The Kirby Company is a manufacturer of vacuum cleaner

Vacuum cleaner

A vacuum cleaner, commonly referred to as a "vacuum," is a device that uses an air pump to create a partial vacuum to suck up dust and dirt, usually from floors, and optionally from other surfaces as well. The dirt is collected by either a dustbag or a cyclone for later disposal...

s and home cleaning accessories, based in Cleveland, Ohio

Cleveland, Ohio

Cleveland is a city in the U.S. state of Ohio and is the county seat of Cuyahoga County, the most populous county in the state. The city is located in northeastern Ohio on the southern shore of Lake Erie, approximately west of the Pennsylvania border...

. It is a subsidiary of the Scott Fetzer Company (also known as Scott & Fetzer) which in turn is part of Berkshire Hathaway

Berkshire Hathaway

Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years,...

. Dealers are located in over 70 countries throughout the world. Since the 1920s, Kirby's products have been sold only door-to-door

Door-to-door

Door-to-door is a sales technique in which a salesperson walks from the door of one house to the door of another trying to sell a product or service to the general public. A variant of this involves cold calling first, when another sales representative attempts to gain agreement that a salesperson...

 using in-home demonstrations.

Berkshire does not disclose Kirby's sales numbers, but Gene Windfeldt, the CEO from 1988 to 1997, estimated the vacuum sales at $1.1 billion per year in 1999. About 70% of Kirby's vacuum sales are financed through distributors, with 60%-plus interests, which brings the total price of the vacuum to more than $2000.

The Kirby Company is a member of the Direct Sales Association.

History

The first Kirby vacuums were designed by Jim Kirby

Jim Kirby

James B. Kirby was a Scottish inventor who moved to America and is known mostly for inventing the Kirby vacuum cleaner....

 (1885-1971) for George Scott and Carl Fetzer after World War I

World War I

World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

, although the Kirby name was not used on a vacuum cleaner until the 1930s. James Kirby invented the "vacuette" circa 1920.

The Vacuette Electric, introduced in 1925 with its removable floor nozzle and handle, became the forerunner of today's multi-attachment Kirby vacuum models. In 1935, the company introduced the Kirby Model C, the first product to carry Jim Kirby's name.

From 1935 through the 1960's, continuous improvements and refinements were made to the Kirby home care system. The last model of this first generation, the Dual Sanitronic 80, was produced in 1969 and still resembled the original.

In 1970, input from Kirby distributors, dealers, management and customers guided Kirby engineers in developing the Kirby Classic. The model was an instant success, with soaring sales, forcing the company to expand its manufacturing facilities outside of Cleveland for the first time. In 1972, Kirby West began operations in Andrews, Texas

Andrews, Texas

Andrews is a city in and the county seat of Andrews County in the U.S. state of Texas within the West Texas region. The population was 10,448 in 2009. Along with Midland and Odessa, these cities form the Midland-Odessa Combined Statistical Area with a population of 241,316 in four counties...

. The facility doubled the company’s manufacturing capabilities.

Berkshire Hathaway bought Kirby parent Scott Fetzer in 1986 for $315 million. Two years prior, Ivan Boesky

Ivan Boesky

Ivan Frederick Boesky is an American stock trader who is notable for his prominent role in a Wall Street insider trading scandal that occurred in the United States in the mid-1980s.-Life and career:...

 had offered to buy Scott Fetzer for $60 a share, or $420 million. Warren Buffett

Warren Buffett

Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is...

 has singled out Scott Fetzer to Berkshire's shareholders as the "prototype" for the "kind of company—and acquisition—he was interested in." According to Berkshire managers, "absolutely no changes were made to the existing Scott Fetzer business or management, and the entire business (and its jet) was preserved."

Beginning in the 1990's, the Generation series - starting with the Generation 3, ushered in a new platform for the cleaner. The addition of TechDrive variable power assist eliminated 90% of the effort required to move the unit back and forth.

As of 2003, Kirby is the largest source of revenue and profit for Scott Fetzer, with approximately 500,000 sales per year, about a third of which are outside the United States. In 2003, Scott Fetzer sold the vacuums to about 835 factory distributors, who in turn sell the vacuums door to door.

Kirby Unit Models

The Kirby Company typically only produces one model at a time. While continuous improvements may be added to the unit during its lifecycle, the unit name remains the same until the next major model update.

Kirby Model Name

• Ezee (1914)
• Wireless Vac-u-ette (1919)
• Vacuette Electric (1925)
• Scott Fetzer Sanitation System (1928-1934)
• Kirby Model 1C (1934-1937)
• Kirby Model 505 (1945-1947)
• Kirby Model 508 (1948)
• Kirby Model 509 (1949)
• Kirby Model 510 (1950-1951)
• Kirby Model 511(1951)
• Kirby Model 512(1952)
• Kirby Model 513(1953)
• Kirby Model 514(1954)

• Kirby Model 515(1955)
• Kirby Model 516 (1956-1957)
• Kirby Model 517 (1957-1958)
• Kirby Model 518 (1958-1959)
• Kirby Model 519(1959)
• Kirby Model 560 (1960-1961)
• Kirby Model 561 (1961-1962)
• Kirby Model 562 (1962-1965)
• Dual Sanitronic 50 (1965-1967)
• Dual Sanitronic 80 (1967-1970)
• Kirby Classic (1970-1973)
• Kirby Classic Omega (1973-1976)

• Kirby Classic III (1976-1979)
• Kirby Tradition (1979-1981)
• Kirby Heritage (1981-1984)
• Kirby Heritage II (1984-1989)
• Kirby Legend II (1989-1990)
• Generation 3 (1990-1993)
• G4 (1993-1996)
• G5 (1996-1999)
• G6 (1999-2001)
• Ultimate G (2002-2004)
• Ultimate G Diamond Edition (2005-2006)
• Sentria (2006 to present)

Kirby Sentria Model

The Kirby Sentria vacuum is sold by Kirby's independent distributors as a complete home care system that converts into twelve separate units - all powered by the same power plant. Made primarily of die cast aluminum, it converts to an upright vacuum, canister vacuum, carpet shampoo system, floor buffer, and additional uses.

The Sentria model is a HEPA rated vacuum that uses disposable filter bags. The Carpet and Rug Institute (CRI) awarded the Sentria model its Gold Level Seal of Approval for meeting the organization's requirements for soil removal, dust containment and appearance retention.

Warranty

The registered purchaser of a Kirby home care system currently receives a three-year Manufacturer's Limited Warranty, access to a Lifetime Rebuild Program, and a Fire Protection Plan.

The three-year warranty guards against defects in material or workmanship. All independent authorized service centers and independent distributors must honor this warranty.

The Lifetime Rebuild Program gives the registered purchaser the option of having his or her vacuum cleaning system serviced to an "as new" condition. For a fee, which varies by model, the registered purchaser can, at any time, send his or her unit to the factory for complete refurbishment. The current rebuild price is determined by the United States Consumer Price Index (currently $175), plus shipping cost. In addition, in the United States, if the registered purchaser's unit is damaged or destroyed by fire, the Kirby company will replace the vacuum with the current model for the rebuild fee. In both of these instances, a new 1-year warranty comes into effect.

Sales Model

New Kirby home care systems are only sold through independent, authorized Kirby distributors through in-home (door-to-door

Door-to-door

Door-to-door is a sales technique in which a salesperson walks from the door of one house to the door of another trying to sell a product or service to the general public. A variant of this involves cold calling first, when another sales representative attempts to gain agreement that a salesperson...

) demonstrations.

From time to time, Kirby Sentria systems are inaccurately advertised for sale as NEW on the internet and in authorized retail stores. Systems sold through other sources are not covered by The Kirby Company's warranty and rebuild plans.

The Kirby Company manufacturers the unit and sells it to a group of authorized distributors. Each distributor is an independent business, and as such sets their own price for the unit and conducts their own business operations.

Independent distributors recruit dealers who are also independent contractors. The dealers sell the unit door-to-door. Dealers are typically compensated through commission only.

Criticism of marketing and sales practices

The practices of some of Kirby's independent distributors have been subject to criticism. The Kirby is included by Lon Fuller and Melvin Eisenberg, Professors of Contract Law at Harvard Law School

Harvard Law School

Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...

 and UC Berkeley School of Law

UC Berkeley School of Law

The University of California, Berkeley, School of Law, commonly referred to as Berkeley Law and Boalt Hall, is one of 14 schools and colleges at the University of California, Berkeley. Berkeley Law is consistently regarded as an elite and prestigious law school...

/Columbia Law School

Columbia Law School

Columbia Law School, founded in 1858, is one of the oldest and most prestigious law schools in the United States. A member of the Ivy League, Columbia Law School is one of the professional graduate schools of Columbia University in New York City. It offers the J.D., LL.M., and J.S.D. degrees in...

, as a textbook example of unconscionability

Unconscionability

Unconscionability is a term used in contract law to describe a defense against the enforcement of a contract based on the presence of terms that are excessively unfair to one party...

. Kirby has been subject to relentless criticism by consumer protection agencies. As of 1999, of the 22 state consumer protection agencies, 15 had received a total of more than 600 complaints in just a few years. Between 1996 and 1999, the Wisconsin Department of Agriculture, Trade and Consumer Protection received 50 complaints regarding Kirby dealers, and concluded from its investigation that Kirby, through its distributors, engaged in a "statewide pattern of trade practices" violation of state consumer-protection laws.

Many of the complaints involve "older customers who lack the will to stand up to grueling sales pitches." The Wall Street Journal records examples where an elderly couple was unable to remove three Kirby salesmen from their home for over five hours; in another example, a disabled woman who had been living alone in a mobile home on $1000/month in Social Security

Social Security (United States)

In the United States, Social Security refers to the federal Old-Age, Survivors, and Disability Insurance program.The original Social Security Act and the current version of the Act, as amended encompass several social welfare and social insurance programs...

 payments and suffering from Alzheimers was discovered to own two Kirby vacuum cleaners, having paid $1,700 for the second one. In 2002, the Florida Agriculture and Consumer Services Commissioner obtained $13,000 in refunds for 13 senior citizens.

According to the Wall Street Journal, the device "costs more than four times what other top-of-the-line vacuum cleaners do." Kirby compares the price difference to that between luxury and economy cars, yet "luxury-car dealers don't make house calls in trailer parks. But Kirby dealers do." The Kirby vacuum cleaner is "marketed exclusively door-to-door—often to people who can ill afford a $1,500 gadget, but succumb to the sales pitch nonetheless."

In 2001, the West Virginia Attorney General obtained more than $26,000 in refunds and credits for dissatisfied Kirby buyers. In 2002, ABC

American Broadcasting Company

The American Broadcasting Company is an American commercial broadcasting television network. Created in 1943 from the former NBC Blue radio network, ABC is owned by The Walt Disney Company and is part of Disney-ABC Television Group. Its first broadcast on television was in 1948...

's Primetime conducted a hidden-camera investigation in response to more than a thousand complaints regarding Kirby's salespeople. In June 2004, the Arizona Attorney General filed suit against Kirby distributors for violations of the Consumer Fraud Act, seeking an injunction against any other home sales. Public authorities flooded with complaints about Kirby vacuum cleaners is not a recent phenomenon; even in the 1960s and 1970s, Kirby had been "cited by various agencies a number of times" and the Detroit Better Business bureau had received so many complaints that it decided to turn the matter over to the Wayne County prosecutor.

Kirby attempts to disclaim liability for its sales force, whom it holds out as independent contractors. Its "Distributor Code of Ethics" enumerates 12 principles, including "observe the highest standards of character, honesty and integrity in dealings with my customers, fellow Distributors and other members of the Kirby profession." Kirby also teaches its distributors direct-sales laws, and requires them to resolve complaints within 24 hours under threat of termination.

Litigation

Between 1998 and 2001, in Alabama alone, more than 100 lawsuits were filed against Kirby and its affiliates and subsidiaries, resulting in nearly $2 million in judgements and settlements.

Twelve distributors of Kirby vacuums in Massachusetts were cited for violations of the Commonwealth’s wage and hour laws by the MA Attorney General's Office in July 2010.
The 12 distributors were cited for a variety of different wage and hour violations including nonpayment of wage, nonpayment of minimum wage, misclassification, child labor, retaliation and record-keeping violations. The distributors were fined a total of $199,300 for the violations and also ordered to pay restitution.

Fraud and RICO

A federal class action lawsuit is pending against Kirby under the civil action provisions of the Racketeer Influenced and Corrupt Organizations Act

Racketeer Influenced and Corrupt Organizations Act

The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization...

 (RICO), for allegedly selling used vacuums as new; the complaint alleges that "Not only is Kirby aware of this practice, it “participates in the scheme by, among other things, selling to its distributors duplicate or replacement ‘Original Purchaser's Registration’ cards to be given to secondhand purchasers."" The complaint also alleges that "Kirby commonly sells distributors new empty boxes and packaging material for the obvious purpose of repackaging units that the distributor previously sold to a prior customer." Kirby's motion to dismiss was rejected. After Kirby refused discovery

Discovery (law)

In U.S.law, discovery is the pre-trial phase in a lawsuit in which each party, through the law of civil procedure, can obtain evidence from the opposing party by means of discovery devices including requests for answers to interrogatories, requests for production of documents, requests for...

 requests for its sales contracts and other documents, Judge Clay D. Land

Clay D. Land

Clay Daniel Land is a United States federal judge.Born in Shreveport, Louisiana, Land received a B.B.A. from the University of Georgia in 1982 and a J.D. from the University of Georgia Law School in 1985. He was in private practice in Columbus, Georgia from 1985 to 2001.On September 21, 2001,...

 compelled Kirby to disclose the requested documents.

A class-action law suit was also filed against Kirby in Bullock County Court in Alabama over its sales practices, specifically it use of credit cards issued expressly to fund the Kirby, under truth in lending laws. Kirby succeeded in persuading a trial judge to recuse himself.

Sexual assault

The Texas Supreme Court

Texas Supreme Court

The Supreme Court of Texas is the court of last resort for non-criminal matters in the state of Texas. A different court, the Texas Court of Criminal Appeals, is the court of last resort for criminal matters.The Court is composed of a Chief Justice and eight Associate Justices...

 held Kirby liable for a rape committed by one of its door-to-door salesmen, finding that the manufacturer maintained control of its distributors and their salespeople, by requiring its distributors to make sales via in-home visits, and that the risk was foreseeable. In that case, the court found that—had the employees references been checked—Kirby would have discovered complaints of inappropriate sexual behavior at his previous employer and an arrest and deferred adjudication for indecency with a child. Phillip R. Jones, Jennifer A. Youpa, and Stacey S. Calvert, "Employment and Labor Law," 53 SMU Law Review 929 (2000).

The Supreme Court of North Dakota also held Kirby liable in a similar rape incident, where the salesman was hired after being convicted of assault and with charges of criminal sexual misconduct in the third degree pending against him.McLean v. Kirby Co., a Div. of Scott Fetzer Co., 490 N.W.2d 229 (N.D. 1992).

Actions against unauthorized dealers

Kirby home care systems are only sold through authorized, independent distributors through in-home demonstrations.http://www.kirby.com In an effort to protect consumers from purchasing used, damaged, or stolen products, Kirby has successfully prevented unauthorized retailers from selling or reselling its vacuum cleaners under misleading circumstances.

Kirby has sued unauthorized dealers who sell Kirby vacuums for, inter alia, trademark infringement

Trademark infringement

Trademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees...

 where the vacuums are identified by the Kirby name and logo. The United States Court of Appeals for the Fifth Circuit

United States Court of Appeals for the Fifth Circuit

The United States Court of Appeals for the Fifth Circuit is a federal court with appellate jurisdiction over the district courts in the following districts:* Eastern District of Louisiana* Middle District of Louisiana...

 has held that such use does not constitute trademark infringement. The United States Court of Appeals for the Ninth Circuit

United States Court of Appeals for the Ninth Circuit

The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...

 vacated an injunction granted in Kirby's favor by a lower court in that Circuit based on similar trademark claims against an unauthorized distributor.

Kirby also did not prevail in a similar action against an unauthorized dealer in Minnesota—where it asserted trademark infringement, false and unfair competition, and trade disparagement; the authorized dealer prevailed on a $90,000 counterclaim against Kirby for defamation and then in a suit against an insurer who refused to defend the suit when the dealer refused Kirby's settlement offer. Kirby's parent lost another such suit in Minnesota based on trademark infringement and other related state law claims.

Nor did Kirby prevail in a tortious interference

Tortious interference

Tortious interference, also known as intentional interference with contractual relations, in the common law of tort, occurs when a person intentionally damages the plaintiff's contractual or other business relationships...

 with contractual relations claim in Washington against an unauthorized retailer; the Supreme Court of Washington awarded attorney's fees to the retailer. However, Kirby has prevailed in cases where unauthorized retailers went farther than using the name and logo to identify the vacuum cleaner, misrepresenting themselves as the manufacturer and claiming the existence of factory warranty.