IMPORTER TO PAY $15 MILLION TO SETTLE CASE INVOLVING ALLEGED EVASION OF CUSTOMS DUTIES

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, December 21, 2015

Texas-Based Importers Agree to Pay $15 Million to Settle False Claims Act Suit for Alleged Evasion of Customs Duties

The Department of Justice announced today that University Furnishings LP and its general partner, Freedom Furniture Group Inc. (collectively University Furnishings) agreed to pay $15 million to resolve a lawsuit brought under the False Claims Act alleging that the companies made or conspired with others to make false statements to avoid paying duties on wooden bedroom furniture imported from the People’s Republic of China.  Texas-based University Furnishings sells furniture for student housing.

“Those who introduce goods into the United States must comply with the law, including the payment of customs duties meant to protect domestic companies and American workers from unfair competition abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”

The government alleged that between 2009 and mid-2012, University Furnishings knowingly misclassified or conspired with others to misclassify wooden bedroom furniture on documents presented to U.S. Customs and Border Protection (CBP) to avoid paying antidumping duties on imports of wooden bedroom furniture manufactured in the People’s Republic of China.  Specifically, University Furnishings allegedly classified the furniture as office and other types of furniture not subject to duties while selling the furniture in the student housing market for use in dormitory bedrooms.  The Department of Commerce assesses and CBP collects antidumping duties to protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.  

“Companies that cheat, by fraudulently mislabeling their imports, undermine U.S. manufacturers and others that obey the rules, and hurt consumers and taxpayers,” said U.S. Attorney Richard L. Durbin Jr. of the Western District of Texas.  “We are hopeful that today’s settlement will help deter others from this type of scheme.”

The allegations resolved by the settlement were originally brought by University Loft Company under the qui tam or whistleblower provisions of the False Claims Act.  The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  University Loft Company will receive $2.25 million as its share of the settlement.

The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Texas, CBP’s Office of Field Operations, Office of Regulatory Audit and Office of Chief Counsel; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

The lawsuit is captioned United States ex rel. University Loft Company v. University Furnishings, LP, et al., No. A13-CV-678 (W.D. Tex.).  The claims resolved by this settlement are allegations only; there has been no determination of liability.

EMPLOYEE WRONGFUL DISCHARGE CHARGES SETTLED BY PLASTIC SURGERY CENTER

FROM: U.S. DEPARTMENT OF LABOR

A plastic surgery center in Dallas has agreed to pay more than $300,000 to settle charges that it unlawfully fired two employees and then sued one of them in state court after she sought help from the NLRB's Fort Worth office.

The center, Advanced Facial Plastic Surgery Center, PA, also agreed to drop the state lawsuit, to rescind a rule prohibiting wage discussions by employees, and to cease paying its attorney to unlawfully and coercively represent its employees. The National Labor Relations Board issued an order on May 29, 2013 approving the terms of the formal settlement.

The case began in December 2010, when a medical technologist at the center was fired for discussing bonuses with other employees. Under the National Labor Relations Act, employees are guaranteed the right to discuss wages and other terms and conditions of employment with co-workers. The technologist filed a charge with the NLRB office in Fort Worth and, following an investigation, the Regional Director issued a complaint and scheduled a trial before an Administrative Law Judge.

The plastic surgery center then fired another employee, a surgical consultant, after she defended her co-workers in a meeting and engaged in other protected concerted activity. That employee filed a charge with the Fort Worth office, which issued a second complaint and consolidated the two cases.

Throughout the NLRB investigations, the center's attorney claimed to represent center employees, requiring all contact with the employees to go through his office. In her charge, the surgical consultant alleged she had been coerced into being represented by the company attorney.

After the surgical consultant filed NLRB charges, the company attorney filed a lawsuit in state court against her, alleging she had been negligent and breached certain fiduciary duties. The NLRB's investigation and analysis determined that the lawsuit was baseless in fact, unsupported in the law, and retaliatory.

The parties presented their cases to Associate Chief Administrative Law Judge Gerald M. Etchingham during a three-day trial in late October 2012. Before a decision issued, the Company, the discharged employees, and Counsel for the Acting General Counsel entered into a settlement agreement that was approved by Judge Etchingham and forwarded to the Board for final approval.

The $315,000 settlement covers lost wages and benefits for the employees, who waived their right to reinstatement to their former positions, as well as attorneys' fees incurred in defending the retaliatory lawsuit in state court. The agreement also called for the Company to withdraw the state court lawsuit, terminate the representation of employees by its attorney, and post, read, and mail a Notice informing current and former employees of their rights.