US v. Jac Natori Co., Ltd.

• Decision Date: 14 October 1993
• Docket Number: Court No. 90-08-00445.
• Citation: 836 F. Supp. 889
• Parties: UNITED STATES of America, Plaintiff, v. JAC NATORI CO., LTD., Defendant.
• Court: U.S. Court of International Trade

836 F. Supp. 889

UNITED STATES of America, Plaintiff, v. JAC NATORI CO., LTD., Defendant.

Court No. 90-08-00445.

United States Court of International Trade.

October 14, 1993.

COPYRIGHT MATERIAL OMITTED

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Marc E. Montalbine, and Office of Regional Counsel, U.S. Customs Service (I. David Krawet, of counsel), for plaintiff.

Irving A. Mandel, for defendant.

MEMORANDUM & ORDER

AQUILINO, Judge:

In denying defendant's motion to dismiss this action brought by the government pursuant to 28 U.S.C. § 1582 to recover penalties and duties under 19 U.S.C. § 1592, this court ordered the defendant to answer the complaint and that discovery be completed. See Slip Op. 93-70, 17 CIT ___, 821 F.Supp. 1514 (May 12, 1993), familiarity with which is presumed.

I

The first part of that mandate has been met but not the second. Rather, as the deadline for discovery drew near, the plaintiff interposed a motion to compel answers to its interrogatories and a motion to extend that deadline until 180 days after disposition of the first motion. Appendix B to the motion to compel contains some 70 written interrogatories propounded to the defendant along with what appear to be dozens of photocopies of business records. By plaintiff's reckoning, the defendant has answered interrogatories 1, 2, 3, 50, 61(b) and 70; all of the others have not been responded to in an acceptable manner.¹

Indeed, Defendant's Response to Plaintiff's First Set of Interrogatories dated June 24, 1993 asserts the following "general objections" to them, among others:

1. ... They are overly broad, unduly burdensome, vague, confusing, argumentative, repetitive, duplicative of prior requests for production of documents, not reasonably calculated to lead to the discovery of relevant information or admissible evidence, and/or request that defendant make or accept legal conclusions or arguments.

2. ... They call for information, documents, or responses that are exempt from production as attorney work product, or are protected by the attorney-client privilege or any other privilege or exemption provided by law.

. . . . .

4. ... They seek information that a judge of a federal district court has already ordered that plaintiff may not obtain from defendant. Sprizzo, J., U.S. v. Jac Natori, Inc., M-18-306 (S.D.N.Y.1988).²

Now in its response to plaintiff's motion to compel, the defendant supplements the foregoing objections with argumentation that it has already "provided all information and pertinent records and documents in its possession during the administrative phase of the proceeding, the district court summons enforcement proceeding, and this de novo stage of the penalty proceeding"³; that "Customs auditors and special agents have repeatedly accused Natori of engaging in criminal conduct, including on-going allegations of concealing or destroying requested documentation" and thus it "and/or its representatives are faced with a real and appreciable threat of criminal prosecution, requiring them to invoke their Fifth Amendment privileges against self-incrimination"⁴; and that "the government is now collaterally estopped from re-arguing the issues long since determined by the district court."⁵ In addition, the defendant asserts specific objections to specified interrogatories.

In response to plaintiff's concomitant motion to extend the deadline for discovery, the defendant contends that the plaintiff itself has failed to afford discovery and "seemingly is attempting to tie its lack of response to these discovery requests with its motion to compel, claiming that somehow defendant has an unfair advantage."⁶ The defendant requests that the plaintiff be ordered to afford discovery in the form of answers to written interrogatories and production of documents and witnesses for deposition.

II

According to Appendix A to plaintiff's motion to compel, the defendant asserts a Fifth Amendment privilege in objection to interrogatories 4-6 (regarding the identity of Natori shareholders, its officers and their duties); 13-14 (regarding any relationship between Natori shareholders and those of FF International Mfg. Corp. ("FFI")); 16-22 (regarding the business practices of Natori during the period 1980 and 1985); 25-26 (regarding the officers responsible for disbursing moneys and the manner in which they were paid and whether and how they could draw moneys from accounts); 29-32 (regarding whether Natori made payments to a specified bank account and the reasons for them); 33-35 (regarding the identity of persons who set up Natori's accounting system and maintained it); 36-38 (regarding the manner in which the corporation's ledgers were maintained); 42 (regarding recordation of certain accounts payable); 43-44 (regarding the identity of source documents and the accounting firm which examined Natori's books and records); 45-53 (regarding certain year-end-adjustment entries); 54 (regarding merchandise and materials purchased but not recorded in the books and records); 55 (regarding certain proper names); 57-60 (regarding the procedures used in submitting consumption-entry paperwork); 61(c) (regarding the cost of components of the merchandise); 61(g) (regarding the manner in which Natori paid for the merchandise); 62 (regarding the identity of Natori officers, employees or agents involved in decisions on prices, charges and values reported to Customs); and 64-66 (regarding the actual nature and legal consequences of the five entries at issue herein). That is, these questions have given rise to the following, repeated response:

Defendant and its representatives respectfully decline to answer ... on the ground that the answer may tend to incriminate them. Defendant is unable to appoint an agent who, without fear of self-incrimination, could furnish such requested information as may be available to it. U.S. v. Kordel, 397 U.S. 1, 7-10 90 S.Ct. 763, 766-69, 25 L.Ed.2d 1 ... (1970). See In re: Corrugated Container Antitrust Litigation, 662 F.2d 875, 882-883 (D.C.Cir. 1981).⁷

Of course, now in response to plaintiff's motion to compel, the defendant admits, as it must, that the privilege against self-incrimination does not attach to corporations⁸ nor, for that matter, may a custodian of corporate books or records withhold them on the ground that he personally might be incriminated by their production.⁹ Moreover, it has been held that the Fifth Amendment testimonial privilege does not apply to an action like this one brought pursuant to 19 U.S.C. § 1592. See United States v. Gordon, 10 CIT 292, 634 F.Supp. 409 (1986).¹⁰

On the other hand, the court stated in Gordon that "the threat of future criminal prosecution may justify assertion of the fifth amendment privilege against self-incrimination even in a strictly civil proceeding." 10 CIT at 296, 634 F.Supp. at 414, citing Lefkowitz v. Turley, 414 U.S. 70, 77, 94 S.Ct. 316, 322, 38 L.Ed.2d 274 (1973). The plaintiff asserts, however, that

neither Natori nor any of its representatives have been indicted for crimes arising from the entries involved in this action. Moreover, the Government's interrogatories deal only with the period of time from 1980 through 1985. The five-year statute of limitations for violations of the customs laws committed during this period has already expired. See 18 U.S.C. § 3283. Accordingly, Natori and its representatives face no real and appreciable threat of criminal prosecution.

Motion to Compel, p. 6.

On its part, the defendant denies that the statute of limitations bars an action against it for violation of 18 U.S.C. § 551¹¹ and maintains that "on at least three separate occasions government officers responsible for the investigation and prosecution of this case have pointedly accused Natori of engaging in fraudulent conduct and of concealing information and/or destroying import-related documents." Defendant's Response in Opposition to Plaintiff's Motion to Compel, p. 8. An affirmation of defendant's counsel appended to this response states:

... 2. During the course of the now eight year Customs investigation underlying this penalty proceeding, I have encountered several instances of criminal allegations being levied against Natori by various government officers responsible for this action.

3. On or about May 22, 1986, while meeting with Customs Special Agent Stephen Yagoda, Mr. Yagoda pointedly remarked that Natori had engaged in fraudulent conduct and that my law firm should get a higher class of clients....

4. On or about January 9, 1987 I received a telephone call from Customs Auditors Eugene Donohue and Robert Perri regarding the ongoing audit of Natori's books and records. During that telephone call, the government auditors pointedly demanded an interview with Natori's accounting personnel for the clearly expressed purpose of establishing whether documents they believed were relevant to the audit had been destroyed by Natori.

5. On or about February 11, 1987 I was served on behalf of Natori with an undated administrative summons demanding, among other things, testimony stating that "where an identified document has been destroyed or alleged to have been destroyed, state the date and reason for its destruction, identify each person having any knowledge of its destruction, and each person responsible for its destruction".

6. On or about May 11, 1987 I met with Customs Special Agent Charles H. Geier and during the course of that meeting Mr. Geier pointedly demanded that I advise Natori not to destroy any documents.

The defendant further argues that the statute of limitations does not bar the government from pursuing a criminal action against it and its representatives for entries made less than five years ago or for conspiring to commit import fraud with regard to entries made earlier because an act in furtherance of such conspiracy, like destruction of documents, starts the running of...