United States v. Universal Fruits & Vegetables (9th Cir. 2004) 362 F.3d 551

The United States brought suit in federal district court against Universal Fruits & Vegetables for violations of the “reverse false claims” provision of the False Claims Act. The “reverse false claims” provision prohibits making or using a false record or statement to conceal or avoid an obligation to pay money to the government. Damages available under the “reverse false claims” provision are “3 times the amount of damages which the government sustained.” According to the United States, Universal had schemed to avoid paying antidumping duties of more than 300 percent on Chinese garlic by transshipping the garlic through South Korea. The district court granted summary judgment for the United States and awarded damages of almost $2 million.

Horvitz & Levy LLP represented Universal on appeal and persuaded the Ninth Circuit to reverse the judgment on jurisdictional grounds. We argued the case was governed by 28 U.S.C. § 1582, which confers upon the Court of International Trade “exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United States . . . to recover customs duties.” The court agreed, rejecting the United States’ contention that the action was for fraud and not related to customs duties. The court agreed with our point that the government’s case was a quintessential customs duties case because the damages awarded to the government were calculated based on the amount of antidumping duties Universal allegedly owed.

The court reversed the judgment and remanded with directions that the district court transfer the matter to the Court of International Trade, to allow that court to resolve the question of its own jurisdiction.

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