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Victaulic Co. v. United States ex rel. Customs Fraud Investigations, LLC

Federal law requires that importers mark certain imported pipe fittings with their country of origin; failure to do so, under certain circumstances, triggers a mandatory 10% “marking duty” levied against the importer. Based on this requirement, Customs Fraud Investigations, LLC (CFI) filed suit against Victaulic Co., a manufacturer and importer of pipe fittings, under a provision of the False Claims Act that prohibits “knowingly conceal[ing] or knowingly and improperly avoid[ing] or decreas[ing] an obligation to pay or transmit money … to the Government.”  CFI’s complaint alleged that Victaulic knowingly imported unmarked pipe fittings and then violated the False Claims Act by evading the marking duties that subsequently accrued.  Victaulic sought to have CFI’s complaint dismissed, making two arguments:  First, Victaulic argued that CFI’s complaint failed to satisfy Federal Rule of Civil Procedure 9(b)’s requirement that a complaint alleging fraud “state with particularity the circumstances constituting fraud” despite the complaint’s identification of over one thousand specific import shipments in connection with which Victaulic allegedly evaded marking duties.  Second, Victaulic argued that marking duties are not “obligations” within the meaning of the relevant False Claims Act provision and that the knowing concealment of marking duties therefore does not create False Claims Act liability.  After the U.S. Court of Appeals for the Fourth Circuit rejected both arguments, Victaulic filed a petition for certiorari review of both issues in the U.S. Supreme Court.  Public Citizen Litigation Group, acting as cocounsel for respondent, prepared and filed a brief opposing the petition. Soon after filing the opposition brief, Public Citizen filed a supplemental brief to bring the Court’s attention a newly issued Second Circuit opinion that explicitly observed that there was no circuit split on the Rule 9(b) issue.