United States v. Freight Forwarder Int'l, Inc.

• Decision Date: 21 January 2015
• Docket Number: Slip Op. 15–5.,Court No. 14–00134.
• Citation: 44 F.Supp.3d 1359
• Parties: UNITED STATES, Plaintiff, v. FREIGHT FORWARDER INTERNATIONAL, INC., Defendant.
• Court: U.S. Court of International Trade

44 F.Supp.3d 1359

UNITED STATES, Plaintiff,
v.
FREIGHT FORWARDER INTERNATIONAL, INC., Defendant.

Slip Op. 15–5.
Court No. 14–00134.

United States Court of International Trade.

Jan. 21, 2015

Motion granted.

[44 F.Supp.3d 1360]

Alexander Orlando Canizares, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for the Plaintiff. With him on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Claudia Burke, Assistant Director.

OPINION
KELLY, Judge:

Plaintiff, the United States (“Plaintiff” or “United States”), brings this action pursuant to 28 U.S.C. § 1582(1) (2012) ¹ to recover a civil penalty against Defendant, Freight Forwarder International, Inc. (“Defendant” or “FFI”), a Louisiana corporation, for violations of section 641 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1641(b)(6) (2012). ² Pl.'s Compl. ¶¶ 1–3, June 5, 2014, ECF No. 3. Defendant has failed to answer or otherwise respond to Plaintiff's Complaint. Upon Plaintiff's request, the Clerk of the Court entered default against Defendant on August 18, 2014. Entry of Default, Aug. 18, 2014, ECF No. 7. Plaintiff now moves under USCIT Rule 55(b) for default judgment against Defendant for transacting customs business without a broker's license under 19 U.S.C. § 1641(b)(6) and 19 C.F.R. § 111.4 (2014).³ Pl.'s Mot. Default J. 1, Nov. 6, 2014, ECF No. 8 (“Pl.'s Mot.”). Plaintiff seeks a $10,000 penalty in accordance with 19 U.S.C. § 1641(b)(6) and (d)(2)(A), as well as post-judgment interest ⁴ and costs including $190 for service of

[44 F.Supp.3d 1361]

the summons and complaint, per 28 U.S.C. § 1961(a) and (b). Pl.'s Mot. 6. Taking the facts alleged in Plaintiff's Complaint as true, the court finds that Plaintiff has met the requirements of USCIT Rule 55 for default judgment, and it has established Defendant's violation of 19 U.S.C. § 1641(b)(6) as well as Plaintiff's compliance with § 1641(d)(2)(A). ⁵ Therefore, the court grants Plaintiff's Motion for Default Judgment (“Motion”).

For purposes of compliance with the procedures set forth in 19 U.S.C. § 1641(d)(2)(A), Plaintiff alleges that “[a]ll requisite administrative procedures have been exhausted.” Pl.'s Compl. ¶ 15. On June 3, 2010, “CBP issued a pre-penalty notice to FFI for conducting customs business without a customs broker's license in violation of 19 U.S.C. § 1641 and 19 C.F.R. § 111.4, with a proposed penalty amount of $10,000.” Pl.'s Compl. ¶ 9. Plaintiff claims that sometime around July 20, 2010, Defendant sought cancellation of the fine, which CBP refused and instead “[o]n August 25, 2010, CBP issued a penalty notice demanding payment of $10,000 and denying FFI's petition.” Id. ¶¶ 10–11. Defendant then filed a request seeking remission or mitigation on October 15, 2010, which CBP denied six months later.⁷ See id.

[44 F.Supp.3d 1362]

¶¶ 12–13. See also Dillmann Decl. ¶¶ 9–10. Finally, Plaintiff states that on four separate occasions CBP issued bills to Defendant for the $10,000 penalty, but that Defendant has not paid the penalty. Pl.'s Compl. ¶ 14.

Jurisdiction and Standard of Review

The court has jurisdiction over this penalty action brought by the United States under 28 U.S.C. § 1582(1) via 19 U.S.C. § 1641(b)(6) and (d)(2)(A). For “[c]ivil actions commenced under section 1582 of [title 28],” the court's determination shall be “upon the basis of the record made before the court....” 28 U.S.C. § 2640(a)(6).

In a motion for default judgment under USCIT Rule 55, the moving party must first demonstrate to the Clerk of the Court by affidavit or otherwise that the opposing party has failed to plead or otherwise defend. USCIT R. 55(a). Upon such a showing, the Clerk must enter default. Id. Under USCIT Rule 55(b), if “the plaintiff's claim is for a sum certain or for a sum that can be made certain by computation, the court—on the plaintiff's request with an affidavit showing the amount due—must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing....” Id. R. 55(b). In determining whether to grant a motion for default judgment, the court may look outside the complaint whenever it needs to “determine the amount of damages or other relief; ... establish the truth of an allegation by evidence; or ... investigate any other matter.” Id. (allowing the court to conduct hearings or make referrals in such situations). While the rule “permits the [trial] court to conduct a hearing to determine damages, such a hearing is not mandatory.” Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir.2012) (citation omitted).

Although a defendant's default acts as an admission of liability for all well-pled facts in the complaint, it does not admit damages. See, e.g., id. (citation omitted); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992) (citations omitted). Furthermore, an entry of default does not automatically establish that the facts constitute a valid legal cause of action. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir.1981) (citation omitted). Therefore, the court must determine whether the allegations in the complaint establish the defendant's liability as a matter of law. See, e.g., City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir.2011) (footnote omitted) (citation omitted).

Discussion

Here, Plaintiff must allege facts sufficient to show a violation of 19 U.S.C. § 1641(b)(6) and CBP's compliance with the procedural requirements of § 1641(d)(2)(A). The court finds that Plaintiff has alleged facts establishing that “FFI ... transact[ed] customs broker business without a license in violation of 19 U.S.C. § 1641(b)(6) and 19 C.F.R. § 111.4.” Pl.'s Mot. 1. Further, the court finds that Plaintiff has met all procedural requirements.

Plaintiff alleges that “[a]t all times relevant to the matters described in this complaint, FFI did not hold a corporate customs broker's license in accordance with 19 U.S.C. § 1641(b)(3) or 19 C.F.R. § 111.11,” and that therefore, “FFI was not licensed or authorized to transact customs business.” Pl.'s Compl. ¶ 4. Plaintiff

[44 F.Supp.3d 1363]

alleges that the merchandise was entered between June 2009 and January 2010, and that Defendant did not have a license at the relevant time. Pl.'s Compl. ¶¶ 4–5. Plaintiff includes an exhibit showing the 19 entries at issue, date of entry and method of payment. Dillmann Decl. at 5.⁸ Plaintiff then alleges that “FFI engaged in customs business by paying duties and fees on behalf of others to [CBP] for the importation of merchandise,” and “for some of the entries,” ⁹ invoiced the importers directly for those fees. Pl.'s Compl. ¶ 6. In Plaintiff's Exhibits, Plaintiff includes evidence showing FFI was the payer company for entry duties paid on behalf of other persons. Pl.'s Exs. 1 at 5, 2 at 9. The Dillmann Declaration includes two invoices printed on FFI company letterhead, which included charges for entry duties. See Dillmann Decl. at 6, 8.

The court finds that the activities alleged are included in the scope of customs business as defined by statute. Section 1641(b)(6) makes it a violation for “[a]ny person who intentionally transacts customs business, other than solely on the behalf of that person, without holding a valid customs broker's license granted to that person under this subsection....” 19 U.S.C. § 1641(b)(6). Any such person is “liable to the United States for a monetary penalty not to exceed $10,000 for each such transaction as well as for each violation of any other provision of this section.” 19 U.S.C. § 1641(b)(6). A person “includes partnerships, associations, and corporations.” 19 U.S.C. § 1401(d). The statute defines customs business to include

those activities involving transactions with the Customs Service concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by the Customs Service upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof. It also includes the preparation of documents or forms in any format and the electronic transmission of documents, invoices,...