Lawsuit of the week: Broker’s alleged errors could cost Asian food importer millions, suit says

Asian food importer Seoul Trading Corp. is suing customs broker FedEx Trade Networks, claiming it could be on the hook for more than $10 million ...
Asian food importer Seoul Trading Corp. is suing customs broker FedEx Trade Networks, claiming it could be on the hook for more than $10 million in duties after a reassessment found errors in product classifications for certain imported dairy-based goods.

The company filed a notice of civil claim in BC Supreme Court on January 30 against FedEx Trade Networks Transport & Brokerage (Canada) Inc., doing business as FedEx Trade Networks. Seoul claims it’s been using FedEx as its customs broker since 2004. From October 2012 to August 2014, the importer claims it brought in frozen ice cream, sherbets and edible ices under relevant tariff codes, relying on FedEx’s advice about whether they could be imported without penalty or whether they required special permits or permissions related to “quota allocation requirements.”

In June 2014, the Canada Border Services Agency (CBSA) began a “trade compliance verification” probe, which eventually found errors during the verification period.

“The plaintiff did not have reason to believe that the classification was incorrect at the time of import and relied upon the professional expertise of the defendant to alert to the obscure CBSA policy issues relating to such importations and to advise the plaintiff how to import the items without conflicting with CBSA policies or give the plaintiff the opportunity to elect not to import the items into Canada at all,” the claim states. “The defendant failed in its professional duty to the plaintiff to provide such warnings and advice or any useful warnings or advice.”

The bill for the alleged errors, while not finalized, potentially leaves Seoul Trading on the hook for $10,976,228 in duties, according to the lawsuit. The company, however, “has taken steps to persuade” the government to back down and possibly issue a retroactive permit and dairy quota allocation because some of the products, made in Korea, are made from Canadian dairy milk solids.

“If the mitigation efforts of the plaintiff do not succeed it will suffer loss in the amount of $10,976,228.31 plus the funds spent by the plaintiff in the mitigation efforts,” the claim states. “The plaintiff has also suffered loss of business and business opportunity as a result of disruptions in the business relationships with customers as a result of disruption of product supply processes caused by the defendant’s breaches of contractual, tortious and fiduciary duties owed to the plaintiff.”

The allegations have not been tested or proven in court, and the defendant had not filed a response by press time.

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