Further to our emails below, we wanted to let you know about an interesting customs valuation-related qui tam action that was just recently unsealed (at least in part).
The case involves a claim brought against OtterBox, a U.S. based importer of protective cases for smartphones, tablets, and computers, by its former supply chain director (who also happens to be a licensed customs broker). The complaint alleges that OtterBox knowingly failed to include certain assists in the value declared to US Customs and Border Protection for articles imported into the United States over a 5-year period. More specifically, the complaint alleges that the relator (i.e., the former supply chain director) repeatedly advised OtterBox management of its obligations under U.S. customs law regarding the alleged additions to value, but was ignored.
The Company has filed a motion to dismiss based on the fact that it had voluntarily disclosed the same violation to US Customs almost a year before the qui tam complaint was filed. OtterBox argues that its prior disclosure provides a “safe harbor” and, thus, the relator has failed to state a claim upon which relief can be granted.
This case is interesting for several reasons. First, while private party-initiated trade enforcement actions are increasingly common in this era of shrinking government resources, the majority of the cases to date have focused on ‘bigger ticket’ items, such as the failure to deposit antidumping/countervailing duties (which are, often times, hundreds of percent of the value) or intentional false statements as to origin in the government procurement context. This case, in contrast, involves a pretty common customs valuation issue (i.e., additions to value), which likely had only a modest duty impact. Second, it was filed by a licensed customs broker, who may have been motivated, at least in part, out of a concern for her license. Finally, the case presents an interesting legal issue that has not been addressed previously – namely, whether the filing of a valid prior disclosure bars a subsequent qui tam claim filed under the False Claims Act.
Regardless of how this case turns out, companies should heed the warning. It is extremely important that all companies have a mechanism that allows trade-related concerns to be raised and addressed in a timely and effective manner. It is also, of course, important to make sure that all additions to value are properly declared to US Customs (upon entry or otherwise).
We hope that this is helpful. If you have any questions about these issues, please let us know.