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Three U.S. beekeeping companies have filed a class action against two honey producers, alleging they illegally imported and mislabeled honey into the United States from China to avoid paying antidumping duties.

The suit, filed on April 18 in federal court in the Northern District of Illinois on behalf of a class of domestic beekeepers, alleges that the honey producers have suppressed the domestic price of honey, causing lost profits and duties to which they are entitled.

"Our clients are extremely upset and have been complaining about these issues for many years," said James Pizzirusso of Hausfeld, who filed the suit along with Adam Levitt, of Grant & Eisenhofer in Chicago; Kenneth Bell of Clark, Partington, Hart, Larry, Bond & Stackhouse in Pensacola, Fla.; Stephen Echsner of Aylstock, Witkin, Kreis & Overholtz, also in Pensacola; and Daniel Gustafson, of Gustafson Gluek PLLC in Minneapolis. "We’re seeking lost profit, lost business opportunities, as well as the money that would have been paid to our clients through the collection of these duties by the United States."

The suit asserts false advertising and unfair competition claims under the U.S. Lanham Act and violations of the U.S. Racketeer Influenced and Corrupt Organizations Act.

Defendants Groeb Farms Inc. and Honey Holdings I Ltd., which does business as Honey Solutions, reached deferred prosecution agreements with the U.S. Department of Justice in February to resolve investigations into transshipped honey.

"It’s an interesting case where we’ve got essentially guilty pleas from defendants who have admitted the essential facts of what we’re alleging—they were fraudulently transshipping Chinese honey to the U.S. through other countries," Pizzirusso said. "It has hurt our clients in many ways."

Representatives of Groeb Farms, based in Onsted, Mich., and Honey Solutions, in Baytown, Texas, did not return calls for comment. The suit also names Horizon Partners Ltd., based in Naples, Fla., an investment holding company that bought Groeb in 2007.

According to the suit, the U.S. International Trade Commission in November voted to keep in place existing antidumping duties on Chinese imports to protect the domestic honey industry. The class action follows numerous criminal investigations in which the U.S. government found rampant transshipping and illegal dumping of Chinese honey into the U.S. market. Most of the imports were disguised and mislabeled to suggest they came from third countries, including India and Malaysia. In addition to being cheaper, Chinese honey typically has been altered from its pure form to include inexpensive sweeteners and high fructose corn syrup, the plaintiffs alleged.

Federal prosecutors charged Groeb and Honey Solutions for illegally transshipping honey toavoid more than $180 million in antidumping duties.

As part of its deferred prosecution agreement announced on February 20, Groeb Farms accepted responsibility for its conduct and that of two former executives who, from 2008 to 2012, illegally imported more than 1,500 container loads of Chinese honey, which it fraudulently mislabeled. It agreed to pay a $2 million fine andcooperate for two years. Its actions cost the government $78.8 million, according to the suit.

"We take full responsibility for and deeply regret any errors that were made in the past regarding the import of honey," said Rolf Richter, the chief executive officer of Groeb Farms, at the time of the deferred prosecution agreement.

As part of its deferred prosecution agreement announced on February 21, Honey Solutions admitted to illegally purchasing one container of Polish honey in 2006 that contained a banned antibiotic. It also admitted to having received transshipped Chinese honey from 2008 to 2010 but attributed that to a broker with which it no longer works. It agreed to pay a $1 million fine and cooperate for two years. The suit claims its actions cost the government more than $33.4 million in antidumping duties.

Plaintiffs Adee Honey Farms in South Dakota, Bill Rhodes Honey Co. LLC in Florida and Hackenberg Apiaries of Pennsylvania filed the suit on behalf of beekeepers with 300 more hives that produced and sold honey in the United States as of 2001.

Contact Amanda Bronstad at [email protected].

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