A federal judge has dismissed a 2021 lawsuit against Cooke Inc. that claimed it violated U.S. law when it acquired Omega Protein in 2017.
The lawsuit, filed by relators W. Benson Chiles and Chris Manthey on behalf of the U.S. government, was first unsealed in May 2024 after the U.S. Department of Justice declined to intervene. In the lawsuit, considered a “qui tam” action where a private citizen files on behalf of the U.S. government, Chiles and Manthey are considered “relators,” or private individuals who bring forth a lawsuit, while the U.S. government is the plaintiff.
The initial complaint claimed that Cooke was committing “figurehead fraud” by controlling a fleet of fishing vessels based in the U.S. – which would violate U.S. foreign ownership rules and constitute a violation of the False Claims Act (FCA).
If the acquisition succeeded, the Blacks Harbour, New Brunswick, Canada-based firm could have been liable for as much as $2 billion in fines.
Under qui tam action, the two relators would be entitled to a portion of the reward.
The relators named an array of companies in the lawsuit, including Omega Protein; Alpha VesselCo Holdings, which is also known as Ocean Fleet Services; Ocean Harvesters; and Cooke Inc., claiming each had a role in deceiving the U.S. Maritime Administration (MARAD) and concealing Cooke’s control of the U.S. fishing fleet.
According to the original compliant, the relators claimed that after Cooke realized its purchase of Omega Protein would violate the American Fisheries Act of 1998 (AFA) – the law that made foreign ownership of fishing fleets illegal – the company came up with a figurehead scheme to violate the AFA citizenship requirements and defraud the U.S.
“Defendants ... concealed from MARAD multiple close connections between Cooke and the vessels’ nominal owner, including that he is a long-time Cooke employee and the Cooke CEO’s nephew,” the lawsuit said.
Now, a federal judge has dismissed the lawsuit entirely after agreeing with Cooke’s claim that neither fishing licenses nor fish quality as “property” under the FCA.
"Cooke Inc. is pleased that the court has dismissed this baseless lawsuit, which we have always maintained was without merit," Cooke Inc. said in a statement. "For over a decade, the individuals behind this lawsuit have repeatedly targeted menhaden harvesters and processors to undermine a sustainable and essential sector of the fishing industry. Fortunately, the court’s sound legal reasoning prevailed over special interest activism."
Read more at Seafood Source. This article was published with permission.
