United States v. C.H. Robinson Company , 760 F.3d 1376 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
UNITED STATES,
Plaintiff-Appellee,
v.
C.H. ROBINSON COMPANY,
Defendant-Appellant.
______________________
2013-1168
______________________
Appeal from the United States Court of International
Trade in No. 06-CV-0434, Judge Leo M. Gordon.
______________________
Decided: July 28, 2014
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STEVEN M. MAGER, Senior Trial Counsel, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for plaintiff-
appellee. With him on the brief were STUART F. DELERY,
Assistant Attorney General, JEANNE E. DAVIDSON, Direc-
tor, PATRICIA M. MCCARTHY, Assistant Director, and
SHELLEY WEGER, Trial Attorney. Of counsel on the brief
was ANDREW KOSEGI, Deputy Assistant Chief Counsel,
United States Customs and Border Protection, Indianapo-
lis, Indiana.
2 U.S. v. C.H. ROBINSON COMPANY
RICHARD F. O’NEILL, Neville Peterson LLP, of New
York, New York, argued for defendant-appellant. With
him on the brief was JOHN M. PETERSON.
______________________
Before O’MALLEY, REYNA, and WALLACH, Circuit Judges.
REYNA, Circuit Judge.
C.H. Robinson Company (“C.H. Robinson”) appeals
the final decision of the U.S. Court of International Trade
finding C.H. Robinson liable for duties, taxes, and fees for
certain entries of wearing apparel from China. United
States v. C.H. Robinson Co., 880 F. Supp. 2d 1335 (Ct.
Int’l Trade 2012). For the reasons below, we affirm.
BACKGROUND
This appeal arises out of an action brought by the
United States against C.H. Robinson, a Customs-bonded
carrier, to recover certain duties, taxes, and fees under
Section 553 of the Tariff Act of 1930, 19 U.S.C. § 1553,
and 19 C.F.R. § 18.8(c). Specifically, the Government
seeks to recover duties, taxes, and fees accrued for three
entries (“subject entries”) of wearing apparel from the
People’s Republic of China (“subject merchandise”), which
entered the United States as Transportation & Exporta-
tion (“T&E”) entries but were never exported and are
currently “missing.”
The subject merchandise entered the United States in
December 2001 at the Port of Los Angeles under T&E
numbers 609.203.744, 609.203.873, and 609.203.862.
Intercambio Comercial Ekim S.A. (“Intercambio”), a
Mexican company, was the importer of record and con-
signee of the subject merchandise. The T&E entry docu-
ments designated C.H. Robinson as the bonded carrier
and indicated that the merchandise was to be delivered to
the care of L.E. Forwarding & Freight Broker (“L.E.
Forwarding”) in Laredo, Texas, for exportation to Mexico.
US v. C.H. ROBINSON COMPANY 3
C.H. Robinson engaged Mario’s Transports Inc. to
transport the subject merchandise from Los Angeles to
Laredo.
Although there is no dispute that the subject mer-
chandise left Los Angeles, it is not clear what happened to
the merchandise after that. What is known is that, on
January 2 and 4, 2002, Mario Peña, Inc. (“Peña”), a U.S.
licensed customs broker, stamped the T&E entry docu-
ments (Customs Forms 7512) at an unmonitored stamp
machine in the lobby of the export lot of the U.S. Customs
Service (“Customs”) at the Port of Laredo. Peña did not
transport the subject merchandise to the export lot, nor
did he see, inspect, or take possession of the subject
merchandise. Peña’s official log book shows receipt of the
T&E entry forms, but does not show a corresponding date
of exportation for each entry.
Customs never inspected or took possession of the
subject merchandise at the Port of Laredo. At the time,
Customs used a self-regulating process at the Port of
Laredo in which Customs did not supervise exportation or
require carriers to report their arrival at the port of
destination or the exportation of the merchandise. In-
stead, Customs relied on a post-audit system designed to
ensure compliance with procedures for T&E entries.
Through this post-audit system, Customs selectively
required carriers to demonstrate disposition of the mer-
chandise upon Customs’ request. The combined reliance
on an export lot and a post-audit process was neither
uncommon nor unusual at the time, in particular along
the U.S.-Mexico border.
In March 2002, Customs initiated a post-audit on the
subject merchandise and contacted C.H. Robinson re-
questing information regarding the disposition of the
merchandise. C.H. Robinson informed Customs that the
merchandise had been exported to Mexico. As proof of
exportation, C.H. Robinson submitted the stamped T&E
4 U.S. v. C.H. ROBINSON COMPANY
entry forms and three stamped Mexican importation
forms, or “pedimentos,” that were provided by Intercam-
bio.
Customs contacted Mexican Customs authorities to
verify the authenticity of the pedimentos. After Mexican
authorities confirmed that the pedimentos were false,
Customs issued three notices of liquidated damages
claims against C.H. Robinson’s custodial bond, each for
$25,000. The notices charged C.H. Robinson with misde-
livery of the subject merchandise in violation of 19 C.F.R.
§ 18.8. In response, C.H. Robinson submitted administra-
tive petitions to Customs, seeking a reduction in the
amount of liquidated damages. Based upon mitigation
guidelines, Customs reduced the amount of liquidated
damages owed for the three subject entries from $75,000
to $57,212.
C.H. Robinson paid the $57,212 in 2004 and filed a
complaint in the U.S. Court of Federal Claims seeking a
full refund. The Court of Federal Claims stayed the
action to permit the Government to pursue collection of
duties against C.H. Robinson. Customs made a demand
on C.H. Robinson, pursuant to 19 U.S.C. § 1553 and
19 C.F.R. § 18.8(c), for payment of $106,407.86, plus
interest, for duties, taxes, and fees owed on the subject
entries. The demand explained that C.H. Robinson failed
to ensure that the subject merchandise was exported to
Mexico and, consequently, “[t]he goods subject to quo-
ta/visa restrictions were diverted into the United States
resulting in a loss of lawful duties due to the govern-
ment.” Joint Appendix (“J.A.”) at 207. C.H. Robinson did
not protest the demand or pay the duties, and its chal-
lenge to Commerce’s assessment of liquidated damages
pending before the Court of Federal Claims remained
stayed.
In 2006, the Government filed the present action in
the Court of International Trade seeking to recover the
US v. C.H. ROBINSON COMPANY 5
$106,407.86 in unpaid duties, taxes, and fees. In March
2007, C.H. Robinson moved to dismiss the Government’s
complaint for failure to state a claim upon which relief
may be granted, alleging that 19 U.S.C. § 1553 does not
allow the collection of duties. The Court of International
Trade denied C.H. Robinson’s motion to dismiss, explain-
ing that section 1553 contemplates that Customs will
promulgate regulations governing T&E entries and, in
turn, 19 C.F.R. § 18.8(c) imposes an obligation on the
bonded carrier to pay duties on any “missing” merchan-
dise. In January 2010, the Court of International Trade
further clarified that the Government would bear the
burden of persuasion at trial to show by a preponderance
of the evidence that the subject merchandise is “missing”
within the meaning of § 18.8(c). The court also noted that
the Government’s burden of persuasion may be satisfied
by “cast[ing] enough suspicion over the exportation/non-
exportation of the merchandise for the fact-finder to
conclude that the merchandise was not exported.” J.A. at
55.
Following a bench trial, the Court of International
Trade found C.H. Robinson liable for the duties, taxes,
and fees demanded by the Government. First, the court
found that the Government established by a preponder-
ance of the evidence that the subject merchandise was
missing. Among other evidence, the court considered
expert testimony by the Assistant Commissioner for Post-
Import and Commercial Fraud for the Mexican Customs
Service, Rodolfo Torres Herrera, who confirmed that the
pedimentos were false and contained numerous discrep-
ancies that were unverifiable by search of official Mexican
electronic databases: the name of the Mexican customs
broker did not match the broker license number; the tax
identification number and population registration number
for the broker did not exist; and there was no record of a
relationship between the importing company and the
broker or the bank listed as having received payment of
6 U.S. v. C.H. ROBINSON COMPANY
Mexican customs duties. See C.H. Robinson, 880 F. Supp.
2d at 1341-42. Mr. Torres Herrera testified that, in his
experience, illegal entry (i.e., smuggling) of merchandise
into Mexico is most often accomplished by using pedimen-
tos that, unlike the pedimentos submitted by C.H Robin-
son, are valid in all respects except for the listed country
of origin, so as to minimize the risk of raising suspicion at
the various Mexican checkpoints through which all truck
cargo must pass upon crossing the U.S./Mexico border.
See id. at 1343. Mr. Jesus Alberto Fernandez Wilburn,
the Port Director of Colombia, Nuevo Leon, Mexico,
further testified that Mexican Customs would have seized
cargo whose pedimentos did not appear in Mexican Cus-
toms’ electronic database and that there is no record that
Mexican Customs seized the merchandise at issue in this
case. See id.
The Court of International Trade further found that
C.H. Robinson failed to account for the missing merchan-
dise. The court noted that C.H. Robinson conceded at
trial that the pedimentos were not genuine and could not
be verified by Mexican authorities. Id. at 1345. The court
also found that none of the evidence submitted by C.H.
Robinson—the pedimentos, driver hand tags and freight
bills, and Mr. Peña’s log book—showed that the subject
merchandise was exported to Mexico; at most, the evi-
dence demonstrated proof of delivery of the subject mer-
chandise to the Port of Laredo in accordance with 19
C.F.R. § 18.8(c). See id. at 1344. The court concluded
that C.H. Robinson, as the bonded carrier, not only had a
responsibility to deliver the merchandise at the destina-
tion port, but also to ensure that the subject merchandise
was either exported or lawfully entered into the United
States. See id. at 1347. Accordingly, the court found C.H.
Robinson liable for duties, taxes, and fees under 19 U.S.C.
§ 1553 and 19 C.F.R. § 18.8(c).
C.H. Robinson timely appealed. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(5).
US v. C.H. ROBINSON COMPANY 7
DISCUSSION
We review the Court of International Trade’s legal de-
terminations without deference. United States v. Ford
Motor Co., 463 F.3d 1286, 1290 (Fed. Cir. 2006). Its
findings of fact are reviewed for clear error. Id. 1
Generally, merchandise imported into the United
States may be entered for consumption, entered for ware-
house, admitted into a foreign trade zone, or entered for
transportation in-bond to another port. Transportation
in-bond allows movement of imported merchandise from
one port to another port in the United States without
appraisement or payment of duties, provided a transpor-
tation entry document is filed (Customs Form 7512) and a
bond is paid. Once the merchandise arrives at a destina-
tion port in the United States, the merchandise may be
officially entered into U.S. commerce and duties and other
imposts or charges are paid, or the merchandise may be
exported and duties and charges are not paid. For exam-
ple, in this case, imports of the subject merchandise from
China would be subject to normal duties and, potentially,
to other charges arising from import quotas and other
trade restrictions applicable to certain apparel products
originating from China.
A T&E entry is the type of in-bond movement typical-
ly used when merchandise is to be exported at a port
other than the port of entry. See 19 U.S.C. § 1553(a). A
bonded carrier transporting merchandise pursuant to a
T&E entry must comply with certain regulations govern-
ing the receipt, safekeeping, and disposition of bonded
1 Indeed, this court has acknowledged the expertise
of the Court of International Trade in these matters is
often reflected in its informed decisions. See Diamond
Sawblades Mfrs. Coal. v. United States, 612 F.3d 1348,
1356 (Fed. Cir. 2010).
8 U.S. v. C.H. ROBINSON COMPANY
merchandise. Under 19 C.F.R. § 18.8(a), the bonded
carrier is responsible for any “shortage, irregular delivery,
or nondelivery at the port of destination or exportation of
bonded merchandise received by it for carriage.”
19 C.F.R. § 18.8(a). The bonded carrier may be liable for
liquidated damages under the carrier’s bond for any such
shortage, failure to deliver, or irregular delivery. Id.
§ 18.8(b). Additionally, the bonded carrier may be liable
for duties:
(c) In addition to the penalties described in para-
graph (b) of this section, the carrier shall pay any
internal-revenue taxes, duties, or other taxes ac-
cruing to the United States on the missing mer-
chandise, together with all costs, charges, and
expenses caused by the failure to make the re-
quired transportation, report, and delivery.
Id. § 18.8(c).
The Court of International Trade held C.H. Robinson
liable under § 18.8(c) because the court found that the
Government established by a preponderance of the evi-
dence that the subject merchandise is “missing” and C.H.
Robinson failed to account for the merchandise. On
appeal, C.H. Robinson does not challenge the validity of
the regulation, but argues instead that the subject mer-
chandise is not “missing” within the meaning of § 18.8(c).
Specifically, C.H. Robinson urges us to interpret the term
“missing” in § 18.8(c) as limited to losses occurring prior
to delivery, i.e., as a result of a shortage, failure to deliver,
or irregular delivery. According to C.H. Robinson, a
bonded carrier transporting merchandise under a T&E
entry is only responsible for delivering the merchandise at
the port of exportation and not for any losses occurring
after that. C.H. Robinson contends that the stamped
T&E entry forms it provided in this case are conclusive
proof that it fulfilled its duty irrespective of what hap-
US v. C.H. ROBINSON COMPANY 9
pened to the merchandise after arriving at the Port of
Laredo.
We agree with C.H. Robinson that the bonded carrier
of merchandise imported under a T&E entry is only
responsible for ensuring delivery, not exportation. How-
ever, although “properly receipted” Customs forms may
constitute acceptable proof of delivery under 19 C.F.R.
§ 18.8(a), such proof is not conclusive. Customs retains
the authority to verify that delivery in fact occurred. As
part of such verification, for example, Customs may
request, as it did in this case, additional evidence of
proper delivery to the port of exportation, such as bills of
lading or delivery receipts. If a preponderance of the
evidence demonstrates that the bonded merchandise was
not properly delivered, stamped Customs Forms 7512 do
not insulate a bonded carrier from liability for any short-
age, failure to deliver, or irregular delivery.
In the case of T&E entries, evidence of proper delivery
may include documents showing that the bonded mer-
chandise was exported. Conversely, lack of exportation
evidence may support a finding that delivery never oc-
curred. Any merchandise that is imported under bond for
exportation but is not actually exported must necessarily
have remained within the United States and remains the
carrier’s responsibility unless the carrier can account for
the shipment by, for example, providing proof of delivery
or transfer to the exporting carrier. Accordingly, we agree
with the Court of International Trade that, where mer-
chandise is entered and transported in-bond for exporta-
tion, the bonded carrier may be required to provide
evidence of delivery, even where the bonded carrier oth-
erwise submits a properly receipted Customs Form 7512
under § 18.8(a).
As the Court of International Trade pointed out, there
is no statute or regulation that imposes a burden on
Customs to search for or locate merchandise to establish
10 U.S. v. C.H. ROBINSON COMPANY
that it was not properly delivered. See C.H. Robinson,
880 F. Supp. 2d at 1347. Customs need only establish by
a preponderance of the evidence that complete delivery
did not occur, which may include showing that the mer-
chandise was not exported. If any merchandise is not
exported and is otherwise unaccounted for, it is “missing”
and Customs may collect duties from the bonded carrier
pursuant to 19 U.S.C. § 1553 and 19 C.F.R. § 18.8(c).
C.H. Robinson relies on 19 C.F.R. § 18.7 to distin-
guish between the obligations of a “delivering carrier” and
an “exporting carrier.” While § 18.7(a) requires the “de-
livering carrier” to surrender the in-bond manifest (i.e.,
Customs Form 7512) to Customs no more than 2 working
days after arrival at the port of exportation, § 18.7(c)
provides that it is the “exporting carrier” who should
maintain exportation records for 5 years from the date of
exportation and make those records available to Customs
upon request. See 19 C.F.R. §§ 18.7(a), (c). C.H. Robinson
argues that, pursuant to the T&E entry documents, C.H.
Robinson was not the exporting carrier; it was not re-
quired to take the goods to Mexico and L.E. Forwarding,
the “consignee,” was instead the party responsible for
exportation.
We disagree with C.H. Robinson that the Court of In-
ternational Trade improperly conflated an exporting
carrier’s obligation to provide, when asked, proof of expor-
tation, with the delivering carrier’s obligation to provide
notice of arrival by surrendering the in-bond manifest to
Customs. The court held C.H. Robinson liable under
19 C.F.R. § 18.8(c) because it is the bonded carrier, not
the exporting carrier, and the regulation provides that the
bonded carrier may be liable for duties on missing mer-
chandise. While a bonded carrier may not be required to
maintain exportation records and provide proof of expor-
tation pursuant to § 18.7(c) unless it is also the exporting
carrier, it may nonetheless be required, pursuant to
§ 18.8(c), to account for missing merchandise transported
US v. C.H. ROBINSON COMPANY 11
under bond. In this case, the Court of International
Trade correctly placed upon the Government the initial
burden to show by a preponderance of the evidence that
the subject merchandise was missing. Once the Govern-
ment met its initial burden, C.H. Robinson’s failure to
provide satisfactory proof of exportation or any other
evidence regarding the disposition of the merchandise
exposed it to liability under § 18.8(c), irrespective of the
duties imposed separately on the exporting carrier under
§ 18.7(c).
Finally, C.H. Robinson argues that the Court of In-
ternational Trade erred when it clarified that, to establish
by a preponderance of the evidence that merchandise is
“missing,” the Government needed only to “cast enough
suspicion over the exportation/non-exportation of the
merchandise for the fact-finder to conclude that the
merchandise was not exported.” J.A. at 55. C.H. Robin-
son also contends that the court erred in finding that the
Government met its burden of proof entirely based on
circumstantial evidence. Although we disagree with the
Court of International Trade’s characterization of the
Government’s proof to the extent it implies a lower bur-
den than a preponderance of the evidence, the law makes
no distinction between direct and circumstantial evidence;
both are valid measures of proof. The only question is
whether the proofs offered satisfy the applicable burden of
proof, and we find that the Government met its burden in
this case.
The Court of International Trade properly weighed all
the evidence presented at trial in holding that, although
there was “no direct evidence as to the whereabouts of the
subject merchandise,” the United States presented
enough evidence to establish by a preponderance of the
evidence that the merchandise is “missing.” C.H. Robin-
son, 880 F. Supp. 2d at 1345. Specifically, the court
considered documents and testimony presented by the
Government that established the falsity of the pedimentos
12 U.S. v. C.H. ROBINSON COMPANY
and the fact that they could not have been used to legiti-
mately or illegitimately introduce the merchandise into
Mexico. See id. at 1341-43. C.H. Robinson ultimately
conceded that the pedimentos were not genuine and could
offer no other evidence of the disposition of the merchan-
dise. Id. at 1345. C.H. Robinson might have been able to
avoid liability under § 18.8(c) had it provided, in addition
to the stamped forms, evidence of proper transfer or
disposition of the merchandise, such as bills of lading,
delivery receipts, or valid Mexican pedimentos and other
documentary evidence of importation into Mexico. The
stamped Customs Forms 7512 are insufficient alone to
rebut the Government’s showing that the subject mer-
chandise was never delivered and is “missing” pursuant to
§ 18.8(c).
“Preponderance of the evidence” means “‘the greater
weight of evidence, evidence which is more convincing
than the evidence which is offered in opposition to it.’” St.
Paul Fire & Marine Ins. Co. v. United States, 6 F.3d 763,
769 (Fed Cir. 1993) (quoting Hale v. Dep’t of Transp., Fed.
Aviation Admin., 772 F.2d 882, 885 (Fed. Cir. 1985)).
Here, the “greater weight of the evidence” shows that the
subject merchandise was not properly delivered. C.H.
Robinson did not allege before the Court of International
Trade, and does not allege here, that Mario’s Transports
delivered the subject merchandise to L.E Forwarding or to
Mexico. Because the Government showed that the mer-
chandise was not delivered and C.H. Robinson has not
rebutted this showing or otherwise accounted for the
subject merchandise, the Court of International Trade did
not clearly err in finding that the merchandise is “miss-
ing.”
CONCLUSION
The Court of International Trade’s decision imposing
on C.H. Robinson liability for duties, taxes, and fees in the
US v. C.H. ROBINSON COMPANY 13
amount of $106,407.86 pursuant to 19 U.S.C. § 1553 and
19 C.F.R. § 18.8(c) is
AFFIRMED