United States v. Country Flavor Corp.
2012 Ct. Intl. Trade LEXIS 33
Ct. Intl. Trade2012Background
- Government sued Country Flavor Corp. and its surety for unpaid antidumping duties under 19 U.S.C. §1592 and §1505 for 13 Vietnamese fish entries.
- Entries were initially identified as 'broadhead' (not subject to antidumping) but CBP testing revealed they were pangasius, subject to a 63.88% Vietnam-wide rate.
- Country Flavor failed to appear or defend; default entered July 1, 2011; surety settled and was dismissed with prejudice.
- Government later sought default judgment for a civil penalty (negligence) and for unpaid duties, plus prejudgment interest.
- Court found liability established but could not determine the appropriate civil-penalty amount or remaining unpaid duties due to evidentiary/documentary inconsistencies.
- Record showed Country Flavor allegedly dissolved; Government sought to cure deficiencies before renewing its motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did default establish liability for negligent misrepresentation under 1592(a)? | Country Flavor negligently identified pangasius as broadhead, violating 1592(a). | Country Flavor did not defend itself; issue is the adequacy of penalty evidence, not liability alone. | Liability established; but relief improper due to evidentiary gaps on amount. |
| Is the civil-penalty amount determinable from the record under 1592(c)(3)? | Civil penalty capped at two times lost revenue; amounts should be computed from the record. | Record insufficient or inconsistent to fix the cap or amount. | Cannot determine civil-penalty amount; default judgment denied. |
| Are the unpaid antidumping duties properly determined from the record? | Unpaid duties total to a specific amount; seeks that amount as part of relief. | Discrepancies between complaint and motion prevent reliable calculation. | Unpaid duties cannot be entered due to inconsistencies. |
| Should prejudgment interest be awarded on civil penalties under 1592? | Interest sought on penalties per governing guidance. | Prejudgment interest is not awarded on civil penalties under 1592. | Prejudgment interest not awarded. |
Key Cases Cited
- In re United States v. Inn Foods, 560 F.3d 1338 (Fed.Cir.2009) (burden-shifting proof in penalty actions; de novo review by CIT)
- United States v. Ford Motor Co., 463 F.3d 1286 (Fed.Cir.2006) (judicial discretion in civil-penalty amount within statutory range)
- United States v. Nat'l Semiconductor Corp., 547 F.3d 1364 (Fed.Cir.2008) (de novo penalty determination; framework for penalties)
- United States v. Complex Machine Works Co., 23 CIT 942, 83 F.Supp.2d 1307 (1999) (factors for determining appropriate civil-penalty amounts)
- United States v. Matthews, 31 CIT 2075, 533 F.Supp.2d 1307 (2007) (penalty amount considerations; supports de novo review)