OPINION
This case involves an action by plaintiff the United States (specifically, the United States Customs Service
1
(“Customs”)) against defendants Pan Pacific Textile Group, Inc. (“Pan Pacific”), Aviat Sportif, Inc. (“Aviat Sportif’), Budget Transport, Inc., Prime International Agency, Billion Sales, Ever Power Corp., American Contractors Indemnity Company (“ACIC”),
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Thomas Man Chung Tao (“Tao”), and Stephen Yu Juang (“Juang”),
3
regarding 68 unlawful entries of track suits imported from the People’s Republic of China (“China”) into the United States. Customs moves for partial summary judgment against Tao, Pan Pacific, and Aviat Sportif (collectively, “defendants”) pursu
I. BACKGROUND
In accordance with USCIT Rule 56(d), the Court begins with a recitation of the relevant facts which appear to be without substantial controversy. During the events at issue in this case, Tao was an importer dealing almost exclusively in tracksuits manufactured in China. PPFUF ¶ 2. To do business in the United States, Tao acted through two companies, Pan Pacific and Aviat Sportif, which were owned and controlled by Tao. PPFUF ¶ 2. In 1993, Tao and his companies engaged the freight forwarding services of Juang, who operated several companies providing cargo transportation between the United States and China. PPFUF ¶ 12. Later that same year, Juang proposed to expand the scope of the services he provided to Tao. PPFUF ¶ 12. Juang offered to provide both freight forwarding and customs clearance services on Tao’s shipments, although he was not a licensed customs broker. 4 PPFUF ¶ 12. Tao accepted Juang’s offer, and signed a power of attorney allowing Juang to conduct customs entry transactions on behalf of Tao and his companies. PPFUF ¶ 14. Tao (or one of his companies) remained the importer of record for approximately one year after Juang began performing customs clearance services. PPFUF ¶ 15.
Upon acquiring these new customs clearance responsibilities, Juang began submitting entry documents to Customs that misdescribed the tracksuits as plastic bags and wooden patio furniture — classifications which carried lesser duty rates 5 and were not subject to quota restrictions. 6 PPFUF ¶¶ 17, 19. He also undervalued the merchandise to further reduce the duties assessed by Customs. PPFUF ¶¶ 17, 19. Juang profited from this scheme by continuing to charge Tao according to the proper duty rate. PPFUF ¶ 20. To support his charges to Tao, Juang supplemented his invoices with accurate entry documents that were never in fact submitted to Customs. PPFUF ¶ 21.
In 1994, Juang approached Tao with an alternate business arrangement (the “flat fee scheme”). PPFUF ¶ 29. Juang claimed that Tao had been “paying too much duty” and proposed that Tao pay a flat fee per shipping container that would include all of the costs of shipment, including both freight forwarding and customs duties. PPFUF ¶ 29. Further, Juang
Before accepting Juang’s proposal, Tao questioned how Juang could make a profit while offering such a reduced flat fee. PPFUF ¶ 33. Tao consulted with Myron Rosenbach (“Rosenbach”), an acquaintance experienced in importing from Asia into the United States, seeking an explanation. Memorandum in Support of Defendants Pan Pacific Textile Group Inc., Aviat Sportif Inc., and Thomas Man Chung Tao’s Motion for Summary Judgment Pursuant to Rule 56 of the Court of International Trade (“Defs.’ Mot.”) at 8. Rosenbach indicated that it was possible for an importer to reduce duties owed by calculating the duty based on production cost rather than invoice value, and he provided Tao with a copy of a letter from a Customs attorney that supported this theory. Defs.’ Mot., Ex. C (Deposition of Myron Rosenbach) (“Rosenbach Dep.”) at 133-35. This letter had been sent to Rosenbach as a general update on customs law, and was not intended for Tao, or written with any knowledge of his situation. Rosenbach Dep. at 135-36. Two days after this conversation, Tao agreed to the flat fee arrangement, including the designation of Juang as the importer of record. PPFUF ¶ 37. Although Tao stated that he assumed that duties would be calculated based on production costs, Tao never provided these costs to Juang. PL’s Mot., App. E (Deposition of Thomas Man-Chung Tao) at 255, 276.
After Tao agreed to the flat fee arrangement, Juang continued to enter Tao’s tracksuits as plastic bags and patio furniture, although he stopped providing Tao with falsified entry documents as support for his invoices. PPFUF ¶ 47. Tao stated that he thought it was not necessary for him to maintain copies of his entry records, since he was no longer the importer of record. PPFUF ¶ 41. Tao also told his supplier, Singmay Industrial, Ltd., that it should no longer purchase quota visas, indicating that Juang would take care of this under the new flat fee scheme. PPFUF ¶ 43. Tao stated that, while he perceived a shift in responsibilities once Juang became the importer of record, he still considered himself to be the owner of the merchandise. PPFUF ¶41. To that end, Tao’s companies continued to place the orders for the merchandise, and received the goods directly from Juang’s companies after they cleared customs. PPFUF ¶ 41. Tao’s company, Pan Pacific, also remained the ultimate consignee. PPFUF ¶ 41.
On or about November 26, 1996, Customs Special Agents began investigating Juang, initially for suspected involvement in the smuggling of Chinese medicine. PL’s Mot. at 7. On February 26, 1997, Customs searched the premises occupied by Juang’s companies. PL’s Mot., App. A (Declaration of David J. Peters) ¶ 5. Records uncovered during the search revealed that, from late 1993 to early 1997, Juang entered tracksuits for Tao, Pan Pacific, and Aviat Sportif. PL’s Mot., App. B (Declaration of Marcia A. Brown) (“Brown Deck”) ¶ 9. Investigators then searched the premises of Pan Pacific and Aviat Sportif and concluded from the records recovered that Tao’s payments to Juang were below the duties that would have been assessed based on the value stated on
On November 21, 2001, Customs filed the instant civil action pursuant to 19 U.S.C. § 1592. Defs.’ Mot., Ex. D (Complaint) (“Compl.”) ¶ 1. In its complaint, Customs sought unpaid duties and a civil penalty for 68 entries of merchandise, including 34 that were at issue in the criminal trial. Compl. ¶¶ 1, 15; PL’s Mot. at 9. These entries were made between September 21, 1995 and January 20, 1997, under the flat fee scheme. 7 PPFUF ¶ 1. Customs set the total domestic value of these goods at $26,051,129, and claimed that $2,034,159B0 in duties remained unpaid. 8 Compl. ¶¶22, 28. In its complaint, Customs sought the recovery of both unpaid duties and a civil penalty under the three alternative theories of liability recognized by 19 U.S.C. § 1592 (i.e., fraud, gross negligence, or negligence). Compl. ¶¶ 28, 31, 34, 37, 40, 43, 44. Under a theory of fraud liability, Customs sought the full amount of unpaid duties, as well as a $26,051,129 civil penalty. Compl. ¶¶ 28, 37. Alternatively, Customs sought $241,351 in unpaid duties 9 and a $956,406 civil penalty under a gross negligence theory or a $482,703 civil penalty under a negligence theory. Compl. ¶¶ 31, 34, 38, 40.
On October 31, 2002, defendants moved for summary judgment on four separate grounds, all of which were denied by this Court.
United States v. Pan Pac. Textile Group, Inc.,
27 CIT-,
II. STANDARD OF REVIEW
“[SJummary judgment is proper ‘if the pleadings [and the discovery materials] show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ”
Celotex Corp. v. Catrett,
Even where summary judgment cannot be rendered upon the whole case, partial summary judgment may be granted in some circumstances.
See
USCIT R. 56(d). “Partial summary judgment is appropriate ‘when it appears that some aspects of a claim are not genuinely controvertible [and] ... genuine issues remain regarding the rest of the claim.’ ”
Ugg Int’l, Inc. v. United States,
The fact that state of mind is at issue in a case does not preclude summary judgment.
See Liberty Lobby,
III. DISCUSSION
A. DEFENDANTS ARE LIABLE FOR DUTIES UNPAID DUE TO THE FRAUDULENT VIOLATIONS OF 19 U.S.C. § 1592 BY THEIR AGENT
On summary judgment, Customs first seeks recovery from defendants of the unpaid duties associated with the entries at issue in this case. Customs has presented two alternative arguments supporting defendants’ liability for duties unpaid due to fraudulent violations of 19 U.S.C. § 1592. Customs first argues that Juang was serving as defendants’ agent, making defendants liable, as principals, for the duties that remain unpaid as a result of Juang’s fraud. Customs’ second argument is that Tao himself (and by extension, Tao’s companies) committed fraud under the statute. Customs argues that Tao deliberately avoided knowledge of Juang’s unlawful activities, which served as constructive knowledge sufficient to make Tao (and Tao’s companies) complicit in the fraud. Further, because the statutory scheme also prohibits violations of 19 U.S.C. § 1592 due to gross negligence or negligence, Customs has presented alternative arguments supporting defendants’ liability for unpaid duties under these lesser theories of liability as well.
For the reasons that follow, the Court finds defendants liable for unpaid duties on the entries at issue in this case. The Court concludes that, as a matter of law, a principal may be held liable under the fraud provisions of 19 U.S.C. § 1592 for a customs violation committed by an agent acting within its proper scope of authority, regardless of whether the principal authorized the agent’s specific unlawful conduct constituting the customs violation. Because the uncontroverted facts in this case clearly demonstrate that Juang committed customs violations in the performance of his duties as defendants’ agent, defendants
1. Juang’s Actions Constituted a Fraudulent Violation of 19 U.S.C. § 1592(a)
As a threshold matter, in order for liability for unpaid duties to accrue under 19 U.S.C. § 1592(d), a violation of 19 U.S.C. § 1592(a) must have been committed through either fraud, gross negligence, or negligence. A fraudulent violation under 19 U.S.C. § 1592(a) is committed directly 12 when four key elements are present: first, the party against whom liability is sought must belong to the class of “persons” subject to liability under the statute; second, that party must enter, introduce, or attempt to enter or introduce merchandise into the United States by means of false documents or acts; third, such documents or acts must also be material; and fourth, the material, false documents or acts must be transmitted or performed fraudulently. 13 19 U.S.C. § 1592(a)(1)(A)(i) (1999). All four elements are easily met in this case.
First, Juang, as importer of record, was clearly a “person” within the meaning of 19 U.S.C. § 1592(a) and, as such, may be held liable for a violation of that statute. This Court has repeatedly held that an importer of record belongs to the class of “persons” subject to liability under 19 U.S.C. § 1592(a) and against whom a claim may be brought for suspect entries.
See, e.g., United States v. F.H. Fenderson, Inc.,
Next, the facts also show that Juang submitted documents to Customs containing information that was both false and material within the meaning of 19 U.S.C. § 1592(a). Juang submitted entry documents to Customs which identified Tao’s merchandise as plastic bags or wooden patio furniture. There is no doubt that these identifications were false, as all parties acknowledge that the shipments contained tracksuits. Further, these false statements were also material. The definition of “material” under 19 U.S.C. § 1592 is provided by 19 C.F.R. pt. 171 app. B(B):
A document, statement, act, or omission is material if it has the natural tendency to influence or is capable of influencing agency action including, but not limited to a Customs action regarding: (1) Determination of the classification, ap-praisement, or admissibility of merchandise (e.g., whether merchandise is prohibited or restricted); (2) determination of an importer’s liability for duty....
Finally, it is clear that Juang fraudulently submitted the material, false entry documents to Customs. Customs’ regulations deem a violation of 19 U.S.C. § 1592 to be fraudulent when “a material false statement, omission, or act in connection with the transaction was committed (or omitted) knowingly, ie., was done voluntarily and intentionally, as established by clear and convincing evidence.” 19 C.F.R. pt. 171 app. B(C)(3) (2005). In the instant case, Juang has admitted to knowingly submitting false statements to Customs. Pl.’s Mot., App. F (Deposition of Stephen Juang) (“Juang Dep.”) at 41-43. Further, defendants, in their own submissions to the Court, have acknowledged that Juang committed fraud through his customs transactions. Defs.’ Mot. at 9. It is thus firmly established by uncontroverted facts that Juang committed fraud, and in so doing, violated 19 U.S.C. § 1592(a). These violations created liability for unpaid duties under 19 U.S.C. § 1592(d).
2. Juang Was Defendants’ Agent
In order for any liability for Juang’s actions to transfer to defendants under agency principles, it must be shown that Juang was defendants’ agent. In the instant case, the uncontroverted facts firmly establish that defendants engaged Juang as their agent. Agency is defined as “the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.” Restatement (Second) of Agency § 1(1) (1958) (the “Restatement of Agency”). It is undisputed that Tao engaged Juang to perform customs entry services on behalf of defendants, and that Juang consented to this arrangement. Tao formalized the agency relationship by signing a power of attorney, a document specifically designed to create an agency relationship.
See, e.g.,
Black’s Law Dictionary 1191 (7th ed.1999) (defining “power of attorney” as “[a]n instrument granting someone authority to act as agent or attorney-in-fact for the
The fact that Juang became the importer of record did not alter the nature of his agency relationship with defendants. Several cases, before this Court and others, have confirmed that the importer of record may also be an agent in the context of the customs transactions he or she is performing.
See, e.g., Corrigan v. United States,
In the instant case, it is clear that Juang continued to function as an agent for defendants, even after Juang became the importer of record. Defendants placed the orders for merchandise prior to importation, and received the goods directly from Juang’s companies after they cleared Customs. Further, Tao intended to retain ownership of the merchandise throughout this process and, to that end, Pan Pacific remained the ultimate consignee. There can be no reasonable doubt that Juang was handling the goods on defendants’ behalf, regardless of how he may have deviated from the proper performance of his duties. Despite the transfer of importer of record status, Juang remained defendants’ agent during the flat fee scheme.
3. Defendants Are Liable for the Customs Violations Committed by their Agent Within the Scope of that Agent’s Authority
It is well established under the agency principle of imputation that defendants, as principals, may be held liable by a third party for the authorized acts of Juang, as their agent. See Restatement of Agency § 140 (“The liability of the principal to a third person upon a transaction conducted by an agent, or the transfer of his interests by an agent, may be based upon the fact that: (a) the agent was authorized; [or] (b) apparently authorized .... ”). An agent is authorized if he acts “in accordance with the principal’s manifestations of consent to him.” Restatement of Agency § 7. In the instant case, Tao unambiguously consented to Juang filing entry documents on defendants’ behalf when he retained Juang’s customs clearance services and signed a power of attorney. Thus, liability for Juang’s customs transactions may be extended to defendants.
It is irrelevant whether or not defendants authorized the specific unlawful conduct which constituted the violation of 19 U.S.C. § 1592(a). In
Gleason v. Seaboard Air Line R. Co.,
Nevertheless, defendants claim that they cannot be found liable due to the “adverse interest exception” to this principle of agency liability. This exception absolves a principal of liability “when an agent abandons his principal’s interests and acts entirely for his or another’s purposes.”
In re Crazy Eddie Sec. Litig.,
To be sure, the instant case appears to be the first time this Court has applied agency liability to customs violations in precisely this manner,
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but the agency principles employed herein are firmly established. For example,
Gleason
demonstrates a closely analogous application of these principles by the Supreme Court.
Gleason
involved a fraudulent scheme by an employee of a railroad company to defraud a cotton merchant.
Gleason,
4. Sound Public Policy Supports Application of Agency Principles to Fraudulent Violations of 19 U.S.C. § 1592
Assigning liability to defendants for Juang’s fraudulent violations of 19 U.S.C. § 1592 is also supported by sound public policy. The policy underlying the agency principle of imputation, at the most basic level, is “to protect innocent third parties or ... to prevent principals from benefiting at the expense of innocent third parties.”
Bankers Life Ins. Co. of Neb. v. Scurlock Oil Co.,
Further, the Court’s holding in this case serves an additional public policy interest by creating proper incentives for importers in the future. If the Court were to allow defendants to immunize themselves from liability for customs violations by hiring a customs broker and transferring importer of record status, the Court would effectively create an incentive for bad behavior. Allowing such protection for importers would discourage care on their part in selecting their agents, and would thus provide more opportunity for dishonest middlemen such as Juang. Moreover, if importers could lower their costs through unlawful customs transactions without incurring any liability, they would be encouraged to seek brokers willing to commit fraud on their behalf (this case demonstrates that it is possible for both parties to benefit from such an arrangement). In the Court’s view, the likely effect of denying liability in this case would be an increase in fraudulent customs transactions. Therefore, the Court concludes that extending liability to defendants for duties unpaid as a result of Juang’s fraud is not only well supported by law, but also sound public policy.
See TIE Communications, Inc. v. United States,
H* ‡ ‡ ‡ :k :k
Accordingly, the Court concludes that defendants are liable for the duties unpaid as a result of Juang’s fraudulent violations of 19 U.S.C. § 1592.
B. SUMMARY JUDGMENT CANNOT BE GRANTED ON THE ISSUE OF LIABILITY FOR A CIVIL PENALTY UNDER 19 U.S.C. § 1592
On summary judgment, Customs makes two alternative claims for the assignment of liability to defendants for a civil penalty under 19 U.S.C. § 1592. Customs first argues that a civil penalty is warranted because defendants were complied: in the false entry of the merchandise at issue through gross negligence, in violation of 19 U.S.C. § 1592(a). 18 In the alternative, Customs argues that, at a minimum, defendants’ role in the flat fee scheme constituted a negligent violation of 19 U.S.C. § 1592(a) deserving of a civil penalty. 19 20 Under either theory, Customs requests that the Court assign liability to defendants for a penalty in accordance with 19 U.S.C. § 1592. 21
Defendants, in turn, request summary judgment on Count 1 of the complaint, in which Customs seeks a civil penalty based on allegations that defendants were complied, in the false entry of the merchandise at issue through fraud.
22
Defendants
For the reasons that follow, the Court concludes that it is unable to grant summary judgment for either party on the issue of a civil penalty under any theory of defendants’ liability. Although the Court finds that defendants are at least eligible for the assignment of liability for a civil penalty under 19 U.S.C. § 1592, defendants’ direct culpability in the flat fee scheme (and thus degree of liability) is a contested factual question which, in the Court’s view, is more appropriate for resolution at trial.
1. Defendants Are Eligible for the Assessment of a Civil Penalty Under 19 U.S.C. § 1592
Like liability for unpaid duties, liability for a civil penalty accrues under 19 U.S.C. § 1592 when a violation of 19 U.S.C. § 1592(a) is committed through either fraud, gross negligence, or negligence. 19 U.S.C. § 1592(c). The Court applies the same four-part test derived from 19 U.S.C. § 1592(a) to determine whether such a violation has been committed for purposes of affixing liability for both unpaid duties and a civil penalty. 23 Here, it is already firmly established that information submitted on behalf of defendants to Customs was both false and material. See supra, at III.A.1. Thus, for a customs violation to exist and penalty liability to thereby accrue to defendants, it need only be determined that: (1) defendants belong to the class of “persons” subject to liability under 19 U.S.C. § 1592 and (2) defendants’ conduct in connection with the false, material submissions to Customs constituted fraud, gross negligence, or negligence. 24
As an initial matter, it is clear that defendants are “persons” subject to liability within the meaning of 19 U.S.C. § 1592(a),
i.e.,
they are at least
eligible
for the assessment of a civil penalty under the statute. This Court has previously held that “neither the statute nor the regulations limit liability for customs penalties to the ‘importer of record.’ ”
United States v. KAB Trade Co.,
2. Disputes of Material Fact Regarding Defendants’ Direct Culpability Preclude Establishing Defendants’ Liability for a Civil Penalty on Summary Judgment
Although defendants are eligible as a matter of law for the assessment of a civil penalty under 19 U.S.C. § 1592, defendants’ direct culpability (and thus degree of liability under a fraud, gross negligence, or negligence theory) is a contested question of fact inappropriate for summary judgment in this case.
Turning first to the fraud theory of penalty liability, the relevant facts are sufficiently disputed to prevent the Court from granting partial summary judgment in favor of defendants. Defendants urge the Court that they are entitled to judgment as a matter of law concerning their penalty liability for fraud because, in their view, Customs has failed to produce any direct evidence of defendants’ knowledge of the customs violations committed under the flat fee scheme. Rather, defendants argue that the uncontroverted direct evidence demonstrates their absolute lack of knowledge. In support of this position, defendants note that Tao has consistently denied any knowledge of the customs violations committed under the flat fee scheme. Defs.’ Mot. at 2, 7-8. Defendants also point to statements by Juang and his employee, Chien Kuo Chen, indicating that they did not disclose the customs violations to defendants. See Juang Dep. at 45; Deposition of Chien Kuo Chen, dated March 17, 2004 at 43-44. Finally, defendants claim that they have introduced evidence indicating that there were rational explanations for why defendants did not suspect criminality in connection with the flat fee scheme. See Ro-senbach Dep. at 185-91.
While this evidence does weigh in defendants’ favor, it is insufficient to warrant summary judgment for defendants on the issue of penalty liability for fraudulent customs violations. In order to prove fraud under 19 U.S.C. § 1592, Customs must establish by “clear and convincing evidence” that defendants “knowingly” committed a customs violation or an act in connection therewith. 19 C.F.R. pt. 171 app. B(C)(3) (2005). To satisfy this standard, Customs need not present
direct
evidence of defendants’ knowing participation in the customs violations. Rather, courts have repeatedly found that, in the fraud context, the clear and convincing evidence standard may be satisfied by circumstantial evidence.
See, e.g., Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc.,
Preservation of the issue of penalty liability for fraudulent customs violations leaves the Court equally unable to determine, on summary judgment, defendants’ liability under the alternate theories of gross negligence and negligence urged by Customs. Turning to the plain language of the statute, it is clear that the three alternative theories of liability recognized by 19 U.S.C. § 1592 are mutually exclusive.
See
19 U.S.C. § 1592(a)(1) (1999) (indicating that a violation may occur “by fraud, gross negligence
or
negligence”) (emphasis added). Congress’ use of the word “or” indicates that a choice must be made among the three theories; for purposes of determining penalty liability under 19 U.S.C. § 1592, a person who commits a customs violation may not have more than one
mens rea
at the time of commission.
25
United States v. Complex Mach. Works Co.,
The Court will not attempt to issue judgment as a matter of law on either of the lesser theories of liability while fraud remains a possible outcome. Such an order at this stage of the proceedings would only add confusion later if a judgment imposing greater liability were made at trial. Instead, it is well within the discretion of this Court to make a threshold determination of eligibility for penalty liability under 19 U.S.C. § 1592 while reserving the issue of actual culpability for trial.
See United States v. Almany,
Accordingly, defendants’ and Customs’ motions for partial summary judgment on the issue of penalty liability are both de
IV. CONCLUSION
For the foregoing reasons, the Court grants Customs’ motion for partial summary judgment on the issue of defendants’ liability for unpaid duties, in an amount to be determined following briefing by both parties. In addition, the Court denies both parties’ motions for partial summary judgment on the issue of defendants’ liability for a civil penalty, reserving this issue for trial. A separate order will be issued accordingly.
Notes
. The United States Customs Service is now U.S. Customs and Border Protection per the Homeland Security Act of 2002, 6 U.S.C. § 542 (2005), and the Reorganization Plan Modification for the Department of Homeland Security, H.R. Doc. 108-32, at 4 (2003).
. ACIC entered into a settlement agreement whereby Customs dismissed its claims against ACIC in exchange for payment of $201,000. Plaintiff's Motion for Partial Summary Judgment (“PL’s Mot.’’) at 10. As such, ACIC is no longer at issue in this case.
.Juang was the owner of Prime International Agency, Budget Transport, Inc., Ever Power Corp., and Billion Sales. Plaintiff's Proposed Findings of Uncontroverted Fact (“PPFUF”) ¶¶ 3-4. The Court entered default judgment against these parties on June 15, 2004. PL’s Mot. at 9. As such, they are no longer at issue in this case.
. It is a violation of Customs' regulations for a broker to transact customs business without a license. 19 C.F.R. § 111.4 (2005).
. See, e.g., HTSUS 3923.21.0090 (1996) (setting 3% tariff for plastic bags); HTSUS 9401.79.0025 (1996) (setting 2.4% tariff for outdoor household furniture sets with metal frames); HTSUS 6211.33.30 (1996) (setting 16.8% tariff for sets of men and boys’ tracksuits of man-made fibers).
.For the duration of defendants’ relationship with Juang, Chinese textiles were subject to quotas and required quota visas for entry into the United States. See, e.g., Agreement Between the United States and China Concerning Trade in Textile and Apparel Products, U.S.-China, June 8, 1995, Temp. State Dep’t No. 95-148,
. Customs did not seek unpaid duties or a civil penalty for the fraudulent entries made by Juang prior to the flat fee scheme. Reply to Defendants’ Opposition to Motion for Partial Summary Judgment at 12.
. Defendants dispute both the valuation of the merchandise and the calculation of duties owed. Defendants' Response to Plaintiff's Rule 56(h) Statement ("Defs/ Resp. to PPFUF”) II59.
. Customs sought a lesser amount of duties under the theories of gross negligence and negligence because the applicable statute of limitations limited recovery of duties from grossly negligent or negligent violations to only those violations committed within five years of the action. 19 U.S.C. § 1621(1) (2005). Invoking an exception to this statute of limitations for cases of fraud, Customs sought additional duties for violations occurring within five years of the discovery of the fraud. 19 U.S.C. § 1621(1) (2005).
."When the Court's rules are materially the same as the [Federal Rules of Civil Procedure ("FRCP”) ], the Court has found it appropriate to consider decisions and commentary on the FRCP in interpreting its own rules.”
Former Employees of Tyco Electronics v. United States Dep’t of Labor,
27 CIT-, -,
. As such, for purposes of the analysis of liability for unpaid duties, the Court need not reach Customs' second argument regarding defendants' complicity in fraud through deliberate ignorance. Similarly, the Court need not reach Customs' arguments concerning gross negligence and negligence, as duties owed under these lesser theories of liability are subsumed by those owed under fraud.
. The statute also prohibits the aiding and abetting of customs violations. 19 U.S.C. § 1592(a)(1)(B) (1999).
. An alleged violation involving a material omission need not satisfy the second requirement concerning falsity. 19 U.S.C. § 1592(a)( 1)(A)(ii) (1999).
. There is also support for the proposition that anyone in a position to satisfy the other elements of a 19 U.S.C. § 1592(a) violation is a "person” within the meaning of the statute, regardless of any other legal status they might hold.
See United States v. Golden Ship Trading,
. Defendants claim that court holdings, including
Synergy Sport Int’l v. United States,
. The novelty of this case is probably due to the unusual nature of the business arrangement under the flat fee scheme. In most customs transactions involving a broker, the principal remains the importer of record and, as such, is made explicitly liable by Customs' regulations. See 19 C.F.R. § 111.29(b)(1) ("If you are the importer of record, payment to the broker will not relieve you of liability for Customs charges (duties, taxes, or other debts owed Customs) in the event the charges are not paid by the broker.”).
. To be clear, Customs does not argue (the Court believes rightly) that this case satisfies the requirements of
Blum,
which permits the assignment of liability for unpaid duties under 19 U.S.C. § 1592 to any party "traditionally liable for such duties[.]”
Blum,
. Customs’ regulations provide that gross negligence is the "actual knowledge of or wanton disregard for the relevant facts ... with indifference to or disregard for the offender’s obligations under the statute.” 19 C.F.R. pt. 171, app. B(C)(2) (2005).
. Customs’ regulations provide that "a violation is negligent if it results from failure to exercise reasonable care and competence....” 19 C.F.R. pt. 171, app. B(C)(1) (2005).
. In its complaint, Customs claimed that defendants committed fraudulent violations of 19 U.S.C. § 1592(a) for the purpose of recovering both unpaid duties and a civil penalty. However, on summary judgment, Customs does not request that penalty liability be assigned to defendants under a fraud theory.
. The penalty amount differs under each theory of liability. See 19 U.S.C. § 1592(c)(1999).
. As indicated
supra,
at III.A, Customs’ regulations provide that a violation of 19 U.S.C. § 1592 is fraudulent "if a material false statement, omission, or act in connection with the
. Although the same test is applied, a claim for recovery of unpaid duties is independent of (and analyzed separately from) a claim for assessment of a civil penalty. Under 19 U.S.C. § 1592, a defendant may be required to restore unpaid duties to the government without payment of a penalty; likewise, a defendant may be required to pay a penalty for a customs violation not resulting in unpaid duties to the government.
See, e.g., Blum,
. These two parts of the statutory test remain open at this stage of analysis because Customs does not seek (the Court believes rightly) a civil penalty under a fraud theory on summary judgment. The Court is precluded from considering an extension of the agency principles discussed supra, at III.A, to satisfy the statutory requirements for the assignment of penalty liability under 19 U.S.C. § 1592 because this remedy was not requested by Customs.
. However, when liability for unpaid duties and a civil penalty are both sought in connection with the same customs violation, the Court notes that the end result of these separate liability analyses may be the attribution of two different states of mind to a single person, such as where the agency principle of imputed mens rea is used to establish only one category of liability. See Blum,