Beware Importers – The Story of Evening Primrose Oil and the Case that Won’t Go AwayNovember 11, 2010
By Dara Katcher Levy –
The government is surely persistent when it comes to imported products that relate to FDA.
On November 2, 2010, the U.S. Court of International Trade denied the U.S.’s application for a default judgment of $17,734,926 against a British corporation that many years ago imported a product regulated by FDA. The underlying activities that formed the basis of the complaint occurred 18 years ago.
The ruling is part of the Evening Primrose Oil saga. In 1985, FDA issued a series of Import Alerts announcing that Evening Primrose Oil could not be sold lawfully in the United States without FDA approval, that the substance did not have FDA approval, and that all import shipment of evening primrose oil offered for entry into the U.S. were to be detained by Customs.
In this lawsuit, which was originally filed in 1997, the Justice Department alleged that Callanish, a Scotland-based manufacturer and shipper of Evening Primrose Oil, created false invoices to materially mislead Customs as to the nature of the product being imported so that it would evade FDA’s Import Alerts. The U.S. alleged that between 1988 and 1992, 52 shipments of Evening Primrose Oil entered the country because of these false statements. Under section 592 of the Tariff Act of 1930, as amended, it is unlawful for any person to introduce merchandise into the U.S. by means of material and false documents, statements, or acts.
The U.S. successfully served Callanish in May 2010. Callanish failed to appear after being served and the court entered Callanish’s default. Because of the default, the court accepted as true all well-pled facts in the complaint. The court did not take issue with any of the facts alleging Callanish’s misconduct, but took issue with the U.S.’s assertion that the domestic value of the evening primrose oil equaled $17,734,926. The court stated that the mere allegation of an amount, absent anything more, does not constitute a well-pled fact. The court therefore, denied, without prejudice, the U.S.’s claim.
The U.S. has pursued this civil penalty case for over 13 years, even though the U.S. has known of the insolvency of Callanish and the lack of any funds to pay the penalty since 2001. Despite the apparent illogic of the government’s effort to collect the penalty from an insolvent foreign company, this case is a reminder of the potential consequences to importers if they do not have clear and accurate descriptions of the imported products on the importation documents.