United States v. Amazon Inc
1:19-cv-05673
S.D.N.Y.Nov 12, 2024Background
- Plaintiffs, private relators, filed a False Claims Act (FCA) suit against Amazon.com, Inc. and its affiliates, alleging liability for false customs-related statements made by third-party sellers on the Amazon.com platform.
- The United States declined to intervene in the case in October 2023, and plaintiffs subsequently twice amended their complaint, now focusing claims solely on Amazon, with third-party sellers no longer defendants.
- Plaintiffs allege Amazon is responsible for third-party sellers' customs fraud, despite Amazon's role beginning after importation.
- Amazon moved to dismiss, arguing that plaintiffs failed to plead FCA fraud with particularity, did not allege plausible causation, scienter, or a conspiracy, and did not link any direct government obligation to Amazon.
- While Amazon’s motion to dismiss is pending, plaintiffs served broad discovery requests; Amazon seeks a stay of discovery until the motion is resolved, citing undue burden, lack of prejudice, and a strong motion to dismiss.
- The court scheduled a telephonic pre-motion conference and ordered plaintiffs to respond.
Issues
| Issue | Plaintiff’s Argument | Defendant’s (Amazon) Argument | Held |
|---|---|---|---|
| Whether Amazon caused false customs statements | Amazon responsible since platform enabled/facilitated third-party | Amazon had no control/direction over third-party sellers’ actions | Pending |
| Sufficiency of fraud pleadings under Rule 9(b) | Relators have pled enough circumstantial facts and inferences | Allegations are speculative and lack necessary particularity | Pending |
| Amazon’s scienter for FCA purposes | Amazon knew/should have known of risk of false submissions | No facts pled to show actual knowledge, reckless disregard, or intent | Pending |
| Conspiracy to violate the FCA | Amazon was part of a conspiracy with third-party sellers | Plaintiffs fail to allege any agreement or overt act by Amazon | Pending |
| Appropriateness of stay of discovery | Discovery needed to develop case and facts | Stay warranted due to breadth/burden, no plaintiff prejudice, strong MTD | Pending |
Key Cases Cited
- Hong Leong Finance Ltd. (Singapore) v. Pinnacle Performance Ltd., 297 F.R.D. 69 (S.D.N.Y. 2013) (Sets out the standard for when a court may stay discovery pending resolution of a dispositive motion)
- Wood ex rel. U.S. v. Applied Rsch. Assocs., [citation="328 F. App'x 744"] (2d Cir. 2009) (Cites Rule 9(b)'s purpose of limiting pretextual litigation fishing for unknown wrongs)
- Amazon Servs. LLC v. U.S. Dep’t of Agric., 109 F.4th 573 (D.C. Cir. 2024) (Rejects attenuated FCA theories against Amazon for third-party actions)