United States v. Ho , 2020 CIT 66 ( 2020 )

Slip Op. 20-66
UNITED STATES COURT OF INTERNATIONAL TRADE
UNITED STATES,
Plaintiff,
v.
Before: Timothy M. Reif, Judge
CHU-CHIANG “KEVIN” HO,
Court No. 19-00038
and
ATRIA CORPORATION,
Defendants.
OPINION
[Quashing plaintiff’s service of process upon defendant, denying defendant’s motion to
dismiss pursuant to USCIT Rule 12(b)(1), and extending the time period for plaintiff to
effect service of process pursuant to USCIT Rule 4(l).]
Dated: May 15, 2020
William George Kanellis, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C. for plaintiff. With him on the brief were
Joseph H. Hunt, Assistant Attorney General, Robert E. Kirschman, Jr., Director and
Patricia M. McCarthy, Assistant Director.
Elon A. Pollack and Kayla R. Owens, Stein Shostak Shostak Pollack & O'Hara,
LLP, of Los Angeles, CA for defendant.
Court No. 19-00038 Page 2
“We are all honorable men here, we do not have to give each other assurances
as if we were lawyers.” — Mario Puzo. 1
***
Reif, Judge: The United States of America (“Government” or “plaintiff”) brings this
enforcement action against Atria Corporation (“Atria”) and Chu-Chiang “Kevin” Ho
(“defendant”) (together, “defendants”) to recover penalties pursuant to 19 U.S.C. § 1592
(2012). 2 Defendant requests that the United States Court of International Trade
(“USCIT” or “CIT”) dismiss the Government’s complaint against him in his individual
capacity pursuant to USCIT Rules 12(b)(1), 12(b)(2), 12(b)(5) and 12(b)(6).
Memorandum in Support of Defendant’s Motion to Dismiss, ECF No. 4 (“Def. Mot.
Dis.”). Mr. Ho claims that: (1) the court lacks subject matter jurisdiction because plaintiff
failed to exhaust its administrative remedies; (2) the court lacks personal jurisdiction
over Mr. Ho due to insufficient service of process; and, (3) plaintiff fails to state a claim
upon which relief can be granted. Def. Mot. Dis. at 1.
After review of the filings and applicable law, this court quashes plaintiff’s service
of process upon defendant and orders that plaintiff properly serve defendant within 60
days of this Order. The court also denies defendant’s motion to dismiss pursuant to
USCIT Rule 12(b)(1) for lack of subject matter jurisdiction. 3 However, it is premature for
1
Francis Ford Coppola, THE GODFATHER NOTEBOOK (1969).
2
All references to the United States Code are to the 2012 edition, unless otherwise
stated.
3
“A court presented with a motion to dismiss under both Fed.R.Civ.P. 12(b)(1) and
12(b)(6) must decide the jurisdictional question first because a disposition of a Rule
12(b)(6) motion is a decision on the merits, and therefore, an exercise of jurisdiction.”
Court No. 19-00038 Page 3
the court to rule on defendant’s motions to dismiss pursuant to USCIT Rules 12(b)(2),
12(b)(5) and 12(b)(6), because of the extension of time for service of process granted
herein. Until service is effected, the court does not have personal jurisdiction over
defendant. “Not only does logic compel initial consideration of the issue of jurisdiction
over the defendant — a court without such jurisdiction lacks power to dismiss a
complaint for failure to state a claim.” I Mark Marketing Servs., LLC v. Geoplast S.p.A,
753 F. Supp. 2d 141, 149 (D.D.C. 2010) (citation omitted). Thus, at this time, the court
“lacks power to dismiss a complaint for failure to state a claim” pursuant to USCIT Rule
12(b)(6). Id. (referring to the analogous FRCP 12(b)(6)); see also Norberg v. Shutterfly,
Inc., 152 F. Supp. 3d 1103, 1104 (N.D. Ill. 2015) (“[I]f there is no in personam
jurisdiction the Court will be unable to reach the Rule 12(b)(6) matter.”).
Subject Matter Jurisdiction
BACKGROUND
On March 19, 2019, the Government filed a complaint against Mr. Ho and Atria
for violations of 19 U.S.C. § 1592. Complaint, ECF No. 2 (“Compl.”). Mr. Ho was the
owner and director of Atria, a California company that claims to have manufactured and
distributed indoor and warehouse lighting products. Compl. ¶¶ 3-4. In March 2014,
defendants Atria and Mr. Ho are alleged to have “attempted to enter, or attempted to
cause to be entered, into the United States” HID headlight conversion kits falsely
described as ballasts for interior track lighting fixtures. Id. ¶¶ 5-9. HID kits are
Congregation Rabbinical College of Tartikov, Inc. v. Village of Pomona, 915 F. Supp. 2d
574, 588 (S.D.N.Y. 2013) (quoting Homefront Organization, Inc. v. Motz, 570 F. Supp.
2d 398, 404 (E.D.N.Y. 2008) (internal quotation marks omitted)).
Court No. 19-00038 Page 4
prohibited from importation into the United States because they violate U.S. Department
of Transportation safety laws. Id. ¶ 5. Atria and Mr. Ho are alleged to have “submitted,
or caused to be submitted, to Customs documents which falsely described the HID
headlight conversion kits as ballasts for interior track lighting fixtures.” Id. ¶ 10.
In June 2018, United States Customs and Border Protection (“Customs”) issued
pre-penalty notices to Atria and Mr. Ho. Id. ¶ 12. Two weeks later, Customs issued a
penalty notice to both Mr. Ho and Atria at “all addresses known to be associated with
[Mr. Ho]” — in Fremont, California and Milpitas, California — and to Atria’s corporate
address in Irvine, California. Id. ¶¶ 14, 15. One of the three penalty notices was
returned undelivered. ECF No. 7, Ex. 1 ¶ 7, 8. While Mr. Ho acknowledges receipt of
the pre-penalty notice at the Fremont, California address, Compl. ¶ 15, Mr. Ho claims to
have “never received any penalty notice from U.S. Customs and Border Protection in
this matter,” ECF No. 4, Ex. 3 ¶ 4, including at the Fremont, California address.
STANDARD OF REVIEW
Adjudication of a case before the court is not proper unless the court has subject
matter jurisdiction over the claims presented. See Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 94-95 (1998). Like all federal courts, this Court is one of limited
jurisdiction. It is thus “presumed to be ‘without jurisdiction’ unless ‘the contrary appears
affirmatively from the record.’” DaimlerChrysler Corp. v. United States, 442 F.3d 1313,
1318 (Fed. Cir. 2006) (quoting King Iron Bridge & Mfg. Co. v. Otoe Cty., 120 U.S. 225,
226 (1887)). “[W]hen a federal court concludes that it lacks subject-matter jurisdiction,
the complaint must be dismissed in its entirety.” Arbaugh v. Y & H Corp., 546 U.S. 500,
Court No. 19-00038 Page 5
514 (2006); see Atanasio v. O’Neill, 235 F. Supp. 3d 422, 424 (E.D.N.Y. 2017) (quoting
5B Wright & Miller, Fed. Prac. & Proc. Civ. § 1353 (3d. ed.)) (“A federal court's
entertaining a case that is not within its subject matter jurisdiction is no mere technical
violation . . .”). The party invoking jurisdiction must “allege sufficient facts to establish
the court's jurisdiction,” Milecrest Corp. v. United States, 41 CIT __, __, 264 F. Supp. 3d
1353, 1362 (2017) (citations omitted), and, therefore, “bears the burden of establishing
it.” Norsk Hydro Can., Inc. v. United States, 472 F.3d 1347, 1355 (Fed. Cir. 2006)
(citations omitted). When deciding a motion to dismiss for lack of subject matter
jurisdiction, “[t]he court must draw all reasonable inferences in favor of the non-movant.
Milecrest Corp., 264 F. Supp. at 1362.
LEGAL FRAMEWORK
This Court has exclusive jurisdiction over actions by the United States to recover
penalties imposed for a violation of 19 U.S.C. § 1592. 28 U.S.C. § 1582(1). The Court,
“where appropriate, shall require the exhaustion of administrative remedies.” Id. §
2637(d). Under the doctrine of exhaustion of administrative remedies, “no one is
entitled to judicial relief for a supposed or threatened injury until the prescribed
administrative remedy has been exhausted.” United States v. Int’l Trading Servs., LLC,
40 CIT __, __, 190 F. Supp. 3d 1263, 1269 (2016).
This Court has found that to exhaust its administrative remedies, Customs “must
perfect its penalty claim in the administrative process . . . by issuing a pre-penalty
notice and a notice of penalty.” Int’l Trading Servs., LLC, 190 F. Supp. 3d at 1269. The
pre-penalty notice must include certain information. 19 U.S.C. § 1592(b). Upon finding
Court No. 19-00038 Page 6
a violation, Customs also “shall issue a written penalty claim.” Id. § 1592(b)(1). The
penalty claim “shall specify all changes in the information” provided in the pre-penalty
notice and provide a “reasonable opportunity . . . to make representations, both oral and
written.” Id.
However, “[i]t is [] well established that § 2637(d) grants the court the discretion
to waive § 1592(b) exhaustion in appropriate circumstances.” United States v. Nitek
Elecs., Inc., 36 CIT __, __, 844 F. Supp. 2d 1298, 1303 (2012). The exhaustion of
administrative remedies is not “strictly speaking a jurisdictional requirement.” United
States v. Rotek, Inc., 22 CIT 503, 508 (1998) (citations omitted). Thus, “the court must
focus not on a rigid application of the agency's regulations, but rather, on whether the
defendant was afforded sufficient opportunity to be heard so as to justify the court's
retention of jurisdiction without further exhaustion of the administrative remedies.” Id.
DISCUSSION
I. Positions of the Parties
Defendant moves to dismiss for lack of subject matter jurisdiction on the basis
that plaintiff failed to exhaust its administrative remedies. Def. Mot. Dis. at 1. Mr. Ho
claims that while the Government alleges to have issued a notice of penalty on June 21,
2018, Compl. ¶ 14, Mr. Ho claims to have never in fact received the notice. ECF No. 4,
Ex. 3 ¶ 4.
The purpose of “issu[ing] a written penalty claim” is both to “specify all changes in
the information” provided in the pre-penalty notice as well as to provide “a reasonable
opportunity . . . to make representations, both oral and written.” 19 U.S.C. § 1592(b)(2).
Court No. 19-00038 Page 7
It is on that basis that Mr. Ho argues that “he did not have a reasonable opportunity to
be heard so as to justify the Court’s retention of jurisdiction in this case.” Def. Mot. Dis.
at 10. Customs “must perfect its penalty claim in the administrative process . . . by
issuing a pre-penalty notice and a notice of penalty,” Mr. Ho argues to the court.
Defendant’s Reply to Plaintiff’s Opposition to Defendant’s Motion to Dismiss, ECF No. 8
(“Def. Rep.”) at 9 (citing Int’l Trading Servs., LLC, 190 F. Supp. 3d at 1269). Defendant
submits that proximity to the expiration of the statute of limitations rendered the
circumstance “exceptional” such as to require the use of certified mail and/or Federal
Express appropriate. Def. Rep. at 9. “Because Customs was behind its own deadline .
. . such a circumstance would be considered ‘exceptional.’” Id.
The Government argues that subject matter jurisdiction is proper on the basis
that CBP exhausted its administrative remedies as required under 19 U.S.C. §
1592(b)(2). Pl. Opp. Mot. at 5-8. The Government argues that administrative remedies
were exhausted because Customs issued a penalty notice, and the “mailbox rule”
presumes that it was received by Mr. Ho. 4 Id. at 5-6. The penalty notice was mailed to
Mr. Ho and Atria at three different addresses, and only one of the notices was returned
4
The mailbox rule is a tool used to determine – when evidence is inconclusive –
whether or not receipt has been accomplished. It instructs that:
if a letter properly directed is proved to have been either put into the post office or
delivered to the postman, it is presumed, from the known course of business in
the post office department, that it reached its destination at the regular time, and
was received by the person to whom it was addressed.
Rios v. Nicholson, 490 F.3d 928, 930–31 (Fed. Cir. 2007) (quoting Rosenthal v. Walker,
111 U.S. 185, 193 (1884)).
Court No. 19-00038 Page 8
undelivered. ECF No. 7, Ex. 1 ¶¶ 5-8. Moreover, Mr. Ho admitted to receipt of the pre-
penalty notice at one of the same addresses to which the penalty notices were sent. Pl.
Opp. Mot. at 6. In the alternative, the Government argues that defendant here had
sufficient opportunity to be heard based on receipt of the pre-penalty notice so that
jurisdiction is proper without exhaustion of administrative remedies. Id. at 7.
II. Analysis
Defendant’s claim that this Court lacks subject matter jurisdiction fails because
Customs exhausted its administrative remedies by following the procedure for issuance
of both pre-penalty and penalty notices specified under 19 U.S.C. § 1592. Even if
exhaustion were a matter of jurisdiction, the court finds that Customs exhausted
administrative remedies in this case.
This Court has found that to exhaust its administrative remedies, Customs must
issue a pre-penalty notice and a notice of penalty. Int’l Trading Servs., LLC, 190 F.
Supp. 3d at 1269. Here, evidence offered by the Government demonstrates that
Customs adhered to the administrative process. Notwithstanding defendant’s allegation
that he did not receive a copy of the penalty notices, Customs issued both notices as
required by 19 U.S.C. § 1592(b). As discussed above, copies of the penalty notice
were mailed to Mr. Ho and Atria at three separate addresses (including the address at
which Mr. Ho confirmed receipt of the pre-penalty notice), and only one mailing was
returned undelivered. ECF No. 7, Ex. 1 ¶¶ 5-8. The “mailbox rule” presumes that Mr.
Ho received the penalty notice. See Rios, 490 F.3d at 930-31.
Court No. 19-00038 Page 9
Customs’ standard process is to send notices by regular mail, Id. ¶ 4, but Mr. Ho
would like the court to find the Government at fault in this case for Customs’ failure to
employ special mail procedures. Whether or not use of regular mail was proper in this
case, “[p]rocedural errors by Customs are harmless unless the errors are ‘prejudicial to
the party seeking to have the action declared invalid.’” Am. Nat'l Fire Ins. Co. v. United
States, 30 CIT 931, 942, 441 F. Supp. 2d 1275, 1287 (2006) (quoting Sea-Land Serv.,
Inc. v. United States, 14 CIT 253, 257, 735 F. Supp. 1059, 1063 (1990)). Any such
harmless error here would not justify dismissal of the complaint.
Even assuming arguendo that Mr. Ho never received the notice, dismissal for
lack of subject matter jurisdiction would not be appropriate here. Since Mr. Ho “was
afforded sufficient opportunity to be heard,” Rotek, Inc., 22 CIT at 508, a waiver of the
exhaustion requirement would be warranted based on the circumstances.
Whether a defendant has sufficient opportunity to be heard depends on whether
defendant has notice of the allegations against him, id.; notice may be actual or
constructive. 5 Defendant has not made a sufficient showing that he did not have not
have a reasonable opportunity to be heard in this case. Customs sent the first pre-
penalty notice for this case on June 8, 2018, Compl. ¶ 12, and Mr. Ho confirmed receipt
of this notice. ECF No. 4, Ex. 1 ¶ 3. As the Government points out, Pl. Opp. Mot. at 6-
7, over six months elapsed from the issuance of the pre-penalty notice to the filing of
5
A defendant “has constructive notice if she ‘was or should have been aware that under
certain circumstances she could be held accountable’ for customs penalties owed by a
corporation.” United States v. KAB Trade Co., 21 CIT 297, 300 (1997) (quoting United
States v. Priority Products, Inc., 793 F.2d 296, 301 (Fed. Cir. 1986)).
Court No. 19-00038 Page 10
this lawsuit, providing Mr. Ho “ample opportunity to participate at the administrative
level.” United States v. KAB Trade Co., 21 CIT 297, 301 (1997) (defendant had “ample
opportunity” when more than two years elapsed from the date of the pre-penalty notice
to the beginning of the enforcement action). Since a pre-penalty notice was issued, Mr.
Ho “had constructive — if not actual — notice of the administrative proceedings and the
potential for his personal liability.” Int’l Trading Servs., LLC, 190 F. Supp. 3d at 1271.
Record evidence shows that Mr. Ho “was or should have been aware” of the allegations
against him. KAB Trade Co., 21 CIT at 300.
In sum, Mr. Ho was provided notice of the allegations against him as required by
the statute. Accordingly, his argument that Customs failed to exhaust administrative
remedies lacks merit and this Court has jurisdiction over the claim. Even if
administrative remedies were not exhausted, the circumstances indicate that Mr. Ho
had a sufficient opportunity to be heard.
Service of Process and Personal Jurisdiction
BACKGROUND
It is uncontested that on April 8, 2019, Mr. Ho was served at his residence in
Fremont, California by Timothy Ault, the Government’s process server. 6 However, Mr.
Ho was served with two copies of the complaint only (one for himself and one for the
company) and no summons. ECF No. 4, Ex. 1 ¶ 5. Plaintiff’s Sur-Reply in Support of
6
According to Mr. Ault’s declaration of service, he has been a registered process server
since 1992, during which time he has completed service between 7,000 and 8,000
times per year, on average. ECF No. 14, Ex. 2 ¶ 1. According to Mr. Ault, “[i]t is
extremely rare that defendant [sic] that I have served claims to have not been served.
There were 5 claims in all of 2018.” Id.
Court No. 19-00038 Page 11
Its Opposition to Defendant’s Motion to Dismiss, ECF No. 20 (“Pl. Sur-Rep.”) at 3. The
Government thus sought to serve Mr. Ho again to cure this defect in the initial attempted
service. The Government claims that Mr. Ault attempted to serve Mr. Ho on May 27,
28, 29, and 30, 2019, including attempts early in the morning and late in the evening,
but, according to Mr. Ault, there was no answer at the residence for any of those
attempts. Pl. Sur-Rep. at 4.
The Government claims that Mr. Ault was finally able to effect service of process
on June 1, 2019. Id. at 9-11. To support this claim, the Government relies on the
account of Mr. Ault — who claims that he personally effected service when he “left [the
documents] on the ground in [Mr. Ho’s] presence,” ECF No. 14, Ex. 2 ¶ 4 — as well as
video footage from outside Mr. Ho’s residence. Exhibit A to Declaration of Kevin Ho,
ECF No. 9. However, defendant contests this assertion by providing evidence that
defendant was away from his residence at this time, thus precluding the possibility that
service was effected pursuant to USCIT Rule 4(d). Def. Opp. Mot. at 5-8. Defendant
also denies that video footage supports the Government's claim because the only
person to appear in them is Mr. Ault himself. Id.
STANDARD OF REVIEW
USCIT Rule 12(b)(5) allows a defendant to seek dismissal for insufficient service
of process. A party filing a motion under USCIT Rule 12(b)(5) “is essentially contesting
the manner in which process of service was performed.” Ramirez De Arellano v.
Colloides Naturels Int’l, 236 F.R.D. 83, 85 (D.P.R. 2006) (describing a motion to dismiss
for insufficient service of process under the analogous FRCP 12(b)(5) rule).
Court No. 19-00038 Page 12
Specifically, “[a] Rule 12(b)(5) motion is the proper vehicle for challenging the mode of
delivery or the lack of delivery of the summons and complaint.” 5B Wright & Miller, Fed.
Prac. & Proc. Civ. § 1353 at 340 (3d. ed.).
Once the sufficiency of service of process is challenged, the burden shifts to
plaintiff to prove proper service. Lopez v. Municipality Dorado, 979 F.2d 885, 887 (1st
Cir. 1994). In the case of a factual dispute regarding service, a judge may make factual
findings necessary to resolve motions to dismiss for lack of personal jurisdiction and
ineffective service of process. See, e.g., Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713
(7th Cir. 2002) (personal jurisdiction); 5B Wright & Miller, supra § 1353 at 340, 345
(stating that “the defense of improper service of process involves a matter in abatement
and does not go to the merits of the action” and that any “factual question raised by the
affidavits or other evidence presented on . . . a Rule 12(b)(5) motion should be
determined by the district court”).
When the validity of service of process is unclear, “the simplest solution . . . is to
quash [service of] process and allow the plaintiff another opportunity to serve the
defendant.” 5B Wright & Miller, supra, § 1354. See also Bakhshi v. McCleod-Wilson,
No. 03-5592, 2006 U.S. Dist. LEXIS 58305, at *1 (E.D.N.Y. Aug. 10, 2006) (“[t]he
remedy for service of a defective summons is to quash service of process — not to
dismiss the action”). In doing so, the Court has the “discretion to order conditions,
including time constraints, within which the plaintiff may make [another] attempt at
service.” 5B Wright & Miller, supra, § 1354.
Court No. 19-00038 Page 13
LEGAL FRAMEWORK
I. Effective Service of Process
USCIT Rule 4(d) governs the methods of service of process in this action. Rule
4(d)(2)(A) specifically prescribes that “an individual . . . may be served in a judicial
district of the United States by . . . delivering a copy of the summons and complaint to
the individual personally.” Rule 4(d)(1) also allows for service to be effected by
“following state law for serving a summons in an action brought in courts of general
jurisdiction in the state where service is made.” In this case, that state is California.
California Code of Civil Procedure § 415.10 mirrors USCIT Rule 4(d)(2)(A), stating that,
“A summons may be served by personal delivery of a copy of the summons and of the
complaint to the person to be served. Service of a summons in this manner is deemed
complete at the time of such delivery.”
California courts have long held that, pursuant to the California rule, a party may
not evade service by physically refusing it. For example, California courts will not permit
a defendant “to defeat service by rendering physical service impossible.” Khourie v.
Sabek, Inc., 220 Cal. App. 3d 1009, 1013 (1990). More specifically:
[W]hen [people] are within easy speaking distance of each other and facts occur
that would convince a reasonable [person] that personal service of a legal
document is being attempted, service cannot be avoided by denying service and
moving away without consenting to take the document in hand.
In re Application of Ball, 2 Cal. App. 2d 578, 579 (1934). In such a case, in which the
person being served declined to accept the documents offered, service may be made
merely by depositing the documents in some appropriate place where they would be
Court No. 19-00038 Page 14
most likely to come to the attention of the person being served.” Crescendo Corp. v.
Shelted, Inc., 267 Cal. App. 2d 209, 212 (1968). 7
Finally, federal courts may not exercise personal jurisdiction over a defendant
until “the procedural requirements of service [are] satisfied.” Nuance Communications,
Inc. v. Abby Software House, et al., 626 F.3d 1222, 1236 (Fed. Cir. 2011) (citing Omni
Capital Int’l Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987)). “[A]ctual notice alone”
will not suffice. Osrecovery, Inc. v. One Group Int’l, Inc. et al., 234 F.R.D. 59, 60-61
(S.D.N.Y. 2005); see also Ruttenberg v. Ruttenberg, 53 Cal. App. 4th 801, 808 (1997).
“Although minor or technical defects in a summons in certain circumstances do not
render service invalid, defects that . . . show a flagrant disregard for the rule do,” such
as failing to serve the summons upon the defendant. Osrecovery, Inc., 234 F.R.D. at
59; see also Dill v. Berquist Const. Co., Inc., 24 Cal. App. 4th 1426, 1439, n.12 (1994)
(stating that while the requirement of service in California should be construed liberally,
such liberal construction may not excuse a total failure to comply with the rule).
7
USCIT Rule 4(d)(2)(B) also states that an individual may be served by “leaving a copy
of [the summons and the complaint] at the individual’s dwelling or usual place of abode
with someone of suitable age and discretion who resides there.” California law similarly
allows for an individual to be served by leaving copies with certain other persons at the
individual’s “usual mailing address,” but additional requirements, including “mailing a
copy of the summons and complaint by first-class mail,” are not prescribed in the
analogous USCIT Rule 4(d)(2)(B). See California Code of Civil Procedure § 415.20.
Whether Mr. Ho was served by “someone of suitable and age discretion” besides Mr.
Ault is not at issue in this case.
Court No. 19-00038 Page 15
II. Time Limits for Service of Process
The plaintiff must also effect service within a specified period of time. USCIT
Rule 4(l) governs the time limits for service of process in this action. The rule provides,
in relevant part, that:
If a defendant is not served within 90 days after the complaint is filed, the
court — on motion or on its own after notice to the plaintiff — must dismiss
the action without prejudice against that defendant or order that service be
made within a specified time. But if the plaintiff shows good cause for the
failure, the court must extend the time for service for an appropriate
period.
USCIT Rule 4(l). Thus, the CIT must grant more time to complete service if the plaintiff
demonstrates good cause for failing to serve defendant within the 90-day period. See
id. In addition, the CIT may grant an extension even absent good cause, as a matter of
the court’s discretion. See id.; United States v. Rodrigue, 33 CIT 1453, 1471, 645 F.
Supp. 2d 1310, 1329 (2009) (citing Henderson v. United States, 517 U.S. 654, 662-63
(1996), and the corollary Federal Rule of Civil Procedure 4(m), Advisory Committee
Note, 1993 Amendments).
DISCUSSION
I. Whether Service Was Effected
A. Positions of the Parties
The Government’s argument for service of process is based on a claim of
evasion. Pl. Sur-Rep. at 9-10. As discussed above, under California law a party may
not evade service by physically refusing it. Khourie, 220 Cal. App. 3d at 1013. The
Government claims that on June 1, “Mr. Ho answered the door, recognized Mr. Ault
from his prior service . . . and immediately shut the door to prevent Mr. Ault from
Court No. 19-00038 Page 16
handing him the documents.” Pl. Sur-Rep. at 10. Mr. Ault claims that he and defendant
were “within easy speaking distance of each other.” In re Application of Ball, 2 Cal.
App. 2d at 579. Thus, Mr. Ho’s alleged refusal “to take the documents offered” would
allow for service to be made “by merely depositing the documents in some appropriate
place where they would be most likely to come to the attention of the person being
served,” Crescendo Corp., 267 Cal. App. 2d at 212, as Mr. Ault evidently did here by
leaving the papers on the “ground in his [Mr. Ho’s] presence.” ECF No. 14, Ex, 1 ¶ 4.
The Government also argues that video evidence supports Mr. Ault’s declaration
because it shows Mr. Ault “reacting” to Mr. Ho at the door, 8 Exhibit A to Declaration of
Kevin Ho, ECF No. 9, while footage from a second camera system “may also reflect that
Mr. Ho opened the door” from another angle. 9 Pl. Sur-Rep. at 2. If the events occurred
as the Government alleges, then service was effected under California law in
accordance with USCIT Rule 4(d)(1).
However, defendant rejects Mr. Ault’s account and claims that no one was at his
residence at the time of Mr. Ault’s attempted service, thus precluding the possibility that
service was effected. Def. Opp. Mot. at 5-8. Defendant provides evidence that he was
“either at [a] restaurant or at [his] parents’ home during [the] time of the purported
service,” ECF No. 16, Ex. 5, and did not return to his residence until several days later.
8
To be clear, the Government infers Mr. Ho’s presence based on Mr. Ault’s own body
movements in the video footage.
9
Mr. Ho provided a recording from a second device — a Ring Doorbell System.
According to the Government, “[Mr. Ho] edited it to include only the process server’s
initial few seconds standing at his door. The remainder of the Ring Video should show
the process server reacting to Mr. Ho answering the door.” Pl. Sur-Rep. at 2.
Court No. 19-00038 Page 17
Id. Def. Rep. at 2-3. Defendant attempts to cast doubt on the credibility of Mr. Ault by
pointing out the Government’s admission that Mr. Ault misidentified Mr. Ho in the
companion case, United States v. Ho, CIT No. 19-00102 (“HO II”), ECF No. 9 at 3. In
HO II, Mr. Ault claimed to have personally served Mr. Ho on a date, June 30, when it
was later proven that Mr. Ho was out of the country. Id. Defendant emphasizes that the
only person to appear in the video footage from June 1 is Mr. Ault, and neither Mr. Ho,
nor anyone else, emerges from the residence in the videos provided. Def. Rep. at 2-3.
If defendant’s account is correct, then service could not have been effected in
accordance with USCIT Rule 4(d).
B. Analysis
Here, the court concludes that service was not effected because “plaintiffs have
the burden of proving proper service,” Lopez, 979 F.2d at 887, and the record indicates
that Mr. Ault did not serve Mr. Ho on the date in question. In particular, the reliability of
the process server, the absence of any individual other than Mr. Ault in video
recordings, and the credible evidence provided by defendant that he was elsewhere on
the afternoon of June 1, all call into question the Government’s claim that Mr. Ault
personally interacted with and served Mr. Ho at his residence.
The Government asks the court to resolve a factual dispute regarding service of
process in the Government’s favor by relying upon the account of Mr. Ault and by
making inferences from Mr. Ault’s body movements captured in the video footage (“At
approximately 3:10:20, Mr. Ault turns to the right. It again appears that he is reacting to
something to his front right.”) Pl. Sur-Rep. at 6 (emphasis supplied).
Court No. 19-00038 Page 18
The video footage does not support the inferences that the Government
suggests. The video exhibits ordinary body movements by Mr. Ault outside of the
entrance to Mr. Ho’s door from which the court does not infer the presence of a second
individual. To the contrary, the video shows that Mr. Ault rings the doorbell twice, then
reaches down to place the service papers on the ground outside the door, without any
discernible interaction with another individual. 10
Moreover, the record provides ample reason to question the reliability of Mr.
Ault’s account. Not only did Mr. Ault fail to serve Mr. Ho with a copy of the summons on
April 8, 2019, but he also claimed to have served Mr. Ho in HO II on June 30, 2019, a
date on which Mr. Ho is confirmed by Customs to have been out of the country. HO II,
ECF No. 9 at 3. Further, the Government does not explain adequately its decision to
replace Mr. Ault in HO II. Teleconference, ECF No. 26 at 44:50-46:30. The weight of
the evidence suggests that the decision related to Mr. Ault’s demonstrated unreliability,
despite assertions by the Government to the contrary.
Finally, the declarations of Mr. Ho and other individuals, the receipts and other
evidence of his whereabouts that afternoon, as well as the video recordings, all suggest
that Mr. Ho’s residence was unattended during the alleged service of process.
For these reasons, the Government failed to carry its burden of proof that service
of process was made. As stated above, when the service of process is defective or
10
The court does not believe that additional video footage would contribute to its
understanding of the circumstances surrounding the alleged service of process.
Accordingly, the court declines to order production of any additional video footage.
Court No. 19-00038 Page 19
plaintiff has not met its burden, “the simplest solution . . . is to quash [service of] process
and allow the plaintiff another opportunity to serve the defendant.” 5B Wright & Miller,
supra, § 1354. See also Bakhshi v. McCleod-Wilson, 2006 U.S. Dist. LEXIS 58305, at
*1 (“[t]he remedy for service of a defective summons is to quash service of process —
not to dismiss the action”).
Since the Government has not sufficiently demonstrated proper service, the
appropriate remedy is to quash service. Accordingly, and for the reasons stated above,
the court hereby quashes service of process that purportedly occurred on June 1, 2019.
II. Whether the Court Should Extend Time for Service
The court, in quashing service of process, has the “discretion to order conditions,
including time constraints, within which the plaintiff may make [another] attempt at
service.” 5B Wright & Miller, supra, § 1354. Thus, this court orders that plaintiff effect
service upon defendant by 60 days from the date of this Order.
Defendant may object to the extension of time for service on the grounds that the
service period prescribed by USCIT Rule 4(l) has since expired. However, it is within
this court’s power to grant an extension of time even absent good cause, as a matter of
the court’s discretion. See USCIT Rule 4(l); Rodrigue, 33 CIT at 1471 (citing
Henderson v. United States, 517 U.S. 654, 662–63 (1996), and the corollary Federal
Rule of Civil Procedure 4(m), Advisory Committee Note, 1993 Amendments).
The court does not make a finding on whether good cause exists for an
extension of time because, regardless of the outcome of that inquiry, the court chooses
to extend the service period as a matter of its own discretion. “To decide otherwise
Court No. 19-00038 Page 20
would be a waste of the Court’s and the parties’ time and resources.” Rivera-Otero, 317
F.R.D. at 329. The defects in the Government’s service of process on April 8, 2019,
and June 1, 2019, are easily curable, and there is no significant prejudice to defendant
in defending suit due to this extension. On the other hand, the potential prejudice to the
Government is high if this court elects to dismiss the suit because the statute of
limitations will prevent the Government from refiling.
CONCLUSION
During Episode 5 of Season 2 of the recently concluded Showtime series
Homeland, based on the Israeli series Prisoners of War, 11 Nicholas Brody (played by
Damian Lewis) is brought to an unknown location while in the custody of the Central
Intelligence Agency. Taking over the interrogation, Carrie Mathison (Clare Danes)
confronts Brody about his shifting explanations for the period of time during which he
was held captive by al-Qaeda as a prisoner of war, in particular regarding the possibility
that he was turned by the enemy and poses a significant risk to national security. 12
“What do you say, when people ask you what it was like over there?” Carrie
asks.
“As little as possible,” Brody replies.
“But if they insist?” asks Carrie.
11
PRISONERS OF WAR, or ʭʩʴʥʨʧ, Hatufim – literally “Abductees” – was created and
directed by Gideon Raff and originally aired in Israel from 2010 to 2012.
12
HOMELAND (Teakwood Lane Productions, Cherry Pie Productions, Keshet
Broadcasting, Fox 21 (2011–14), Fox 21 Television Studios (2015–2020), Showtime
Networks, Studio Babelsberg; Executive Producers Debora Cahn, Alex Gansa, Howard
Gordon, et al., 2011-2020).
Court No. 19-00038 Page 21
“I lie. Tell them stories they want to hear,” responds Brody.
Carrie declares in response, “It’s the lies that undo us. It’s the lies we think we
need to survive. When was the last time you told the truth?”
***
In quashing service of process here, this court need not determine nor speculate
as to whether the Government’s process server, Mr. Ault, misrepresented the
circumstances of the alleged service or merely mistakenly identified another individual
as Mr. Ho. Ultimately, such a determination is unnecessary for this court to render the
service of process insufficient.
For the reasons stated above, defendant’s motion to dismiss pursuant to USCIT
Rule 12(b)(1) is denied, and service of process upon defendant is quashed. Further,
defendant’s motion to dismiss for insufficiency of service of process is, for the time
being, denied. The Government is provided sixty (60) days from the date of this Order
to effect proper service on defendant. If service is not made on defendant within that
time, the motion to dismiss for insufficient service of process will be granted. Until
proper service of process is accomplished, this Court lacks personal jurisdiction to
entertain any further proceedings in this cause of action. The court does not rule on
defendant’s 12(b)(2) and 12(b)(5) motions, and, as a result, is unable to address the
12(b)(6) motion at this time.
/s/ Timothy M. Reif
Timothy M. Reif, Judge
Dated: May 15, 2020
New York, New York