US v. Daewoo Intern.(America) Corp.

• Decision Date: 29 September 1988
• Docket Number: Court No. 87-03-00528.
• Parties: UNITED STATES of America, Plaintiff, v. DAEWOO INTERNATIONAL (AMERICA) CORPORATION and Daewoo Corporation, Defendants.
• Court: U.S. Court of International Trade

696 F. Supp. 1534

12 CIT 889

UNITED STATES of America, Plaintiff, v. DAEWOO INTERNATIONAL (AMERICA) CORPORATION and Daewoo Corporation, Defendants.

Court No. 87-03-00528.

United States Court of International Trade.

September 29, 1988.

COPYRIGHT MATERIAL OMITTED

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice (A. David Lafer and Jeanne E. Davidson), Washington, D.C., of counsel, Robyn M. Bacon, Los Angeles, Cal., Charles D. Ressin, Sandra Strempel and Kathleen F. McGuigan, U.S. Customs Service, Washington, D.C., for plaintiff.

Milbank, Tweed, Hadley & McCloy (Richard D. Cleary, Edward J. Reilly, New York City, and Stanley J. Marcuss), Washington, D.C., for defendants.

MEMORANDUM OPINION

TSOUCALAS, Judge:

The government alleges defendants fraudulently imported 236 entries of steel and steel products into the United States in violation of 19 U.S.C. § 1592 and seeks to recover $163,065,386.00 assessed in penalties. Plaintiff has moved for partial judgment on the pleadings pursuant to USCIT R. 12(c) claiming defendants are estopped from denying their liability as to nine of the entries because they had previously pleaded guilty in a criminal action which involved these nine entries.

Defendants oppose plaintiff's motion for partial judgment on the pleadings arguing the Court should not give collateral estoppel effect to the guilty pleas because: (1) no issues were actually litigated in that proceeding; (2) there is a lack of identity in issues between the criminal violations and the civil violations of 19 U.S.C. § 1592; (3) 19 U.S.C. § 1592 requires a full evidentiary hearing; and (4) defendants' affirmative defenses bar plaintiff's recovery. Plaintiff has moved to strike defendants' affirmative defenses and to strike an affidavit of a former Customs' official submitted by defendants in support of their affirmative defenses.

Background

On January 3, 1985, defendants Daewoo International Corporation (Daewoo-America), Daewoo Corporation (Daewoo-Korea), and the president of Daewoo-Korea pleaded guilty to Counts One through Ten of a Superseding Information. See Plaintiff's Memorandum in Support of its Motion for Partial Judgment on the Pleadings, Attachments B, C (hereinafter "Plaintiff's Memorandum"). In the Information, defendants were charged with knowingly, willfully and unlawfully making and causing to be made material false and fraudulent statements and representations to the United States Customs Service (Customs) and the United States Department of Commerce (Commerce). Plaintiff's Memorandum, Attachment B. These statements were made on consumption entries including Special Summary Steel Invoices (SSSI) in connection with the importation of steel in violation of 18 U.S.C. § 1001 (covering false statements) and other Federal Criminal Statutes. In substance, defendants sought to avoid the Trigger Price Mechanism (TPM), which was a means to monitor dumping: if steel was sold below the trigger price, an antidumping duty investigation could be initiated. Defendants submitted false declarations to Customs whereby the sales prices were falsely inflated. A criminal investigation resulted in a 32 Count Grand Jury Indictment against Daewoo-America, Daewoo-Korea, and other individuals. See Plaintiff's Memorandum, Attachment A.

Count One of the Information alleged the factual elements of the conspiracy to fraudulently enter steel products:

A. INTRODUCTORY ALLEGATIONS:

....

6. At all times relevant to this information, importers of various steel products were required, at or near the time of importation, to submit consumption entry documents to the United States Customs Service concerning the importation, including, but not limited to: Consumption Entry forms (Form No. 7501); Special Summary Steel Invoices (Form No. 5220); Commercial Invoices; and Special Customs Invoices (Form No. 5515).

7. At all times relevant to this information, consumption entry documents filed with the United States Customs Service in connection with an entry of merchandise were required to set forth truthful information concerning the price of the merchandise, including a statement as to whether a rebate has been allowed upon exportation of the merchandise from the foreign country into the United States. Title 19, United States Code, Sections 1481(a) and 1485(a).

8. At all times relevant to this information, the Antidumping Act, Title 19, United States Code, Section 160 et seq., as amended, 19 U.S.C. 1673-1677, provided for the imposition of additional duties, known as dumping duties, if the Government determined that foreign merchandise was being imported into the United States at less than its fair value and that this conduct was injuring an industry of the United States.

9. In an effort to detect possible dumping of foreign steel products and to enforce the provisions of the Antidumping Act, on or about December 30, 1977, the United States Treasury Department announced a program to monitor the prices of steel mill products imported into the United States, which monitoring device was called the Trigger Price Mechanism (TPM). Under the TPM program, administered at various times by the United States Treasury and Commerce Departments, if various steel products imported into this country were sold below a specific price, known as the "trigger price," an anti-dumping investigation could be instituted by the United States. Trigger prices for steel were published by the Department of the Treasury during the period February 1978 to January 11, 1982, with the exception of a six-month period in 1980.

B. OBJECT OF THE CONSPIRACY

10. From on or about January 1980 and continuing to or about June of 1982 in the Central District of California and elsewhere, the defendants DAEWOO-KOREA and DAEWOO-AMERICA, knowingly, willfully and unlawfully conspired, combined, confederated and agreed together to commit an offense against the United States; that is, to knowingly, willfully and unlawfully make and cause to be made to the United States Customs Service and the United States Department of Commerce material false and fraudulent statements and representations in connection with the importation of steel products referred to in those consumption entries identified in counts two through ten below in violation of 18 U.S.C. 1001.

C. MEANS OF THE CONSPIRACY

In order to further the objects of the conspiracy as set forth in paragraph 10 and to conceal the true prices of these steel product transactions and avoid and evade the proper application of the Trigger Price Mechanism and avoid possible anti-dumping investigations, the defendants DAEWOO-KOREA and DAEWOO-AMERICA would and did cause falsely inflated sale prices to its American customers to be reported to the United States Customs Service with respect to those consumption entries referred to in counts two through ten, below, and further with respect to those consumption entries:

(1) It was a part of the conspiracy that in order to disguise the actual price of the imported steel products DAEWOO-AMERICA would issue falsely inflated invoices to its unrelated resale customers, and that these inflated invoices would coincide with the falsely inflated prices submitted to the Customs Service;

(2) It was a part of the conspiracy that, even at the time of the entry of the steel and at the time of the issuance of the inflated invoices, DAEWOO-AMERICA would expect its American resale customers to pay only the actual agreed purchase order prices rather than the falsely inflated invoice prices; and

(3) It was a part of the conspiracy that DAEWOO-AMERICA would keep internal records of the difference between the false invoice prices and the actual agreed purchase order prices and would prepare internal credit memoranda to credit customers' accounts for "trigger price difference" amounts.

Plaintiff's Memorandum, Attachment B at 1-5.

Counts Two through Ten describe the individual occurrences in which defendants "did knowingly, willfully and unlawfully make and cause to be made a material false and fraudulent statement and representation on a Special Summary Steel Invoice (Form 5520) ... (In violation of 18 U.S.C. 1001 and 2)." Id. at 6.

Discussion

Plaintiff has moved for partial judgment on the pleadings in connection with the nine entries subject to defendants' guilty pleas. Plaintiff's motion for judgment on the pleadings must be denied if, as against the defendants, any factual issue is raised, but granted if there is no factual dispute and plaintiff is clearly entitled to judgment as a matter of law. C.J. Tower & Sons of Buffalo, Inc. v. United States, 68 Cust.Ct. 377, 379, C.R.D. 72-11, 343 F.Supp. 1387, 1390 (1972). It must appear to a certainty that defendants are not entitled to judgment under any facts that may be proved, viewing the pleaded facts most favorably toward defendants, and drawing all reasonable inferences thereto. Id.; F.W. Myers & Co. v. United States, 72 Cust.Ct. 133, 135, C.D. 4515, 374 F.Supp. 1395, 1397 (1974). Plaintiff maintains defendants are collaterally estopped from denying liability under § 1592, since defendants' guilty pleas to § 1001 establish the elements of the offense under § 1592.¹

The basic concept behind collateral estoppel is to preclude relitigation of an issue. Thus, issue preclusion may be invoked where a subsequent action involves the same issue of fact or law which was actually litigated and determined in the first action, where that determination was essential to the previous judgment, and where a full and fair opportunity to litigate the issue was afforded. See Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979); also Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 333, 91 S.Ct. 1434, 1445, 28 L.Ed.2d 788 (1971); Cromwell v. County of Sac, 94 U.S. 351, 353, 24 L.Ed. 195 (1877); Jackson Jordan, Inc. v. Plasser American Corp., ...