Kirby Company

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This article is about the vacuum maker. For the maritime company, see Kirby Corporation.
Kirby Company
Type Division
Industry Consumer products
Founded 1914 (as the Scott Fetzer Company) 1935 (as the Kirby Company)
Headquarters Cleveland, Ohio
Products Vacuum cleaners
Parent Berkshire Hathaway
Website www.kirby.com

The Kirby Company is a manufacturer of vacuum cleaners and home cleaning accessories, based in Cleveland, Ohio, USA. It is a division of The Scott Fetzer Company (also known as Scott & Fetzer) which in turn is part of Berkshire Hathaway. Dealers are located in over 70 countries throughout the world. Since 1920, Kirby's products have been sold only door-to-door using in-home demonstrations.[1]

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.[2] About 70% of Kirby's vacuum sales are financed through distributors.

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

History[edit]

A 1989 Kirby Legend II

The first Kirby vacuums were designed by Jim Kirby (1885-1971) for George Scott and Carl Fetzer after World War I, although the Kirby name was not used on a vacuum cleaner until the 1930s.[3] James Kirby invented the "vacuette" circa 1920.[2]

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.[4]

From 1935 through the 1960s, 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 1967 and still resembled the original.[4]

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. The facility doubled the company's manufacturing capabilities.[4]

Berkshire Hathaway bought Kirby parent Scott Fetzer in 1986 for $315 million.[2] Two years prior, Ivan Boesky had offered to buy Scott Fetzer for $60 a share, or $420 million.[5] Warren Buffett has singled out Scott Fetzer to Berkshire's shareholders as the "prototype" for the "kind of company—and acquisition—he was interested in."[6] 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."[7]

Beginning in the 1990s, 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.[4]

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.[8] In 2003, Scott Fetzer sold the vacuums to about 835 factory distributors, who in turn sell the vacuums door to door.[8]

Kirby unit models[edit]

The Kirby Company typically only produces one model at a time. Kirby's vacuums made until 1919 were made by Frantz Premier, ones made from 1919 to 1934 are branded and made by The Scott & Fetzer Company, and then all machines made after 1934 are still made by Scott & Fetzer, but branded as Kirby.

Kirby Model List:

  • The Domestic Cyclone (Designed 1906, never produced)
  • The Ezee (1914-1919)
  • The Wireless Vacuette (1919-1925)
  • The Vacuette Electric (1925-1928)
  • Scott Fetzer Sanitation System (1928-1934)
  • Kirby Model C/R (1934-1935)
  • Kirby Model 1C/1R (1935-1937)
  • Kirby Utility (1936-1938)
  • Kirby Model 2C/2R (1937-1939)
  • Kirby Model 3C/3R (1939-1940)
  • Kirby Model 4C/4R (1940-1941)
  • Kirby Model 505 (1945)
  • Kirby model 506 (1946)
  • Kirby Model 507 (1947)
  • Kirby Model 508 (1948)
  • Kirby Model 509 (1949)
  • Kirby Model 510 (1950)
  • Kirby Model 511 (1951)
  • Kirby Model 512 (1952)
  • Kirby Model 513 (1953)
  • Kirby Model 514 (1954)
  • Kirby Model 515 (1955)
  • Kirby Model 516 (1956)
  • Kirby Model 517 (1957)
  • Kirby Model 518 (1958)
  • Kirby Model 519 (1959)
  • Kirby Model 560 (1960)
  • Kirby Model 561 (1961)
  • Kirby 562 Sanitronic (1962)
  • Kirby Sanitronic VII (1963-1964)
  • Kirby Dual Sanitronic 50 (1965-1967)
  • Kirby Dual Sanitronic 80 (1967-1969)
  • Kirby Classic (1970-1973)
  • Kirby Classic Omega (1973-1976)
  • Kirby Classic III (1976-1979)
  • Kirby Tradition (1979-1981)
  • Kirby Heritage (1981-1984)
  • Kirby ComVac 1300 (1982-1984)
  • Kirby ComVac 1600 (1982-1984)
  • Kirby Heritage II (1984-1987)
  • Kirby Heritage II Legend (1987-1989)
  • Kirby Legend II (1989-1991)
  • Kirby Generation 3 (1990-1993)
  • Kirby G4 (1993-1997)
  • Kirby G5 (1997-1999)
  • Kirby Gsix (1999-2002)
  • Kirby Gsix 2000 Limited Edition (2000)
  • Kirby Gsix 2001 Limited Edition (2001)
  • Kirby Ultimate G (2002-2003)
  • Kirby Ultimate G Diamond Edition (2003-2006)
  • Kirby Sentria (2006-2012)
  • Kirby Sentria II (2012-2014)

Current model[edit]

The Kirby Sentria 2 vacuum cleaner is sold by Kirby's independent distributors as a complete home care system that converts into several different units - all powered by the same power plant. Made primarily of aluminum, it converts into an upright vacuum cleaner, a canister vacuum cleaner, a carpet shampoo system, a floor buffer, a tile cleaner, an air pump, and a sander .[9]

The Sentria 2 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.[10]

There are minimal differences between the Sentria II and the outgoing Sentria. Newer Sentria systems progressively included the updated smaller and less restrictive Mini-Emtor and F Style filter bag connector which are now used on the Sentria II. Other differences include a new plastic base to reduce weight, a new bag design, and a color change featuring a lighter grey with blue accents.

Warranty[edit]

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 for original owners and $350 for non-original owners), 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 practice[edit]

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

From time to time, Kirby Sentria 2 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.[11]

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.[12]

Criticism of marketing and sales practices[edit]

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 and UC Berkeley School of Law/Columbia Law School, as a textbook example of unconscionability.[13] Kirby has been subject to relentless criticism by consumer protection agencies.[2] 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.[2] 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.[2]

Many of the complaints involve "older customers who lack the will to stand up to grueling sales pitches."[2] 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 payments and suffering from Alzheimers was discovered to own two Kirby vacuum cleaners, having paid $1,700 for the second one.[2] In 2002, the Florida Agriculture and Consumer Services Commissioner obtained $13,000 in refunds for 13 senior citizens.[14]

According to the Wall Street Journal, the device "costs more than four times what other top-of-the-line vacuum cleaners do."[2] 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."[2] 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."[2]

In 2001, the West Virginia Attorney General obtained more than $26,000 in refunds and credits for dissatisfied Kirby buyers.[14] In 2002, ABC's Primetime conducted a hidden-camera investigation in response to more than a thousand complaints regarding Kirby's salespeople.[14] 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.[14] 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.[15]

Kirby attempts to disclaim liability for its sales force, whom it holds out as independent contractors.[2] 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."[2] Kirby also teaches its distributors direct-sales laws, and requires them to resolve complaints within 24 hours under threat of termination.[2]

Litigation[edit]

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.[16]

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.[17]

Sexual assault[edit]

The Texas Supreme Court 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.[18] 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.[19]

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.[20][21]

Fraud and RICO[edit]

A federal class-action lawsuit is pending against Kirby under the civil action provisions of the Racketeer Influenced and Corrupt Organizations Act (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.""[22] 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."[23] Kirby's motion to dismiss was rejected.[22] After Kirby refused discovery requests for its sales contracts and other documents, Judge Clay D. Land compelled Kirby to disclose the requested documents.[24]

A class-action lawsuit was also filed against Kirby in Bullock County Court in Alabama over its sales practices, specifically its use of credit cards issued expressly to fund Kirby purchases, under truth in lending laws.[2] Kirby succeeded in persuading a trial judge to recuse himself.[25]

Actions against unauthorized dealers[edit]

Kirby has sued unauthorized Kirby vacuum dealers for United States trademark infringement where the vacuums are identified by the Kirby name and logo. The United States Court of Appeals for the Fifth Circuit has held that such use does not constitute trademark infringement.[26][27] The United States Court of Appeals for the Ninth Circuit vacated an injunction granted in Kirby's favor by a lower court in that Circuit based on similar trademark claims against an unauthorized distributor.[28]

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.[29][30] Kirby's parent lost another such suit in Minnesota based on trademark infringement and other related state law claims.[31]

Nor did Kirby prevail in a tortious interference with contractual relations claim in Washington against an unauthorized retailer; the Supreme Court of Washington awarded attorney's fees to the retailer.[32] 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.[33]

Notes[edit]

  1. ^ The Kirby Story from the company's website
  2. ^ a b c d e f g h i j k l m n o Joseph P. Cahill, "Here's the Pitch: How Kirby Persuades Uncertain Customers to Buy $1,500 Vacuum," The Wall Street Journal (October 4, 1999).
  3. ^ Kirby Model History
  4. ^ a b c d The Scott Fetzer Company, "A History of Quality, Reliability & Performance" (#739807 copyright 2007)
  5. ^ Robert Cole. "Boesky makes bid for Scott & Fetzer" New York Times (April 27, 1984).
  6. ^ Miles, 2003, p. 273.
  7. ^ Miles, 2003, p. 274.
  8. ^ a b Miles, 2003, p. 276.
  9. ^ The Scott Fetzer Company, "Sentria by Kirby" (#730106 copyright 2010)
  10. ^ .www.carpet-rug.org
  11. ^ http://www.kirby.com/
  12. ^ "Kirby Vacuums". Ventura Vacuum. Retrieved 4 June 2013. 
  13. ^ Lon L. Fuller and Melvin Aron Eisenberg, Basic Contract Law, Eight Edition 80 (2006).
  14. ^ a b c d Greg Dawson, "Kirby Always Cleaning Up After Others," Orlando Sentinel (August 27, 2004).
  15. ^ Sidney Margolius, The innocent investor and the shaky ground floor 117 (1971).
  16. ^ National Union Fire Ins. Co. v. Cavins, 226 Fed.Appx. 895 (11th Cir. 2007).
  17. ^ http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&f=2010_07_21_kirby_citation&csid=Cago
  18. ^ Read v. Scott Fetzer Co., 990 S.W.2d 732 (Tex. 2008).
  19. ^ Phillip R. Jones, Jennifer A. Youpa, and Stacey S. Calvert, "Employment and Labor Law," 53 SMU Law Review 929 (2000).
  20. ^ McLean v. Kirby Co., a Div. of Scott Fetzer Co., 490 N.W.2d 229 (N.D. 1992).
  21. ^ Paul S. Swedlund, "Negligent Hiring and Apportionment of Fault between Negligent and Intentional Tortfeasors: A Consideration of Two Unanswered Questions in South Dakota Tort Law," 41 South Dakota Law Review 45 (1995-1996).
  22. ^ a b Jordan v. Scott Fetzer Co., 2007 WL 4287719 (M.D. Ga 2007).
  23. ^ Civil RICO Report, "Customers claim vacuum sales violate RICO" (January 1, 2008).
  24. ^ Jordan v. Scott Fetzer Co., 2009 WL 1885063 (M.D. Ga 2009).
  25. ^ Ex parte Kirby Co., 784 So.2d 290 (Ala. 2000).
  26. ^ Scott Fitzer Co. v. House of Vacuums, Inc., 381 F.3d 477, 478 (5th Cir. 2004).
  27. ^ Phillip B. Philbin and Carmen E. Griffin, "Intellectual Property Law," 58 SMU Law Review 985 (2005).
  28. ^ Scott and Fetzer Co. v. Dile, 643 F.2d 670 (9th Cir. 1981).
  29. ^ Williamson v. North Star Companies, 1997 WL 53029 (Minn. Ct. App. 1997).
  30. ^ Louis J. Speltz and Ann S. Grayson, "Is that your final answer? Are insureds entitled to insurance coverage for trademark infringement?" 23 Hamline Law Review 348 (2000).
  31. ^ Scott Fetzer Co. v. Williamson, 101 F.3d 549 (8th Cir. 1996).
  32. ^ Scott Fetzer Co., Kirby Co. Div. v. Weeks, 786 P.2d 265 (Wash. 1990).
  33. ^ Scott Fetzer Co. v. Gehring, 288 F.Supp.2d 696 (E.D. Pa. 2003).

References[edit]

  • Miles, Robert P. 2003. The Warren Buffett CEO: Secrets from the Berkshire Hathaway Managers.