Chicken Exporter Accused of Dodging Taxes

(CN) – A Georgia poultry processor claims in a federal lawsuit that a Michigan chicken exporter used its labels to disguise broiler chicken as meat processed from old hens to avoid Canadian taxes.

Based in Marietta, Ga., Tip Top Poultry specializes in “spent fowl,” or hens whose egg-laying days are behind them. Broiler chickens are raised for meat consumption, while spent fowl hens are processed for meat after their egg productivity declines.

Tip Top sued Santemp Inc., which runs a cold storage and export facility in Detroit, on Tuesday in Detroit federal court.

According to Tip Top, Canada places a tariff quota on how much meat from broilers that can be imported. However, no such limit on spent fowl is in place.

“Santemp Group circumvented Canadian tariffs by placing Tip Top’s labels onto broiler meat and submitting paperwork to the USDA inspector and Canadian border control agency falsely stating that the package contains spent fowl originating from Tip Top’s processing plants when it did not,” Tip Top’s lawsuit states.

The poultry company noted that after an exporter reaches the Canadian quota for broiler meat, a “prohibitive” 238 percent tariff applies. Tip Top claims Santemp has been mislabeling poultry for years, producing absurd import statistics.

“In 2012 this mislabeling resulted in Canada being shown as having imported more ‘spent fowl’ breast meat from the United States than was actually produced in the entire United States,” the complaint states.

Three years later, Canada appeared to have imported 95.6 percent of the spent fowl from the United States, according to Tip Top.

“These numbers are impossible by legitimate means given United States’ domestic  consumption and the fact that legitimate spent fowl is exported to countries other than Canada,” the company claims.

The poultry producer says Canadian border officials alerted it in November 2015 to a pair of shipments, each containing 1,000 boxes of chicken that allegedly bore counterfeit labels.

Tip Top’s counsel sent a letter to Santemp a year later “protesting the Santemp Group’s past and future use of Tip Top’s name and information,” but the demand was rejected, according to the lawsuit.

Tip Top also says it would have to spend millions of dollars if poultry bearing its label is recalled.

The company asserts claims of false designation of origin, trade dress infringement, unfair competition, conspiracy and violation of the Michigan Consumer Protection Act. It is represented by Daniel Wirth of the Marietta-based law firm of Gregory, Doyle, Calhoun & Rogers LLC

In addition to Santemp, International Inspections LLC, Santemp Truck Brokerages Inc. and Metro Cold Storage Inc are also named as defendants.

Santemp Inc. did not respond Friday to an email request for comment.