New tariffs have dominated headlines in recent months, but a key question has received far less attention: How does the U.S. government make sure importers — who collectively brought in $3.36 trillion worth of goods last year — actually pay the duties that they owe?
While inspectors can’t look at every shipment, one way to keep importers honest is the threat of liability under the False Claims Act, or FCA, for customs duty evasion. It’s an increasingly active area of law, lawyers tell me, and likely to get even hotter as President Donald Trump’s tariffs kick in and the amount of money at issue skyrockets.
For the past 20 years, however, the ability of whistleblowers to bring cases alleging customs fraud has been under a cloud in the San Francisco-based 9th U.S. Circuit Court of Appeals, thanks to a 2004 decision that put the circuit’s nine western states — and their busy ports — at odds with the rest of the country.
Earlier this week, a 9th Circuit panel offered new clarity, rejecting the notion that the Court of International Trade has exclusive jurisdiction over such actions. The panel also rebuffed arguments that the FCA conflicts with a customs statute that gives the government another pathway to recover fraudulently unpaid duties — but more on that later.
The decision “opens the door for whistleblowers” to bring customs-related enforcement actions in federal district courts, said Mayer Brown partner Kelly Kramer, who represented pipe fitting maker Island Industries in...
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