79 F.Supp.3d 1343 (CIT. 2015), 14-00045, United States v. NYCC 1959 Inc.
|Citation:||79 F.Supp.3d 1343|
|Opinion Judge:||Donald C. Pogue, Senior Judge.|
|Party Name:||UNITED STATES, Plaintiff, v. NYCC 1959 INC., Defendant|
|Attorney:||No. 14-00045 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, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., ...|
|Judge Panel:||Before: Donald C. Pogue, Senior Judge.|
|Case Date:||June 19, 2015|
|Court:||Court of International Trade|
granting plaintiff's motion for default judgment.
The United States brings this action to recover a civil penalty as permitted by Section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (2012) (" Section 592" ).1 The Government claims that Defendant NYCC 1959 Inc. (" NYCC" ), an importer of candles from the People's Republic of China (" China" ), unlawfully attempted to enter 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).2 Because NYCC failed to timely appear, plead, or otherwise defend, default was entered against it.3 The Government now moves for default judgment pursuant to USCIT Rule 55(b).4
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 a grossly negligent violation of Section 592 as a matter of law, Plaintiff's motion for a default judgment is granted. In addition, because the Government's claim is for a civil penalty amount within the statutory limit for such violations, judgment shall be entered for the Plaintiff accordingly.
Here, Defendant NYCC has defaulted by not appearing. Entry of Default, ECF No. 7. Because a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint,5 the court must enter judgment against NYCC if (1) " the plaintiff's allegations establish the defendant's liability as a matter of law," 6 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).7
I. Admitted as True, the Government's Factual Allegations Establish NYCC's Liability as a Matter of Law.
Section 592 prohibits attempts to " enter or introduce any 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 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 submitted entry documents to U.S. Customs and Border Protection (" Customs" ) that falsely indicated that the merchandise in question was not subject to any antidumping duties.8 In fact (accepting, as necessary in cases of default, the truth of the Plaintiff's factual allegations9), the merchandise NYCC attempted to enter - candles from China wholly composed of petroleum wax - was covered by an antidumping duty order.10 Because the false entry information was material to Customs' evaluation of NYCC's duty liability for the attempted entry,11 the Government's factual allegations, deemed admitted by the defaulting Defendant, establish that NYCC attempted to enter merchandise into the commerce of the United States by means of information that was both material and false.
In the absence of any defense by the Defendant, these factual allegations are sufficient to establish NYCC's liability under Section 592 for a monetary penalty based on negligence.12 The next inquiry, therefore, concerns the Government's alternative claim to a monetary penalty based on gross negligence.13
" Gross negligence, for purposes of [S]ection 592, is behavior that is willful, wanton, or reckless, or demonstrates an 'utter lack of care.'" 14 Here the Government alleges that, prior to the entry attempt in question, NYCC had " twice attempted to enter Chinese candles from the same manufacturer without payment of antidumping duties," 15 and that in both prior instances Customs had tested the merchandise and determined it to be subject to the antidumping duty order covering petroleum wax candles from China.16 In both prior instances, Customs issued to NYCC a rate advance for the antidumping duties, the first of which was paid by NYCC's surety and the other of which remains outstanding.17 These undenied allegations establish sufficient prior knowledge by NYCC to constitute a complete lack of care, demonstrating that when NYCC falsely indicated to Customs that the merchandise covered by this attempted entry was not subject to antidumping duties, it did so " with actual knowledge of or wanton disregard for the relevant facts and with indifference to or disregard for its obligation to file the entry as subject to antidumping duties." 18
Thus the Government has met its burden to establish NYCC's liability for a grossly negligent violation of Section 592. The remaining question before the court is the claimed penalty amount.
II. The Penalty Amount
Section 592 also provides for the civil penalty amount to be assessed for gross negligence.19 Where (as here) the material misrepresentation that forms the basis of the grossly 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 " four times the lawful duties, taxes, and fees of which the United States is or may be deprived." 20 The Government alleges that the attempted entry in question consisted of 1160 cartons of candles, with an " entered value" of $33,396.00,21 a " dutiable value" determined by Customs to be $38,275.20,22 and a " domestic value" 23 calculated by Customs to be $101,759.59.24 This attempted false entry is alleged to have " resulted in a potential loss of antidumping duties of $41,452.04," 25 based on a 108.3 percent ad valorem antidumping duty rate applicable to petroleum wax candles imported from China.26 Customs assessed a penalty of $15,310.08 - which is alleged to represent 40 percent of the calculated dutiable value of the merchandise - for NYCC's grossly negligent violation of Section 592.27 NYCC has not paid any part of this penalty.28
Although the Government's presentation of its case has not always been precise,29 the facts alleged are sufficient to establish that the amount of the claimed penalty - $15,310.08 - falls within the statutory cap set by the lesser of either the merchandise's domestic value or four times the potential duty loss.30 NYCC itself entered the value of the merchandise as...
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