Victaulic ordered to pay $1.1M to attorneys in customs lawsuit

FORKS TOWNSHIP — Forks Township-based Victaulic Co. has been ordered to pay $1.1 million in fees and expenses to lawyers who claimed the manufacturer evaded tariffs on imported pipe fittings.

U.S. District Judge Mark A. Kearney on Monday granted a request by attorneys for Customs Fraud Investigations to be paid for their work on the lawsuit, which Victaulic agreed to settle in May for $600,000.

The award is about half the $2 million in fees and expenses the three law firms that worked on the case for Customs Fraud Investigations claimed they were entitled to.

Victaulic did not admit any wrongdoing. Spokeswoman Megan Longenderfer said the company is disappointed that it was forced to spend millions defending itself in a case that proved it had paid all applicable taxes. She added that Victaulic has done its best to follow a process for marking its imported goods with the country of origin, although she acknowledged one instance of improper markings after a 2010 accident at Victaulic’s Alburtis facility.

“We find it outrageous that the court awarded attorney’s fees and Victaulic is investigating grounds for reconsideration and appeal accordingly,” Longenderfer said.

Attorney Anna Haac said Customs Fraud Investigations was pleased that the court recognized her team’s efforts in the case. She said it was an important victory for consumers and the government, which receives a substantial amount of revenue from duties on imported goods.

Customs Fraud Investigations of Takoma Park, Maryland, filed the lawsuit in 2013, alleging that Victaulic avoided tariffs on millions of pounds of pipe fittings produced in China, Poland and Canada. Victaulic should have paid the tariffs because the fittings were not properly marked with their country of origin.

It filed the suit under the federal False Claims Act, which allows private citizens who uncover fraud against the government to sue for damages on its behalf and share up to 29 percent of the money recovered. The Justice Department awarded Customs Fraud Investigations $174,000 of the settlement, with the rest going to the federal government.

The lawsuit estimated a total of $1.76 billion in damages for the government, including unpaid tariffs, penalties and liability for ongoing conduct by Victaulic, Kearney’s opinion says.

Kearney rejected Victaulic’s arguments that attorney fees should be denied or reduced to reflect that the settlement was a fraction of the original demand.

Morning Call reporter Peter Hall can be reached at 610-820-6581; peter.hall @mcall.com.