UNITED STATES, Plаintiff, v. COUNTRY FLAVOR CORP., Defendant.
Court No. 11-00138
United States Court of International Trade
May 22, 2012
Slip Op. 12-65
OPINION
RIDGWAY, Judge:
Pending before the Court is Plaintiff’s Renewed Motion for Entry of Default Judgment, in which the Government addresses various issues raised in Country Flavor I and once again requests a default judgment against defendant importer Country Flavor Corporation. See Plaintiff’s Renewed Motion for Entry of Default Judgment (“Renewed Motion for Default Judgment”); United States v. Country Flavor Corp., 36 CIT —, 825 F.Supp.2d 1296 (2012) (“Country Flavor I”).
As Country Flavor I explained, the Gоvernment commenced this action against Country Flavor and its surety, International Fidelity Insurance Company, seeking unpaid antidumping duties and penalties related to 13 entries of frozen fish fillets that Country Flavor imported from Vietnam in 2006. See generally Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1298-99. After Country Flavor failed to enter an appearance by counsel and failed to plead or otherwise defend itself within 21 days of being served with the summons and complaint, the Clerk of the Court entered Country Flavor’s default. See Entry of Default (July 1, 2011); see generally Country Flavor I, 36 CIT at —, —, 825 F.Supp.2d at 1299, 1301. The Government later settled with Country Flavor’s surety, and the surety was dismissed with prejudice from the action. Sеe Order (Sept. 16, 2011); see generally Country Flavor I, 36 CIT at —, —, 825 F.Supp.2d at 1299, 1301. Thereafter, the Government sought entry of a default judgment against the remaining defendant, Country Flavor. See Plaintiff’s Motion for Entry of Default Judgment (“Motion for Default Judgment”). The Government’s original Motion for Default Judgment was the subject of Country Flavor I.
Country Flavor I ruled in favor of the Government on the issue of liability, concluding that the Government had established that Country Flavor misclassified each of the 13 subject entries of frozen fish fillets (depriving the United States of applicable antidumping duties), and, further, that Country Flavor’s actions constituted negligent violations of
Country Flavor I nevertheless concluded that a default judgment could not enter, because the Government had not offered the proof required to establish the amount of the civil penalty to be imposed and the amount of antidumping duties that remains unpaid. See generally Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1303; see also id., 36 CIT at —, 825 F.Supp.2d at 1305-08 (concerning amount of civil penalty); id., 36 CIT at —, 825 F.Supp.2d at 1308-09 (concerning amount of antidumping duties that remains unpaid). The Government’s Motion for Default Judgment therefore was denied without prejudice. See generally id., 36 CIT at —, —, 825 F.Supp.2d at 1299, 1310.
As set forth below, the Government’s Renewed Motion for Default Judgment cures the defects in the Government’s original motion. Accordingly, the Renewed Motion must be granted, and judgment by default entered against Country Flavor for a civil penalty in the amount of $617,562.00, as well as $28,984.75 in unpaid antidumping duties (together with prejudgment interest on that sum).
I. Background
A summary recitation of the facts of the case is necessary here because—as detailed below—the Government’s Renewed Motion for Default Judgment corrects a number of misstatements made in its complaint, in its original Motion for Default Judgment, and in the declaration that the Government filed in support of that motion (“Thierry Declaration I”). And a number of those misstatements of fact were reflected in Country Flavor I.
In eаrly July 2006, Customs sent Country Flavor Notices of Action with respect to 10 of the 13 entries at issue, stating Customs’ intent to assess antidumping duties and demanding that Country Flavor pay antidumping duty cash deposits on those 10 entries at the 63.88% Vietnam-wide rate. See Thierry Declaration II, Exh. 3 (Notices of Action); see also Renewed Motion for Default Judgment at 2; Thierry Declaration II ¶ 8.4 Thereafter,
In late January 2011, Customs issued a pre-penalty notice to Country Flavоr in the amount of $617,562.00, based on Country Flavor’s alleged negligence in declaring the fish as “broadhead” (rather than pangasius) in the entry summaries filed with Customs. See Thierry Declaration II, Exh. 4 (Pre-Penalty Notice); Thierry Declaration I ¶ 9. The pre-penalty notice stated that the actual loss of revenue totaled $308,781.23, and indicated that the proposed penalty of $617,562.00 represented “two times the loss of revenue.” See Thierry Declaration II, Exh. 4 (Pre-Penalty Notice); see also Thierry Declaration I ¶¶ 9-10. The $308,781.23 figure does not appear in the complaint in this matter. See Complaint. However, the complaint does assert that Country Flavor is liable for “unpaid duties in the amount of $305,445.95.” See Complaint ¶ 29; see also id. at ¶ 4 of demand for relief (asserting claim against Country Flavor for “lost duties in the amount of $305,445.95”).
Finally, the Government failed even to ensure that the facts—as corrected—were consistently incorporated into its Renewed Motion for Default Judgment. Thus, for example, the Renewed Motion correctly states that Customs notified Country Flavor that the agency intended to assess antidumping duties as to “10 of the 13 subject entries.” See Renewed Motion for Default Judgment at 2. However, in the two sentences thereaftеr, the Government fails to reflect that the correct number of entries is 10, not 11. Specifically, the Government incorrectly states that Customs “demanded that Country Flavor pay antidumping duty cash deposits upon those 11 entries,” and that Customs liquidated “the remaining two entries” without regard to antidumping duties. See id. at 2-3 (emphases added); see also id. at 13 (stating incorrectly that notices of action covered “11 of the 13 subject entries”).
International Fidelity Insurance Company served as Country Flavor’s surety for the entries in question. Specifically, International Fidelity had issued a continuous entry bond to Country Flavor, promising to pay all duties, taxes, and fees owed during the period at issue in this action, up to a maximum of $100,000.00. See Complaint ¶ 6; Thierry Declaration I ¶ 13; Welty Declaration ¶ 4. Of that sum, the surety paid $6,582.22 for “antidumping duties and mаndatory interest upon one of the 13 subject entries” before this action was commenced. See Complaint ¶ 19; see also id. ¶ 6; Welty Declaration ¶¶ 5-6. In addition, the surety had issued eight single transaction bonds for entries of merchandise subject to this action, promising to pay all duties, taxes, and fees owed on the specified entries, up to varying amounts. See Complaint ¶ 7; Thierry Declaration I ¶ 13; see also Welty Declaration ¶ 12 (specifying the eight entries covered by single transaction bonds). According to the complaint, none of the single transaction bonds had been exhausted at the time this аction was commenced; and the remaining single transaction bond coverage then totaled $174,908.67. See Complaint ¶ 7.
In early August 2011, International Fidelity made another payment to Customs, in the amount of $274,417.78, in settlement of the Government’s claims against it in this action and to cover the surety’s “liability upon certain single entry bonds that were not part of this action.” See Renewed Motion for Default Judgment at 6.7 The surety was subsequently dismissed with prejudice from this action. See Order (Sept. 16, 2011). In the meantime, the Clerk of the Court entered Country Flavor’s default, and the Government filed its original Motion for Default Judgment. See Entry of Default (July 1, 2011); Motiоn for Default Judgment.
The analysis that follows summarizes both the disposition of the Government’s original motion in Country Flavor I and the Government’s response to that decision, as reflected in its Renewed Motion for Default Judgment.
II. Analysis
The Government’s Renewed Motion for Default Judgment supplements the record in this matter with additional declarations and supporting documentation, including the relevant notices of action, the pre-penalty notice, the penalty notice, and a domestic value worksheet. See generally Thierry Declaration II; Welty Declaration; Thierry Declaration II, Exh. 3 (Notices of Action); id., Exh. 4 (Pre-Penalty
A. The Amount of the Civil Penalty
In its original Motion for Default Judgment, the Government sought a civil penalty for negligence in the amount of $617,562.00, which was asserted to represent “the statutory two times lost revenue maximum amount for negligence.” See Motion for Default Judgment at 6; see also id. at 7; Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1305. As Country Flavor I explained (and as the Government’s original motion acknowledged), the civil penаlty statute caps the penalty for negligence in cases such as this at “the lesser of . . . (i) the domestic value of the merchandise, or (ii) two times the lawful duties . . . of which the United States [was] deprived.” See id., 36 CIT at —, 825 F.Supp.2d at 1301;
Specifically, as Country Flavor I explained, the declaration submitted with the Government’s original Motion for Default Judgment attested that the antidumping duties on the 13 entries at issue (i.e., the amount of lawful duties of which the U.S. was deprived) totaled $308,781.23. See generally Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1308 (citing Thierry Declaration I ¶ 10). However, that figure ($308,781.23) does not appear in the Government’s complaint in this matter. See Complaint. And the Government’s original motion failed to reconcile the $308,781.23 figure with the figure of $305,445.95, which the complaint seemed to indicate was the relevant sum. See Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1308; Complaint ¶ 29 (seeking “unpaid duties in the amount of $305,445.95”); see also id. at ¶ 4 of demand for relief (same).
Country Flavor I similarly explained that neither the Government’s original Motion for Default Judgment nor the Thierry declaration submitted with that motion represented that a civil penalty in the amount of “two times the lawful duties . . . of which the United States [was] deprived” would be less than a penalty in the amount of “the domestic value of the merchandise.” See Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1305. Indeed, as Country Flavor I further explained, the Government had proffered no evidence to establish the domestic value of the merchandise at issue. See id., 36 CIT at —, 825 F.Supp.2d at 1305-07.8
Based on the record as it has been supрlemented, it is clear that, as the Renewed Motion for Default Judgment states, a civil penalty in the amount of $617,562.46 (i.e., two times $308,781.23, which is the total “lawful duties . . . of which the United States [was] deprived”)—rounded down to $617,562.00—is less than “the domestic value of the merchandise” (whether that value is $874,497.21 or $876,497.21). See Renewed
B. The Amount of Unpaid Antidumping Duties
In addition to a civil penalty in the amount of $617,562.00, the Government’s original Motion for Default Judgment also sought a default judgment for $34,363.45 in outstanding unpaid antidumping duties (together with prejudgment interest) as lost revenue under
As Country Flavor I explained, however, the Government’s calculation of an outstanding balance of $34,363.45 in antidumping duties was undermined by the seeming discrepancy between the $305,445.95 figure specified in the Government’s complaint and the $308,781.23 figure set forth in the original Motion for Default Judgment (which appeared nowhere in the complaint). See generally Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1308; see also section II.A, supra (discussing apparent discrepancy between $305,445.95 figure in complaint
Now seeking unpaid antidumping duties in the amount of $28,984.75 (plus prejudgment interest), the Government’s Renewed Motion for Default Judgment addresses each of the relevant issues raised in Country Flavor I. See generally Renewed Motion for Default Judgment at 5-6, 10, 14; Welty Declaration ¶ 15. As discussed above, the Renewed Motion makes it clear that the $305,445.95 figure set forth in the complaint was in error, and that the total antidumping duties on the 13 entries amounted to $308,781.23. See section II.A, supra. In addition, the Government’s Renewed Motion acknowledges and specifically accounts for two payments made by the surety which reduced the outstanding balance of antidumping duties on the 13 entries at issue here. See generally Renewed Motion for Default Judgment at 5-6; Welty Declaration ¶¶ 6-10, 15.
In particular, the Government explains that, prior to the commencement of this action, International Fidelity tendered payment of $6,582.22 with respect to one of the 13 subject entries (specifically, entry # GX5-99118484). See Renewed Motion for Default Judgment at 5; Welty Declaration ¶ 6; see also Complaint ¶ 6 (stating that, as of date of filing of complaint, “$6,582.22 [of surety’s continuous entry bond] has been exhausted”); id. ¶ 19 (stating that, as of date of filing of complaint, surety “has paid $6,582.22 in antidumping duties and mandatory interest upon one of the 13 subject entries”).13 Because the surety’s payment was not submitted within 30 days of Customs’ bill, additional interest of $43.42 had accrued by the time payment was made. See Renewed Motion for Default Judgment at 5; Welty Declaration ¶¶ 5-6, 8. Pursuant to Customs’ regulations, the surety’s payment of $6,582.22 was applied first to the accrued interest of $1,246.94, and then to the principal ($5,378.70), leaving a remaining balance of $43.42 in antidumping duties outstanding as to entry # GX5-99118484. See Renewed Motion for Default Judgment at 5; Welty Declаration ¶ 7 (citing
The Renewed Motion for Default Judgment similarly accounts for International Fidelity’s later payment, in the amount of $274,417.78. The Government explains that the $274,417.78 payment was made not only to settle the instant action as against the surety, but also to satisfy the surety’s liability under certain single entry bonds that were not part of this action. See Renewed Motion for Default Judgment at 6.14 Specifically, according to the Govern-
In sum, International Fidelity’s payment of $5,378.70 in antidumping duties on entry # GX5-99118484 reduced the total unpaid antidumping duties on the 13 entries at issue from $308,781.23 to $303,402.53. See Renewed Motion for Default Judgment at 6. And reducing that $303,402.53 figure by the surety’s subsequent payment of $274,417.78 leaves a remaining balance of $28,984.75—the amount of lost revenue that the Government now seeks pursuant to
In light of the determination of liability in Country Flavor I, and based on the Government’s Renewed Motion for Default Judgment (as outlined above), the Government is entitled to the requested default judgment for lost revenue in the amount of $28,984.75. In addition, as explained in Country Flavor I, the Government is entitled to an award оf prejudgment interest on that sum. See generally Country Flavor I, 36 CIT at —, 825 F.Supp.2d at 1302 (and authorities cited there) (summarizing legal basis for award of prejudgment interest on unpaid antidumping duties).
III. Conclusion
For the reasons set forth above, the Renewed Motion for Default Judgment must be granted in favor of the Government and against Country Flavor for a civil penalty in the amount of $617,562.00, as well as $28,984.75 in unpaid antidumping duties (together with prejudgment interest on the latter sum).
Judgment will enter accordingly.
Notes
Similarly, the complaint, the original Motion for Default Judgment, and the supporting declaration all stated incorrectly that notice was given as to 11 entries, when, as the Government now notes, the notices actually covered only ten. See Complaint ¶ 13 (stating that notice of action covered “11 of the 13 subject entries”); id. ¶¶ 14-15, 22, 25 (erroneously referring to 11 entries); Motion for Default Judgment at 2 (stating that notice of action covered “11 of the 13 subject entries”); Thierry Declaration I ¶ 8 (same); compare Thierry Declaration II, Exh. 3 (Notices of Action).
These errors (and the other similar errors identified below) are troubling for a number of reasons. As a threshold matter, by signing and filing the complaint in this action, counsel for the Government certified that, based on an “inquiry reasonable under the circumstances,” “the factual contentions [set forth in the complaint] have evidentiary support.” See
Further, the Government’s numerous mistakes of fact serve to underscore the importance of requiring the Government to file with the court all relevаnt documentation from the penalty proceedings at the administrative level. Absent that mandate in Country Flavor I, the numerous errors in the complaint, in the original motion, and in the supporting declaration never would have come to light. See Country Flavor I, 36 CIT at — n. 7, 825 F.Supp.2d at 1303 n. 7 (citing other cases concerning the filing with the court of the record compiled in penalty proceedings before Customs). Particularly if the court cannot rely on the accuracy of the factual representations of counsel and the statements of witnesses made under penalty of perjury, the court must be able to review the source doсumentation for itself.
The circumstances here are all the more egregious because the Government never acknowledges its errors. Incredibly, nowhere does the Renewed Motion for Default Judgment or the declarations filed in support of that motion give any indication that specific facts set forth therein are squarely at odds with (and, indeed, constitute corrections of) statements of fact that were made in the complaint, in the original Motion for Default Judgment, and in the declaration supporting the original motion. This lack of candor further undermines the court’s confidence in the accuracy and reliability of representations made by the Government. It is beyond cavil that the court cannot be expected to compare a party’s submissions with documents that the party filed earlier in order to determine for itself whether the party’s factual representations are inconsistent.
The Government goes so far as to argue that “the facts and circumstances with respect to Country Flavor’s recent behavior merit a higher penalty.” See Renewed Motion for Default Judgment at 11 (emphasis added); see also id. at 11 n. 3 (asserting that “the circumstances here: dissolution [of Cоuntry Flavor] in light of [the] pre-penalty notice; and the operation of the company by the same president from the same address in the apparent same line of business as Country Flavor, evince a lack of cooperation and should merit an enhanced penalty”); id. at 13 (emphasizing that Country Flavor cannot “simply walk away from liability by transferring assets to its insiders and then dissolving”). However, the civil penalty imposed here—$617,562.46—is the statutory maximum permitted for acts of negligence. See