Facts

In 2017, Island Industries, a Tennessee-based manufacturer of fire protection and steel piping system supplies, brought an action against several other waterworks and fire protection suppliers, including Sigma, Vandewater International Inc., Vandewater's president Neil Reubens, Anvil International LLC, Smith-Cooper International, and Allied Rubber & Gasket Co. (ARGCO), alleging violations of the False Claims Act (FCA). The court dismissed Anvil International from the case in 2020, while ARGCO and Smith-Cooper reached undisclosed settlements with Island Industries in July 2020 and March 2021, respectively, and were dismissed from the case. In April 2021, the Court stayed the case against Vandewater and Reubens in light of those defendants' bankruptcy proceedings.

PLAINTIFFS' CONTENTIONS: Plaintiff contended that for nearly a decade Sigma imported Chinese-made welded outlets worth $4.4 million and avoided paying a 182.9% anti-dumping duty on those imports by knowingly making false statements to U.S. Customs and Border Protection. These actions deprived the U.S. of over $8 million since 2010.

DEFENDANT'S CONTENTIONS: Defendants denied all contentions and argued that plaintiff had not proven that defendants had any obligation to pay the anti-dumping duties and knew that it was making false statements. Defendant claimed that the butt-weld pipe fittings that are subject to the anti-dumping duty are meant to be welded together at both ends to carry dangerous fluids, while the welded outlets at issue are welded at only one end and used to transport less dangerous fluids. Defendants also contended that there is an understanding within the piping industry that its imports are not the same as the Chinese carbon steel butt-weld pipe fittings subject to the duty and that they were unaware that they were subject to the duty until the U.S. Department of Commerce opened an investigation into possible tariff evasion in 2018.

Result

Judgment of $24,256,638 in treble damages and an additional $1,824,145 in civil penalties from original $8,085,546.03 jury verdict

Poll

8-0