Newsmakers Jan. 24-Feb. 6: Otterbox moves to settle suit

Otter Products LLC, the company that makes OtterBox smartphone and tablet cases, paid $4.3 million to the U.S. government to settle allegations that the company violated federal law by underpaying customs duties, the U.S. Attorney’s Office for the District of Colorado said in April.

The settlement stemmed from a whistleblower lawsuit filed in U.S. District Court in Denver by former OtterBox supply chain director Bonnie Jimenez in 2011. Jimenez, of Brighton, was to receive $830,000 in the settlement negotiated by Assistant U.S. Attorney Amanda Rocque.

Whistleblowers with knowledge of fraud against the U.S. can present those allegations to the government. If an investigation confirms those claims, the whistleblower shares in a settlement.

SPONSORED CONTENT

How dispatchable resources enable the clean energy transition

Platte River must prepare for the retirement of 431 megawatts (MW) of dispatchable, coal-fired generation by the end of the decade and address more frequent extreme weather events that can bring dark calms (periods when there is no sun or wind).

Between 2006 and 2011, privately held OtterBox made many of its products in China, and then imported those products for distribution and retail sale. OtterBox was responsible for the submission of entry documents to U.S. Customs and for the payment of any customs duties owed on those imported products.

OtterBox, however, knowingly omitted a portion of the value of OtterBox cases on imported product documents and made false statements in other documents submitted to Customs and Border Protection, federal authorities alleged. As a result of OtterBox’s omissions and false statements, OtterBox knowingly underpaid customs duties it owed and violated the False Claims Act.

OtterBox, which saw rapid global growth during the period, denied that it knowingly underpaid customs duties and noted that the company settled the case without admitting liability. The company corrected payment discrepancies, enhanced its internal controls and paid all duties that it owed, former CEO Brian Thomas said at the time.

UPDATE

U.S. District Judge Raymond Moore dismissed the lawsuit April 28. OtterBox announced in November that Thomas left the company and that chief operating officer Peter Lindgren had succeeded him as CEO.

Meanwhile, OtterBox is embroiled in another lawsuit. California-based consumer products company Belkin International Inc. is suing OtterBox in U.S. District Court in California, seeking damages of $10 million. The suit alleges that OtterBox, which purchased competitor LifeProof in 2013, has been violating an agreement that had granted Belkin exclusive rights to distribute LifeProof cases in Europe, the Middle East and Africa.

The lawsuit comes amid reports that OtterBox is exploring a sale of the company. In August, Reuters reported that OtterBox is exploring a sale valuing the company at more than $2.5 billion. Citing anonymous sources, the report stated that OtterBox has hired investment bank Goldman Sachs Group Inc. to manage the process.