Opinion ID: 1870807
Heading Depth: 2
Heading Rank: 1

Heading: Amway Agreement

Text: Appellants first argue that Nitro and West Palm are bound by the arbitration clause contained in the Amway Rules of Conduct. However, neither Nitro nor West Palm are signatories to any agreement with Amway. Moreover, according to Amway's own documents, Nitro and West Palm are BSM businesses that operate in an industry entirely independent of Amway. Nonetheless, appellants seek to bind Nitro and West Palm as third-party beneficiaries of Ken Stewart or Stewart Associates' distributorship agreement with Amway. To be bound as a third-party beneficiary, the terms of the contract must clearly express intent to benefit that party or an identifiable class of which the party is a member. Peters v. Employers Mut. Cas. Co., 853 S.W.2d 300, 301 (Mo. banc 1993). In cases where the contract lacks an express declaration of that intent, there is a strong presumption that the third party is not a beneficiary and that the parties contracted to benefit only themselves. State ex rel. William Ranni Assocs., Inc. v. Hartenbach, 742 S.W.2d 134, 141 (Mo. banc 1987). Furthermore, a mere incidental benefit to the third party is insufficient to bind that party. Id. at 140. Here, the Amway distributorship agreement expresses no intent whatsoever to benefit Nitro and West Palm, and any benefit obtained from the agreement, if at all, was incidental. Accordingly, Nitro and West Palm are not third-party beneficiaries. Appellants also attempt to bind Nitro and West Palm under the theory that they acted as agents of Ken Stewart or Stewart Associates. In support, appellants cite Byrd v. Sprint Commc'ns Co., L. P., 931 S.W.2d 810, 815 (Mo.App.1996), for the proposition that non-signatory agents [are] bound by arbitration agreements signed by their principals. In our view, though, Byrd was wrongly decided. Under hornbook rules of agency, it is the principal that can be bound by the signature of the agent, not the agent that can be bound by the signature of the principal. This is so because the principal can control the conduct of the agent, which is the essence of the agency relationship. State ex rel. Bunting v. Koehr, 865 S.W.2d 351, 353 (Mo. banc 1993). It is not the other way around, that the agent can control the principal. Otherwise, the principal would be the agent for the agent. Thus, without the benefit of Byrd , the agency theory is to no avail, and the rule controls that [a] party cannot be required to arbitrate a dispute that it has not agreed to arbitrate. Dunn, 112 S.W.3d at 436. To the extent it is to the contrary, Byrd is overruled. Finally, appellants claim that Nitro and West Palm are bound to arbitrate under the Amway Rules of Conduct on the basis that they agreed to be bound by Pro Net's Terms and Conditions. The rationale is that Pro Net's Terms and Conditions contain a general requirement that Pro Net members abide by the Amway Rules of Conduct, which include the Amway arbitration clause. This rationale, of course, presupposes that Nitro and West Palm are members of Pro Net, an issue that will be addressed, infra. Assuming, though, that Nitro and West are members of Pro Net and bound by Pro Net's Terms and Conditions, the Amway arbitration clause still does not apply. A separate Pro Net arbitration clause is explicitly set forth in the Terms and Conditions that is significantly different from the Amway clause and that is specific to Pro Net membership only. Under well-established contract principles, where an apparent inconsistency exists between a clause that deals with an issue specifically and one that deals with the same issue generally, the specific clause should be held to nullify the general clause. State ex rel. Smith v. City of Springfield, 375 S.W.2d 84, 91 (Mo. banc 1964). Because the Pro Net clause is specific to disputes arising out of or relating to Pro Net membership, the Amway Clause has been superseded by the Pro Net clause.
Whatever their relationship with Amway, Nitro and West Palm contend that the scope of the arbitration agreement does not cover the disputes that are the subject of their petition against appellants. This Court agrees. The Amway arbitration clause states: [T]he parties are required to submit any remaining claim(s) arising out of or relating to their Amway Distributorship, the Amway Sales and Marketing Plan, or the Amway Rules of Conduct (including any claim against another Amway distributor, or any such distributor's officers, directors, agents, or employees or against Amway Corporation or any of its officers, directors, agents, or employees) to binding arbitration in accordance with the Amway/ADA Arbitration Rules. This is not a suit against Amway. Nor are Nitro and West Palm's claims brought pursuant to any Amway distributorship. Nor do Nitro and West Palm make any allegation pertaining to the Amway Sales and Marketing Plan. Nor do they allege that appellants violated the Amway Rules of Conduct or any other part of the Amway agreement. And in that regard, the petition expressly states, This action is not predicated upon the Amway Rules (since the BSMs industry is not a party of the Amway business), nor does it seek the enforcement of any such Rules. Instead, the subject and entire focus of the lawsuit is that appellants allegedly conspired to misappropriate Nitro and West Palm's BSM businesses. According to Amway's own documents, in order to avoid antitrust concerns, BSM businesses are organized in and operate in an industry entirely independent of Amway. And in fact, Amway promulgated and distributed a separate BSM arbitration agreement for use by the Amway dealers' independent BSM businesses, in lieu of the arbitration clause in the Amway Rules of Conduct. Although this Court is mindful of the many cases holding that the scope of arbitration agreements is to be liberally construed, the Amway clause in this case is clear on its face and cannot be stretched to cover the lawsuit herein.