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Amway Loses Appeal In Arbitration Case

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SAN FRANCISCO — A lawsuit alleging Amway and its upper level distributors operate an illegal pyramid scheme is headed back to court after an appeals court struck down company efforts to force plaintiffs into arbitration.

A federal appeals court this week upheld a decision from a 2007 lawsuit against Amway that invalidated a requirement that disputes with the company be resolved through a mediation process rather than in court.

The appeals judges agreed with a U.S. Circuit Court decision that said Ada-based Amway’s mandatory "Alternative Dispute Resolution" process was so slanted in the company’s favor that it was "unconscionable."

The ruling relates to a proposed class-action lawsuit filed in California by three former Amway distributors, which the company refers to as Independent Business Owners.

In a statement provided to The Press this morning, Amway said it expected the ruling and it continues to believe the allegations have no merit.

"The Ninth Circuit historically has been skeptical of contract arbitration," the statement read.

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