Third Circuit Holds eBay-Based Allegations Sufficient To Plead Reverse False Claim For Failure To Pay Import Duties

In October, the Third Circuit held in United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., 839 F.3d 242 (3rd Cir. 2016), that the 2009 amendments to the False Claims Act ("FCA") allowed a relator to pursue a reverse false claims action against an importer who allegedly failed to properly mark its imported products with a country-of-origin label. The Third Circuit further concluded, over a vigorous dissent, that the relator had satisfied both Rule 8 and Rule 9(b) by pleading a detailed statistical analysis supported by an attached expert declaration purporting to show that the fraud alleged had occurred.

Background

The subject of this qui tam case is pipe fittings, specifically, the country-of-origin markers that appear (or are supposed to appear) on these fittings. Under the Tariff Act of 1930, 19 U.S.C. § 1304(c), pipe fittings must carry the name of their country of origin. If a customs official discovers unmarked or improperly marked goods,