D.C. Circuit Affirms Dismissal of Customs Fraud Whistleblower Suit Against Office Suppliers
The U.S. Court of Appeals for the D.C. Circuit recently affirmed the dismissal a False Claims Act lawsuit alleging customs fraud by several major office supply retailers. An anonymous “pencil industry insider” had claimed Staples, OfficeMax, Target and Industries for the Blind had misreported the country of origin on entries of pencils that should have been subject to antidumping duties. In its Dec. 2 decision, the Appeals Court affirmed the District of Columbia U.S. District Court in finding the lawsuit was invalid because it was based on publicly available information.
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The anonymous “John Doe” had relied on manifest data from the PIERS database to make his case that Staples, OfficeMax, Target and Industries for the Blind had purchased Chinese-made pencils from suppliers in Indonesia, Hong Kong and Vietnam, and falsely declared them to be originating goods of those three countries instead of China in order to avoid paying AD duties. He said the pencils had telltale signs of Chinese origin, including a distinctive method of joining the pencils’ halves, substandard wood, off-center leads, low-quality erasers, inferior paint, unmatchable price, and loose ferrules.
The D.C. Circuit held that both the PIERS data and the physical characteristics of the pencils were publicly available, and as a consequence could not form the basis of a False Claims Act whistleblower complaint. PIERS manifest data is a form of “news media” under the False Claims Act that is “readily accessible to the public,” held the affirmed District Court decision. And most of the information cited by Doe on the characteristics of Chinese-origin pencils was listed in an International Trade Commission report on an abortive 1994 AD duty investigation on cased pencils from Thailand, said the Appeals Court. Finally, Staples, OfficeMax, and Target were all identified in a 2005 ITC report as possible importers of Chinese pencils.
(U.S. ex rel. John Doe v. Staples, Inc., Et Al., D.C. Cir. 13-7071, dated 12/02/14)
Email ITTNews@warren-news.com for a copy of the opinion.