UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

AMWAY CORPORATION,

Plaintiff and Counter‑Defendant,

THE PROCTER & GAMBLE COMPANY;

THE PROCTER & GAMBLE DISTRIBUTING

COMPANY; and SIDNEY SCHWARTZ,

File No. 1:98‑CV‑726

HON. ROBERT HOLMES BELL

Defendants and Counter‑Plaintiffs,

and

DINSMORE & SHOHL, LLP; and KENNETH

LOWNDES,

ORDER AND PARTIAL JUDGMENT

In accordance with the opinion entered this date,

IT IS HEREBY ORDERED that Defendants Procter & Gamble Company and Procter & Gamble Distributing

Company's motion for summary judgment (Docket # 577) is GRANTED.

IT IS FURTHER ORDERED that Defendant Dinsmore & Shohl, LLP's renewed motion for summary judgment

(Docket # 583) is GRANTED.

IT IS FURTHER ORDERED that Defendant Sidney Schwartz's motion for summary judgment (Docket # 575)

is DENIED.

IT IS FURTHER ORDERED that JUDGMENT is entered in favor of Defendants Procter & Gamble Company

and Procter & Gamble Distributing Company and Defendant Dinsmore & Shohl, LLP, and that Plaintiff's complaint

against these Defendants is DISMISSED.

Date: September 14, 2001

ROBERT HOLMES BELL

CHIEF UNITED STATES DISTRICT JUDGE

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

AMWAY CORPORATION,

Plaintiff and Counter‑Defendant,

THE PROCTER & GAMBLE COMPANY;

THE PROCTER & GAMBLE DISTRIBUTING

COMPANY; and SIDNEY SCHWARTZ,

File No. 1:98‑CV‑726

HON. ROBERT HOLMES BELL

Defendants and Counter‑Plaintiffs,

and

DINSMORE & SHOHL, LLP; and KENNETH

LOWNDES,

OPINION

In this diversity action Plaintiff Amway Corporation has alleged tortious interference with contract and with actual and prospective business relations. This matter comes before the Court on motions for summary judgment filed by Defendants Procter & Gamble Company and Procter & Gamble Distributing Company (collectively referred to as "P&G"), Defendant Dinsmore & Shohl, LLP and Defendant Sidney Schwartz.

This action was not filed in a vacuum. It is only one small episode in a long history of corporate warfare between Amway and P&G. The apparent pervasive ill will between the parties has resulted in a long corporate battle that has most recently led to the filing of a series of three tortured, over‑litigated federal court cases in Utah,¹ Texas² and now in Michigan.

In Utah P&G sued several Amway distributors under a variety of legal theories based on their dissemination of the Satanism rumor.³ In its third amended complaint P&G joined Amway as a defendant, alleging that Amway is an illegal pyramid and alleging fraud and product disparagement. The district court granted summary judgment to the defendants on

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¹Procter & Gamble v. Haugen, No. 95‑NC‑94W (D. Utah).

²Procter & Gamble v. Amway, No. H097‑2385 (D. Tex.).

³P&G has been plagued by rumors of links to Satanism since the late 1970s or early 1980s:

The most common variant of the rumor is that the president of P&G revealed on a television talk show that he worships Satan; that many of P&Gs profits go to the church of Satan; and that there is no harm in such disclosure, because there are no longer enough Christians left in the United States for such devilish activities to make a difference. The rumor often was circulated in the form of a written flier that listed numerous P&G products and called for a boycott.

Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 542 (5th Cir. 2001).

all claims. The Tenth Circuit reversed in part and remanded the Lanham Act and tortious interference claim for further proceedings. Procter & Gamble Co. v. Haugen, 222 F. 3d 1262 (10th Cir. 2000). Amway has been dismissed from the Utah case. Procter & Gamble Co. v. Haugen, __F. Supp.2d__, 2001 WL 957683 (D. Utah June 7, 2001 ).

In Texas P&G sued Amway and others for defamation, fraud, and violations of the Lanham Act, RICO and Texas state law. Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 541‑42 (5th Cir. 2001). The district court dismissed the case. The Fifth Circuit affirmed the dismissal the Lanham Act and RICO claims based on Amway's allegedly illegal pyramid scheme for lack of standing, but reversed the dismissal of Lanham Act and RICO and claims based on Amway's spreading of the Satanism rumor and remanded for further proceedings. Id. at 564‑65.

Defendant Sidney Schwartz created an Internet website that is highly critical of Amway. In connection with its suit against Amway in Utah, P&G, through its counsel, Defendant Dinsmore & Shohl. LLP ( "Dinsmore"), hired the services of Sidney Schwartz as a non‑testifying consultant. Dinsmore allegedly provided Schwartz with copies of litigation documents from P&G's suits against Amway, as well as from other suits against Amway. Schwartz posted some of those documents on his website. This case stems from P&G's relationship with Mr. Schwartz.

Amway alleges in its third amended complaint that Defendants, individually and in concert with one another, disseminated malicious attacks against Amway on the internet with

the intent and effect of interfering with Amway's contracts and prospective and actual business relationships with independent distributors of Amway products, potential distributors, and consumers of Amway products. Third Amended Complaint at ¶ 68.

II.

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In evaluating a motion for summary judgment the Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574, 587 (1986). If Defendants carry their burden of showing there is an absence of evidence to support a claim then Plaintiff must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324‑25 (1986).

"On summary judgment, all reasonable inferences drawn from the evidence must be viewed in the light most favorable to the parties opposing the motion." Hanover Ins. Co. v. American Engineering Co., 33 F.3d 727, 730 (6th Cir. 1994) (citing Matsushita, 475 U.S. at 586‑88). Nevertheless, the mere existence of a scintilla of evidence in support of Plaintiff's position is not sufficient to create a genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The proper inquiry is whether the evidence is such that a reasonable jury could return a verdict for Plaintiff. Id. See generally, Street v. J.C. Bradford & Co., 886 F.2d 1472, 1476‑80 (6th Cir. 1989).

III.

In reviewing P&G and Dinsmore's motions for summary judgment on Amway's claim of tortious interference with actual and prospective business relations, several key observations guide the Court's analysis. Although these observations will be more fully developed below, it is essential to address these observations right from the start because, notwithstanding the parties' assertions to the contrary, this is not a complicated case. This case has been over‑prepared and over‑litigated by Amway and P&G. It must be pared down to the real issues.⁴

The first observation that is crucial to the Court's analysis is that, at least with respect to Defendants P&G and Dinsmore, this is a tort action about speech. Amway's only allegations regarding P&G and Dinsmore are that they gave documents to Schwartz which Schwartz posted on his internet website. While Amway contends that it is the wrongful nature of P&G's and Dinsmore's conduct, rather than their false speech, which is at the heart of Amway's tortious interference claim, Amway has not pointed to evidence that P&G and Dinsmore engaged in any wrongful conduct other than delivering documents to Schwartz, nor has Amway pointed to any evidence that it was injured by any non‑speech related conduct by P&G and Dinsmore.

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⁴It is also essential to address these basic factual themes early on because counsel for Amway has gone to great lengths in its 118 page brief to muddy the waters. Amway's brief is filled with unsupported inferences, hyperbole and a failure to distinguish between the various defendants. The confusion is compounded by counsel's strategic decision not to identify the exhibits relied on except by reference to "Andrew Aff. Ex.___." There are 205 exhibits attached to the Andrew affidavit.

Amway has attempted to dodge the speech issue by asserting a conspiracy between P&G, Dinsmore and Schwartz. Amway recites a litany of conduct by Schwartz, and then asserts that this conduct is attributable to P&G and Dinsmore because they were all part of a conspiracy to destroy Amway. This brings the Court to the second legal conclusion. As more fully discussed below, the evidence of record does not support the finding of a conspiracy between P&G, Dinsmore and Schwartz.

Third, not every document allegedly provided by P&G and Dinsmore to Schwartz is at issue in this case.⁵ Because Amway is alleging tortious interference with business relations, it is only the documents that were posted on the Schwartz website that are conceivably at issue in this case, because those were the only documents that were disseminated in such a way that they could reach current and potential distributors and interfere with their relationships with Amway.

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⁵There is some dispute between the parties regarding what documents P&G and Dinsmore gave to Schwartz and what documents Schwartz retrieved from others. Dinsmore contends that the only documents provided to Schwartz by Dinsmore are the court filings in the Utah litigation, publicly available court filings in the Setzer case, and transcripts of the Amway motivational audio tapes that Mr. Schwartz provided to Dinsmore. 5/18/01 Heuck Aff. ¶16. Amway contends Dinsmore also provided Mr. Schwartz with a copy of the Texas complaint and the documents from Cairns v. Amway Corp., Case No. C‑1‑84‑0783 (S.D. Ohio) ("the Cairns case"). Schwartz dep. at 169‑72. For purposes of this motion the Court, viewing the facts in the light most favorable to Amway, will assume that P&G and Dinsmore provided Schwartz all of the documents at issue: the litigation documents from the Utah case, the Texas case, the Cairns case and the Setzer case, and transcripts of the Amway motivational tapes.

Fourth, Amway attributes only 18 allegedly defamatory statements on the Schwartz website to P&G and Dinsmore. These statements come from the Texas complaint and the complaint filed in Setzer v. Amway, Case No. 6:86‑1893‑3 (D.S.C.) ("the Setzer case").

Fifth, there is no question of fact that all of the documents from P&G and Dinsmore that were posted on the web were publicly available court documents.

Sixth, none of the allegedly defamatory statements is new. Amway's sales, recruitment, and distribution methods have been highly successful, but they have also given rise to controversy. The question of Amway's being an illegal pyramid has been in the public forum for years, even before Schwartz began his website. The issue has been discussed in news articles, investigated by the FTC, and addressed in private lawsuits against Amway. This observation is not made to excuse the repetition of a defamatory statement,⁶ but to put the entire controversy into perspective.

Seventh, Amway is a public figure.

Finally, this suit, like P&G's previous suits against Amway, is more about business competition and bad blood between the two corporations than about the spread of the Satanism rumor or Schwartz's website attacks on Amway. The inordinate attention the parties have devoted to this case is a reflection of the animosity between these parties and

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⁶ The Court recognizes that one who repeats a defamatory statement about a public figure with knowledge that it is false, or with reckless disregard of the truth, adopts it as his own and may be liable in equal measure to the original defamer. See Liberty Lobby, Inc. v. Dow Jones & Co. , 838 F.2d 1287, 1298 (D.C. Cir. 1988).

their penchant for rehashing their history of grievances against each other, rather than the legal significance of the present action.

With these themes in mind, the Court will turn to an examination of the legal issues presented by P&G and Dinsmore's motions for summary judgment.

IV.

Amway has filed a one count complaint alleging one claim of tortious interference with contract and with actual and prospective business relations. The parties agree that Michigan law controls the substantive aspects of this case. The elements of a tortious interference claim are: (1) the existence of a valid business relationship or expectancy; (2) knowledge of the relationship or expectancy on the part of the interferer; (3) an intentional or improper interference with the relationship that induces or causes a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. DXS, Inc. v. Siemens Medical Systems, Inc., 100 F.3d 462, 469 (6th Cir. 1996) (citing cases). To establish the "improper interference" element, Amway must prove "the intentional doing of a per se wrongful act or the doing of a lawful act with malice and unjustified in law for the purpose of invading the contractual rights or business relationship of another." Tata Consuitancy Services, a Div. of Tata Sons Ltd. v. Systems Intern., Inc., 31 F.3d 416, 422 (6th Cir. 1994) (quoting Wood v. Herndon & Herndon Investigations, Inc., 186 Mich.App. 495, 499‑500, 465 N.W.2d 5, 8 (1990)). The second prong of this test requires consideration of several factors including: "(1) the nature of the defendant's conduct, (2) the nature of the plaintiff’s contractual interest, (3) the social utility

of the plaintiff's and the defendant's respective interests, and (4) the proximity of the defendant's conduct to the interference." Jim‑Bob. Inc. v. Mehling, 178 Mich. App. 71, 97, 443 N.W.2d 451 (1989).

Amway contends that its allegations of improper interference come under both prongs of the test. It is alleging both defamation and the doing of lawful acts with a wrongful motive.

Amway claims that P&G and Dinsmore provided Schwartz with numerous documents from the Utah case, a copy of the third amended complaint in the Texas case, copies of two internal Amway memoranda that were attached to pleadings in the Cairns case approximately three inches of pleadings from the Setzer case, and transcripts of Amway motivational tapes that Dinsmore produced from tapes that Schwartz provided to Dinsmore. Although Amway alleges that some of the documents Dinsmore turned over to Schwartz were confidential documents filed under seal in the Utah case, Amway has not alleged or shown that any of those documents were posted on the web or caused it injury. The only document from the Utah case that was posted on the web was the third amended complaint.⁷

Amway does not contend that all of the documents that were posted on the Schwartz website caused it injury. In a discovery order dated November 23, 1999, (Docket # 142), the Magistrate Judge required Amway to state "the words and source of each and every statement

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⁷Robert Heuck II Aff.¶ 16.

uttered by P&G or by any person allegedly acting on behalf of P&G that Amway contends was false, misleading or derogatory, or interfered with a current or prospective business relationship." In response to this order Amway identified 99 statements on the Schwartz website that it considers defamatory. Of these 99 statements, only 18 statements are attributed to information supplied by P&G and Dinsmore. These 18 statements include 16 paragraphs from P&G's Texas federal court complaint against Amway and two statements from the Setzer complaint. See Addendum A to P&G's brief in support of summary judgment. The 16 allegations from the Texas complaint relate to allegations that Amway is a pyramid scheme or to allegations that Amway violated the RICO Act. The two statements from the Setzer case relate to allegations that Amway violated the RICO act. Amway does not dispute P&G and Dinsmore's characterization of the number and source of the allegedly defamatory statements that it attributes to P&G and Dinsmore. Based upon Amway's designation of the statements it relies on in support of its interference claim, the only documents at issue for this Court are the third amended Texas complaint and the Setzer documents.

Amway's claims against P&G and Dinsmore are based in large part on Amway's contention that P&G and Dinsmore should be held responsible for the unfair and misleading manner in which the public documents from the Texas case and the Setzer case were posted on Schwartz's website. Amway contends that P&G and Dinsmore can be held liable for

Schwartz's actions because there was a conspiracy between P&G, Dinsmore and Schwartz to attack Amway.

Michigan law defines a civil conspiracy as a combination of two or more persons, by some concerted action, to accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or unlawful means. Fenestra, Inc. v. Gulf-American Land Corp., 377 Mich. 565, 593, 141 N.W.2d 36 (1966); Feaheny v. Caldwell, 175 Mich. App. 291, 307, 437 N.W.2d 358, 365 (1989); Mays v. Three Rivers Rubber Corp., 135 Mich. App. 42, 48, 352 N.W.2d 339, 341 (1984).

The agreement, or preconceived plan, to do the unlawful act is the thing which must be proved. Direct proof of agreement is not required, however, nor is it necessary that a formal agreement be proven. It is sufficient if the circumstances, acts and conduct of the parties establish an agreement in fact. Furthermore, conspiracy may be established by circumstantial evidence and may be based on inference

Temborius v. Slatkin, 157 Mich. App. 587, 600, 403 N.W.2d 821 (1986). Once a conspiracy is established, whatever was done in pursuance of it by one of the conspirators is to be considered as the act of all. Brown v. Brown, 338 Mich. 492, 503, 61 N.W.2d656 (1953). The Sixth Circuit has held that summary judgment was appropriate on a civil conspiracy claim where the plaintiffs "failed to present any evidence of a common design or concert of actions among the alleged conspirators." Menuskin v. Williams, 145 F.3d 755, 770 ( 6th Cir. 1998) (applying parallel Tennessee law).

In support of its conspiracy allegations, Amway points to evidence that P&G and Schwartz had a common goal of harming Amway; that P&G and Dinsmore provided their inflammatory complaints knowing he would repost them; that they asked Schwartz to collect motivational tapes for them; that the Internet confederacy destroyed e‑mail evidence just as P&G had done in Utah; that P&G and Dinsmore met, spoke with, or received e‑mail or other correspondence from some members of the confederacy; and that Schwartz shared the information he received from Dinsmore with his internet confederates.⁸

The fact that P&G and Dinsmore sought information from Schwartz is not evidence of a conspiracy. There is no dispute that P&G and Dinsmore lawfully contacted Schwartz as part of their pretrial investigation in connection with their Utah lawsuit in order to obtain information they could use in their litigation against Amway. In September 1996 when Dinsmore first contacted Schwartz, P&G was in the middle of litigation with Amway. Because Amway is a closely‑held corporation, information about Amway was not readily available to P&G. Schwartz had been collecting information about Amway since the early 1990s.⁹ In January 1996 he started his website "Amway: The Untold Story."¹⁰ Schwartz had a large amount of information, not otherwise available to P&G, concerning Amway,

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⁸Amway brief in opposition to motions for summary judgment at 46‑47.

⁹Schwartz collected and shared information on Amway through his position as section leader on the Working From Home forum on Compuserve. He also shared his research on Amway on other on‑line services. 9/8/97 Schwartz Aff. at ¶¶ 4‑6.

¹⁰Schwartz Aff. 9/8/97 at ¶ 7.

including information about Amway's s history business practices and distributor organization.¹¹Before he was first contacted by Dinsmore, Schwartz had independently obtained and posted a copy of one of P&G's earlier complaints in the Utah litigation, as well as information regarding other complaints against Amway.¹²Many of these previous actions

referenced on the Schwartz site included pyramid and RICO claims against Amway. ¹³

Prior to Dinsmore's first contact with Schwartz, Schwartz already had allegations on his website that Amway was an illegal pyramid scheme and that it had violated RICO. His website included a copy of the federal class action complaint in Hanrahan v. Amway, Civ. No. 94-4615 (E.D. Pa.), which contains pyramid and RICO allegations. There was also reference on the Schwartz site to other suits with similar pyramid and RICO claims against Amway filed by then‑current or former Amway distributors.

Dinsmore retained Schwartz as a non‑testifying consultant to assist in obtaining information about Amway that might be useful to P&G in the Utah action and leads concerning other potential sources of such information.¹⁴ There is no evidence in the record to remotely suggest that P&G and Dinsmore's retention of Schwartz as a non‑testifying consultant was improper.

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¹¹Heuck Aff. 8/27/99 at ¶ 2.

¹²Heuck dep. at 72‑73; Hamilton dep. at 14‑16.

¹³See P&G Motion for Summary Judgment, Addendum C.

¹⁴ Heuck Aff. 5/18/01 ¶6.

The fact that Dinsmore provided copies of legal documents to Schwartz is not evidence of a conspiracy. Again, this activity must be viewed in the context of Schwartz's role as a non‑testifying consultant. It was not improper for Dinsmore to provide Schwartz with documents from the Utah case or the Setzer case that contained similar claims, to

acquaint Schwartz with the nature of the information P&G needed to support its claims in the Utah action.¹⁵

Viewing the facts in the light most favorable to Amway, the Court will assume that P&G and Dinsmore knew that Schwartz was likely to repost the information they provided to him and that he was likely to continue to make derogatory comments about Amway on his website. But none of that satisfies Amway's burden of showing P&G and Dinsmore entered into a concerted action with Schwartz to accomplish an unlawful purpose, or to accomplish a lawful purpose by unlawful means. The documents were public. An individual does not vouch for what a third party will do with information lawfully provided to him. There is no evidence that P&G and Dinsmore had any input or control into what Schwartz posted on his website, how he posted it, or what editorial comments he added to the materials they provided him. The evidence is unrebutted that Schwartz's decision on what to post on his website was made independently and without input or encouragement from P&G and/or Dinsmore. Schwartz was adamant in his testimony that he alone was responsible for what

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¹⁵Heuck Aff. 5/18/01 at ¶ 9‑10.

went on his website.¹⁶ There is no evidence that P&G and Dinsmore controlled or attempted to control what was on Schwartz's website. There is no evidence that anyone at Dinsmore even suggested, requested, encouraged, or expected Schwartz to post anything on his website.¹⁷ Although Schwartz requested Mr. Heuck of Dinsmore to review his comments regarding the Texas litigation, Mr. Heuck declined to do so.¹⁸

The remaining evidence Amway relies on regarding the unilateral actions of the "Internet confederates" is not sufficient to show the existence of an agreement between them and P&G and Dinsmore. Such unilateral actions are not building blocks from which a reasonable inference of a concert of action can be drawn. They might carry some weight if Amway could show that these actions were taken in furtherance of an agreement. However, because Amway has not come forward with any evidence from which a jury could reasonably infer a joint agreement between P&G, Dinsmore, and Schwartz, the activities of

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¹⁶ Schwartz testified that it was absolutely his sole decision as to what the web site would look like throughout the entire time he maintained the site, and that he made it clear to Mr. Heuck and Mr. Hamilton that he would not change that policy:

They didn't ask, but I just made sure they understood that nothing went on the site that wasn't my decision to put on there, to take off, modify, whatever. I just felt since it was my site and had my name on it that needed to be my responsibility to do that, to be responsible for the content.

2/13/01 Schwartz dep. at 269‑70. See also Schwartz dep 9/22/97 at 97‑98, 172; 9/8/97 Schwartz Aff. at ¶ 8.

¹⁷Heuck dep. at 167; 5/18/01 Heuck Aff. at ¶ 14; 5/l l/0; Hamilton Aff. at ¶ 7.

¹⁸Heuck dep. at 174-78, 212-13.

Schwartz and his Internet confederates cannot be imputed to P&G and Dinsmore. Without evidence of an agreement, the assertion that Schwartz had similar goals as P&G and Dinsmore is innocuous. The fact that Schwartz gave information received from Dinsmore to his Internet confederates is innocuous. The fact that the Internet confederates sent information to P&G or Dinsmore, or met with them, is innocuous. Contrary to Amway's assertions, these facts are not sufficient to create a triable issue regarding the existence of a tacit agreement between P&G, Dinsmore and Schwartz to harm Amway.

Amway has also asserted that P&G and Dinsmore can be held liable under Michigan's concert of action claim. To state a concert of action claim a plaintiff need only allege that the defendants were jointly engaged in tortious activity as a result of which the plaintiff was harmed. Abel v. Eli Lilly and Co., 418 Mich. 311, 338, 343 N.W.2d 164, 176 (1984). The

evidence of record shows that P&G and Dinsmore acted in concert with Schwartz to discover evidence about Amway for use in on‑going litigation. As more fully discussed above, the evidence does not show that P&G and Dinsmore were jointly engaged in tortious activity with Schwartz.

Now that discovery is closed, Amway's conspiracy claim must be tested against the evidence of record. That evidence does not create an issue of fact for the jury on the issue of a conspiracy. There is no evidence to suggest that P&G and Dinsmore had any control or influence over what Schwartz posted on the website. Accordingly, to the extent Amway has

shown that the pleadings were posted in an unfair or misleading fashion, that allegation is not attributable to P&G and Dinsmore.

Because Amway has failed on its proofs of a conspiracy between P&G, Dinsmore and Schwartz, Amway's action against P&G and Dinsmore is strictly one of speech. The other wrongful actions Amway attributes to Schwartz and his Internet confederates -‑ destroying evidence, breaking into Amway distributor websites, sending spam e‑mail messages to distributors, mounting a campaign to convince the Chinese government to keep Amway out of China, and other acts ‑- are not attributable to P&G and Dinsmore.

VI.

Even though Amway's claim is for tortious interference with business relations, because this case against P&G and Dinsmore is solely about speech, First Amendment protections regarding speech apply. When a claim for tortious interference with business relations is premised on the publication of defamatory statements, First Amendment protections apply. Lakeshore Community Hosp., Inc. v. Perry, 212 Mich. App. 396, 401, 538 N.W.2d 24 (1995). "As with defamation actions, where the conduct allegedly causing the business interference is a defendant's utterance of negative statements concerning a plaintiff, privileged speech is a defense." Id. See also Arim v. General Motors Corp.. 206 Mich App. 178, 193, 520 N.W.2d 695 (1994) (a private party does not lose First Amendment protection, notwithstanding improper means or motives.); Meyer v. Hubbell. 117, Mich. App. 699, 710-11, 324 N.W.2d 139 (1982) (absolute privilege for statements made in judicial proceedings

is a defense to suits for interference with prospective economic advantage). See also Hustler Magazine v. Falwell, 485 U.S. 46, 56 (1988) (applying the actual malice requirement to a public figure's claim of intentional infliction of emotional distress based on a publication of allegedly defamatory material).

Because Amway's action against P&G and Dinsmore involves only speech, the Court must consider First Amendment protections that might be accorded that speech.

The First Amendment prohibits public figures from recovering damages caused by a defendant's statement unless they prove that the statement was a defamatory falsehood and that it was made with actual malice, that is, "with knowledge that it was false or with reckless disregard of whether it was false or not." New York Times Co. v. Sullivan. 376 U.S. 254, 279‑80 (1964). See also Hustler Magazine v. Falwell, 485 U.S. 46, 52 (1988). The plaintiff alleging defamation against a public figure must produce "sufficient evidence to permit the conclusion that [the defendant] in fact entertained serious doubts as to the truth of the publication," or "actually had a high degree of awareness of probable falsity." Southwell v. Southern Poverty Law Ctr., 949 F. Supp. 1303, 1305 (W.D. Mich. 1996).

"When determining if a genuine factual issue as to actual malice exists in a libel suit brought by a public figure, a trial judge must bear in mind the actual quantum and quality of proof necessary to support liability under New York Times. For example, there is no genuine issue if the evidence presented in the opposing affidavits is of insufficient caliber or quantity to allow a rational finder of fact to find actual malice by clear and convincing evidence."

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 ( 1986) ( citing New York Times v. Sullivan, 376 U.S. 254, 279‑80 (1964)).

"Those who, by reason of the notoriety of their achievements or the vigor and success with which they seek the public's attention, are properly classed as public figures." Gertz v. Robert Welch, Inc., 418 U.S. 323, 342 (1974). A corporation attains public figure status "by voluntarily assuming a role of special prominence in the affairs of society." Lakeshore Hosp. v. Perry, 212 Mich. App. 396, 403 (1995).

Amway has alleged in its third amended complaint that it has affiliated operations in 45 countries with over 14,000 employees. and that its estimated retail sales for 1998 vas $5.7 billion.¹⁹ Amway has approximately one million independent distributors in the United States and three million distributors worldwide.²⁰ P&G has presented substantial evidence that Amway is a multi‑billion dollar corporation, that it is well known world‑wide, that it has advertised extensively, and that it has been the subject of public debate since long before the actions at issue in this case took place.²¹ Amway does not concede that it is a public figure, but it has not come forward with any evidence to dispute the characterization of the corporation as a public figure. The Court is satisfied for purposes of this motion that Amway is a public figure.

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¹⁹Amway's third amended complaint at ¶ 1‑2.

²⁰Amwav's third amended complaint at ¶ 3.

²¹See exhibits 42‑51 to P&G's motion for summary judgment.

Amway contends, nevertheless, that Defendants are precluded from raising the First Amendment actual malice defense. As a preliminary matter, Amway contends P&G and Dinsmore are judicially estopped from arguing that Amway must prove actual malice because this position is diametrically opposed to their successful argument in the Texas case that actual malice is not required of a public figure to recover for injury to reputation when commercial speech is involved. In the Texas case the Fifth Circuit held that P&G would not have to prove actual malice to succeed on its Lanham Act claim for disparagement of commercial activities. P&G v. Amway, 242 F. 3d at 546‑47.

"Judicial estoppel forbids a party from taking a position inconsistent with one successfully and unequivocally asserted by that same party in an earlier proceeding." Warda v. Commissioner of Internal Revenue, 15 F.3d 533, 538 (6th Cir. 1994). This doctrine "preserves the integrity of the courts by preventing a party from abusing the judicial process through cynical gamesmanship, achieving success on one position, then arguing the opposite to suit an exigency of the moment." Id. (quoting Teledyne Indus. v. National Labor Relations Bd., 911 F.2d 1214, 1218 (6th Cir.1990)).

Judicial estoppel does not bar P&G and Dinsmore's actual malice defense in this action. The differences between the actual malice issue in the two cases are too significant to call the two positions inconsistent. As a preliminary matter, Dinsmore was not a party to the Texas case, and would not come within the judicial estoppel doctrine. Moreover, the speech at issue in this case is not the same speech or even the same kind of speech that was

at issue in the Texas case. In the Texas case the Fifth Circuit held that the Satanism rumor was commercial speech, deserving of less constitutional protection, because it had an economic motivation. P&G v. Amway, 242 F.3d at 567. The Court finds no support for Amway's argument that litigation documents in this case are commercial speech under the three factors identified in Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66‑67 (1983).²² Finally, unlike the Texas case, this case does not arise under the Lanham Act. For all these reasons the Court declines to apply the judicial estoppel doctrine to bar P&G and Dinsmore from raising the actual malice defense.

Amway also contends that Defendants have waived their right to raise the actual malice defense by raising a reliance on counsel defense and arguing a lack of subjective awareness of falsity of the complaints, at the same time that they have refused discovery into what the advice of counsel was or what counsel's subjective beliefs and mental impressions were. Amway's at‑issue argument was rejected by the Magistrate Judge and affirmed by this

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²²The Fifth Circuit applied the following test for commercial speech:

In Bolger, the Court recognized three factors that help determine whether speech is commercial: (i) whether the communication is an advertisement, (ii) whether the communication refers to a specific product or service, and (iii) whether the speaker has an economic motivation for the speech. If all three factors are present, there is "strong support" for the conclusion that the speech is commercial.

P&G v. Amway, 242 F.3d at 552 (citing Bolger. 463 U.S. at 67).

Court on appeal.²³ Amway's more recent argument that P&G has waived the attorney‑client privilege was also rejected by the Magistrate Judge and affirmed by this Court on appeal.²⁴

With respect to the substance of P&G and Dinsmore's actual malice defense, Amway contends it has come forward with sufficient evidence to raise an issue of fact as to whether P&G and Dinsmore knew the pyramid scheme and RICO allegations were false. In support of this contention Amway contends the allegations were so objectively false that a reasonable jury could conclude that P&G and Dinsmore did not believe them to be valid; that P&G's litigation campaign against Amway is evidence of actual malice; and that Schwartz's malice can be imputed to the P&G Defendants.

"Whether the evidence in a defamation case is sufficient to support a finding of actual malice is a question of law." Ireland v. Edwards. 230 Mich. App. 607, 639, 584 N.W.2d 632, 636 (1998). See also Lakeshore Hosp. v. Perry, 212 Mich. App. 396, 404, 538 N.W.2d 24 (1995). "In considering a motion for summary disposition, a court must consider whether the evidence is sufficient to allow a rational finder of fact to find actual malice by clear and convincing evidence." Id. (citing Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986)). "Because a jury verdict in a defamation case involving a public figure may rest only on clear and convincing evidence of actual malice, to survive a motion for summary disposition in

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²³See 1/24/01 discovery order (Docket # 319), affirmed, 2/23/01 opinion and order (Docket #402 & #403).

²⁴See 7/2/01 order (Docket # 646), affirmed, 9/13/01 Opinion and Order (Docket # ___).

such a case, the nonmovant must show actual malice by clear and convincing evidence rather than by a mere preponderance." Kefgen v. Davidson, 241 Mich. App. 611, 624, 617 N.W.2d 351, 360 (2000). See also Southwell v. Southern Poverty Law Center, 949 F. Sup. 1303, 1310 (W. D. Mich. 1996) ("[A] public figure plaintiff must provide substantial evidence that he can prove actual malice by clear and convincing evidence, even at the summary judgment stage.").

Amway has presented substantial evidence in support of its assertion that it is not an illegal pyramid scheme and has not violated RICO, and that the allegations in the Texas and Utah cases to the contrary are false. P&G and Dinsmore have produced evidence that their claims are true. Although this conflicting evidence presents an issue of fact as to whether the illegal pyramid and RICO allegations are true or false, that factual issue does not require the Court to deny summary judgment. Even where there are questions of fact regarding the falsity of the alleged defamatory statements, summary judgment may still be appropriate where the evidence is not sufficient to allow a rational finder of fact to find actual malice by clear and convincing evidence. Ireland, 230 Mich. App. at 622. For purposes of this motion the Court will assume the allegations are false. The only issue for this Court's determination is whether Amway has come forward with sufficient evidence to allow a rational finder of fact to find by clear and convincing evidence that Defendants P&G and Dinsmore knew the pyramid and RICO allegations were false or that they made these allegations with reckless disregard as to their falsity.

Reckless disregard in this context is defined as a high degree of subjective awareness of probable falsity. New York Times, 376 U.S. at 280.

Reckless disregard for the truth is not established merely by showing that the statements were made with preconceived objectives or insufficient investigation. Furthermore, ill will, spite or even hatred, standing alone, do not amount to actual malice. "Reckless disregard" is not measured by whether a reasonably prudent man would have published or would have investigated before publishing, but by whether the publisher in fact entertained serious doubts concerning the truth of the statements published.

Ireland, 230 Mich. App. at 622.

A pyramid scheme is one in which the profits of a few people at the "top" of an organization are made primarily from those below them within the organization, rather than from sales to persons outside the organization. The focus of a pyramid is to recruit more people into the group, rather than on retail sales. See Webster v. Omnitrition Int'l, 79 F.3d 776, 782 (9th Cir. 1996). The Sixth Circuit has given its approval to an instruction defining a pyramid scheme as a "process characterized by the payment . . . of money to the company in return for . . . the right to sell a product and the right to receive in return for recruiting other participants into the program rewards which are unrelated to the sale of the product to ultimate users." United States v. Gold Unlimited. Inc., 177 F.3d 472, 479 (6th Cir. 1999).

In 1975 the Federal Trade Commission ("FTC") charged Amway with violations of the Federal Trade Commission Act, 15 U.S.C. 45. The FTC complaint included an allegation that Amway was an illegal pyramid scheme. After a comprehensive review of Amway practices. the FTC determined in 1979 that Amway was not an illegal pyramid because its

policies prevented inventory loading and encouraged retail sales. In re Amway Corp., 93 F.T.C. 618, 715‑16 (1979). The ALJ found that Amway's buy‑back rule, 70% rule and ten-customer rules were enforced by Amway and that they in fact served to encourage retail sales and prevent inventory loading by Amway distributors. Id. at 646, 668.

The Ninth Circuit noted in Omnitrition that the FTC's 1979 Amway decision did not hold that any "multi level marketing" program employing policies like Amway's is not a pyramid scheme as a matter of law. "The FTC held that Amway was not a pyramid scheme as a matter of fact because its policies were enforced and were effective in encouraging retail sales." 79 F.3d at 784 (emphasis in original). Omnitrition could not rebut claims that it was an illegal pyramid merely by showing it had adopted the rules approved in Amway. It also had to come forward with evidence that the safeguards were enforced and actually served to deter inventory loading and encourage retail sales. Id. at 783. See also SEC v International Heritage. Inc., 4 F. Supp.2d 1378, 1384 (N.D.Ga.1998) ("[T]he critical determination of the legality of [defendant's] operations will not be based on the written plan but on the actual practices of the company."); FTC v. Equinox Int'l Corp., 1999 U.S. Dist. Lexis 19866, * 18-24 (D. Nev. Sept. 14, 1999 (having rules like Amway's does not insulate a company from a pyramid finding; policies must be shown to be enforced in practice and to effectively promote retail sales.). In other words, the question of whether a particular company operates as an illegal pyramid involves a fact‑intensive analysis.

Through the extensive discovery taken in this case Amway has had access to all of the factual information P&G and Dinsmore relied on in support of their allegations in the Texas complaint. P&G and Dinsmore have come forward with 163 pages listing the nature of the evidence on which they relied in asserting that Amway has not been enforcing the rules and has allowed its business to become an illegal pyramid scheme.²⁵ The evidence includes news articles, internal Amway memoranda, Amway motivational tapes, trial testimony from other cases filed against Amway, and correspondence. P&G and Dinsmore have come forward with evidence that certain Amway distributors earn far more in their sale of motivational tools than from the sale of Amway products. They have produced evidence that although Amway set a 20% guideline for as a way to ensure proportionality of BSM sales to Amway product sales in 1983. some distributors have exceeded this guideline. They have produced evidence that many Amway distributors almost totally ignore the 10 customer rule. They have produced evidence that the operation of Amway's buyback rule may not be adequate, given the Ninth Circuit's ruling in Webster v. Omnitrition, 79 F.3d 776, 783‑84 (9th Cir. 1996), that the restocking fee prevented summary judgment on the issue of whether Omnitrition was an illegal pyramid scheme. See Omnitrition, 79 F.3d at 783‑84.

What P&G and Dinsmore knew about Amway also came from other claims that had been filed against Amway. Since the 1979 FTC decision, a number of cases have been filed

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²⁵Exh. 26 to Dinsmore Motion for summary judgment.

against Amway alleging pyramid and RICO claims. P&G has produced evidence that Amway settled the Hanrahan case, which included a RICO count.²⁶ Another court dismissed an action and counterclaim between Amway distributors on the basis that the transactions between the parties amounted to a pyramid scheme which was unenforceable as being against the public policy of the State of New York. Schaffer v. Talerico, 118 Misc. 2d 66, 67, 459 N.Y.S. 2d 716 (City Ct. N.Y. 1983).

P&G and Dinsmore have produced internal Amway memoranda expressing the concerns of those at the top of the Amway corporation that the motivational tools business, if allowed to go unchecked, had a potential for becoming an illegal pyramid scheme.²⁷ Amway has not only addressed the issue of pyramid concerns internally, it has also publicly addressed the issue of whether Amway is an illegal pyramid on the Amway website.²⁸ In addition to the information P&G and Dinsmore had when they filed the Texas case, discovery in this case has revealed internal Amway memoranda from Mulham and Halliday which reveal that Amway's highest executives were concerned about an illegal pyramid.²⁹

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²⁶See, Notice of Settlement, Exh. 32 to P&G's motion for summary judgment.

²⁷ See, 1983 Postma memorandum; 1983 Rich De Vos, "Directly Speaking" tape. Exh. 25 & 26 to P&G's motion for Summary Judgment.

²⁸Exh. 22 to P&G's Motion for Summary Judgment.

²⁹1983 Halliday Memorandum; 1982 Mulham Memorandum. (Exh. A, B & C to Dinsmore's Supplemental Reply).

Because Amway is a closely held corporation, all the details about how it operated were not available to P&G and Dinsmore. However, the record reveals that they did some investigation and had information from which they could reasonably conclude that their allegations were true. Despite Amway's extraordinary access in this case to the internal documents of P&G and its attorneys, Amway has not been able to come forward with any evidence that P&G and Dinsmore knew that their allegations were false or that they acted in reckless disregard of the falsity of their allegations against Amway.

While all of the evidence produced by P&G and Dinsmore is subject to qualification and explanation by Amway, it is clear that the pyramid and RICO allegations are in the marketplace of ideas and are subject to vigorous debate. There may be an issue of fact as to the truth of P&G and Dinsmore's claims, but given the long‑standing dispute, the many complaints raised by former distributors, and Amway's own concerns about maintaining an appropriate balance between recruitment and retail sales