It all began with a supposed anonymous fax to the National Marine Fishery Service (NMFS) on February 3, 1999. The mystery fax alleged that Honduran businessman David McNab had a shipment of “undersized (3 & 4oz) lobster tails” scheduled to arrive in Bayou La Batre, Alabama on February 5, 1999. The fax also said that the lobster should be packed in cardboard boxes, but was in fact packed in clear plastic bags.
Based on this strange, anonymous message, NMFS agents waited for McNab’s ship and captured it on arrival. With no explanation, the federal government held the entire ship for several weeks and then off-loaded and transported McNab’s 70,000 pounds of Caribbean spiny lobster to a government freezer in Florida. There the lobster tails languished for six months while NMFS agents searched Honduran regulations for some reason to keep the lobster meat and prosecute the importers and distributors.
After numerous phone calls, letters, and trips to Honduras, the NMFS focused on three provisions. The first details the processing and packaging of fish harvested in Honduran waters. This 1993 regulation, promulgated pursuant to a 1973 statute, included the mention of packaging in cardboard boxes. The second regulation prohibits harvesting any lobsters with tails shorter than 5.5 inches. This must have surprised the NMFS agents, since the market price lists published by NMFS include prices for two and three ounce Caribbean spiny lobsters from Honduras. A government expert acknowledged at trial that these little lobsters would all have tails shorter than 5.5 inches. The third Honduran provision prohibits destroying or harvesting “eggs, or the offspring of fish, chelonians or other aquatic species for profit.”
Six months after sending them to the cooler, NMFS agents finally began to inspect the locked-up lobster tails. Only about three percent of the lobster tails turned out to be less than 5.5 inches long. Just seven percent showed any evidence of having been egg-bearing lobsters. These small amounts belie the suggestion that McNab or his employees were intentionally harvesting young or egg-bearing lobsters. Nevertheless, prosecutors included these regulations as predicates for alleged violations of the Lacey Act.
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Government prosecutors, not satisfied even with 35 tons of lobster, filed criminal charges against McNab. The also charged three American businesspeople who frequently purchased and distributed lobster tails from McNab. All charges against McNab and most charges against the others were predicated on the three Honduran regulations, applied through the Lacey Act. No charges were ever brought against the defendants in Honduras. The alleged Lacey Act violations served primarily to trigger more serious charges.
If importing the lobster in bags instead of boxes was illegal, prosecutors reasoned, then planning to import it was criminal conspiracy, the actual importation was smuggling, and payments became felony money laundering.
At the District Court’s foreign law hearing,
McNab presented copious evidence showing that the Honduran regulations at issue were invalid. The size restriction had never been signed by the President of Honduras, an absolute requirement for such a regulation under Honduran law. The Attorney General of Honduras supplied an opinion, confirming other testimony, that because the size restriction was not signed it could never have had the force of law.
McNab presented other witnesses, including
a former Honduran Minister of Justice, who testified that the egg harvesting regulation was never intended to apply to animals that happened to bear eggs when caught. The prohibition against harvesting or destroying eggs for profit was meant to do just that, to prevent the harvesting of eggs themselves (turtle eggs in particular).
Government prosecutors somehow convinced the court to ignore McNab’s extensive evidence and
instead accept the testimony of a single, mid-level Honduran bureaucrat, Liliana Paz. For reasons that remain unexplained, the “Secretary-General” of the Honduran Ministry of Agriculture and Livestock – an official whose primary duty is to be “an instrument of communication” and who has no expertise or authority to render legal opinions – boldly testified that all the regulations were valid and had the force of law.
Despite the obvious lack of criminal intent on the part of the defendants, as well as concerns about the validity of the Honduran regulations, all four businesspeople were convicted on a general verdict.
In August 2001, McNab and two businessmen were each sentenced to eight years in prison. The fourth defendant, a businesswoman from New Jersey who resold seafood to restaurants like Red Lobster, was sentenced to two years in prison.
The government trumpeted the convictions in press releases that labeled McNab “the ringleader of a smuggling operation.” The reports mislead the public by suggesting that McNab was intentionally harvesting undersized and egg-bearing lobsters, never mentioning that these were a tiny portion of his catch. The government fails to note that the only reason for declaring the entire shipment illegal was that it was packed in bags, not boxes.
In effect, the defendants were convicted of smuggling because they packed lobster in clear plastic bags instead of opaque cardboard boxes.
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Several months after the end of the criminal trial, the Honduran Court formally held that the size limit was void and declared that it had never had the force of law.
McNab’s attorneys also discovered that the law authorizing the packaging regulations was repealed in 1995. Under Honduran law, a regulation is automatically repealed when the authorizing statute is repealed. Even the prosecution’s witness from the Honduran Ministry of Agriculture and Livestock admitted this in an affidavit.
It also became clear that the egg-harvesting provision had been repealed in a way that, under Honduran law, operated retroactively.
McNab additionally filed a motion before the Honduran National Human Rights Commissioner challenging Ms. Paz’s testimony about Honduran law. The National Human Rights Commissioner, Dr. Leo Valladares, is an internationally respected constitutional lawyer and human rights advocate. His office in Honduras is charged with addressing complaints that government officials’ actions constitute “legal error.” Dr. Valladares issued a report, which the Minister of Agriculture signed, stating that Ms. Paz’s testimony constituted “an error of law.”
The scholarly report found that the packaging regulation was repealed in 1995, the size restriction had “never had the force of law,” and that the egg-bearing provision had been retroactively repealed.
The government of Honduras, through its embassy, directed all of this information to the U.S. State Department, asking that they forward it directly to the Department of Justice.
The Attorney General of Honduras also filed an amicus curiae brief with the 11th Circuit, providing this information and explaining that McNab and the other businesspeople had not violated any Honduran law. All of this was ignored by the Court of Appeals when they concluded that “finality” was, apparently, more important than justice.
Regulations vs Employment
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Originally Posted by Gelatinous Cube
) and the fact that your oil comparison works is the problem. It implies that the product is a commodity that is similar enough across sources that the consumer cannot distinguish between those sources. If these businesses are producing a product and service mix that can be matched by a cart on the street then they are failing to justify their investment in the location. They should either differentiate their product to the point where it offers the consumer a value that the carts cannot match or drop the location and get a cart themselves. The brick and mortar locations and the carts should operate in symbiosis if they are both playing to their strengths. A storefront offers a merchant the opportunity to create a greater value for the consumer and thus charge a premium for that value. If they cannot create that value it is no one's fault but their own. Regulating away more efficient competing business models ultimately hurts consumers.
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