Five Food Producers File $1 Billion Suit Against Insurers, US Government

   DOW JONES NEWSWIRES 
 

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 Monday 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; [e-mail]