American Samoa, StarKist Owner At Center Of Two Fed Cases

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At issue, Delaware fraud and Guam liability cases

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, July 30, 2014) – A federal judge has ordered the U.S. government to file a detailed response to a move by two companies allegedly affiliated with Dongwon Industries — owner of StartKist Co., and StarKist Samoa Inc. — to dismiss a lawsuit pending at the federal court in Wilmington, Delaware. On the other hand, a federal judge in Guam has ruled that Dongwon’s representatives knew that a fishing vessel, which was contracted to supply the crew and maintenance, was unseaworthy before it sank off the waters of Guam in 2010 — killing the captain and an officer. According to the federal judge, Dongwon sold the vessel — Majestic Blue — for $10 to Majestic Blue Fisheries LLC.

Guam Case

In the Guam case, it was early this year that Majestic Blue Fisheries LLC petitioned the court for exoneration and limitation of liability, by seeking to limit its liability under federal law for "all damages occasioned" by the sinking of its vessel the Majestic Blue in 2010. Petitioner alleged that the total value of its interest in the Majestic Blue did not exceed $33,500, according to court documents. (The owner's petition of exoneration and limitation of liability is the result of a wrongful lawsuit pending in the Guam court against the company by the wife of the vessel’s captain, who died when the boat sank.) Information in the court’s decision states that Dongwon acquired Majestic Blue fishing vessel in 1979 — seven years after it was built in Spain and was at the time apparently called ‘Costa de Marfil’. Then in 2008, the vessel — which was registered in South Korea — was sold for $10 in April 2008 to Majestic Blue LLC. In his decision issued last Friday after reviewing all filings and other pertinent information in the case, U.S. Magistrate Judge Joaquin V.E. Manibusan Jr., said the court finds that the Majestic Blue vessel "was not seaworthy when it sailed from Guam on her final voyage" in May 2010; that all unseaworthy conditions were constructively and actually known to the Petitioner and, therefore, the Petitioner is not eligible to limit its liability under the federal Limitations Act. Additionally, the petitioner knew specifically of the unseaworthy conditions manifesting itself at the rudder stock with an excessive and constant leak; knew of the incompetency of the crew which lacked training, experience, a common language, communication skills, and basic emergency skills, and knew that the Captain it provided the Majestic Blue was a mere figurehead — a ship master with no real authority. According to the decision, Petitioner had contracted Dongwon in 2008 to arrange and supervise dry docking and repairs, maintain the vessel and supply crew to man the vessel. While the decision by Manibusan does not apply directly to Dongwon, an official with Moore & Co., says this counts as a huge victory from the findings it brings forth, which will be applied to the wrongful death case — against Dongwon and Majestic Blue — when it goes to trial, according to Undercurrent News, an industry online news provider.

Delaware Case

The Delaware lawsuit was filed in November 2012 by Moore & Company, a Florida based law firm and included the U.S. government, as plaintiff. Defendants include South Korean based Dongwon, Majestic Blue Fisheries LLC, Pacific Breeze Fisheries LLC, Jayne Songmi Kim and her sister Joyce Jungmi Kim and their father Jaewoong Kim. Plaintiff claims, that among other things, the suit arises from false and fraudulent statements made by defendants to the government for the purpose of obtaining U.S. vessel documentation and tuna fishing licenses for two Korean owned and operated purse seiner tuna fishing vessels. The vessels, owned by the Kim sisters, both Korean born who later became naturalized U.S. citizens, are registered in Delaware as limited liability corporations (LLC). The vessels — MV Majestic Blue and MV Pacific Breeze — operate out of Guam. Dongwon has denied in court documents that it owns the two vessels, but plaintiffs disagree and allege in court documents that Dongwon had divested ownership through fake sales of the vessels to the Kim sisters in order to obtain fishing licenses, which are only available to U.S fishing vessels. Plaintiffs allege the defendants "set up sham ownership structures using U.S. citizen straw-people, and fraudulently certified the vessels would be controlled by U.S. citizens." This fraudulent certification allowed defendants to obtain U.S. certificates, according to plaintiffs, and these certificates allowed them to obtain fishing licenses under the South Pacific Tuna Treaty (SPTT). However, the defendants assert the lawsuit does not even profess to have any firsthand inside information of fraud, but instead filed the suit based upon publicly available information and allegations and therefore the complaint should be dismissed under federal public disclosure law. Defendants also argue that the court lacks jurisdiction over the subject matter and that the plaintiff has failed to state a claim. Since Mar. 31, the defendants have had a motion pending for the court to schedule a date to hear oral arguments, because all required motions in the case have been filed. It appears from court documents that the court is awaiting the U.S. government to file a response to the defendants’ motion to dismiss the case. Last Thursday, U.S. District Court Judge Sue L. Robinson issued a one-page order saying that the federal government in May last year stated that if the relator — referring to Moore & Company — or the defendants proposed this case be dismissed, settled, or discontinued, the government first wants to provide a written consent before a final decision is made. Robinson ordered the government to file a written consent and other pertinent information by Aug. 25 so that the court may rule on the dismissal motion. Further, the government may also notify the court of its position on this case. In its motion filed earlier this year, the government says it reserves the right to order any deposition transcripts, to intervene in this action, for good cause, at a later date, and to seek the dismissal of the Moore & Company’s action or claim. As of yesterday, the government had yet to respond to Robinson’s order.

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