United States v. Greenlight Organic, Inc.
| Decision Date | 04 August 2022 |
| Docket Number | Slip Op. 22-87,Court No. 17-00031 |
| Citation | 586 F.Supp.3d 1342 |
| Parties | UNITED STATES, Plaintiff, v. GREENLIGHT ORGANIC, INC. and Parambir Singh Aulakh, Defendants. |
| Court | U.S. Court of International Trade |
William G. Kanellis and Ashley Akers, Attorneys, 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, Joseph M. Spraragen, and Robert F. Seely, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, N.Y., for Defendants Greenlight Organic, Inc. and Parambir Singh Aulakh.
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 for Summary Judgment ( ), ECF No. 157, filed by Defendants. See also Mem. Law Supp. Defs.’ Mot. Summ. J. ( ), ECF No. 157-1. This is Defendants’ third dispositive motion challenging the statute of limitations, but unlike the previous two motions, this motion was filed after the Parties completed discovery. Defendants argue that Plaintiff's fraud action is time-barred by the five-year statute of limitations set forth in 19 U.S.C. § 1621. See Defs.’ Mot. at 1; Defs.’ Mem. at 35–36; Defs.’ [Corrected] Reply Pl.’s Opp'n Defs.’ Mot. Summ. J. at 1, ECF No. 168. Plaintiff contends that the action was initiated timely because the statute of limitations did not begin to run until February 2012 when the Government first obtained evidence of double invoicing from Greenlight. United States’ Opp'n Defs.’ Second Mot. Summ. J. ("Pl.’s Opp'n") at 2, ECF No. 162.1 For the following reasons, the Court denies the Motion for Summary Judgment.
The Court has jurisdiction pursuant to 28 U.S.C. § 1582. The Court will grant summary judgment if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." USCIT R. 56(a). To raise a genuine issue of material fact, a party cannot rest upon mere allegations or denials and must point to sufficient supporting evidence for the claimed factual dispute to require resolution of the differing version of the truth at trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Processed Plastics Co. v. United States, 473 F.3d 1164, 1170 (Fed. Cir. 2006) (citation omitted).
The Court presumes familiarity with the procedural history and recounts briefly the procedural history for context. See United States v. Greenlight Organic, Inc. ("Greenlight I"), 42 CIT ––––, ––––, 352 F. Supp. 3d 1312, 1313–14 (2018) ; United States v. Greenlight Organic, Inc. ("Greenlight II"), 43 CIT ––––, ––––, 419 F. Supp. 3d 1298, 1301–02 (2019) ; United States v. Greenlight Organic, Inc. ("Greenlight III"), 44 CIT ––––, ––––, 466 F. Supp. 3d 1260, 1262–63 (2020).
Plaintiff commenced this action against Greenlight on February 8, 2017. Summons, ECF No. 1; Compl., ECF No. 2. The Court denied Greenlight's first motion for summary judgment, in which Greenlight argued that the action was time-barred by the five-year statute of limitations, 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 Greenlight I, 42 CIT at ––––, 352 F. Supp. 3d at 1313–14, 1315–16 (citing 19 U.S.C. § 1621). The Court explained:
The record on summary judgment does not provide the court with enough information to assess when the Government first had knowledge of Greenlight's fraudulent activities. For example, the record does not demonstrate clearly whether the Government had knowledge of Greenlight's intent to defraud the revenue or otherwise violate the laws of the United States when the Government discovered Greenlight's misclassification of its entries in 2011. More facts are needed to ascertain when the Government first had knowledge of Greenlight's fraudulent misclassification and undervaluation activities, including when the Government began to suspect a potential double[ ]invoicing scheme and when the Government had knowledge of an intent to defraud with respect to the misclassification of entries.
Id. at ––––, 352 F. Supp. 3d at 1315–16.
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.2 Greenlight II, 43 CIT at ––––, 419 F. Supp. 3d at 1306.
Plaintiff filed the Second Amended Complaint on January 8, 2020. Second Am. Compl. The Court denied Aulakh's motion to dismiss the Second Amended Complaint, in which Aulakh argued for dismissal 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.3 Greenlight III, 44 CIT at ––––, 466 F. Supp. 3d at 1263–66. 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.
The following facts are not in dispute.
Leslie Jordan is the principal of Leslie Jordan, Inc. ("LJI"), a business and manufacturer of apparel that was a competitor of Greenlight. The United States’[ ] Rule 56.3 Statement of Issues of Material Fact ("Pl.’s SMF") ¶ B.1, ECF No. 162-1; see Defs.’ USCIT R. 56.3 Statement of Material Facts Not in Issue ( ) ¶ 1, ECF No. 157-1. By Letter of May 31, 2011, Ms. Jordan sent a "complaint" to U.S. Immigration and Customs Enforcement ("ICE"), Homeland Security Investigations ("HSI"), that described Greenlight's alleged misconduct. Defs.’ SMF ¶ 2 (citing Ex. B); Pl.’s SMF ¶ B.1.
In September 2011, HSI Special Agent Sean Lafaurie sought assistance from Customs Regulatory Audit to evaluate the allegations of undervaluation and misclassification. Pl.’s SMF ¶ B.9 (citing Ex. 6); see Defs.’ SMF ¶ 5 (citing Ex. E).
Customs testing showed that sample merchandise was classified mistakenly as "woven" rather than "knit." Pl.’s SMF ¶ B.13 (citing Soo Hoo Decl. ¶ 5); Defs.’ SMF ¶ 7.
By email of October 26, 2011, Customs provided a calculated loss of revenue. Defs.’ SMF ¶ 7 (citing Ex. G); Pl.’s SMF ¶¶ B.10, B.14.
On December 6, 2011, Customs Supervisory Import Specialist Tonda Fuller issued a Customs Form 28 "Request for Information" to Greenlight, seeking import data. Defs.’ SMF ¶ 15 (citing Ex. K); Pl.’s SMF ¶ B.16 (citing Ex. 9).
On December 19, 2011, Customs and HSI interviewed Greenlight officials Monika Gill and Aulakh at Greenlight's office. Defs.’ SMF ¶ 17 (citing Exs. L, M); Pl.’s SMF ¶ B.17 (citing Ex. 11). Greenlight was served with a Department of Homeland Security Summons or subpoena, requesting documents including shipping documents, commercial invoices, and receipts of payment related to the importation of goods into the United States. Defs.’ SMF ¶ 17 (citing Exs. L, M); Pl.’s SMF ¶ B.17 (citing Ex. 12).
Defendants argue that the date of discovery in this fraud investigation from which the five-year statute of limitations began to run was either: (1) May 31, 2011, when Leslie Jordan provided her complaint to ICE and ICE began to (informally) investigate Greenlight; (2) October 31, 2011, when ICE opened a formal investigation; or (3) December 19, 2011, when Customs opened a formal investigation. Defs.’ Mem. at 21. Plaintiff contends that the Government discovered evidence of fraud no earlier than February 9, 2012, when Greenlight first produced some of its internal business records showing double invoicing. Pl.’s Opp'n at 5.
For fraudulent civil penalty enforcement actions brought under 19 U.S.C. § 1592, the statute sets forth a five-year statute of limitations for commencing a case:
[N]o suit or action (including a suit or action for restoration of lawful duties under subsection (d) of such sections) may be instituted unless commenced within 5 years after the date of the alleged violation or, if such violation arises out of fraud, within 5 years after the date of discovery of fraud ....
19 U.S.C. § 1621(1) (emphasis added). The language "within 5 years after the date of discovery...
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