Lee v. U.S., SLIP.OP. 02-33.

Decision Date29 March 2002
Docket NumberNo. 97-12-02192.,SLIP.OP. 02-33.,97-12-02192.
Citation196 F.Supp.2d 1351
PartiesByung Wu LEE, Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

Peter S. Herrick, Miami, FL, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General; Joseph I. Liebman, Attorney-In-Charge, and John J. Mahon, Acting Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Aimee Lee and Arthur J. Gribbin); David Fleck, Office of Associate Chief Counsel, U.S. Customs Service, Of Counsel; for Defendant.

OPINION

RIDGWAY, Judge.

Plaintiff Byung Wu Lee ("Mr.Lee") initiated this action pursuant to 19 U.S.C. § 1641(d)(2)(B) to contest the decision of the Secretary of the Treasury ("Secretary") revoking his customhouse broker's license. Mr. Lee has moved for judgment on the agency record under U.S. CIT Rule 56.1 to set aside the Secretary's decision. For the reasons that follow, Mr. Lee's motion is denied, and the Secretary's decision is affirmed.

I. Background

The United States Customs Service ("Customs"), a bureau of the Department of the Treasury, issued a broker's license to Mr. Lee on August 12, 1987. Agency Record ("A.R.") 17 at 4. On two separate occasions in the years that followed, Customs assessed monetary penalties against him for various violations of applicable statutes and regulations. On both occasions, he failed to pay the penalties within 60 days of their assessment.

Mr. Lee's failures to make timely payment themselves constituted new breaches of Customs regulations—specifically, 19 C.F.R. §§ 111.29 and 111.94.1 Invoking 19 C.F.R. § 111.53,2 Customs sought revocation of Mr. Lee's license based on the new charges. The specific facts underlying the new charges were set forth in two so-called "specifications" in the administrative proceedings which ultimately resulted in the decision to revoke Mr. Lee's license, and which are at issue here.

A. Specification I

On August 16, 1990, Customs issued to Mr. Lee a Notice of Intent to Issue Monetary Penalty, advising that Customs was considering assessing a $1,000 penalty against him. That "$1,000 Pre-Penalty Notice" charged Mr. Lee with failure to exercise responsible supervision and control over Customs business conducted (a violation of 19 U.S.C. § 1641(b)(4)) and with failure to obtain a power of attorney before transacting Customs business for a principal (a violation of 19 C.F.R. § 141.46). A.R. 17 at 6.

Through counsel, Mr. Lee responded to the $1,000 Pre-Penalty Notice on September 13, 1990, contesting Customs' allegations and urging that the agency take no further action. A.R. 17 at 7-8. Customs considered but rejected Mr. Lee's arguments and, on January 15, 1991, issued a Notice of Penalty for $1,000 (the "$1,000 Penalty Notice"). A.R. 17 at 9. Mr. Lee responded to the notice through counsel on February 8, 1991, requesting "administrative relief' from the penalty. A.R. 17 at 13-14. After consideration of that second response, Customs rendered its final determination on October 10, 1991 ("Final Determination I"), mitigating the penalty to $250. A.R. 17 at 15.

Customs sent demand letters in November 1991 and in January, March, and April 1992. A.R. 17 at 17, 20, 23, 26. However, Mr. Lee failed to respond. Only after the matter had been forwarded to the Department of Justice for collection did Mr. Lee pay the $250—in January 1993, well more than a year after Customs' Final Determination I. A.R. 17 at 27-28.

B. Specification II

In the meantime, on December 7, 1992, Customs had issued to Mr. Lee another Notice of Intent to Issue Monetary Penalty. That notice (the "$30,000 Pre-Penalty Notice") advised that Customs was considering assessing a $30,000 penalty against Mr. Lee for a laundry list of violations of applicable statutes and regulations identified in an agency audit of his books and records conducted in March 1992.3 A.R. 17 at 29-33.

Mr. Lee filed no response to the $30,000 Pre-Penalty Notice. See A.R. 9, Recommended Decision and Order of Administrative Law Judge John M. Frysiak, In the Matter of Customs Broker's License Revocation of Byung Wu Lee ("ALJ Decision") ¶ 10. After considering the applicable laws and regulations, Customs issued a Notice of Penalty for $30,000 dated January 12, 1993 (the "$30,000 Penalty Notice"). A.R. 17 at 34. In the absence of any submission or other response from Mr. Lee, that determination was deemed to be the agency's final determination ("Final Determination II"). ALJ Decision ¶¶ 11, 23.

Customs sent demand letters in March, April and May 1993. A.R. 17 at 39, 46, 53. Customs' final demand for payment, dated December 15, 1993, offered to explore settlement possibilities. A.R. 17 at 60. The letter also warned Mr. Lee that, absent a response by December 24, 1993, the matter would be forwarded to the Justice Department for collection and action might be taken against his broker's license. Id. Mr. Lee failed to pay the penalty or otherwise respond to Customs' letter. ALJ Decision ¶ 25.

C. The Collection Action and The License Revocation Proceeding

Seeking to collect the $30,000 penalty, the Justice Department brought suit against Mr. Lee in this Court. The collection action, captioned United States v. Byung Wu Lee, Court No. 95-08-01075, was filed August 23, 1995. See A.R. 23.

In parallel with the Justice Department's prosecution of the collection action in this forum, Customs took action at the administrative level, commencing preliminary proceedings to revoke Mr. Lee's broker's license, based on his failure to timely pay the assessed penalties. The Commissioner of Customs approved the initiation of those proceedings on December 7, 1995, pursuant to 19 C.F.R. § 111.53(c), which authorizes license suspension or revocation proceedings where a broker has "violated any provision of any law enforced by Customs or the rules or regulations issued under any such provision." A.R. 28; see also 19 C.F.R. § 111.53(c) (1995).

Customs issued a Notice of Preliminary Proceedings and a Proposed Notice to Show Cause and Statement of Charges ("Proposed Notice to Show Cause") on December 27, 1995. See A.R. 26 at 1; A.R. 27 at 1. The Proposed Notice to Show Cause informed Mr. Lee of the charges against him in two specifications. A.R. 27 at 2. Specification I concerned Mr. Lee's failure to pay the mitigated penalty of $250 within 60 days of Customs' Final Determination I, issued October 10, 1991; Specification II concerned his failure to pay the $30,000 penalty within 60 days of Customs' Final Determination II, issued January 12, 1993. In both instances, the failures to make timely payment were cited as violations of 19 C.F.R. §§ 111.29 and 111.94. The Proposed Notice to Show Cause noted that — almost three years after Customs' Final Determination II—Mr. Lee still had not paid the $30,000 penalty. Id.

By letter from counsel dated January 29, 1996, Mr. Lee requested that the license revocation proceeding be held in abeyance pending resolution of the collection action. A.R. 25. Customs denied the request for an abeyance, but granted Mr. Lee additional time to respond to the proposed charges in the revocation proceeding. A.R. 24.

In a March 4, 1996 submission, Mr. Lee argued that the statute of limitations had expired for the violations which are the basis for Specification I, and that Specification II was "covered" by the $30,000 collection action he was then contesting. A.R. 20. The submission also incorporated by reference Mr. Lee's answer, affirmative defenses, and response to the request for admissions filed in the collection action. A.R. 21-22.

In a supplemental submission dated May 13, 1996, Mr. Lee argued that Customs could not proceed in a revocation action because it was already suing him to collect a penalty based on the same facts. A.R. 19 at 1. The Commissioner of Customs rejected that argument and authorized the institution of formal revocation proceedings on June 14, 1996.4 A.R. 18.

The formal revocation proceedings commenced on August 13, 1996, with Customs' issuance of a Notice of Revocation Proceedings and a Notice to Show Cause and Statement of Charges ("Notice to Show Cause"). See A.R. 16; A.R. 17. Among other things, those documents informed Mr. Lee of his right to file an answer to the charges, his right to be represented by counsel at the formal revocation proceedings, and his right to cross-examine witnesses. A.R. 16 at 1.

D. The Administrative Hearing and The Decision of the Secretary

The license revocation hearing was conducted before an administrative law judge ("ALJ") on September 11, 1996. ALJ Decision ¶ 5. In his Recommended Decision and Order dated December 16, 1996, the ALJ made findings of fact and drew conclusions of law concerning both Specifications I and II, as well as the non-payment of penalties. See generally ALJ Decision.

Based on the record developed before him, the ALJ found that Mr. Lee was on notice that he owed the $250 penalty assessed against him on October 10, 1991, but chose not to pay or otherwise resolve it. ALJ Decision ¶ 24. The ALJ further found that Mr. Lee did not resolve the $250 penalty until January 1993—well more than 60 days following Customs' Final Determination I, and only after a number of demands had issued and the case had been forwarded to the Justice Department for collection. Id.

Based on the record, the ALJ similarly determined that Mr. Lee was on notice that he owed the $30,000 penalty assessed on January 12, 1993, but again chose not to make timely payment or otherwise respond to Customs or resolve the penalty, which—as the ALJ noted—still remained unpaid. Id. ¶ 25.

The ALJ therefore concluded that Customs had met its burden of proof to establish the alleged violations. Specifically, he determined that:

[Customs] . . . proved by a preponderance of the evidence that Mr. Lee twice violated 19 C.F.R. § 111.29 as set forth in Violation I,...

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