On June 23, 2025, the Ninth Circuit issued a long-awaited decision in Island Industries Inc. v. Sigma Corp. affirming a $26M False Claims Act (“FCA”) judgment against the defendant importer. Sigma had appealed the judgment after a jury found the company violated the FCA by failing to pay customs duties owed to U.S. Customs and Border Protection (“CBP”). The Ninth Circuit’s decision addresses an important jurisdictional issue and illustrates the significant financial exposure importers can face under the FCA at a time of increased tariffs and enforcement by the government.
The case was initiated in 2017 when Island Industries (a domestic manufacturer of pipe fittings) filed a sealed lawsuit as a relator against six competitors, including Sigma, under the FCA’s qui tam provisions. The relator alleged that defendants made two types of false statements on customs forms to evade antidumping duties of 182.9% for welded outlets imported from China—i.e., (1) the defendants falsely declared that the products they were importing were not subject to antidumping duties and (2) the defendants falsely described the products as steel couplings (a product not covered by the anti-dumping order) rather than welded outlets (a covered product). After investigating the allegations, the Department of Justice (“DOJ”) declined to intervene, and the case was unsealed. Island nevertheless moved forward with the lawsuit and eventually settled with three of the defendants before trial. The...
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