D.C. District Court Dismisses Whistleblower Suit Alleging AD Duty Evasion by Target, OfficeMax and Staples
The D.C. United States District Court dismissed a whistleblower's action against Staples, OfficeMax, Target, and Industries for the Blind for alleged false country of origin statements on entry documentation to avoid payment of antidumping duties on pencils from China. The anonymous whistleblower pursued the action under the False Claims Act, which allows private citizens to bring suit on behalf of the government over false or fraudulent claims for payment to the federal government. In return, the whistleblower receives a portion of the recovered funds. But to bring suit, the whistleblower must have inside information, unless he or she is the original source of public information. In this case, the whistleblower was neither.
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The whistleblower, referred to as John Doe in the opinion, alleged that the four defendants imported pencils of Chinese origin, but declared on entry documentation that the country of origin was variously Hong Kong, Taiwan, Malaysia, Indonesia and Vietnam. In so doing, the companies erroneously identified the country of origin; evaded antidumping duties on pencils from China; and wrongly claimed Generalized System of Preferences benefits. The government decided not to join the whistleblower on the suit, but the whistleblower elected to proceed without government support.
Given that False Claims Act suits often bring financial benefits for whistleblowers, the Act deters opportunistic would-be whistleblowers relying solely on public information by only giving courts jurisdiction to hear the case if it is based on inside information. The only exception is if the whistleblower is the original source of public information.
In this case, the court found that the would-be whistleblower was neither. The whistleblower based his case on information from a trade statistics database, as well as the form of the pencils imported by the defendants. According to the whistleblower, the several characteristics of the pencils identified them as being manufactured in China.
The trade statistics database qualified as "news media" for False Claims Act purposes, however, and so was publicly available. The information on characteristics of Chinese-manufactured pencils was also available in an International Trade Commission report, and so was publicly available as well. The whistleblower also claimed that he was the original source of the information, as he "organized the pencil industry effort to impose antidumping duties on Chinese-origin pencils." The court said that these claims weren't based on any evidence, so the whistleblower didn't qualify for the exception.
Because the whistleblower relied on public information to build his case, and was not the original source, the court dismissed his False Claims Act action without considering whether his allegations had any merit.