United States v. Greenlight Organic, Inc.

• Decision Date: 18 October 2021
• Docket Number: Slip Op. 21-145,Court No. 17-00031
• Parties: UNITED STATES, Plaintiff, v. GREENLIGHT ORGANIC, INC. and Parambir Singh Aulakh, Defendants.
• Court: U.S. Court of International Trade

542 F.Supp.3d 1409

UNITED STATES, Plaintiff,

v.GREENLIGHT ORGANIC, INC. and Parambir Singh Aulakh, Defendants.

Slip Op. 21-145

Court No. 17-00031

United States Court of International Trade.

October 18, 2021

William Kanellis, Attorney, and Ashley Akers, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Plaintiff United States. With them on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director.

Robert B. Silverman and Joseph M. Spraragen, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, N.Y., for Defendants Greenlight Organic, Inc. and Parambir Singh Aulakh.

OPINION AND ORDER

Choe-Groves, Judge:

This matter involves a discovery dispute in a claim brought under 19 U.S.C. § 1592. Plaintiff United States ("Plaintiff") brings this 19 U.S.C. § 1592 civil enforcement action seeking to recover unpaid duties and to affix penalties, alleging that Defendants Greenlight Organic, Inc. ("Greenlight") and Parambir Singh Aulakh ("Aulakh") (collectively, "Defendants") imported wearing apparel into the United States fraudulently. Second Am. Compl. ¶ 1, ECF No. 124. The statute, 19 U.S.C. § 1592, prohibits companies from making false statements or omitting material information in the course of importing merchandise into the United States through fraud, gross negligence, or negligence. See 19 U.S.C. § 1592(a)(1). Plaintiff alleges that Greenlight misclassified and undervalued its subject merchandise fraudulently in violation of the statute. Second Am. Compl. ¶¶ 21–22.

Before the court is the Motion to Compel Plaintiff to Provide Proper Answers to Defendants’ Requests for Admission ("Motion to Compel" or "Mot. Compel"), ECF No. 155, filed by Defendants under USCIT Rule 36(a)(6) to determine the sufficiency of Plaintiff's answers and objections to Defendants’ requests for admission. See also Mem. Supp. Defs.’ Mot. Compel ("Defs.’ Mem.") at 4, ECF No. 155-1. Defendants assert that in responding to Defendants’ requests for admission, Plaintiff failed to comply with USCIT Rule 36 by objecting and making qualified denials to requests for admission numbers 1–43, 47–57, 59, 61–75, 77–104, and 107–116. Mot. Compel at 1. Defendants ask the Court to direct Plaintiff to provide sufficient answers or order that the matters are admitted, and award legal fees incurred in preparing the Motion to Compel. Id. at 2–3. Plaintiff contends that it complied with USCIT Rule 36 in its answers and objections due to misleading or ambiguous wording, use of excerpts from documents taken out of context, and Plaintiff's inability to confirm the veracity of information due to destruction of corroborating records by Aulakh. United States’ Opp'n Defs.’ Mot. Compel ("Pl.’s Opp'n") at 1, ECF No. 161. For the following reasons, the Court grants in part and denies in part the Motion to Compel.

BAGKGROUND

The Court presumes familiarity with the facts and procedural history and recounts briefly the procedural history for context. Plaintiff commenced this action against Greenlight on February 8, 2017. Summons, ECF No. 1; Compl., ECF No. 2. The Court denied Greenlight's motion for summary judgment because the record did not provide enough information to assess when Plaintiff first discovered Greenlight's fraud—whether in 2011, as Greenlight asserted, or in February 2012, as Plaintiff asserted—from which time the five-year statute of limitations began to run. See United States v. Greenlight Organic, Inc., 42 CIT ––––, ––––, 352 F. Supp. 3d 1312, 1313–14, 1315–16 (2018) (citing 19 U.S.C. § 1621 ).

Plaintiff filed the First Amended Complaint, adding Aulakh as a defendant and pleading additional facts with leave of the Court on April 2, 2019. See First Am. Compl., ECF No. 111. The Court granted Aulakh's motion to dismiss the First Amended Complaint for failure to state a claim upon which relief may be granted, with judgment to be entered after forty-five days if Plaintiff did not file a second amended complaint.¹ United States v. Greenlight Organic, Inc., 43 CIT ––––, ––––, 419 F. Supp. 3d 1298, 1306 (2019).

Plaintiff filed the Second Amended Complaint on January 8, 2020. Second Am. Compl. The Court denied Aulakh's motion to dismiss on the theories that U.S. Customs and Border Protection ("Customs") failed to exhaust administrative remedies, the five-year statute of limitations had expired, and Plaintiff failed to plead fraud with particularity based on additional facts pleaded in the Second Amended Complaint.² United States v. Greenlight Organic, Inc., 44 CIT ––––, ––––, 466 F. Supp. 3d 1260, 1263–66 (2020). Aulakh argued that the five-year statute of limitations had run and Plaintiff asserted again that the Government discovered Defendants’ fraudulent scheme in February 2012, when Aulakh first produced to Customs records from Greenlight showing evidence of a double-invoicing scheme. Id. at ––––, 466 F. Supp. 3d at 1264. The Court held that the Second Amended Complaint contained sufficient facts accepted as true to establish on its face that the Government discovered the fraudulent activity in February 2012, and the Complaint was filed within five years in February 2017. Id. at ––––, 466 F. Supp. 3d at 1265.

JURISDICTION

The Court has jurisdiction over the underlying action pursuant to 28 U.S.C. § 1582.

DISCUSSION

I. Legal Standards

USCIT Rule 36 permits a party to serve a request for admission on another party. USCIT R. 36(a)(1). When answering a request for admission:

If a matter is not admitted, the answer must specifically deny it or state in detail why the answering party cannot truthfully admit or deny it. A denial must fairly respond to the substance of the matter; and when good faith requires that a party qualify an answer or deny only a part of a matter, the answer must specify the part admitted and qualify or deny the rest. The answering party may assert lack of knowledge or information as a reason for failing to admit or deny only if the party states that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny.

USCIT R. 36(a)(4). When objecting to a request for admission, "[t]he grounds for objecting to a request must be stated." USCIT R. 36(a)(5). To challenge responses:

The requesting party may move to determine the sufficiency of an answer or objections. Unless the court finds an objection justified, it must order that an answer be served. On finding that an answer does not comply with this rule, the court may order either that the matter is admitted or that an amended answer be served.

USCIT R. 36(a)(6).

"The purpose of requests for admission[ ] is not necessarily to obtain information but to narrow the issue for trial." Beker Indus. Corp. v. United States, 7 C.I.T. 361, 361 (1984) (citation omitted). The purpose of USCIT Rule 36, as with the corresponding Federal Rule of Civil Procedure Rule 36, "is to expedite trial by eliminating the necessity of proving essentially undisputed and peripheral issues." See id. at 362. " Rule 36 admissions are ‘not to be used ... in the hope that a party's adversary will simply concede essential elements.’ " Kahrs Int'l, Inc. v. United States, 33 C.I.T. 117, 121, 602 F. Supp. 2d 1352, 1357 (2009) (quoting Conlon v. United States, 474 F.3d 616, 622 (9th Cir. 2007) ).

II. Requests for Admission Regarding Certain Entries and Vendors

Defendants assert that Plaintiff's responses to requests 1–33 are unacceptable because Plaintiff is able to admit the matters based on entry records in the possession of Customs, and Exhibits 1 and 2 filed by Plaintiff with the Second Amended Complaint. Defs.’ Mem. at 8. Defendants explain that when a foreign vendor ships an entry package to Greenlight, Greenlight's broker prepares a customs entry form based on the commercial invoice and bill of lading. Id. at 8–9. Defendants explain further that "[t]he data received in all entry filings is maintained by [Customs] in a data base that is available to [Customs] personnel." Id. at 9. In Defendants’ view, Plaintiff is able to corroborate requests 1–33 with entry information available to Plaintiff in Customs’ database. Id. at 8. Plaintiff responds that it does not have the ability to admit the matters in requests 1–33 because there is evidence that Defendants and their "co-conspirators submitted false documentation to the Government" and Defendants did not provide email communications with Greenlight's brokers or other internal records that may have allowed Plaintiff to verify the information in requests 1–33. Pl.’s Opp'n at 9–10.

Requests 1–3, 8–9, 14–15, 19–20, 24–25, and 29–30 ask Plaintiff to admit facts related to certain entries. See Defs.’ Objs. Pl.’s Resps. Defs.’ [Reqs. Admis.] ("Ex. B"), ECF No. 155-3. As an example of Plaintiff's responses to requests 1–3, 8–9, 14–15, 19–20, 24–25, and 29–30, request 1 states and Plaintiff responds, in relevant part:

1. Admit that entry numbers 408-1163899-5 ... covered goods purchased by Greenlight from Rajlakshmi Cotton Mills PVT. Ltd. ("Rajlakshmi") in India.

Response. Plaintiff objects because ... defendants GREENLIGHT, AULAKH, and/or their co-conspirators destroyed, spoliated, or otherwise failed to disclose the GREENLIGHT records which would allow for a meaningful response as to the contents of the entries. Otherwise, denied.

Id. at 1–2.

Plaintiff brings this case based on allegations that Defendants conspired with one of Greenlight's foreign vendors, One Step Ahead, to make false statements to Customs, and that Defendants created a second falsified set of invoices for purchases from One Step Ahead. See Second Am. Compl. ¶¶ 9, 12–14, 17, 21. Plaintiff also explains that Defendants blame Greenlight's brokers. See Pl.’s Opp'n at 9. Thus, there are allegations of falsified invoices and false statements by Defendants, one of Greenlight's foreign vendors, and possibly Greenlight's...