An important decision was issued Monday, June 23, 2025, out of the U.S. Court of Appeals for the Ninth Circuit, in a customs duty evasion case brought under the False Claims Act. In the case of Island Industries v. Sigma Corporation, the plaintiff, a competitor of the defendant who brought the case as a qui tam relator, alleged that the defendant had evaded antidumping duties on certain pipe fittings that the defendant imported into the United States. At trial, the jury found against the defendant, and that the defendant owed approximately $8 million in unpaid duties (which would be automatically tripled under the False Claims Act). On appeal, the Court of Appeals held:
1. Qui tam cases under the False Claims Act that allege evasion of customs duties are properly brought in federal district courts, and not in the Court of International Trade.
2. That the government may seek penalties against an importer that evades duties under 19 U.S.C. § 1592 does not preclude the government, or a private qui tam plaintiff, from also seeking damages and penalties under the False Claims Act, 31 U.S.C. § 3729. An importer that evades duties is subject to potential liability under both laws.
3. Liability under the “reverse false claims” provision of the False Claims Act requires that the defendant have had an “obligation” to pay money to the government. Defendant argued that it had no “obligation” to pay the antidumping duties at issue because the amount of duties owed was not fixed until...
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