Source: https://caselaw.findlaw.com/us-9th-circuit/1371899.html
Timestamp: 2019-08-19 13:17:50
Document Index: 210690545

Matched Legal Cases: ['§\u20021631', '§\u20021631', '§\u20023729', '§\u20023729', '§\u20021582', '§\u20021631', '§\u20023732', '§\u20023732', '§\u2002256', '§\u20023732', '§\u20021391', '§\u20023732']

Before REINHARDT, O'SCANNLAIN, and FISHER, Circuit Judges. Gina McCoy,Horvitz & Levy LLP, Encino, CA, argued the cause for the appellants and filed briefs. Mitchell C. Tilner also was on the briefs. Douglas Hallward-Driemeier, an attorney on the appellate staff of the Civil Division, United States Department of Justice, Washington, DC, argued the cause for the appellee and filed a brief. Robert D. McCallum, Assistant Attorney General, Debra W. Yang, United States Attorney, and Douglas N. Letter, also were on the brief.
The government's “motion to direct transfer pursuant to 28 U.S.C. § 1631 or, in the alternative, petition for panel rehearing” is GRANTED.
Accordingly, the opinion filed March 17, 2004 is amended as follows:
Slip. op. at 3320 n. 13: At the very beginning of this footnote, insert the following language:
“While the question of its jurisdiction to entertain FCA cases is of course for the Court of International Trade (and, in due course, the Federal Circuit) to resolve,”
Slip. op. at 3321: Prior to the signal for footnote 14, insert the following language:
“Because the CIT ‘may be able to hear th[is] case,’ ” Sessler v. United States, 7 F.3d 1449, 1452 (9th Cir.1993), “the prudent thing to do is to direct the district court to transfer the case to the CIT so that the CIT can determine the question of its own jurisdiction.” Pentax Corp. v. Myhra, 72 F.3d 708, 711 (9th Cir.1995).”
Slip. op. at 3321: Following the word “REVERSED,” insert the following language:
“and REMANDED to the district court with instructions to transfer this case to the CIT pursuant to 28 U.S.C. § 1631.”
More than five years later,4 on November 2, 2000, the government filed suit against Universal, alleging that, on four separate occasions, Universal had filed false customs documents indicating that South Korea, rather than China, was the origin of the garlic it was importing. Universal's actions, the government alleged, violated the so-called “reverse false claims” provision of the False Claims Act (“FCA”), which makes it illegal to “make [ ], use[ ], or cause[ ] to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the government.” 31 U.S.C. § 3729(a)(7). As provided for under the FCA, the government sought “a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the government sustain [ed]” as a result of the false claim. 31 U.S.C. § 3729(a). The total value of the four shipments, as declared by Universal, was $170,993. Applying the 376.67 percent antidumping duty to that declared value resulted in actual damages of $644,079, which, when trebled, totaled $1,932,237. On top of that, the government added four civil penalties of $5,000 for each of the false customs declarations and a fifth such penalty for David Pai's alleged false statement to a customs agent. In total, the government sought $1,952,237 in damages from Jason Pai, and $1,957,237 from David Pai and Universal.
it is well-established that § 1582(a) means what it says: the jurisdiction of the Customs Court 6 is exclusive. Even when other, broadly-worded statutes seem to confer concurrent jurisdiction on the district courts, the exclusivity of Customs Court jurisdiction reflects a policy of paramount importance which overrides the literal effect of [other statutes].
The government counters that its FCA claim “is not a suit to collect duties that defendants owe based upon the importation of goods. Rather it is [a] suit to recover damages and statutory penalties based upon defendants' fraud as provided in the False Claims Act․” Appellee's Br. at 17. Responding to Universal's charge that the distinction between FCA damages and customs duties is illusory, the government notes that this court has distinguished between “underlying fraudulent activity”-which does not trigger FCA liability-and “the [false] claim for payment,” which does. United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996); see also United States ex rel. Sutton v. Double Day Office Services, Inc., 121 F.3d 531, 534 (9th Cir.1997) ( “Double Day's failure to pay Sutton prevailing wages was a violation of the [Service Contract Act]; however, it was not a violation of the FCA. Double Day violated the FCA when it submitted a claim for payment to the United States falsely stating that it had complied with the FCA. The FCA attaches liability to the claim for payment, not to the underlying activity.”).
[3] The second problem with the government's reliance on Blum is the reality of what it seeks in the instant case. Even accepting the government's characterization of its FCA claim against Universal as one for “damages,” the fact remains that, should it prevail in its action, at least part of the government's damages will be “customs duties,” namely the antidumping tariffs it claims Universal fraudulently evaded.12 Allowing the government to alter this reality by incorporating “customs duties” into “damages” runs counter to the principle that a party “may not, by creatively framing [its] complaint, circumvent a congressional grant of jurisdiction ․ A [c]ongressional grant of exclusive jurisdiction cannot be so easily circumvented.” Heller, Ehrman, White & MacAuliffe v. Babbitt, 992 F.2d 360, 363-64 (D.C.Cir.1993) (internal quotation marks omitted, second alteration in original). Furthermore, if the government could bring an FCA claim in district court whenever a party fraudulently withholds customs duties, then the exclusive jurisdiction over actions to recover customs duties in all such instances would become a virtual nullity: The government could simply recast the withheld duties as damages and proceed in district court under the FCA.13
Because our precedent requires courts faced with “conflicts between the broad grants of jurisdiction to the district courts and the grant of exclusive jurisdiction to the [Court of International Trade]” to resolve those conflicts “by upholding the exclusivity of the [Court of International Trade's] jurisdiction,” Cornet Stores, 632 F.2d at 98, we must conclude that the district court in this case lacked subject matter jurisdiction. Because the CIT “may be able to hear th[is] case,” Sessler v. United States, 7 F.3d 1449, 1452 (9th Cir.1993), “the prudent thing to do is to direct the district court to transfer the case to the CIT so that the CIT can determine the question of its own jurisdiction.” Pentax Corp. v. Myhra, 72 F.3d 708, 711 (9th Cir.1995).14
REVERSED and REMANDED to the district court with instructions to transfer this case to the CIT pursuant to 28 U.S.C. § 1631.
13. While the question of its jurisdiction to entertain FCA cases is of course for the Court of International Trade (and, in due course, the Federal Circuit) to resolve, we do not believe that our decision today operates effectively to preclude the government from employing the reverse false claims provision of the FCA in seeking to recover fraudulently evaded customs duties. Although the Federal Circuit has suggested that the district courts have exclusive jurisdiction over FCA suits initiated by qui tam relators, LeBlanc v. United States, 50 F.3d 1025, 1031 (Fed.Cir.1995), we see little reason to believe that the CIT would extend that limited holding to bar its own jurisdiction to entertain reverse false claims actions brought by the government to recover customs duties. As the Second Circuit quite persuasively has explained, 31 U.S.C. § 3732(a) merely delineates proper venue for FCA actions, not jurisdiction over such claims. United States ex rel. Thistlethwaite v. Dowty Woodville Polymer, 110 F.3d 861, 865 (2d Cir.1997); see also Shekoyan v. Sibley Int'l Corp., 217 F.Supp.2d 59, 73 n. 15 (D.D.C.2002); United States ex rel. McCarthy v. Straub Clinic & Hosp., 140 F.Supp.2d 1062, 1071 (D.Haw.2001). To the Second Circuit's analysis, we add the observation that, far from supplanting the CIT's ability to hear FCA actions, § 3732 complements it. For, while the CIT's venue already is effectively universal, see 28 U.S.C. § 256, the number of district court venues in which FCA suits could be brought would be quite limited in the absence of § 3732. Cf. 28 U.S.C. § 1391(b). In a sense, then, § 3732 simply brings venue in the district courts into line with the generous venue options already made available to the CIT-but does not somehow operate to bar the CIT from exercising its jurisdiction over appropriate FCA actions. To its credit, the CIT has tentatively signaled agreement with this view. See United States ex rel. Felton v. Allflex USA, Inc., 989 F.Supp. 259, 21 C.I.T. 1344, 1347 (1997) (identifying LeBlanc's language as-at best-an “alternative holding,” suggesting that it may be dicta, noting that the case arose in the qui tam context, and highlighting the “appeal” of the Second Circuit's understanding of the relevant statutory provision).