United States v. NYCC 1959 Inc. , 182 F. Supp. 3d 1346 ( 2016 )

Slip Op. 16 - 83
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES, Before: Donald C. Pogue,
Senior Judge
Plaintiff,
Court No. 15-00111
v.
NYCC 1959 INC.,
Defendant.
OPINION
[granting plaintiff’s motion for default judgment]
Dated: September 7, 2016
Zachary J. Sullivan, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice,
of Washington, DC, for the Plaintiff. Also on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General,
Jeanne E. Davidson, Director, and Franklin E. White, Jr.,
Assistant Director. Of counsel was Karen Hiyama, Senior
Attorney, U.S. Customs and Border Protection, of Detroit, MI.
Pogue, Senior Judge: The United States brings this
action to recover unpaid duties and a civil penalty, as
permitted by Section 592 of the Tariff Act of 1930, as amended,
19 U.S.C. § 1592 (2012) (“Section 1592”).1 Compl., ECF No. 3,
at ¶ 1. Plaintiff claims that Defendant NYCC 1959 Inc.
(“NYCC”), an importer of candles from the People’s Republic of
1 Further citations to the Tariff Act of 1930, as amended, are to
the relevant provisions of Title 19 of the U.S. Code, 2012
edition.
Court No. 15-00111 Page 2
China (“China”), negligently entered merchandise into the
commerce of the United States by means of materially false
information, in violation of 19 U.S.C. § 1592(a)(1)(A)(i). Id.
at ¶¶ 3-8, 14. Because NYCC failed to timely appear, plead, or
otherwise defend, default was entered. Entry of Default, ECF No.
9. The Government now moves for default judgment pursuant to
USCIT Rule 55(b). Pl.’s Mot. for Default J., ECF No. 12.
The court has jurisdiction pursuant to 28 U.S.C.
§ 1582(1) (2012).
As further explained below, because the Government’s
well-pleaded complaint and supporting evidence adequately
establish the defaulting Defendant’s liability for negligent
violations of Section 1592 as a matter of law, Plaintiff’s
motion for a default judgment is granted. Judgment shall be
entered against the Defendant for the unpaid duties owed as a
result of these violations. In addition, because the
Government’s adequately documented, certain claim for a civil
penalty against NYCC is in an amount that is within the
statutory limit for such violations, judgment shall also be
entered for the Plaintiff on its penalty claim.
DISCUSSION
Because a defendant who defaults thereby admits all
well-plead factual allegations contained in the complaint, e.g.,
Court No. 15-00111 Page 3
City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137
(2d Cir. 2011) (“It is an ancient common law axiom that a
defendant who defaults thereby admits all well-pleaded factual
allegations contained in the complaint.”) (quotation marks and
citation omitted), the court must enter judgment against NYCC if
(1) Plaintiff’s allegations establish NYCC’s liability as a
matter of law, see id.,2 and (2) “the plaintiff’s claim is for a
sum certain or for a sum that can be made certain by
computation.” USCIT R. 55(b).3
I. Admitted as True, the Government’s Factual Allegations
Establish NYCC’s Liability as a Matter of Law.
Section 1592 prohibits the entry of merchandise into
the commerce of the United States by means of “any document or
electronically transmitted data or information, written or oral
statement, or act which is material and false,” if the
2 See also, e.g., United States v. Freight Forwarder Int’l, Inc.,
__ CIT __, 44 F. Supp. 3d 1359, 1362 (2015) (relying on Mickalis
Pawn Shop, 645 F.3d at 137).
3 USCIT Rule 55(b) provides that “[w]hen the plaintiff’s claim is
for a sum certain or for a sum that can be made certain by
computation, the court – on the plaintiff’s request with an
affidavit showing the amount due – must enter judgment for that
amount and costs against a defendant who has been defaulted for
not appearing and who is neither a minor nor an incompetent
person.” Plaintiff’s complaint alleges that NYCC is a
corporation, not a minor or an incompetent person. See Compl.,
ECF No. 3, at ¶ 3 (averring that, “[u]pon information and
belief,” Defendant NYCC is “a New York corporation . . . engaged
in the importation of candles”).
Court No. 15-00111 Page 4
responsible person acted with “fraud, gross negligence, or
negligence.” 19 U.S.C. § 1592(a)(1)(A)(i). Here, the Government
adequately alleges that NYCC entered merchandise into the
commerce of the United States using entry documents that falsely
indicated to U.S. Customs and Border Protection (“Customs”) that
the merchandise in question was not subject to any antidumping
duties. Compl., ECF No. 3, at ¶¶ 4-7 & Ex. A. In fact
(accepting, as necessary in cases of default, the truth of the
Plaintiff’s factual allegations, Mickalis Pawn Shop, 645 F.3d at
137), the merchandise – candles from China containing petroleum
wax – was covered by an antidumping duty order. Compl.,
ECF No. 3, at ¶¶ 4-5 (citing Petroleum Wax Candles from [China],
51 Fed. Reg. 30,686 (Dep’t Commerce Aug. 28, 1986) (antidumping
duty order)).
The false entry information was material to Customs’
evaluation of NYCC’s duty liability for these entries because it
affected Defendant’s antidumping duties, see Compl., ECF No. 3,
at ¶¶ 6, 8; United States v. Rockwell Int’l Corp., 10 CIT 38,
42, 628 F. Supp. 206, 210 (1986) (“[T]he measurement of the
materiality of the false statement is its potential impact upon
Customs’ determination of the correct duty for the imported
merchandise.”) (citations omitted). Therefore, the Government’s
factual allegations, deemed admitted by the defaulting
Defendant, establish that NYCC entered merchandise into the
Court No. 15-00111 Page 5
commerce of the United States by means of information that was
both material and false. Accordingly, admitted as true, the
Government’s factual allegations establish NYCC’s liability
under Section 1592 as a matter of law. See 19 U.S.C.
§ 1592(a)(1)(A)(i). Judgment must therefore be entered against
NYCC for the underpayment of duties that resulted from these
violations. See Compl., ECF No. 3, at ¶¶ 8-11.
Moreover, in the absence of any defense by the
Defendant, the Government’s uncontested factual allegations are
also sufficient to establish NYCC’s liability under Section 1592
for a monetary penalty based on negligence. See 19 U.S.C.
§ 1592(e)(4) (“Notwithstanding any other provision of law, in
any proceeding commenced by the United States in the Court of
International Trade for the recovery of any monetary penalty
claimed under [Section 1592] . . . if the monetary penalty is
based on negligence, the United States shall have the burden of
proof to establish the act or omission constituting the
violation, and the alleged violator shall have the burden of
proof that the act or omission did not occur as a result of
negligence.”). Accordingly, the next question before the court
is the claimed penalty amount.
II. The Penalty Amount
Section 1592 provides a maximum civil penalty amount
Court No. 15-00111 Page 6
for penalties based on negligent violations. 19 U.S.C.
§ 1592(c)(3). Where (as here) the material misrepresentation
that forms the basis of the negligent violation concerned the
assessment of duties, the amount of the penalty may not exceed
the lesser of “the domestic value of the merchandise” or “two
times the lawful duties, taxes, and fees of which the United
States is or may be deprived.” See id. at § 1592(c)(3)(A).
Here the Government alleges, providing supporting
evidence, that the total domestic value of the entries in
question was $270,611.26. See Compl., ECF No. 3, at ¶ 15 n.1
& Ex. A; Decl. of Elena Pietron, ECF No. 12-1 (“Pietron Decl.”),
at ¶¶ 4-6, 9 & Ex. 5. The Government also provides evidence
that the potential antidumping duty loss was $138,509.21.
See Pietron Decl., ECF No. 12-1, at ¶ 7.4 Two times this amount
is $277,018.42. Accordingly, the maximum allowable penalty
amount for NYCC’s negligent violation of Section 1592 with
respect to these entries is $270,611.26, which is the lesser of
the two amounts. See 19 U.S.C. § 1592(c)(3)(A).
4 $138,509.21 is the sum of the duties owed on each of the three
entries at issue – $49,574.33 plus $46,127.14 plus $42,807.74.
See Pietron Decl., ECF No. 12-1, at ¶ 7. Although $49,574.33 of
this amount was paid by NYCC’s surety, Compl., ECF No. 3,
at ¶ 8, such that only $88,934.88 remains in actual lost
revenue, the statute contemplates the full amount of the
potential duty loss. See 19 U.S.C. § 1592(c)(3)(A)(ii) (“two
times the lawful duties, taxes, and fees of which the United
States is or may be deprived”) (emphasis added).
Court No. 15-00111 Page 7
After taking appropriate preliminary steps, see Decl.
of Wanda Vela, ECF No. 12-2 (“Vela Decl.”), at ¶¶ 3-4, 8,
Customs ultimately issued to NYCC a formal demand for payment of
the $88,934.88 in unpaid antidumping duties and a penalty of
$266,671.78, both of which remain unpaid. Compl. ECF No. 3,
at ¶¶ 9-11. Because the amount of the claimed penalty falls
within the statutory cap set by the lesser of the merchandise’s
domestic value and two times the potential duty loss, the
Government’s assessed penalty amount in this case is within the
scope of authority provided by 19 U.S.C. § 1592(c)(3)(A).
Because Defendant has defaulted, it raises no equitable claim,
argument, or factual allegations supportive of a lesser penalty
amount. Judgment shall therefore be entered for the unpaid
antidumping duties and the penalty as claimed, plus post-
judgment interest, see 28 U.S.C. § 1961(a), and pre-judgment
interest on the unpaid duties,5 see United States v. Nat’l
5 Pre-judgment interest on the outstanding duty amount shall be
computed pursuant to 26 U.S.C. § 6621, see 19 U.S.C. § 1677g(b),
from April 14, 2015 – the date of the summons in this action,
Summons, ECF No. 1 – rather than the last formal demand for
payment, see Vela Decl., ECF No. 12-2, at ¶ 8 & Ex. 3, in
recognition of the Government’s continued consideration of the
matter in exchange for NYCC’s waiver of the statute of
limitations, see id. at ¶ 11 & Ex. 5 (Statute of Limitations
Waiver Form) (stating that NYCC waived the statute of
limitations, after Customs’ formal demand for payment, to
“obtain the benefits of the orderly continuation and conclusion”
(footnote continued)
Court No. 15-00111 Page 8
Semiconductor Corp., 547 F.3d 1364, 1369-70 (Fed. Cir. 2008)
(pre-judgment interest not available for penalties pursuant to
19 U.S.C. § 1592(c)); United States v. Horizon Prods. Int’l
Inc., __ CIT __, 82 F. Supp. 3d 1350, 1355 (2015) (awarding pre-
judgment interest solely on outstanding duty amount in a penalty
action), plus costs. See USCIT Rule 55(b) (requiring the entry
of judgment for the plaintiff, plus costs, when the plaintiff’s
claim is for a sum certain against a competent defendant who has
been defaulted for not appearing); supra note 3 (providing
relevant text of USCIT Rule 55(b)).
CONCLUSION
For all of the foregoing reasons, the Government’s
motion for default judgment against NYCC for a negligent
violation of 19 U.S.C. § 1592(a) is granted. Judgment shall be
entered in the amount of $355,606.66 ($88,934.88 in unpaid
antidumping duties plus $266,671.78 in penalty), plus
post-judgment interest, computed in accordance with 28 U.S.C.
§§ 1961(a)-(b), as well as pre-judgment interest solely on
$88,934.88 (the outstanding duty amount), computed pursuant to
of the agency’s continued review of the entries in question).
As the evidence presented does not establish any other date for
the conclusion of this additional review (and hence the true
finalization of the demand for payment), the summons provides
the earliest equitable date from which to compute pre-judgment
interest.
Court No. 15-00111 Page 9
26 U.S.C. § 6621, from April 14, 2015 (the date of the
unanswered summons), until the date of judgment, plus costs.
_______/s/ Donald C. Pogue___
Donald C. Pogue, Senior Judge
Dated: September 7, 2016
New York, NY