Exporter Tells 9th Circuit the Tariff Act, Not FCA, Has Sole Means to Recover Evaded AD Duties
The Tariff Act's customs penalty statute, and not the False Claims Act, governs customs penalties for fraud, gross negligence and negligence, and is the exclusive means to recover liquidated antidumping duties, appellant Sigma told the U.S. Court of Appealsfor the 9th Circuit in a June 12 brief. Responding to the court's order for supplemental briefing on the two laws, Sigma said 19 U.S.C. 1592 is more specific than the False Claims Act and has a "detailed and comprehensive legal regime," including specific provisions addressing customs fraud (Island Industries v. Sigma, 9th Cir. # 22-55063).
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Sigma said Congress in Title 19 intended for customs-related penalties to apply uniformly across "all Customs districts," and the law grants exclusive jurisdiction to the Court of International Trade for civil actions on customs duties. Congress also meant for liquidation to be a "critically important event," being final and conclusive, save for express exceptions, which exist under Section 1592, the brief said. The district court in the case under appeal committed a "fundamental error" when it questioned whether the regulations on liquidation limit the FCA and disparaged liquidation as a "mere 'regulatory scheme' that cannot 'limit a statute that Congress passed,'" Sigma argued.
"The district court ignored that it was Congress itself that decided liquidation was 'final and conclusive upon all persons (including the United States…),' barring an applicable express exception," the brief said. "Congress was neither subtle nor ambiguous in its choice of language. In this case, all relevant entries have been liquidated."
The California trial court recently ruled that Sigma, along with other companies, violated the FCA with welded outlet imports from China by failing to pay antidumping duties while submitting false information on the applicability and amount of duties owed (see 2202090071). The judgment came after a three-day jury trial wherein Sigma was ultimately found liable for over $24.2 million in damages and $1.8 million in civil monetary penalties. On appeal, the question was raised about whether the FCA or Section 1592 was the proper home under which to recover AD duties avoided via false statements.
Sigma claimed Section 1592 must prevail over the "general statute," the FCA, as the exclusive remedy for addressing customs fraud. "In this case, the relevant entries have been liquidated, which liquidation is 'final and conclusive' unless Congress provides an exception," the brief said. "Congress provided such a limited exception in 19 U.S.C. § 1592(d), but it has never created a similar exception in the FCA. A party cannot use the FCA to restore duties, even when it does so under the guise of seeking FCA damages." The comprehensive nature of Section 1592 "makes it hard to believe that Congress intended" to allow individual whistleblowers to enforce customs laws when the U.S. has chosen not to do so, Sigma argued.