Webster v. Omnitrition, 79 F.3d 776 (1996)

Is Summary Judgment appropriate when a company pleads an "Amway safeguards defense?"


The Court of Appeals held that to succeed on Summary Judgment by asserting an "Amway safeguards defense", a company must present evidence that their safeguards are actually effective in preventing inventory loading and encouraging retail sales by distributors. In the District Court, Omnitrition had presented evidence that its sales program had been deliberately structured like Amway's program, which had been found not to be fraudulent or deceptive in a FTC administrative decision. Omnitrition failed to present evidence that their program rules regarding minimum retail sales and minimum number of retail customers were actually successful in doing what they claimed. Hence, a genuine issue of material fact existed, and summary judgment was not appropriate.

The full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Webster_v_Omnitrition79F3d776-1996.php

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

Reference Info:Federal, 9th Circuit, California | United States

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