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Click here for the full text of this decision FACTS:The distributors’ complaints centered upon their relationships with Amway Corp., a multinational seller of household products in existence since 1959. Amway distributes products by means of a vast network of independent distributors who, in turn, continuously recruit new distributors (also called “downliners”). Amway Distributors earn their income based on commissions from their own sales and those generated by their downliners. In order to distribute Amway products, every Amway distributor signs Amway’s standard distributorship agreement, which “confer[s] a right to distribute Amway products, and the right to receive sales commissions or”bonuses’ on any products sold, for a period of one year.” Among other things, the distributor agrees to pay an annual fee and to abide by Amway’s Code of Ethics and Rules of Conduct “as amended and published from time to time in official Amway literature.” This agreement must be renewed annually. Many distributors renew automatically while others submit a renewal form each year entitled “Notice of Intent to Continue.” Business Support Materials (BSM) complement the Amway network, and consist of “rallies, tapes, books, and functions designed to motivate distributors.” In June 1997, the distributors complained about the determination of profits regarding sales of BSM materials. In September 1997, Amway informed the distributors that it would amend its rules of conduct to include an arbitration program. All of the distributors who later sued Amway renewed their distributorship agreements after Amway gave notice of implementation of the arbitration program. On Jan. 8, 1998, a group of distributors (the Morrison group) sued Amway and other defendants in Texas state court, alleging a number of federal and state law claims. Amway and the other defendants on Feb. 6, 1998, timely removed the case to the district court, then filed a motion to stay the suit pending arbitration. The distributors argued against the stay, contending, inter alia, that the arbitration agreement was not binding on them. On Oct. 15, 1998, the district court granted Amway’s motion and stayed the suit pending arbitration. Shortly after removal of the Morrison group’s state suit, another group of distributors (the Hamilton group), filed a state court action against Amway and other defendants with substantially similar state law claims as those of the Morrison group but lacking all the federal causes of action. Thereafter, on July 1, 1998, the Morrison group joined the Hamilton group in the second state suit. Amway moved in the state court to stay the proceedings in that suit pending arbitration pursuant to the arbitration agreement. Approximately one month after the federal district court stayed its proceedings, the state court stayed the state litigation pending arbitration of the Hamilton group’s claims. The state court abated the Morrison group’s claims because they were already sub judice in federal court, and the claims were subsequently dismissed for want of prosecution by the state court on Oct. 23, 2003. On May 18, 2001, the distributors requested arbitration under the arbitration agreement. On June 14, 2001, Amway and other defendants filed counterclaims in the arbitration. On Aug. 17, 2001, the distributors filed a motion for “Summary Disposition” in the arbitration, contending, inter alia, that there was no valid agreement to arbitrate, that if there were such an agreement it did not apply to disputes, which allegedly arose before the introduction of the arbitration program. On Oct. 15, 2001, the arbitrator Anne Gifford denied both motions for summary disposition. JAMS, the arbitration services provider for Amway, provided the parties with the names and biographical information of five potential arbitrators “who had”completed the training course for Arbitrators offered by [JAMS/Endispute], and conducted by Amway and the Amway Distributors Association [ADA].’ ” The parties ultimately selected Anne Gifford to arbitrate the dispute, and she was appointed as arbitrator on June 14, 2001. On Oct. 9, 2001, Gifford disclosed to the parties that she had attended a 1998 training session conducted by Amway and had subsequently conducted mediation training of certain Amway employees. Gifford held a teleconference with the parties where she invited any questions about her 1998 training. No party raised an objection. After allowing discovery, Gifford on Jan. 13, 2005 ruled in favor of the distributors on all of Amway’s claims and in Amway’s favor on all of distributors’ claims; fees and costs were awarded to each prevailing party, thereby resulting in an award of $7 million to Amway offset by an award to distributors of $1 million. The ruling (in common with all others in this arbitration) contains no analysis and states no reasons. The distributors on Jan. 27, 2005 moved in the district court to vacate the award alleging, inter alia, Gifford’s alleged partiality and “corruption” as well as the unenforceability of the arbitration agreement. On March 31, 2005, Amway and the other defendants moved the district court to confirm the award and enter judgment on it. The district court, after a largely nonevidentiary hearing on May 20, 2005, allowed discovery on the matter of Gifford’s alleged partiality, but on Sept. 15, 2005, after filings by the parties as to the discovery results, ultimately denied the motion to vacate and confirmed the award. The distributors moved for rehearing on Sept. 21, 2005, which the district court denied without a hearing on Oct. 4, 2005. The distributors appealed. HOLDING:Reversed and remanded. The distributors asserted that the district court erred in its Oct. 15, 1998, order staying their suit pending arbitration. The distributors contended that the district court erred by compelling arbitration, because an enforceable arbitration agreement never existed. The distributors claimed the arbitration agreement was not valid and enforceable for several reasons. First, the distributors argued that the provision in the distributorship agreement in September 1997 � which amended Amway’s rules of conduct to for the first time to include arbitration � rendered the arbitration agreement contained in the 1998 distributorship agreements illusory, lacking in consideration and unenforceable. The distributors argued that Amway, by virtue of its power to amend the rules of conduct, could unilaterally repeal or amend the arbitration provisions so that they were inapplicable even as to disputes, such as those here involved, of which Amway was aware and that arose out of events occurring prior to such an amendment. While it is inferable, the court stated, that an amendment by Amway to the arbitration provision would not become effective until published, there is nothing to suggest that once published the amendment would be inapplicable to disputes arising, or arising out of events occurring, before such publication. Thus, the court found no savings clause that would retain arbitration for existing claims upon elimination of the arbitration clause. As a result, the court held that the arbitration agreement was illusory and unenforceable as applied to the claims at issue. OPINION:Garwood, J.; Garwood, Smith and DeMoss, JJ.

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