Nitro Distributing v. Alticor , 453 F.3d 995 (2006)

Does an arbitration clause, which binds a distributor, also bind that distributor’s separate business if the separate business has not signed an agreement to arbitrate?

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The Eighth Circuit ruled that the distributors' "tools business" was not bound by the arbitration clause, even though the owner was bound through their ownership of an Amway distributorship. Nitro Distributing distributed motivational tapes and materials to support and encourage Amway distributors. These materials were sold to distributors to help them support their downlines, in direct competition with Amway's in house motivational materials. The owners of Nitro also owned an Amway distributorship. Amway's rules prohibit a distributor from operating a tools business in conjunction with a distributorship. The tools business sued, and Amway attempted to enforce the arbitration clause from the owners distribution business against their tools business, despite the tools business never having agreed to arbitrate. The court ruled that common ownership of the distribution and tools businesses did not cause the arbitration clause of one to bind the other. The Amway rules prohibit tools businesses, and by their terms, do not govern the conduct of tools businesses.

Full case and case summary also available at: http://www.mlmlegal.com/legal-cases/NitroDistributing_v_Alticor.php

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Published In: Civil Procedure Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:Federal, 8th Circuit, Missouri | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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