United States v. C.H. Robinson Co.

• Decision Date: 28 July 2014
• Docket Number: No. 2013–1168.,2013–1168.
• Citation: 760 F.3d 1376
• Parties: UNITED STATES, Plaintiff–Appellee, v. C.H. ROBINSON COMPANY, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

760 F.3d 1376

UNITED STATES, Plaintiff–Appellee,

v.C.H. ROBINSON COMPANY, Defendant–Appellant.

No. 2013–1168.

United States Court of Appeals, Federal Circuit.

July 28, 2014.

Richard F. O'Neill, Neville Peterson LLP, of New York, New York, argued for defendant-appellant. With him on the brief was John M. Peterson.

Before O'MALLEY, REYNA, and WALLACH, Circuit Judges.

REYNA, Circuit Judge.

C.H. Robinson Company (“C.H. Robinson”) appeals the final decision of the U.S. Court of International Trade finding C.H. Robinson liable for duties, taxes, and fees for certain entries of wearing apparel from China. United States v. C.H. Robinson Co., 880 F.Supp.2d 1335 (Ct. Int'l Trade 2012). For the reasons below, we affirm.

Background

This appeal arises out of an action brought by the United States against C.H. Robinson, a Customs-bonded carrier, to recover certain duties, taxes, and fees under Section 553 of the Tariff Act of 1930, 19 U.S.C. § 1553, and 19 C.F.R. § 18.8(c). Specifically, the Government seeks to recover duties, taxes, and fees accrued for three entries (“subject entries”) of wearing apparel from the People's Republic of China (“subject merchandise”), which entered the United States as Transportation & Exportation (“T & E”) entries but were never exported and are currently “missing.”

The subject merchandise entered the United States in December 2001 at the Port of Los Angeles under T & E numbers 609.203.744, 609.203.873, and 609.203.862. Intercambio Commercial Ekim S.A. (“Intercambio”), a Mexican company, was the importer of record and consignee of the subject merchandise. The T & E entry documents designated C.H. Robinson as the bonded carrier and indicated that the merchandise was to be delivered to the care of L.E. Forwarding & Freight Broker (“L.E. Forwarding”) in Laredo, Texas, for exportation to Mexico. C.H. Robinson engaged Mario's Transports Inc. to transport the subject merchandise from Los Angeles to Laredo.

Although there is no dispute that the subject merchandise left Los Angeles, it is not clear what happened to the merchandise after that. What is known is that, on January 2 and 4, 2002, Mario Peña, Inc. (“Peña”), a U.S. licensed customs broker, stamped the T & E entry documents (Customs Forms 7512) at an unmonitored stamp machine in the lobby of the export lot of the U.S. Customs Service (“Customs”) at the Port of Laredo. Peña did not transport the subject merchandise to the export lot, nor did he see, inspect, or take possession of the subject merchandise. Peña's official log book shows receipt of the T & E entry forms, but does not show a corresponding date of exportation for each entry.

Customs never inspected or took possession of the subject merchandise at the Port of Laredo. At the time, Customs used a self-regulating process at the Port of Laredo in which Customs did not supervise exportation or require carriers to report their arrival at the port of destination or the exportation of the merchandise. Instead, Customs relied on a post-audit system designed to ensure compliance with procedures for T & E entries. Through this post-audit system, Customs selectively required carriers to demonstrate disposition of the merchandise upon Customs' request. The combined reliance on an export lot and a post-audit process was neither uncommon nor unusual at the time, in particular along the U.S.-Mexico border.

In March 2002, Customs initiated a post-audit on the subject merchandise and contacted C.H. Robinson requesting information regarding the disposition of the merchandise. C.H. Robinson informed Customs that the merchandise had been exported to Mexico. As proof of exportation, C.H. Robinson submitted the stamped T & E entry forms and three stamped Mexican importation forms, or “pedimentos,” that were provided by Intercambio.

Customs contacted Mexican Customs authorities to verify the authenticity of the pedimentos. After Mexican authorities confirmed that the pedimentos were false, Customs issued three notices of liquidated damages claims against C.H. Robinson's custodial bond, each for $25,000. The notices charged C.H. Robinson with misdelivery of the subject merchandise in violation of 19 C.F.R. § 18.8. In response, C.H. Robinson submitted administrative petitions to Customs, seeking a reduction in the amount of liquidated damages. Based upon mitigation guidelines, Customs reduced the amount of liquidated damages owed for the three subject entries from $75,000 to $57,212.

C.H. Robinson paid the $57,212 in 2004 and filed a complaint in the U.S. Court of Federal Claims seeking a full refund. The Court of Federal Claims stayed the action to permit the Government to pursue collection of duties against C.H. Robinson. Customs made a demand on C.H. Robinson, pursuant to 19 U.S.C. § 1553 and 19 C.F.R. § 18.8(c), for payment of $106,407.86, plus interest, for duties, taxes, and fees owed on the subject entries. The demand explained that C.H. Robinson failed to ensure that the subject merchandise was exported to Mexico and, consequently, “[t]he goods subject to quota/visa restrictions were diverted into the United States resulting in a loss of lawful duties due to the government.” Joint Appendix (“J.A.”) at 207. C.H. Robinson did not protest the demand or pay the duties, and its challenge to Commerce's assessment of liquidated damages pending before the Court of Federal Claims remained stayed.

In 2006, the Government filed the present action in the Court of International Trade seeking to recover the $106,407.86 in unpaid duties, taxes, and fees. In March 2007, C.H. Robinson moved to dismiss the Government's complaint for failure to state a claim upon which relief may be granted, alleging that 19 U.S.C. § 1553 does not allow the collection of duties. The Court of International Trade denied C.H. Robinson's motion to dismiss, explaining that section 1553 contemplates that Customs will promulgate regulations governing T & E entries and, in turn, 19 C.F.R. § 18.8(c) imposes an obligation on the bonded carrier to pay duties on any “missing” merchandise. In January 2010, the Court of International Trade further clarified that the Government would bear the burden of persuasion at trial to show by a preponderance of the evidence that the subject merchandise is “missing” within the meaning of § 18.8(c). The court also noted that the Government's burden of persuasion may be satisfied by “cast[ing] enough suspicion over the exportation/nonexportation of the merchandise for the fact-finder to conclude that the merchandise was not exported.” J.A. at 55.

Following a bench trial, the Court of International Trade found C.H. Robinson liable for the duties, taxes, and fees demanded by the Government. First, the court found that the Government established by a preponderance of the evidence that the subject merchandise was missing. Among other evidence, the court considered expert testimony by the Assistant Commissioner for Post–Import and Commercial Fraud for the Mexican Customs Service, Rodolfo Torres Herrera, who confirmed that the pedimentos were false and contained numerous discrepancies that were unverifiable by search of official Mexican electronic databases: the name of the Mexican customs broker did not match the broker license number; the tax identification number and population registration number for the broker did not exist; and there was no record of a relationship between the importing company and the broker or the bank listed as having received payment of Mexican customs duties. See C.H. Robinson, 880 F.Supp.2d at 1341–42. Mr. Torres Herrera testified that, in his experience, illegal entry (i.e., smuggling) of merchandise into Mexico is most often accomplished by using pedimentos that, unlike the pedimentos submitted by C.H. Robinson, are valid in all respects except for the listed country of origin, so as to minimize the risk of raising suspicion at the various Mexican checkpoints through which all truck cargo must pass upon crossing the U.S./Mexico border. See id. at 1343. Mr. Jesus Alberto Fernandez Wilburn, the Port Director of Colombia, Nuevo Leon, Mexico, further testified that Mexican Customs would have seized cargo whose pedimentos did not appear in Mexican Customs' electronic database and that there is no record that Mexican Customs seized the merchandise at issue in this case. See id.

The Court of International Trade further found that C.H. Robinson failed to account for the missing merchandise. The court noted that C.H. Robinson conceded at trial that the pedimentos were not genuine and could not be verified by Mexican authorities. Id. at 1345. The court also found that none of the evidence submitted by C.H. Robinson—the pedimentos, driver hand tags and freight bills, and Mr. Peña's log book—showed that the subject merchandise was exported to Mexico; at most, the evidence demonstrated proof of delivery of the subject merchandise to the Port of Laredo in accordance with 19 C.F.R. § 18.8(c). See id. at 1344. The court concluded that C.H. Robinson, as the bonded carrier, not only had a responsibility to deliver the merchandise at the destination port, but also to ensure that the subject merchandise was either exported or lawfully entered into the United States. See id. at 1347. Accordingly, the court found C.H. Robinson liable for duties, taxes, and fees under 19 U.S.C. § 1553 and 19 C.F.R. § 18.8(c).

C.H. Robinson timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Discussion

We review the Court of International Trade's legal determinations without deference. United States v. Ford Motor Co., 463 F.3d 1286, 1290 (Fed.Cir.2006). Its findings of fact are reviewed for clear error. Id.¹

Generally, merchandise imported into the United States may be entered for consumption, entered for warehouse, admitted into a foreign trade zone, or entered for transportation in-bond to another port. Transportation in-bond allows movement of imported merchandise from one port to...