FILED
NOT FOR PUBLICATION AUG 05 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA No. 09-55783
ex rel. ALVIN TAMANAHA,
D.C. No. 2:08-cv-03927-R-VBK
Plaintiffs - Appellants,
MEMORANDUM *
v.
FURUKAWA AMERICA, INC.,
Defendant - Appellee.
and
FURUKAWA ELECTRIC, CO. LTD, a
Japanese corporation; et al.
Defendants
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted June 6, 2011
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The Honorable James S. Gwin, District Judge for the U.S. District
Court for Northern Ohio, Cleveland, sitting by designation.
Before: B. FLETCHER and N.R. SMITH, Circuit Judges, and GWIN, District
Judge.**
Appellant and Qui Tam Relator Alvin Tamanaha appeals the district court’s
dismissal with prejudice of his False Claims Act action. We review a district
court’s denial of leave to amend for abuse of discretion, keeping in mind that “such
denial is strictly reviewed in light of the strong policy permitting amendment.”
Sisseton-Wahpeton Sioux Tribe of Lake Traverse Indian Reservation v. United
States, 90 F.3d 351, 355 (9th Cir. 1996) (quoting Texaco, Inc. v. Ponsoldt, 939
F.2d 794, 798 (9th Cir. 1991)). Finding that the district court abused its discretion
in dismissing the action without allowing Tamanaha’s requested leave to amend,
we reverse and remand.
Tamanaha alleges that Furukawa submitted materially false information to
the United States Customs Service in order to undervalue—and thereby reduce
customs duties owed on—imported goods, in violation of the False Claims Act, 31
U.S.C. §§ 3729–3733 (2006). On Furukawa’s motion to dismiss, the district court
dismissed Tamanaha’s complaint for failure to state a viable False Claims Act
claim under Federal Rule of Civil Procedure 12(b)(6) and for failure to plead fraud
with particularity as required by Federal Rule of Civil Procedure 9(b). Tamanaha
requested leave to amend his complaint to allege more precisely that Furukawa
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violated a preexisting obligation to pay customs duties established by federal
regulation. The district court denied the request.
A “court should freely give leave [to amend a complaint] when justice so
requires.” Fed. R. Civ. P. 15(a)(2). Where a plaintiff’s fraud allegations are
dismissed under Rule 12(b)(6) or for failure to comply with Rule 9(b)’s heightened
pleading standard, we have consistently held that “‘[l]eave to amend should be
granted if it appears at all possible that the plaintiff can correct the defect.’” Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir. 2003) (quoting Bly-Magee
v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)).
Any amendment to Tamanaha’s complaint would be the first. And, contrary
to the district court’s conclusion, such amendment would not be inherently futile.
First, Tamanaha could amend his complaint to plead that Furukawa sought to
decrease a fixed obligation to pay customs duties established by federal regulation.
Under customs regulations, importers have an existing, non-contingent and
nondiscretionary liability for customs duties. See, e.g., 19 C.F.R. §§ 141.4, 159.2
(demanding entry and liquidation of imported merchandise); 19 U.S.C. § 1503
(assessment of duties on imports is generally based on the appraised value of the
imported goods as determined on liquidation); Harmonized Tariff Schedule of the
United States (2011) (codified at 19 U.S.C. § 1202), available at
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http://www.usitc.gov/tata/hts/. Such liability arises immediately and automatically
upon the importation of goods into the United States. 19 C.F.R. § 141.1(b)(1).
Accordingly, false statements or records made to avoid or decrease this obligation
to pay—which Tamanaha could allege in an amended complaint—are actionable
under the False Claims Act’s reverse false claims provision. 31 U.S.C. §
3729(a)(7) (2006); United States v. Bourseau, 531 F.3d 1159, 1169 (9th Cir. 2008)
(requiring plaintiff in False Claims Act action to show that defendant, by false
statement, sought to conceal, avoid, or decrease a precise, preexisting obligation to
pay United States).
Tamanaha could also amend his complaint to address the district court’s
stated reason for dismissing the action under Rule 9(b): that the original complaint
did not detail how Furukawa submitted its allegedly false statements and to whom.
Leave to amend would provide Tamanaha further opportunity to “state with
particularity the circumstances constituting fraud,” Fed. R. Civ. P. 9(b), although it
may be appropriate to relax Rule 9(b)’s heightened pleading standard to the extent
that evidence of the alleged false claims lies within Furukawa’s exclusive
possession, see United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d
1048, 1052 (9th Cir. 2001).
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Tamanaha could thus cure any Rule 12(b)(6) or 9(b) defects by amending
his complaint to allege the specific sources of Furukawa’s preexisting obligation to
pay customs duties and to plead a False Claims Act violation with greater
particularity. Given Rule 15’s strong preference for allowing amendment, Foman
v. Davis, 371 U.S. 178, 182 (1962) (Rule 15(a)’s “mandate is to be heeded”),
Tamanaha should have the opportunity to amend.
Because we find that the district court abused its discretion in denying
Tamanaha leave to amend his complaint, we need not directly reach the question of
whether the original complaint sufficiently pleaded a reverse False Claims Act
claim. Furthermore, we decline to reassign this case upon remand, finding no
indication from the record that District Judge Manuel Real could not fairly comply
with our mandate or that reassignment is necessary to preserve the appearance of
justice. See Earp v. Cullen, 623 F.3d 1065, 1071-72 (9th Cir. 2010).
Upon remand, the district court is instructed to allow amendment to the
complaint.
REVERSED AND REMANDED WITH INSTRUCTION.
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