implement a Plan that would`
`accomplish what Amway promised and represented it would, all`
`distributors, including the plaintiffs, lost and did not receive`
`tremendous amounts of profits and bonuses to which they were entitled`
`and which were promised for the years 1975 through 1985.`

`WHEREFORE, plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a Werna Enterprises, and Dana International,`
`Inc., pray for judgment against defendant, Amway Corporation, for`
`breach of contract and damages in whatever amount they are found to`
`be entitled to for the loss of profits and bonuses for the years 1975`
`through 1985 resulting from Amway's failure to properly implement an`
`Income Preservation Plan as promised by defendant.`

`COUNT V`

`INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS`
`AND DAMAGES RESULTING FROM AMWAY'S EXTREME`
`AND OUTRAGEOUS CONDUCT TOWARD PLAINTIFFS`

`87. Plaintiffs hereby restate and incorporate, by`
`reference, each and every allegation set forth in Paragraphs 1`
`through 11 of the General Allegations, Paragraphs 12 through 40 of`
`Count I, Paragraphs 41 through 59 of Count II, Paragraphs 60 through`
`80 of Count III and Paragraphs 81 through 86 of Count IV as if set`
`out fully herein.`

`88. Sometime in 1984, Amway set out to publicly embarrass,`
`humiliate and degrade the Gommeringers and intentionally cause them`
`severe emotional distress and anxiety.`

`89. Amway's conduct was intended to frustrate the`
`Gommeringers, ostracize them and debilitate their efforts to build`
`and sustain their Amway business.`

`90. To accomplish its malicious intentions, Amway did the`
`following:`

`(a) refused the Gommeringers numerous privileges and`
`perquisites which the Gommeringers had already worked hard for`
`and rightfully earned;`

`(b) disinvited or revoked the Gommeringers invitation or`
`refused to allow them to participate in several high-level`
`functions which are considered by the distributors to be Amway's`
`public recognition of, approval of and reward for the work,`
`efforts and commitment of the invited guest, such as the`
`executive Diamond Club Hong Kong trip, the 1984 Regional`
`Leadership Meeting, the Enterprise Yacht trip to Peter Island and`
`the Hawaiian trip.`

`(c) incited other Amway distributors to file formal`
`complaints against the Gommeringers in the form of "419s" and to`
`reveal information about the Gommeringers which could be used`
`against them;`

`(d) discredited and undermined the Gommeringers' leadership`
`by speaking against the Gommeringers at Amway rallies and`
`functions.`

`91. All of Amway's conduct had the intended effect of`
`humiliating, harassing, degrading, and undermining the Gommeringers'`
`hard work and efforts in building their distributorship business and`
`making it successful.`

`92. Amway's extreme and outrageous conduct toward the`
`Gommeringers was intentional, malicious and spiteful.`

`93. Throughout l984 and l985, Amway continued to harass and`
`offend the Gommeringers on numerous occasions culminating in the`
`Gommeringers' distributorships being terminated in April 1985 and`
`telling the world of Amway that it made the Gommeringers "an example"`
`of what happens to you if you disagree with Amway.`

`94. As a result of Amway's outrageous conduct described`
`above, plaintiffs have suffered and continue to suffer severe`
`emotional distress, anguish and anxiety which has resulted in bodily`
`harm and injuries.`

`WHEREFORE , plaintiffs, Werner and Erna Gommeringer,`
`individually and d/b/a Werna Enterprises, and Dana International,`
`Inc., pray for judgment against defendant, Amway Corporation, for`
`intentional infliction of emotional distress, anguish and anxiety and`
`compensatory, punitive and exemplary damages in whatever amount they`
`are found to be entitled to for mental, psychological, emotional and`
`physical injury resulting from Amway's shocking and outrageous`
`conduct.`

`BUCHANAN & BOS`
`Attorneys for Plaintiffs`

`Dated August 17, 1987`