If at First P&G Does Not Succeed . . .
After losing in Utah, the consumer products giant wasn’t giving up, however. In July 1997, Procter & Gamble sued Amway again, this time in the U.S. District Court for the Southeastern District in Texas in Houston, with another long list of allegations: unfair competition, negligent supervision, negligence, business disparagement, defamation, tortious interference with prospective business relations, vicarious liability, fraud, violations of the Lanham Act, and violations of the Texas Business and Commerce Code. The suit also alleged that Amway was a pyramid scheme: “The Amway enterprise is in reality an elaborate, illegal pyramid scheme,” the suit read. It continued:
Amway’s objective is to entice consumers out of the retail marketplace by convincing them that purchasing Amway products will make them rich. Of those who invest the time, money, and personal sacrifice to become Amway distributors, only a select few even break even. Even fewer realized the profits touted by Amway in its sales pitch—and they do so by siphoning money from the victims at the bottom.”12
Procter & Gamble named as defendants the Amway Distributors Association, Haugen, Patton, and some of Amway’s other top distributors and organizations, all of whom were based in Utah or Texas. The suit also alleged violations of the federal Racketeer Influenced and Corrupt Organizations Act, known as RICO, based on Amway’s alleged pyramid scheme. Passed in 1970 to combat organized crime, ...