District Court to Consider Whether Broker's Liability Limits Apply to Importer's Lawsuit

An importer’s lawsuit against its customs broker for the broker’s alleged failure to stay on top of issues related to some FDA-regulated entries will continue, after a judge of the Western Washington U.S. District Court declined to halt the discovery process in the case. The broker says its terms and conditions cut its liability to a mere $200, but the judge said the importer’s arguments that those liability limits are invalid could be bolstered by more evidence.

Normally an apparel importer, JAS Supply began importing alcohol wipes during the COVID-19 pandemic. It engaged Reliant as its broker. In its initial complaint, filed in July, JAS Supply said Reliant failed to adequately address or inform it of FDA’s detention of four entries because the manufacturer had not registered with the agency.

JAS Supply found out about the issue three months later, when FDA refused admission and ordered the shipments redelivered to port for exportation or destruction. Though Reliant had provided documentation to FDA to resolve a similar issue on a previous entry, by this point the period to appeal the agency’s import refusal had passed, JAS Supply said. The importer says the alleged mistake cost it over $700,000 over the four entries.

Radiant Customs moved in August for a quick victory in the case, citing the clause in its terms and conditions. But JAS Supply argues the clause is invalid. Among other things, the importer argues the terms and conditions in the power of attorney exempt issues related to customs brokerage, though they do set liability limits related to “customs business.” They should be ignored as “unconscionable” under Washington state law because they are so one-sided, given the over $700,000 loss it suffered as a result of Radiant’s actions.

Immediately before the court was Radiant Customs’ motion to stop discovery in the case so the judge could quickly put the matter to rest by affirming the liability limitations. The District Court refused the stay. “The Court finds that Defendants have failed to demonstrate good cause to stay discovery. The Court is not convinced JAS will be unable to obtain facts through discovery to support its apparent claims,” the court said.