The court of appeals affirmed a judgment of the district court. The court held that the entire mandatory alternative dispute resolution procedure in a marketing company’s agreements with its distributors was procedurally and substantively unconscionable and unenforceable under California law.
Jeff Pokorny, Larry Blenn and Kenneth Busiere, identified as independent business owners (IBOs), worked distributing products and services for Quixtar, Inc., the successor to Amway Corporation. They filed a class action against Quixtar and individual senior distributors (collectively, Quixtar) in the district court, alleging that Quixtar was operating an illegal pyramid scheme in violation of the Racketeer Influenced and Corrupt Organizations Act and California state law.
