Matson Inc. has finalized a proposed legal settlement with the U.S. Department of Justice and a whistleblower over fuel surcharge reimbursements that will cost the Hawaii-based ocean cargo transportation company $10 million.
The company announced Tuesday that it signed a settlement agreement Thursday to resolve a lawsuit filed in California by Mario Rizzo on behalf of the federal government.
Rizzo contended that Matson misapplied fuel surcharges on military household goods shipments between Hawaii or Guam and the mainland that were ultimately paid for by the Department of Defense.
Matson said in February that it planned to settle the lawsuit and reserved $10 million from its fourth-quarter earnings for the expense. At that time the settlement, which was proposed through nonbinding mediation, still needed federal government approval.
Under terms of the settlement, Matson will pay the government $9 million, of which Rizzo will receive about $2.6 million. Matson also will pay Rizzo $950,000 for legal expenses.
Matson said in a statement that the settlement agreement has no bearing on the merit of Rizzo’s allegations.
"This agreement is neither an admission of liability by Matson nor a concession by the United States or (Rizzo) that their claims are not well-founded," the company said.
Rizzo, who according to shipping industry publication TradeWinds is a freight-forwarding industry consultant, filed his lawsuit in 2010 in U.S. District Court in California against Horizon Lines LLC and added Matson as a defendant in 2012.
Horizon said in its most recent financial report filed in May that it intends to vigorously defend itself against the suit.
Specifically, Rizzo alleged that Matson and Horizon combined fuel surcharges for ship and rail transportation on bills to freight forwarders contracted to move household goods for military personnel. The federal government, however, prohibits rail fuel surcharges on military household goods shipments to the mainland from Hawaii and Guam.
