Victaulic Settles False Claims Act Suit on Marking Duties From Customs Fraud Investigation Company

A pipe importer will pay $600,000 to settle a False Claims Act suit over its failure to pay marking duties, according to lawyers in the case. Victaulic had been accused by Customs Fraud Investigations LLC of failing to mark pipe fittings it imported from China and Poland and then failing to pay the 10 percent marking duty to CBP (see 14091119).

After the case was initially dismissed in federal district court (see 1504290070), the 3rd U.S. Circuit Court of Appeals revived the case, holding failure to pay marking duties may be a violation of the False Claims Act (see 1610060030).

Unlike in most False Claims Act cases, this one wasn’t filed by a whistleblower with a previous relationship with Victaulic. Instead, Customs Fraud Investigations, a Maryland company that conducts research and analysis related to potential customs fraud, based its case on publicly available manifest data and listings on eBay. The Eastern Pennsylvania U.S. District Court agreed to dismiss the case, except to decide claims against Victaulic for attorney’s fees and the amount of the settlement Customs Fraud Investigations should receive from the government for bringing the case.

“We are pleased with the settlement, and with the law that we were able to develop in the U.S. Court of Appeals,” said Jonathan Tycko of Tycko & Zavareei, who represented Customs Fraud Investigations in the case. “Our victory in the Court of Appeals in this case will be of significant benefit to the U.S. government, taxpayers and consumers for many years to come through greater enforcement of, and compliance with, country-of-origin marking requirements,” he said.

The settlement puts to an end “nearly six years of very costly and disruptive litigation,” said Thomas Hill of Pillsbury Winthrop, who represented Victaulic. “Victaulic paid $600,000 without any admission of wrongdoing or liability of any kind, in a case where the plaintiff had sought hundreds of millions of dollars and the United States after review chose not to intervene,” he said.