Judge rejects Pokorny, Blenn et.al vs Amway/Quixtar class action settlement

I’ve been meaning for some time to write a blog post about the Amway/Quixtar class action settlement in the Pokorny, Blenn etal lawsuit in California. Back in November I reported that Amway had settled the case and even posted an apology of sorts on one of the Amway corporate blogs. Right from the beginning of the case it was my opinion that it was legally meritless. Amway’s problem is that the court has rejected private  arbitration as the solution, meaning the case could head to a public jury trial. No company likes either the cost, or publicity, that a lawsuit like this could bring, even if you believe you could win it.

So I wasn’t entirely surprised when they announced the settlement.

Having followed the case and retrieved related court documents, I was expecting my post today to be about how Quixtar IBOs from around 2003 until now would shortly be contacted with information on how they could request various refunds and other relief as a result of the class action settlement. I was having problems retrieving the last submitted court document though (from December 29, 2010) which I expected would have all the final details.

Needless to say, I was more than surprised to finally obtain it and discover the judge has rejected the settlement – and, in my opinion, in pretty scathing terms. I’ll post the document on Amway Wiki in the next few days so you can read it for yourself, but essentially you get the impression he feels the settlement was little more than what I think it was – a way out for the plaintiffs to pay their lawyers and for Amway to get the case to disappear. Many of the details he requests the plaintiffs supply are I think next to impossible to assess – for example asking how much BSM did IBOs who bought BSM buy.  I’ll post some more details and discussion on Amway Talk. It will be interesting to see how this one plays out!

UPDATE 2011-01-21: Cindy Droog from Amway Corp Communications has pointed out that the judge hasn’t actually rejected the settlement, he’s deferred a decision and requested more details. Next hearing is in April.

 UPDATE 2012-04-16: The settlement has now been approved, details at www.quixtarclass.com

6 thoughts on “Judge rejects Pokorny, Blenn et.al vs Amway/Quixtar class action settlement”

  1. Cindy, ibofb is correct. The judge is rejecting the settlement offer.

    If you read the documents, the Court has several problems with the settlement.

    The Court is very concerned about the fairness to the victims.

    1- Amway is offering a $35 million cash settlement…. but $20 million of that goes to the lawyers. The pool of IBO victims split the rest, after millions of dollars of expenses are taken out.

    2- Amway claims that part of their settlement is $100 million in changes including retraining, a new product focus and enforcement of rules and regulations regarding tools. But the Court does not see how any of this money will benefit the victims who are no longer in the business. It only benefits IBOs from this point forward, but not those who lost and have quit. (And it has been noted that many of these changes were things Amway was doing already… tool accreditation, more product training, etc)

    3- The Court also questions the valuation of Amway’s $21 million product offering to those who lost. First of all, the $21 million is based on “estimated retail value.” Since Amway does not make retail profit this is really nothing the Corporation is losing, yet they are counting it as a gift to the victims. The Court wants to know the actual cost of the products, minus “estimated retail profit” and minus the markup to the distributors. (they also seem to have discovered that Amway is offering the voucher only on their most profitable product lines) It is likely that the $21 million product offering is really closer to $5-$6 million in cost to the company.

  2. This is Cindy Droog from Amway Corporate Communications, and I just wanted to weigh in with a clarification.

    To say that the judge presiding over the Pokorny case has rejected the settlement isn’t technically correct. He has simply continued the hearing, asking both sides to provide additional information before he rules on it. As a result, there has been a delay in the proceedings. A delay like this is not unusual in the U.S. court system at all.

    We remain confident that the settlement will ultimately be approved, but will not know much more until mid-March or April of this year.

    1. Hi Cindy, yes technically you are correct. He “deferred” ruling on the settlement until more information is provided. Having read what he’s requested though, and his other comments, I don’t think a non-legal use of the term “rejection” is too hard a description in regard with what was offered.

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