Dongwon lawsuit update
Attorneys for plaintiffs suing South Korean based Dongwon Industries, owner of StarKist Co. and StarKist Samoa Inc., have asked the federal court in Delaware to dismiss claims made by Dongwon, whom they allege fraudulently obtained U.S. fishing vessel documentation and tuna fishing licenses to fish in the exclusive economic zone (EEZ) of Pacific Island Nations for two vessels. They allege the vessels are actually Korean owned.
Legal counsel Clay Naughton filed the response last Thursday on behalf of Moore & Company, a Florida based law firm and included the U.S. government. The lawsuit was first filed in 2012 but was unsealed last year. Plaintiffs then filed an amended complaint in January this year.
Defendants in the case are Dongwon, Majestic Blue Fisheries LLC, Pacific Breeze Fisheries LLC, Jayne Songmi Kim, her sister Joyce Jungmi Kim and their father Jaewoong Kim. The Kim sisters are owners of the LLC.
In seeking to dismiss the complaint “with prejudice” (meaning they are forbidden from filing another lawsuit based on the same arguments), the defendants first pointed out that Moore has represented a client for several years in an ongoing, related litigation against some of the defendants in the current action.
In June of 2010, the Majestic Blue sank in western Pacific waters with 24 people on board. Moore “instituted” the wrongful death suit, representing the widow of the captain, the only person who died when the boat sank.
After obtaining, through its representation, secondhand knowledge of purported information and allegations outlined in the complaint, Moore now brings this action before the court claiming “it has information of fraud against the government”, the defense argued.
However, the defendants assert the lawsuit does not even profess to have any firsthand, inside information of fraud, but instead filed the suit based upon publicly available information and allegations and therefore the complaint should be dismissed under the FCA’s public disclosure bar.
Regarding Moore’s allegations that the defendants set up a sham ownership structure to obtain fishing licenses, the defendants argued that the fishing licenses “do not constitute money or property interests of the U.S. Government” as required under the federal False Claim Act (FCA). (See Samoa News edition Feb. 5 for more details on first story.)
NEW PLAINTIFF FILING
The plaintiffs reiterated that its Amended Complaint alleges Dongwon and its co-conspirators made false certifications every year from 2008 until 2014 to obtain South Pacific Tuna Treaty (SPTT) Fishing Licenses for which the federal government pays $16 million annually as part of a program to promote the U.S. fishing industry.
According to Naughton, the “first hint of this fraud” was uncovered by Moore while representing the American captain, who was killed while working onboard one of “Dongwon’s illegally licensed fishing vessels”.
“However, it was only after more than two years of its own investigation that Moore had gathered sufficient information and evidence to file this action for Violations of FCA,” Naughton said.
He added that the defendants motion to dismiss the case does not challenge the facts underlying Moore’s fraud claims, but instead argues Moore is barred from bringing the claims based on public disclosures and the pleading requirements of the FCA, “but basing all of its arguments on an outdated version of the FCA which should not be applied here.”
Naughton cited several reasons the defendant’s motion to dismiss should be denied and the plaintiff's motion granted. For example, the Patient Protection and Affordable Care Act (PPACA) makes the public disclosure bar non-jurisdictional, shifting the burden of proof to Defendants. The PPACA also amends the public disclosure bar so that disclosures made in civil lawsuits are not considered FCA qualified disclosure unless the Government or its agent is a party to the suit.
The public disclosure bar does not bar Moore’s claims because, “disclosures made in prior civil litigation are not FCA public disclosures”. Additionally, the public disclosure bar is also inapplicable because Moore is an original source as it has independent information which materially adds to any publicly disclosed information, and it voluntarily provided this information to the Government before filing this action.
Further, Moore adequately pleads the falsity of defendants’ certification that the non-U.S. citizens do not exercise control over the LLC or have actual command of the Vessels.
Naughton also argued that the Kim sisters (Jayne and Joyce) were born in Guam but are citizens of Korea, and were instructed only after becoming U.S. citizens to form two United States limited liability companies (LLCs) to take ownership of the two fishing vessels in question.
“Only through this fraudulent ownership structure could Dongwon obtain U.S. registration, thereby qualifying the Vessels for FFA fishing licenses and ultimately to fish for tuna in waters governed by the SPTT,” Naughton further argues.
And therefore, it is alleged, the defendants’ presented false certification to the federal government, including the U.S. Coast Guard and the National Marine Fisheries Service as well as to the FFA, falsely certifying that Defendants’ Vessels were owned and controlled by U.S. citizens, when in fact the Vessels and the LLCs were owned and controlled by Korean citizens.
To further prove the “falsity of defendants’ certification”, Naughton argued that Moore provides other evidence as well including:
• the Kim Sisters receipt of no money from either LLC;
* Dongwon’s direct efforts to obtain fishing licenses;
• the revelation that William Phil, the purported Manager of Majestic Blue Fisheries & Pacific Breeze Fisheries, was actually a pseudonym for three Korean nationals employed by Dongwon;
• the Kim Sisters giving over of total control over the Vessels’ operations to Dongwon;
• Dongwon’s admission the Vessels are “their” Vessels;
• and that Dongwon paid the American Captain’s wage despite their ostensibly being employed by the LLCs.