U.S. ex.rel. Sanders v. North American Bus Industries, Inc. (Maryland U.S.D.C.)(not approved for publication)

Memorandum Opinion and Order dated January 3, 2007--Judge J. Frederick Motz (not approved for publication)

In an informal format (letter memo to counsel), the judge denied the plaintiff's motion for summary judgment, and granted in part and denied in part the defendant's motion of summary judgment.

Plaintiff's "Buy America" claims in count I were based upon the contention that defendant NABI's payments to NABI Hungary (its Hungary-based parent company) for Engineering and Technology ("E&T") services in sham contracts were designed to disguise the true purpose of those payment, which was to enable NABI to qualify for a federal subsidy and shift taxable income to the overseas parent company. The judge found there to be genuine issues of fact, and denied both parties' summary judgment motions as to count I, noting, however, that there was no evidence in the record that any other company would have provided the buses for less, nor that the buses were not delivered, so there could be no claim for actual damages, but only the penalties provided in the False Claim Act.

The gravamen of plaintiff's claims in counts II and III is that the defendant obtained a refund of customs duties and avoided further customs duties by falsely stating that certain component parts were permanently installed on the frames of the buses being imported from Hungary, thus qualifying them as "unfinished buses" rather than "bus shells," to which a 4% customs duty would apply. The judge found the alleged misstatements to be immaterial, since the classification did not depend on installation of the component parts, only that the component parts were supplied with the rest, which was undisputed.

Finally, in count IV, the plaintiff claimed that by declaring only the contract price and not the allegedly fictitious cost for E&T services, NABI had underpaid custom duties. Since as above the unfinished buses were not subject to custom duty, the judge indicated the likely merits of the defendant's motion, but since the defendant had not responded to NABI's claim that duty-free treatment only applied to bus shells imported after April 12, 1997, the judge dismissed the defendant's summary judgment motion, with leave to file another summary judgment motion as to the count.

The judge had also dismissed the United States' request for a delay on the judge's ruling, to allow it to reconsider its earlier decision not to intervene, since the case had been pending since 2002, the United States had twice been invited to intervene and had twice declined, and it had received copies of all the electronic filings in the case. In the judge's words, "Under these circumstances, the time has come for this court to rule without hearing from the United States."

The full opinion is available in PDF, as is the order.