The government's "motion to direct transfer pursuant to 28 U.S.C. § 1631 or, in the alternative, petition for panel rehearing" is GRANTED.

Accordingly, the opinion filed March 17, 2004 is amended as follows:

Slip. op. at 3320 n. 13: At the very beginning of this footnote, insert the following language: "While the question of its jurisdiction to entertain FCA cases is of course for the Court of International Trade (and, in due course, the Federal Circuit) to resolve,"

Slip. op. at 3321: Prior to the signal for footnote 14, insert the following language:

"Because the CIT `may be able to hear th[is] case,'" Sessler v. United States, 7 F.3d 1449, 1452 (9th Cir.1993), "the prudent thing to do is to direct the district court to transfer the case to the CIT so that the CIT can determine the question of its own jurisdiction." Pentax Corp. v. Myhra, 72 F.3d 708, 711 (9th Cir.1995)."

Slip. op. at 3321: Following the word "REVERSED," insert the following language:

"and REMANDED to the district court with instructions to transfer this case to the CIT pursuant to 28 U.S.C. § 1631."

O'SCANNLAIN, Circuit Judge.

We must decide which court — a federal district court or the Court of International Trade — has jurisdiction over an action brought by the United States under the False Claims Act arising out of an importer's scheme to avoid paying customs duties.

* In July of 1994, the United States Department of Commerce ("Department") issued a preliminary determination that fresh garlic from the People's Republic of China (PRC) was being "dumped" into the United States. See 59 Fed.Reg. 35310-12 (July 11, 1994).1 Pursuant to its authority under the Tariff Act of 1930, the Department also issued a preliminary antidumping order imposing a duty of 376.67 percent of the declared value of each shipment of garlic. Id. at 35311. To get their shipments of garlic, importers were required to post a bond or to provide a cash deposit. The preliminary order became final in November of 1994. See 59 Fed.Reg. 59209-03 (Nov. 16, 1994).

Incorporated in 1987, Universal Fruits & Vegetable Corporation ("Universal") was in the produce business, importing, among other things, garlic, ginger and shallots for resale in the United States. David Pai initially ran the business by himself, but eventually his father, Jason Pai, came on to assist him. Universal was informed of the antidumping duty by its customhouse broker,2 Due International. At the time the duty became effective, Universal was expecting a shipment of garlic en route from China. Universal never posted the duty required upon arrival under the antidumping order and ultimately abandoned the shipment.

Soon thereafter, the government began investigating Universal on suspicion that, unwilling (or unable) to pay the large antidumping duty, the company was transshipping its garlic via South Korea so as to avoid having to do so. In June of 1995, Customs agents executed a search warrant at Universal's premises and seized various business records, among them several incriminating documents lending strong support to the government's contention that Universal was evading the antidumping duty by transshipping.3

More than five years later,4 on November 2, 2000, the government filed suit against Universal, alleging that, on four separate occasions, Universal had filed false customs documents indicating that South Korea, rather than China, was the origin of the garlic it was importing. Universal's actions, the government alleged, violated the so-called "reverse false claims" provision of the False Claims Act ("FCA"), which makes it illegal to "make[], use[], or cause[] to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the government." 31 U.S.C. § 3729(a)(7). As provided for under the FCA, the government sought "a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the government sustain[ed]" as a result of the false claim. 31 U.S.C. § 3729(a). The total value of the four shipments, as declared by Universal, was $170,993. Applying the 376.67 percent antidumping duty to that declared value resulted in actual damages of $644,079, which, when trebled, totaled $1,932,237. On top of that, the government added four civil penalties of $5,000 for each of the false customs declarations and a fifth such penalty for David Pai's alleged false statement to a customs agent. In total, the government sought $1,952,237 in damages from Jason Pai, and $1,957,237 from David Pai and Universal.

Universal moved to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim. With respect to the former motion, Universal contended that, because the government's claim concerned a customs matter, it fell within the exclusive jurisdiction of the Court of International Trade. See 28 U.S.C. § 1582(3) ("The Court of International Trade shall have 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.").5 With respect to the latter motion, Universal contended that, even if suit under the FCA in district court were jurisdictionally sound, the customs duties sought by the government were not sufficiently definite to constitute an "obligation" under the terms of the FCA. The district court denied both motions.

The government then moved for summary judgment based upon evidence seized in its 1995 search of Universal's premises and upon a series of declarations concerning that evidence. The district court granted the motion for summary judgment on December 17, 2001, and the next day entered judgment awarding damages in the full amount sought. Universal and David and Jason Pai timely appealed.

28 U.S.C. § 1582 confers upon the Court of International Trade ("CIT")

exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United States —

(1) to recover a civil penalty under section 592, 593A, 641(b)(6), 641(d)(2)(A), 704(i)(2), or 734(i)(2) of the Tariff Act of 1930;

(2) to recover upon a bond relating to the importation of merchandise required by the laws of the United States or by the Secretary of the Treasury; or

(3) to recover customs duties.

Id. A complementary statutory provision, 28 U.S.C. § 1340, confers upon the district courts "original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Court of International Trade." Id. (emphasis added).

In interpreting the predecessor statute to § 1582, we have held that

it is well-established that § 1582(a) means what it says: the jurisdiction of the Customs Court6 is exclusive. Even when other, broadly-worded statutes seem to confer concurrent jurisdiction on the district courts, the exclusivity of Customs Court jurisdiction reflects a policy of paramount importance which overrides the literal effect of [other statutes].

Fritz v. United States, 535 F.2d 1192, 1195 (9th Cir.1976).7

The Supreme Court has nevertheless noted that "Congress did not commit to the Court of International Trade's exclusive jurisdiction every suit ... challenging customs-related laws...." K mart Corp. v. Cartier, Inc., 485 U.S. 176, 188, 108 S. Ct. 950, 99 L. Ed. 2d 151 (1988) (emphasis in original). Rather, Congress "opted for a scheme that achieved the desired goals of uniformity and clarity by delineating precisely the particular customs-related matters over which the Court of International Trade would have exclusive jurisdiction." Id. Thus, "[d]espite the fact that the Customs Courts Act of 1980 broadened the exclusive jurisdiction of the Court of International Trade, it cannot exercise jurisdiction over actions not addressed by a specific jurisdictional grant." Trayco, Inc. v. United States, 994 F.2d 832, 836 (Fed.Cir.1993).

The "specific jurisdictional grant at issue," 28 U.S.C. § 1582(3), gives CIT exclusive jurisdiction over (1) any civil action (2) which arises out of an import transaction (3) and which is commenced by the United States (4) to recover customs duties. That the first three elements of this provision are satisfied in the present case is undisputed. The central issue, then, is whether the government's "reverse false claims" action is one to "recover customs duties."

* In support of its contention that the government's claim here is, at bottom, a customs claim, Universal notes that the measure of the government's damages is essentially a tally of the duties it claims Universal owed multiplied by three. Because we have consistently rejected "creative arguments ... presented in hopes of avoiding the exclusivity of Customs Court jurisdiction," Cornet Stores, 632 F.2d at 98, Universal contends that we must do so here as well.

The government counters that its FCA claim "is not a suit to collect duties that defendants owe based upon the importation of goods. Rather it is [a] suit to recover damages and statutory penalties based upon defendants' fraud as provided in the False Claims Act...." Appellee's Br. at 17. Responding to Universal's charge that the distinction between FCA damages and customs duties is illusory, the government notes that this court has distinguished between "underlying fraudulent activity" — which does not trigger FCA liability — and "the [false] claim for payment," which does. United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996); see also United States ex rel. Sutton v. Double Day Office Services, Inc., 121 F.3d 531, 534 (9th Cir.1997) ("Double Day's failure to pay Sutton prevailing wages was a violation of the [Service Contract Act]; however, it was not a violation of the FCA. Double Day violated the FCA when it submitted a claim for payment to the United States falsely stating that it had complied with the FCA. The FCA attaches liability to the claim for payment, not to the underlying activity.").

In support of its attempt to distinguish Universal's false customs declarations from the customs duties those false declarations were designed to avoid, the government relies on the Federal Circuit's decision in United States v. Blum, 858 F.2d 1566 (Fed.Cir.1988). In Blum, the defendant was alleged to have "improperly caused orange juice concentrate to be entered into the United States duty-free ... whereas the orange juice concentrate was not entitled to duty-free entry." Id. at 1567. The government brought an action against Blum, his importer, and his importer's surety under 19 U.S.C. § 1592(a) (1982) which in pertinent part stated that "no person, by fraud, gross negligence, or negligence... may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of any document, written or oral statement, or act which is material and false."8 The government sought to impose the statutory penalties set forth in § 1592(c)9 against Blum, but also sought under § 1592(d)10 to recover from Blum and the other defendants the import duties lost as a result of the violation of § 1592(a).

The CIT dismissed the government's § 1592(d) claim, reasoning that the subsection "does not provide the United States with an independent cause of action to collect lost import duties resulting from conduct that violated subsection (a)." Blum, 858 F.2d at 1568-69. On appeal, the Federal Circuit reversed the CIT's dismissal of the government's § 1592(d) claim, noting that "[t]he statutory scheme provides the United States with means both (1) to impose a penalty for the improper conduct and (2) to recover the import duties lost as a result of the improper conduct." Blum, 858 F.2d at 1569. The court thus concluded that an action seeking to impose the statutory penalties for violating § 1592(a) is distinct from one seeking the lost duties recoverable under § 1592(d). Id.

According to the government, the Federal Circuit's distinction between customs and penalties — and its conclusion that the United States could seek recovery of each in the same action — reflects a "statutory framework regarding customs duties [that] allows the government to choose among a variety of remedies to combat fraud." Appellee's Br. at 19. The government's reliance on Blum stumbles, however, over two obstacles: the first legal, the other factual. First, whatever Blum says about the remedial options available to the government in actions relating to the customs violations at issue in that case, it does not say anything at all about where jurisdiction over such actions would be proper. Indeed, Blum itself involved an action initiated in the CIT, reflecting the fact that, while § 1592 sets forth an administrative mechanism for attempts to introduce merchandise into the United States by fraud or negligence, it also contains a provision that allows the government to bring a § 1592 action in the CIT. See 19 U.S.C. § 1592(e).11

The second problem with the government's reliance on Blum is the reality of what it seeks in the instant case. Even accepting the government's characterization of its FCA claim against Universal as one for "damages," the fact remains that, should it prevail in its action, at least part of the government's damages will be "customs duties," namely the antidumping tariffs it claims Universal fraudulently evaded.12 Allowing the government to alter this reality by incorporating "customs duties" into "damages" runs counter to the principle that a party "may not, by creatively framing [its] complaint, circumvent a congressional grant of jurisdiction ... A [c]ongressional grant of exclusive jurisdiction cannot be so easily circumvented." Heller, Ehrman, White & MacAuliffe v. Babbitt, 992 F.2d 360, 363-64 (D.C.Cir.1993) (internal quotation marks omitted, second alteration in original). Furthermore, if the government could bring an FCA claim in district court whenever a party fraudulently withholds customs duties, then the exclusive jurisdiction over actions to recover customs duties in all such instances would become a virtual nullity: The government could simply recast the withheld duties as damages and proceed in district court under the FCA.13

Because our precedent requires courts faced with "conflicts between the broad grants of jurisdiction to the district courts and the grant of exclusive jurisdiction to the [Court of International Trade]" to resolve those conflicts "by upholding the exclusivity of the [Court of International Trade's] jurisdiction," Cornet Stores, 632 F.2d at 98, we must conclude that the district court in this case lacked subject matter jurisdiction. Because the CIT "may be able to hear th[is] case," Sessler v. United States, 7 F.3d 1449, 1452 (9th Cir.1993), "the prudent thing to do is to direct the district court to transfer the case to the CIT so that the CIT can determine the question of its own jurisdiction." Pentax Corp. v. Myhra, 72 F.3d 708, 711 (9th Cir.1995).14

REVERSED and REMANDED to the district court with instructions to transfer this case to the CIT pursuant to 28 U.S.C. § 1631.