United States v. Santos, Slip Op. 13-154

CourtU.S. Court of International Trade
Writing for the CourtRichard W. Goldberg
Docket NumberCourt No. 13-00025,Slip Op. 13-154
Decision Date26 December 2013


Slip Op. 13-154
Court No. 13-00025


Dated: December 26, 2013

Before: Richard W. Goldberg, Senior Judge

Plaintiff's motion for default judgment is granted.

Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for plaintiff. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Stephanie L. Ciechanowski, Office of the Assistant Chief Counsel, U.S. Customs and Border Protection, of Laredo, TX.

Goldberg, Senior Judge: On January 11, 2013, the United States (the "Government" or "United States") commenced an action against Defendants Alejandro Santos and Alejandro Santos, CHB (collectively, "Santos") to recover civil penalties assessed under section 641 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1641(d)(2)(A) (2006).1 Summons & Compl., ECF Nos. 1-2. The United States now moves for entry of default judgment. Mot. for Entry of Default J., ECF No. 8 ("Default J. Mot."). Because the Clerk has entered default against Santos and the allegations in the Complaint support the United States' entitlement to relief, the court grants the Government's motion and enters judgment against Santos in the amount of $30,000.

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This Court has jurisdiction pursuant to 28 U.S.C. § 1582(1) and will review the Government's claim for a penalty and the amount of any penalty de novo. See 28 U.S.C. § 2640(a)(6). On de novo review, "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." United States v. Santos, 36 CIT ___, ___, 883 F. Supp. 2d 1322, 1326 (2012). In reaching its determination, the court "may look beyond the complaint if necessary to 'determine the amount of damages or other relief' or 'establish the truth of an allegation by evidence.'" Id. at ___, 883 F. Supp. 2d at 1327 (quoting USCIT R. 55(b)).

Since the Clerk has entered default against Santos, the court accepts as true all well-pled factual allegations in the Government's Complaint. See United States v. Callanish Ltd., Slip Op. 10-124, 2010 WL 4340463, at *3 (CIT Nov. 2, 2010); USCIT R. 8(c)(6) ("An allegation—other than one relating to the amount of damages—is admitted if a responsive pleading is required and the allegation is not denied."). Entry of default does not admit legal claims. Thus, the court independently assesses whether the unchallenged facts give rise to a legitimate cause of action. Callanish Ltd., 2010 WL 4340463, at *3; Santos, 36 CIT at ___, 883 F. Supp. at 1326.


The Government has filed a one-count complaint against Santos, and the court accepts the following factual allegations as true. During the period in question, Mr. Santos was an individually licensed customs broker operating as a corporation named Alejandro Santos, CHB.2 Compl. ¶ 4. On January 14, 2008, Santos filed Entry Number BTN-00022126. Id. ¶ 6. The

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entry summary represented that the imported merchandise was "Fats of Bovine Animals, OT, Harmonized Tariff Schedule 1502.00.0060" and identified Santos as the importer of record and ultimate consignee. See id.; Default J. Mot., Decl. of Liza Lopez at Exs. 1-2. On January 18, 2008, Santos filed Entry Number BTN-00022589 and made the same representation regarding the content of the imported merchandise. Compl. ¶ 7. Despite Santos' representations, the commercial invoices for both entries revealed that the imported product was actually Co-Ral Flowable, a pesticide.3 Id. ¶ 8. The Government submits that Co-Ral Flowable is classifiable under subheading 3808.91.2500 of the Harmonized Tariff Schedule of the United States ("HTSUS").4 Id.

Other than the classification discrepancy, Customs found additional flaws in the documentation pertaining to the entries in question. First, Santos claimed duty-free treatment under the North American Free Trade Agreement ("NAFTA") even though he did not possess the requisite certificates of origin. Id. ¶ 12. Second, the commercial invoices that Santos presented to U.S. Customs and Border Protection ("Customs") were not in English and did not include the duty rate and classification of the imported merchandise. Id. ¶ 11. Third, Santos did not have an Environmental Protection Agency ("EPA") Form 3540-1 (Notice of Arrival of Pesticides and Devices) on file even though Co-Ral Flowable was a pesticide. Id. ¶ 13. Lastly, because Santos did not have that form and did not classify the merchandise as a pesticide,

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Customs was unable to detain and inspect the merchandise as it normally would for shipments of pesticides. Id. ¶ 14.

On the basis of the foregoing alleged violations, Customs transmitted pre-penalty and penalty notices to Santos on December 9, 2010 and April 26, 2011, respectively. Id. ¶ 16. Both notices informed Santos that the penalty totaled $30,000.5 See Default J. Mot., Decl. of Liza Lopez at Exs. 3-4. Santos did not respond to Customs' notices and has not paid any of the assessed penalty. See Compl. ¶¶ 16-17. On January 11, 2013, the Government commenced a civil enforcement action against Santos.

Santos waived formal service of process but has not otherwise appeared in the action or responded to the Complaint. See Waiver of Service of Summons, ECF No. 4. The Clerk entered default on April 11, 2013 and the Government later moved for default judgment. See Clerk's Entry of Default, ECF No. 6. Santos did not respond to the Government's motion.


19 U.S.C. § 1641(d)(1)(C) permits monetary penalties "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." The amount of any penalty assessed under § 1641(d)(1)(C) may not exceed $30,000, and Customs may not assess a penalty unless it provides all statutorily-mandated process. Id. § 1641(d)(2)(A). As set forth below, the Government sufficiently pled facts establishing multiple regulatory violations, Customs complied with the mandatory notification procedures, and Customs' $30,000 monetary penalty was reasonable under the facts. Default judgment is, thus, appropriate.

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I. The Government has shown that Santos violated multiple regulations "enforced by the Customs Service," in derogation of 19 U.S.C. § 1641(d)(1)(C)

A. 19 C.F.R. § 152.11

19 C.F.R. § 152.11 requires classification of merchandise in accordance with the HTSUS. Entry summaries for Entry Numbers BTN-00022126 and BTN-00022589 described the imported merchandise as "Fats of Bovine Animals, OT," classifiable under HTSUS 1502.00.0060. Compl. ¶¶ 6-7; Default J. Mot., Decl. of Liza Lopez at Exs. 1-2. The commercial invoices, however, revealed that the imported merchandise was Co-Ral Flowable, a pesticide classifiable as HTSUS 3808.91.2500. Compl. ¶ 8; Default J. Mot., Decl. of Liza Lopez at Ex. 6. Accepting the Government's allegations as true, Santos violated 19 C.F.R. § 152.11 by misclassifying merchandise.

B. 19 C.F.R. §§ 12.112-.113

19 C.F.R. § 12.112(a) requires that importers of pesticides submit a Form 3540-1 Notice of Arrival to the EPA Administrator "prior to the arrival of the shipment in the United States." The EPA then completes the Notice of Arrival and returns it to the importer or his agent. Id. When the pesticides arrive, the importer or his agent must present the port director with the completed Notice of Arrival for further analysis. Id. § 12.113(a). If the importer or his agent does not present a completed Notice of Arrival, the port director will detain the pesticides pending receipt of that form. Id. § 12.113(b)-(c).

The Government alleges that Co-Ral Flowable is a pesticide and that Santos did not have an EPA Form 3540-1 on file for the two entries in question. Compl. ¶¶ 8, 13. Santos, the broker and importer of record, thus violated 19 C.F.R. § 12.112 by failing to obtain a required EPA

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form.6 By extension, Santos also violated 19 C.F.R. § 12.113 by not presenting a completed Notice of Arrival upon arrival of...

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