United States v. Santos, Slip Op. 12 - 151

CourtU.S. Court of International Trade
Writing for the CourtDonald C. Pogue
PartiesUNITED STATES, Plaintiff, v. ALEJANDRO SANTOS, CHB, Defendant.
Docket NumberSlip Op. 12 - 151,Court No. 11-00436
Decision Date21 December 2012


Slip Op. 12 - 151
Court No. 11-00436


Dated: December 21, 2012

Before: Donald C. Pogue,
Chief Judge

granting motion for default judgment

Karen V. Goff, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, and Barbara S. Williams, Attorney in Charge, International Trade Field Office.

Pogue, Chief Judge: This is an action by United States Customs and Border Protection ("Customs") to recover civil penalties from a customs broker, Mr. Alejandro Santos ("Santos"), for violating Customs' regulations. Customs' Motion for Default Judgment, ECF No. 10, filed pursuant to USCIT R. 55(b), is currently before the court. Because the Clerk has entered default against Santos, Order, May 8, 2012, ECF No. 9, and Customs' Complaint, ECF No. 3, establishes a right to relief, sufficient facts to support that right, and sufficient facts to support the requested relief, Customs' motion will be

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granted, and judgment will be entered against Santos in the amount of $19,000.

The court has jurisdiction pursuant to Section 641(d)(2)(A) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1641(d)(2)(A) (2006)1 and 28 U.S.C. § 1582(1) (2006).


Customs' Complaint contains four counts, each relating to one of the four penalties imposed against Santos. Customs alleges that it imposed the penalties following three separate reviews of entries of merchandise by Santos at the Port of Laredo, TX. Because Santos did not plead or otherwise respond to Customs' Complaint, the following factual allegations are taken as true. USCIT R. 8(c)(6).

First, on January 15, 2009, Customs Import Specialists visited Santos' place of business to conduct a review of entries. Compl. ¶ 6. During the review, the Import Specialists discovered that Santos had billed certain entries (BTN-0000501-4, BTN-0000730-9, BTN-0000742-4, BTN-0002238-1, BTN-0003018-6, and BTN-0000165-8) to a freight forwarder, Salvador Pedraza d/b/a SPR International ("SPR"), rather than the importer of

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record or ultimate consignee, without transmitting a copy of the bill to the importer of record or obtaining a waiver from the importer. Id. ¶¶ 6-9; Ex. A to Compl. Based on these findings, Customs issued penalty number 2010-2304-3-00004-01, in the amount of $5000. Compl. ¶ 11; Ex. D to Compl. This penalty is the subject of Count I.

During the same visit, the Import Specialists requested a copy of the power of attorney associated with entry BTN-00001658. Compl. ¶¶ 15-17. The requested power of attorney was not in Santos' records; instead, it was faxed to Santos' office upon the Import Specialists' request. Id. ¶ 20. The power of attorney faxed to Santos' office was dated February 15, 2007, Id. ¶ 18, which was subsequent to the importation of the entry on November 10, 2006, Id. ¶ 16; furthermore, the document did not identify Santos as the holder of power of attorney, Id. ¶ 18-19; Ex. E to Compl. Based on these findings, Customs issued penalty number 2010-2304-3-00005-01, in the amount of $5000. Compl. ¶ 23; Ex. H to Compl.2 This penalty is the subject of Count II.

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Second, on September 4, 2008, Santos presented four entry summaries, Customs Form CF 7501 ("CF 7501"), to Customs for entry numbers BTN-00040011, BTN-00040029, BTN-00040037, and BTN-00040045. Compl. ¶ 28. The entry summaries classified the merchandise as "vegetable hair" under Harmonized Tariff Schedule of the United States ("HTSUS") subheading 1409.90.10. Id. ¶ 28; Ex. A to Mot. Default J. (entry summaries attached as Ex. 1). The entered merchandise, however, was corn husks, which Customs asserts are separately classified under HTSUS subheading 1404.90.90. Compl. ¶ 28. Based on these findings, Customs issued penalty number 2010-2304-3-00003-01, in the amount of $4000. Id. ¶ 31; Ex. K to Compl. This penalty is the subject of Count III.

Third, on April 15, 2009, Santos filed entry BTN-00052032, indicating that the entry contained "U.S. goods returned." Compl. ¶ 35. An April 17, 2009, inspection of the entry revealed that the merchandise was not entirely U.S. Goods Returned. Id. ¶ 36. After receiving notification from Customs, Santos acknowledged the discrepancy and indicated that the entry included goods originating in Great Britain; however, Santos never corrected the CF 7501. Id. ¶¶ 37-39; Exs. L, M to Compl.

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Based on these findings, Customs issued penalty number 2010-2304-3-00180-01, in the amount of $5000. Compl. ¶ 43; Ex. P to Compl. This penalty is the subject of Count IV.

For each penalty, Customs issued a pre-penalty notice, penalty notice, and final demand for payment; Santos failed to respond to any of Customs' penalty notices or demands, and the penalties remain unpaid. Compl. ¶¶ 11-12, 23-24, 31-32, 43-44; Ex. B to Mot. Default J. ¶¶ 11-18. To remedy Santos' non-payment, Customs, on November 9, 2011, commenced suit in this court by filing the Summons and Complaint. On January 12, 2012, Commerce filed proof of service. Proof of Service, ECF No. 4. Santos did not respond to the Complaint, and upon motion for entry of default, the Clerk of the Court entered default on May 8, 2012. Order, May 8, 2012, ECF No. 9. Customs subsequently filed its Motion for Default Judgment, and Santos has not responded to the Motion.


A case brought pursuant to 28 U.S.C. § 1582(1) is reviewed de novo. 28 U.S.C. § 2640(a)(6) (providing that in cases commenced under 28 U.S.C. § 1582, "[t]he Court of International Trade shall make its determinations upon the basis of the record made before the court"); United States v. UPS Customhouse Brokerage, ___ CIT ___, 686 F. Supp. 2d 1337, 1364

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(2010) ("UPS Customhouse Brokerage II") (interpreting "determination upon the basis of the record made before the court" to require trial de novo).3 Specifically, to decide a penalty enforcement action under § 1582(1), the court must consider both whether the penalty has a sufficient basis in law and fact and whether Customs provided all process required by statute and regulations. UPS Customhouse Brokerage II, ___ CIT at ___, 686 F. Supp. 2d at 1346. No distinction is drawn in § 2640(a) between determination of the penalty claim and the penalty amount; therefore, pursuant to 28 U.S.C. § 2640(a), the

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court considers both the claim for a penalty and the amount of the penalty de novo. See Ricci, 21 CIT at 1146, 985 F. Supp. at 127.

A defendant's default admits all factual allegations in the complaint, USCIT R. 8(c)(6), but it does not admit legal claims, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (reasoning, in the context of a motion to dismiss for failure to state a claim, that when a court accepts factual allegations as true, it does not, therefore, accept legal conclusions as true).4 "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In addition, in the case of a default judgment, the court may look beyond the

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complaint if necessary to "determine the amount of damages or other relief" or "establish the truth of an allegation by evidence." See USCIT R. 55(b); United States v. Inner Beauty Int'l (USA) Ltd., Slip Op. 11-148, 2011 WL 6009239, at *2 (CIT Dec. 2, 2011).


Pursuant to 19 U.S.C. § 1641(d)(1)(C), Customs may "impose a monetary penalty . . . if it is shown that the broker . . . has violated any provision of any law enforced by the Customs Service or the rules or regulations issued under any such provision."5 As noted above, Customs' Complaint contains four counts, each alleging that Customs has not received payment of a monetary penalty lawfully imposed against Santos pursuant to 19 U.S.C. § 1641(d)(1)(C) for violation of applicable regulations and following the procedures required by 19 U.S.C. § 1641(d)(2)(A). The court will address each count in turn.

I. Count I

Count I alleges that Santos violated 19 C.F.R. § 111.36 when he conducted business with a freight forwarder, SPR, without forwarding a copy of his bill to the importer of

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record. Compl. ¶¶ 6-10. A broker employed by an unlicensed person, such as a freight forwarder, is required to transmit a copy of the bill or entry to the importer of record "unless the merchandise was purchased on a delivered duty-paid basis or unless the importer has in writing waived transmittal of the copy of the entry or bill for services rendered." 19 C.F.R. § 111.36(a) (2006). Customs alleges that Santos failed to copy the importer of record for entries billed to SPR. Compl. ¶¶ 8-9. Customs supports these allegations with copies of the brokerage receipts for the entries in question. Ex. A to Compl. The receipts show that Santos billed SPR, but they do not indicate that the importer was notified of the transaction as required by § 111.36(a). Ex. A to Compl. Taking these facts as true, Santos violated 19 C.F.R. § 111.36 by failing to notify...

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