United States v. Amazon Inc

Background

Mike D. Henig and Henig Furs, Inc. sued Amazon.com, Inc. and Amazon.com Services, LLC under the False Claims Act. The United States declined to intervene. The relators alleged that foreign manufacturers and distributors imported fur products into the United States using false customs declarations, including incorrect product descriptions and understated values. They claimed that this conduct avoided Fish and Wildlife Service inspection fees and customs tariffs and that Amazon knowingly participated by receiving, storing, marketing, selling, and delivering the fur products.

The complaint alleged that Amazon’s business agreements and website identified the foreign sellers as the importers of record and made them responsible for required customs filings and payments. It also alleged that Amazon received and sold fur products despite information in invoices, packing slips, and customer communications that allegedly showed the products were fur and had entered through non-designated ports. Amazon moved to dismiss under Rules 12(b)(6), 8(a), and 9(b), arguing that the complaint did not adequately plead a False Claims Act violation or a conspiracy.

Reverse False Claims

The court analyzed the relators’ claim under 31 U.S.C. § 3729(a)(1)(G), which addresses knowingly using or causing a false record or statement that reduces an obligation to pay the government. The court explained that the complaint had to plausibly allege Amazon’s knowledge, causation, and an obligation to pay.

The court held that the alleged generalized profit motive and Amazon’s decision to accept and sell the products did not create a strong inference that Amazon actually knew the customs information was false. The court also rejected the deliberate-ignorance theory because the complaint did not specifically allege that Amazon was aware of a substantial risk that the foreign sellers had made false statements or that Amazon had a duty to investigate them.

The court further held that the allegations did not establish reckless disregard. The absence of a physical inspection form from packages arriving at Amazon warehouses did not show that the form had not been filed, because it could be filed electronically and did not necessarily have to accompany the shipment after customs clearance. Although some imports allegedly entered through non-designated ports, the court concluded that, even assuming the complaint’s allegations were true, they did not strongly infer that Amazon knew of false claims. The allegations about Amazon’s monitoring of communications also did not identify specific information that should have prompted an investigation.

The court separately found causation insufficient. The complaint did not plausibly allege that Amazon took specific steps to circumvent customs requirements, hide the foreign sellers’ conduct, or cause the false claims to be submitted. The court rejected the argument that Amazon knowingly passed along false information, finding that the complaint alleged the information was first presented by the foreign sellers to government agencies.

The court rejected Amazon’s argument that it had no obligation to pay merely because the foreign sellers were designated as importers of record. It stated that a non-importer of record could still be liable if it caused false records to be presented to the government. But because the complaint did not adequately allege knowledge or causation, the court granted Amazon’s motion to dismiss the reverse false claims.

Conspiracy Claim

The court also considered the claim that Amazon conspired with the foreign sellers to commit reverse false claims. Such a claim required allegations of an agreement to violate the False Claims Act and at least one overt act in furtherance of that agreement.

The court held that the alleged ongoing business relationship and potential mutual financial benefit did not plausibly show an agreement to defraud the government. The alleged overt acts—such as advertising and selling the products, processing payments, handling communications, and processing returns—were essentially the same conduct alleged as the basis for the reverse false claims. The court therefore found that the conspiracy claim was duplicative and not adequately pleaded.

Disposition

Judge Ramos granted Amazon’s motion to dismiss the reverse false claims and granted Amazon’s motion to dismiss the conspiracy-to-commit-reverse-false-claims claim. The conclusion states that Amazon’s motion to dismiss was granted and directs the Clerk of Court to terminate the listed motions. The opinion does not specify whether the dismissal was with or without prejudice.