("Five Food Producers File $1B Suit Against Insurers, US Govt,"
published 12:55 p.m. EDT, misstated the day the lawsuit was filed
in the seventh paragraph. The correct version follows.)
Five domestic producers of food products filed a $1 billion
lawsuit seeking class-action status against a handful of major
insurance companies and the U.S. government for alleged damages
caused by dumped Chinese food products.
The complaint alleges the insurers' negligent issuance of
customs surety bonds, and the subsequent refusal to pay under the
bonds, allowed the sale of "huge amounts of competing food imports"
from China at below cost, or "dumped" prices.
"The dumping of these imports forced the domestic producers to
significantly lower the prices for their competing products,
causing the producers to lose hundreds of millions of dollars,"
said Michael Coursey, a partner with Kelly Drye & Warren LLP,
the law firm representing the domestic producers.
A customs surety bond is a contract used for guaranteeing that a
specific obligation will be fulfilled between customs and an
importer for any given import transaction. Customs bonds are
required on all commercial imports entering the U.S.
The complaint alleges that for eight years, the insurers
negligently issued hundreds of customs surety bonds that guaranteed
the payment of any dumping duties the government might determine
were owed by U.S. importers for the specified Chinese goods.
The five producers - Sioux Honey Association, Adee Honey Farms,
Monterey Mushrooms Inc., The Garlic Co. and Beaucoup Crawfish of
Eunice Inc. - say the alleged action caused "severe financial
damages."
The lawsuit, filed Tuesday in the federal court of International
Trade, also claims the U.S. Customs and Border Protection and the
Commerce Department failed to enforce four antidumping orders
issued to protect domestic producers from "dumped" Chinese
imports.
The defendants include Hartford Financial Services Group Inc.
(HIG), Kingsway Financial Services Inc. (KFS) unit Lincoln General
Insurance Co., Swiss Reinsurance Co. (RUKN.VX) unit Washington
International Insurance Co. and American International Group Inc.
(AIG) unit American Home Assurance. Representatives from the
insurers or the Commerce Department weren't immediately available
for comment.
-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com