U.S. v. Ups Customhouse Brokerage, Inc.
| Citation | 558 F.Supp.2d 1331 |
| Decision Date | 28 May 2008 |
| Docket Number | Slip op. 08-60. Court No. 04-00650. |
| Parties | UNITED STATES, Plaintiff, v. UPS CUSTOMHOUSE BROKERAGE, INC., Defendant. |
| Court | U.S. Court of International Trade |
Gregory G. Katsas, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Melinda D. Hart, Courtney E. Sheehan, and Nancy Kim); Edward Greenwald, of counsel, Department of Homeland Security, U.S. Customs and Border Protection, for Plaintiff.
Akin, Gump, Strauss, Hauer & Feld, LLP, Washington, DC (Terence J. Lynam, Lars-Erik A. Hjelm, and Tamir A. Soliman), for Defendant.
Post-Trial Opinion
The Bureau of Customs and Border Protection ("Customs") initiated this action1 against Defendant, UPS Customhouse Brokerage, Inc. ("UPS") seeking to enforce monetary penalties of $75,000 for UPS's alleged violation of section 641 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1641 (2000) ("the broker statute").2
In order to prevail, Customs needs to satisfy the statutory requirements of section 1641(b)(4),3 which require that it prove, by a preponderance of the evidence, (1) that UPS was a licensed "customs broker"; (2) that UPS was engaged in "customs business"; and (3) that UPS failed to "exercise responsible supervision and control" over its "customs business." 19 U.S.C. § 1641(b)(4). As noted below, the parties have stipulated as to the first two elements. See Agreed Facts ¶¶ 1-8, infra, Therefore, the only remaining legal issue is for Customs to prove, by a preponderance of the evidence, the third element— that UPS failed to "exercise responsible supervision and control."
Customs alleges that UPS failed to "exercise responsible supervision and control" over its customs business by repeatedly misclassifying certain entries of merchandise under subheading 8473.30.9000 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Merchandise properly classified under HTSUS 8473.30.9000 must contain a cathode-ray tube ("CRT"). Notwithstanding extensive warnings to UPS and remedial training by Customs, UPS continued to misclassify a variety of electronic merchandise under HTSUS 8473.30.9000 () (hereinafter "30.90") despite the statutory requirement that items classifiable under 30.90 contain a CRT. UPS's persistence in this regard culminated in multiple violations of the broker statute. Accordingly, Customs levied a total of $90,000 in fines against UPS, of which $15,000 was paid. This action was instituted to collect the remaining $75,000 balance.
A bench trial was held on December 4-6, 2007 and continued on December 19, 2007.4 Testimony was taken from various witnesses and the parties also submitted post-trial briefs on January 30, 2008.5
At trial, the Court heard testimony from six witnesses. Customs produced: (1) Ms. Lydia Goldsmith, a Supervisory Import Specialist and Trade Enforcement Coordinator at the Customs Area Port of Cleveland, Ohio; (2) Mr. Daniel Piedmonte, former Field National Import Specialist at the Customs Area Port of Cleveland, Ohio; (3) Mr. Karl Moosbrugger, former Import Specialist at the Customs Area Port of Cleveland, Ohio; and (4) Mr. Donald J. Woods, a former Compliance Manager at UPS. UPS produced three witnesses in support of its case: (1) again, Mr. Woods; (2) Mr. Norman T. Schenk, Vice President of Brokerage Services at UPS; and (3) Mr. Joe Welch, UPS's former Manager for Training and Customs Compliance. This Court finds the testimony of all witnesses credible and thus probative of the issues in dispute.
Both Customs and UPS introduced at trial documents relating to several categories: (1) the relevant penalty actions and the entries at issue in this litigation; (2) the use of convenience classifications generally and 30.90 in particular; (3) training and education efforts by both Customs and UPS concerning the use of 30.90; (4) Customs's warning letters to UPS concerning its use of 30.90; and (5) internal UPS communications regarding the same. The Court finds this documentary evidence highly probative because it provides contemporaneous accounts of events related to Customs efforts to increase compliance under 30.90, including training, UPS's responses, and the eventual imposition of the penalty actions in this case.
In accordance with USCIT Rule 52(a), and having given due consideration to the' testimony of all six witnesses and documentary evidence presented and admitted by the Court at trial, and for the reasons that follow, the Court enters judgment in favor of Customs pursuant to the following stipulated facts, findings of fact, and conclusions of law.
The Opinion proceeds as follows. Part II sets out the Jurisdiction and Standard of Review. Part III contains the Agreed Facts, as jointly stipulated to by the parties, and Part IV contains the Court's Findings of Fact. Part V contains the Court's Conclusions of Law, and Part VI provides for the eventual entry of judgment pursuant to USCIT Rule 58.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1582(1) (2000).
The Court reviews a case brought under 19 U.S.C. § 1641(d)(2)(A) de novo as to the facts, the law, and the amount of the penalty, 28 U.S.C. § 2640 (2000); United States v. Ricci, 21 CIT 1145, 1146, 985 F.Supp. 125, 126 (1997).
Applying this standard to the material facts in dispute in the instant case, Customs has the burden to establish that the particular entries at issue here do not contain a CRT.6 The parties have stipulated that the merchandise in 37 of the 45 entries at issue in this case do not contain a CRT. (See Agreed Facts ¶ 7, infra.). Three of the remaining eight disputed entries were withdrawn by Customs at trial. (See note 8, infra.) Therefore, Customs need only present evidence that the remaining five entries do not contain a CRT. (See Agreed Facts ¶ 8, infra.)
The parties jointly agreed to the following facts before and during trial:
1. At all times relevant to the matters that are the subject of this action, UPS was a licensed customs broker doing business in Louisville, Kentucky.
2. UPS was the broker of record for the entries that are the subject of this action.
3. A cathode-ray tube ("CRT") is a glass vacuum tube that produces light or images and can serve as a display on a monitor or television.
4. Between January 10 and May 10, 2000, UPS filed with Customs in the Port of Louisville, 60 entries of merchandise under 30.90 that became the subject of penalty case numbers 2000-4196-300217, -300218, -300219, -300221, -300222, -300223, -300319, and -300320.
5. Beginning May 15, 2000, Customs initiated 8 penalty actions against UPS covering the 60 entries referenced in Agreed Facts, ¶ 4, as follows:
A. May 15, 2000: Three Penalty Actions under cases -300217 ($5,000), -300218 ($5,000), and -300219 ($5,000).
B. July 11, 2000: Three Penalty Actions under cases -300221 ($5,000), -300222 ($5,000) and -300223 ($5,000).
C. August 15, 2000: Two Penalty Actions under cases -300319 ($30,000) and -300320 ($30,000).
6. UPS paid $15,000 for the three penalty actions initiated on May 15, 2000.7 The remaining five penalty actions, penalty case numbers 2000-4196-300221, -300222, -300223, -300319, and -300320, comprising 45 of the original total of 60 entries, and representing $75,000 in assessed uncollected penalties, are the subject of the amended complaint filed in this action.
7. In advance of trial, the parties stipulated that the following 37 entries (out of 45 entries) of merchandise, entered under 30.90, did not contain a CRT:
To continue reading
Request your trial
-
US v. UPS Customhouse Brokerage, Inc.
...control of its customs business, and entered judgment for the United States and against UPS. United States v. UPS Customhouse Brokerage, Inc., 32 CIT ___, 558 F.Supp.2d 1331 (2008) ("UPS IV"). UPS successfully appealed, and the Court of Appeals issued an opinion affirming in part, vacating ......
-
U.S. v. Ups Customhouse Brokerage, Inc.
...and 3) the United States is entitled to a judgment in the amount of $75,000 against UPS. United States v. UPS Customhouse Brokerage, Inc., 558 F.Supp.2d 1331 (Ct. Int'l Trade May 28, 2008). We affirm the court's holding that UPS merchandise under subheading 8473.30.9000. Because the Court o......
-
United States v. Ups Customhouse Brokerage Inc.
...vacated and partially remanded this Court's earlier Judgment for Plaintiff following a bench trial, United States v. UPS Customhouse Brokerage, Inc., 32 CIT ----, 558 F.Supp.2d 1331 (2008) (“Post-Trial Decision”). Familiarity with these prior opinions is assumed. Parties' ContentionsI. The ......