Long v. Amway Corp.

306 F. Supp. 3d 601
CourtDistrict Court, S.D. Illinois
DecidedJanuary 30, 2018
Docket17 Civ. 2613 (KPF)
StatusPublished
Cited by5 cases

This text of 306 F. Supp. 3d 601 (Long v. Amway Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Long v. Amway Corp., 306 F. Supp. 3d 601 (S.D. Ill. 2018).

Opinion

KATHERINE POLK FAILLA, District Judge:

Beginning in 2011, Plaintiff Keyu Long distributed goods for Defendant Amway Corp. ("Amway") pursuant to a contract that, among other things, compensated her through commissions and bonuses; the contract was renewed in 2015. In 2017, Plaintiff brought this action seeking a declaratory judgment that an arbitration agreement (the "Arbitration Agreement") embedded in her contract with Amway was unconscionable and thus unenforceable. Assuming the Court agreed with this position, Plaintiff then advanced claims for damages, alleging that Amway had wrongfully deprived her (and other distributors) of an annual sales bonus for performance in 2016. Perhaps more significantly, Plaintiff alleged that Amway had deprived her of this bonus on account of her race, and that Amway had similarly withheld sales bonuses from 75 to 100 other distributors of Chinese extraction of whom she was aware.

Relying on the Arbitration Agreement, Amway moved to dismiss the Complaint or to stay the case and compel arbitration. For the reasons outlined below, the Court holds that the Arbitration Agreement is valid and thus grants the motion to compel arbitration.

BACKGROUND1

A. Factual History

1. Amway's Registration Process

Amway is a Michigan corporation, which touts itself as "a leader in the direct selling *604industry, offering entrepreneurs an exceptional business opportunity." (VanderVen Decl. ¶ 3). That "exceptional business opportunity" consists of registering distributors, to which Amway refers as "Independent Business Owners" (or "IBOs"), to sell Amway's "nutrition, wellness, beauty, and home products" and "sponsor others to do the same." (Id. ). Amway's sales platform compensates IBOs through "various commissions and bonuses ... under the IBO Compensation Plan." (Id. ).

In 2011, shortly after arriving from China, Plaintiff registered as an IBO at the behest of a Chinese couple who had previously worked for Amway. (See Pl. Decl. ¶¶ 5, 8). She renewed her registration with Amway in 2015, and it is that renewal agreement that is relevant to Plaintiff's current claims. (See VanderVen Decl. ¶ 8 n.1). To register, Plaintiff was required by Amway to sign a Registration Agreement that incorporated a separate document containing the Rules of Conduct and Compensation Plan that were applicable to all IBOs. (See id. at ¶ 4).

The face of the Registration Agreement contains a section reading, "AGREEMENT TO MEDIATE AND ARBITRATE DISPUTES." (Reg. Agmt.). That provision states:

Amway ... and its IBOs mutually agree to resolve all claims and disputes arising out of or relating to an Independent Business, the Amway Independent Business Owner Compensation Plan ("IBO Compensation Plan"), or the Rules of Conduct ... under the Dispute Resolution Procedures described in the Rules of Conduct, specifically Rule 11. The Rules of Conduct shall be part of this IBO Registration Agreement and are incorporated by reference. A copy of the Rules of Conduct is available to review at www.amway.com.

(Id. ). In turn, Rule 11 of the Rules of Conduct (the "ADR Provision") subjects disputes between Amway and its IBOs to a three-tiered dispute-resolution process. (See VanderVen Decl. ¶ 9-13). These procedures, explained more fully below, are also outlined in the Registration Agreement itself, which further contains a clause delegating issues of arbitrability to an arbitrator: "The Arbitrator shall have exclusive authority to resolve any dispute relating to the enforceability of this Agreement, including, but not limited to, any claim that all or any part of this Agreement is void or voidable." (Reg. Agmt.).

The Registration Agreement speaks in relevant part to the first step in the dispute-resolution process, requiring an IBO to "agree to submit any dispute [the IBO] may have with ... Amway ... that is not resolved informally ... to conciliation[.] The conciliation requirement is reciprocal and binds Amway, IBOs[,] and Approved Providers." (Reg. Agmt.). The Rules of Conduct describe "conciliation" as a non-binding process "designed to resolve disputes efficiently in a non-confrontational setting." (Rules § 11.4; see VanderVen Decl. ¶ 10). Conciliation initiates upon the complaining party's "providing a Request for Conciliation form to the other affected Parties" as well as "the Amway Business Conduct and Rules Department." (Rules § 11.4). A mediator oversees the process; he or she is selected by the Board of the Independent Business Owner Association International ("IBOAI"), "an independent trade association comprised of Amway distributors that represents the interests of all Amway IBOs." (VanderVen Decl.¶ 10).

*605An IBO may object to the IBOAI mediator, however, in which case Conciliation proceeds before a neutral mediator. (Id. ).

The Rules of Conduct provide further that "[i]f any part of [a] dispute is not resolved by mediation ..., any IBO who is a Party to the remaining dispute may request a Hearing Panel[.]" (Rules § 11.4.2).2 The Hearing Panel consists of "a disinterested three-person ... panel selected by the IBOAI Board Executive Committee.' " (VanderVen Decl. ¶¶ 11-12). At this stage, the complainant presents evidence, and at the conclusion of the proceeding, the Hearing Panel issues a written, non-binding recommended resolution. (Id. at ¶ 12).

After proceeding before a Hearing Panel, either party may disregard the proposed resolution and proceed to the final dispute resolution mechanism-binding arbitration. (VanderVen Decl. ¶¶ 12-13). Arbitration is thus the third and final step to dispute resolution under the Registration Agreement and Rules of Conduct. The Registration Agreement requires an IBO to

agree that if any dispute cannot be resolved by good faith efforts in Conciliation ..., [the IBO] will submit any remaining claim or dispute arising out of or relating to [the IBO], the IBO Compensation Plan, or the IBO Rules of Conduct (including any claim against ... Amway Corp. ...) ... to binding arbitration[.]

(Reg. Agmt.). Rule 11.5 of the Rules of Conduct, in turn, requires "[t]he Parties [to] submit any Disputes that were not resolved through the process described in Rule 11.4, through binding arbitration[.]" (Rules § 11.5).

2. Plaintiff's Registration History

The parties agree that Plaintiff first registered as an IBO in 2011 and registered again in 2015. (See Pl. Opp. 5-6; VanderVen Decl. ¶ 8 n.1).3 But they vehemently dispute the specifics of the process by which Plaintiff re-registered as an IBO.

Amway contends that Plaintiff's 2015 Registration Agreement-including the provision requiring IBOs to resolve any disputes pursuant to Rule 11's ADR Provision-was presented to her in Mandarin Chinese. (VanderVen Decl. ¶¶ 7-8). Indeed, Amway attached as an exhibit to its motion a Registration Agreement in Chinese bearing Plaintiff's name, signature, and other identifying information. (See Chinese Reg. Agmt.).

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306 F. Supp. 3d 601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/long-v-amway-corp-ilsd-2018.