Boynton v. United States

Slip Op. 07-146

UNITED STATES COURT OF INTERNATIONAL TRADE

Sherri N. Boynton,

Plaintiff,
Before: Pogue, Judge
v. Court No. 06-00095

UNITED STATES,

Defendant.

[Plaintiff’s motion for judgment on the record denied. Action
remanded to the Secretary of the Department of Homeland Security
for further consideration.]
Decided: October 02, 2007

Law Offices of Robert W. Snyder (Robert w. Snyder) for Sherri N.
Boynton, Plaintiff.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams,
Attorney in Charge, International Trade Field Office, Aimee Lee,
Civil Division, Dept. Of Justice Commercial Litigation Branch,
Maritza Tamayo-Sarver, of council, Office of Associate Chief
Counsel, U.S. Customs and Border Protection for U.S. Department of
Homeland Security, Customs and Border Protection, Defendant

OPINION

Pogue, Judge:

Plaintiff, Sherri N. Boynton, moves for judgment on the

administrative record pursuant to USCIT Rule 56.1, asking the court

to set aside the decision of the Secretary of the Department of
Court No. 06-00095 Page 2

Homeland Security1 (“the Secretary”) revoking her Customs broker’s

License.2

The Court has jurisdiction over this case under Section 641(e)

of the Tariff Act of 1930, 19 U.S.C. § 1641(e)(1),3,4 and 28 U.S.C.

§ 1581(g) (granting the Court of International Trade exclusive

jurisdiction of any civil action to review the revocation of a

Customs broker’s License by the Secretary of the Department of

Homeland Security (“DHS”)). In accordance with 19 U.S.C. §

1
In this instance, the revocation decision was made by
Acting Assistant Secretary of the Department of Homeland Security
Elaine Dezenski.
2
Until January 2003, revocation decisions were made by the
Secretary of the Treasury. After the reorganization of the
former United States Customs Service revocation decisions are
made by the Secretary of Homeland Security. 6 U.S.C. § 203
(2004).
3
Citation is to the 2000 edition of the U.S. Code unless
otherwise noted.
4
19 U.S.C. § 1641(e)(1) provides: In general. A customs
broker, applicant, or other person directly affected may appeal
any decision of the Secretary denying or revoking a license or
permit under subsection (b) or (c), or revoking or suspending a
license or permit or imposing a monetary penalty in lieu thereof
under subsection (d)(2)(B), by filing in the Court of
International Trade, within 60 days after the issuance of the
decision or order, a written petition requesting that the
decision or order be modified or set aside in whole or in part. A
copy of the petition shall be transmitted promptly by the clerk
of the court to the Secretary or his designee. In cases involving
revocation or suspension of a license or permit or imposition of
a monetary penalty in lieu thereof under subsection (d)(2)(B),
after receipt of the petition, the Secretary shall file in court
the record upon which the decision or order complained of was
entered, as provided in section 2635(d) of title 28, United
States Code.
Court No. 06-00095 Page 3

1641(e)(1) and USCIT Rule 56.1(a), the court will review the

decision of the Secretary of DHS on the administrative record,

considering any objections raised in that proceeding.5

Standard of Review

The factual findings of the Secretary must be based on

substantial evidence. 19 U.S.C. § 1641(e)(3). See also 5 U.S.C. §

706(2)(E) and Anderson v. United States, 16 CIT 324, 324 799 F.

Supp. 1198, 1199-1200 (1992). Substantial evidence includes “such

relevant evidence as a reasonable mind might accept as adequate to

support a conclusion.” Fusco v. United States Treasury Dep’t, 12

CIT 835, 838-39, 695 F. Supp. 1189, 1193 (1988) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Less than the weight

of the evidence, the possibility of drawing two inconsistent

conclusions from the evidence does not prevent the agency’s

findings from being supported by substantial evidence. Barnhart v

U.S. Treasury Dep’t, 9 CIT 287, 290 613 F. Supp. 370, 373 (1985).

For legal issues, in accordance with 5 U.S.C. § 706(2)(A) the

court reviews the Secretary’s revocation decision to determine

5
In their briefs, both the government and Boynton sometimes
imply that this court is to review the recommendation of ALJ
Sippel. This is incorrect. Our review is of the decision made
by Acting Assistant Secretary Elaine Dezenski for the Department
of Homeland Security. We, like Secretary Dezenski, must
sometimes look directly at ALJ Sippel’s findings and
recommendations to determine whether a particular charge is
supported by substantial evidence or not, but it is ultimately
the decision of the Secretary that we review.
Court No. 06-00095 Page 4

whether it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law”. See also Barnhart, 9 CIT

at 291, 613 F. Supp. at 374 (The court need only “assure itself the

decision was rational and based on consideration of relevant

factors”).

Background

Plaintiff Sherri N. Kaplan, a.k.a. Boynton received her

Customs broker’s License in 1987. Through July 1, 1998, Plaintiff

worked as the qualifying broker for Southwest Customs Service.6 On

July 3, 1998, Boynton wrote to Customs to advise that as of July 1,

1998, she had resigned from Southwest and would no longer be the

licensed individual employed by Southwest.7 On July 7, 1998,

Boynton again wrote to Customs to confirm that she had resigned her

position at Southwest effective July 1, 1998. She updated her

license to use her married name, “Boynton”, and stated that she

intended to apply for a permit to operate under her married name.

She submitted an application to operate under the name “Sherri N.

Boynton CB”, on July 23, 1998, and informed Customs that all

6
Southwest was assigned filer code “G91" and every entry
submitted by Boynton for Southwest was required to begin with
“G91.” In re Revocation of Customs Broker License of Sherri N.
Boynton, 9 (Feb. 2, 2004, citing Tr. 2445.
7
There is some lack of clarity in the record as to whether
Boynton took control of some or all of the existing Customs
records or files after she left the employment of Southwest. As
none of the charges upheld by this court depend on this matter,
we do not decide this question.
Court No. 06-00095 Page 5

operations would be conducted at 25031 Oak Street, Lomita, CA

90717, declaring that, “[a]ll files will be kept at this location

in numerical order . . . each file will contain . . . a copy of my

invoice to the customer as their Customs Broker, a copy of the

Entry Summary and any other documents directly pertaining to each

particular importation.” In re Revocation of Customs Broker

License of Sherri N. Boynton, 9-10 (Feb. 2, 2004, citing Tr. 570.)

Boynton reconfirmed her resignation from Southwest on July 27th,

1998.

Shortly thereafter a new license was issued to Sherri N.

Boynton under her original license number, allowing her to use the

license under her married name. A new Customs broker permit was

issued to her authorizing her to conduct business as “Sherri N.

Boynton.” The business address on the permit was the same as used

in her application, 25031 Oak Street, Lomita CA 90717-2207.

Boynton was assigned filer code “GE6," requiring every entry she

filed, whether for herself or a client, to begin with “GE6.”

From the time shortly before she left the employment of

Southwest until the initiation of disciplinary actions in August,

2001, numerous problems arose with Boynton’s actions as a Customs

broker. Customs agents advised her, in writing and in person,

about proper procedures and she was placed on national and local
Court No. 06-00095 Page 6

sanctions.8 Eventually, on August 9, 2001, the director of the Los

Angeles/Long Beach Port (the “Port Director”) requested that

license revocation proceedings be instituted against Boynton. The

Assistant Commissioner authorized the initiation of preliminary

proceedings on September 11, 2001, and a “Notice of Preliminary

Proceedings and the Notice to Show Cause and Statement of Charges”

was served on Boynton on September 27, 2001. The Port Director

requested authorization to institute formal revocation proceedings

against Boynton’s license on December 20, 2001, and the Assistant

Commissioner authorized the proceedings on February 26, 2002.

Revocation proceedings commenced on March 28, 2002, under the

direction of the former United States Customs Service, now the

United States Customs and Border Protection, a part of the

Department of Homeland Security. Customs’ Notice to Show Cause and

Statement of Charges (“Notice”) issued on March 28, 2002 was re-

issued on November 5, 2002 without modification to the charges. A

formal hearing was conducted at Long Beach, California by

Administrative Law Judge (“ALJ”) Sippel, from November 4 until

8
National sanctions are imposed on a Customs broker when her
operation has two defaulted payments of any kind within a 12
month period. A broker on national sanctions does not have the
privilege of having ten days to file entry summaries and to pay
estimated duties and must submit all documents and duties before
the release of goods. National sanctions affect a broker or
importer in every port. Local sanctions have effect only in a
local port and are instituted by local port directors for failure
to file documents or pay duties in a timely fashion or for
defaulting on certain payments.
Court No. 06-00095 Page 7

November 7, 2002, in accordance with the Administrative Procedures

Acts (“APA”), 5 U.S.C. § 554 et seq., and the Customs Rules of

Practice, 19 C.F.R. § 111.62 et seq. ALJ Sippel issued a

recommendation of license revocation on February 2, 2004. This

recommendation was reviewed by the Secretary, and a decision

revoking Boynton’s license was issued on January 23, 2006. Boynton

filed a timely appeal of the Secretary’s decision on March 20,

2006. It is the revocation decision issued by the Secretary that

we review here.

Discussion

In her decision revoking Boynton’s license, The Secretary

stated, “[b]ased on the record in this case, and in concurrence

with the ALJ’s recommended determination, I sustain [Custom’s]

proposed revocation of Ms. Boynton’s License.” Memorandum for

Commissioner Robert C. Bonner from Acting Assistant Secretary

Elaine Dezenski re revocation of Customs Broker License - Sherri N.

Boynton. At the same time, the Secretary’s decision did not hold

any particular charge or set of charges against Boynton to be

independently sufficient for the revocation of her license.

Customs regulations allows for revocation of a customs

broker’s license if, “[t]he broker has violated any provision of

any law enforced by Customs or the rules or regulations issued

under any provision of any law enforced by Customs.” 19 C.F.R. §
Court No. 06-00095 Page 8

111.53(c). See also, 19 U.S.C. § 1641(d)(1)(C). However, Customs’

policy has generally been to issue progressive penalties and to

reserve revocation of a broker’s license only for “egregious”

violations.9 An “egregious” violation is a “flagrant act or

omission that shows gross irresponsibility beyond that of a

nonrepetitive [sic] clerical mistake or a good-faith oversight.”

Customs Directive Number 099 3530-007 Section 5(B),10 available at

http://www.cbp.gov/linkhandler/cgov/toolbox/legal/directives/3530

9
“The Customs response to a broker violation depends upon
whether it is egregious (flagrant) or, like most broker
violations, nonegregious. For nonegregious violations, Customs
will first attempt to work with the broker through communication
and education to improve the broker's overall performance. . . .
If a broker's performance remains unsatisfactory despite
counseling and warning letters, progressive punitive action
should then be taken. Except for egregious violations, the
sequence of Customs actions to compel compliance by a broker
should generally be:
o communication about a particular deficiency
o a warning letter
o a penalty
o a larger penalty and a warning about suspension
o suspension/revocation of the license”

Customs Directive Number 099 3530-007 Section 5(A), available at
http://www.cbp.gov/linkhandler/cgov/toolbox/legal/directives/3530
-007.ctt/3530_007.doc
10
Examples of “egregious” violations given in Customs
Directive Number 099 3530-007 include, “[t]he continued
employment of a felon after Customs has denied the broker
permission for such employment, the continued filing of entries
by a broker after the broker is notified that his or her permit
has been revoked, and the intentional misuse of clients' funds.”
Customs Directive Number 099 3530-007 Section 5(B). As none of
the charges against Boynton fit directly into the enumerated
examples, it is not immediately clear if they are “egregious”
violations or not.
Court No. 06-00095 Page 9

-007.ctt/3530_007.doc. Thus, under Customs policy, if Boynton has

committed “egregious” violations of Customs rules, then revocation

of her license is warranted. However, because the Secretary based

her opinion not on a particular enumerated violation or sub-set of

violations, but rather on the record as a whole, the court is

unable to affirm the Secretary’s decision unless it upholds each of

her findings. We therefore must review each of the charges set out

against Boynton under the “substantial evidence” test. Because the

court may not substitute its judgment as to the appropriate penalty

for Boynton, Barnhart, 9 CIT at 291, 613 F. Supp. at 374, if any

charges remain after our review, the case must be remanded to the

Secretary for further consideration. The Secretary may then decide

what penalty is appropriate in light of any surviving charges.

The Government objects to this approach, noting that Boynton,

in her brief, did not challenge one charge taken as proven by the

Secretary: charge 5, operating under a name other than that on her

broker’s license without permission from or notice to Customs.11

The government’s position is that, pursuant to 19 C.F.R.

§ 111.53(c),12 the Secretary could have based her decision on this

11
This charge was challenged by Boynton in her original
complaint to this court. She did not there, however, offer any
evidence against the charge but merely (and implausibly) blamed
the problem on using an old computer program. In her brief she
did not challenge this charge, skipping from charge 4 to charge
6.
12
19 C.F.R. § 111.53:
(continued...)
Court No. 06-00095 Page 10

one uncontested charge and that, given this, remand is not

appropriate or necessary. The government is not correct. If the

court were to follow the government’s argument it would be

substituting the court’s judgment for that of the agency. Because

the Secretary did not state that this charge alone would be

sufficient to ground a revocation of Boynton’s license, we will not

make that decision for her now and, as noted, we must review each

of the charges against Boynton under the “substantial evidence”

test. If we do not find all of the charges accepted by the

Secretary to be supported by substantial evidence, we must remand

to the Secretary to determine a consequence in accordance with the

remaining charges, if any. See SEC v. Chenery Corp., 318 U.S. 80,

87 (1943) (“[t]he grounds upon which an administrative order must

be judged are those upon which the record discloses the action was

based.”)

Discussion of Charges

Charge I alleges a violation of 19 C.F.R.

§ 111.2(a)(2)(ii)(1), requiring that all brokers maintain a power

12
(...continued)
The appropriate Customs officer may initiate proceedings for the
suspension, for a specific period of time, or revocation of the
license or permit of any broker for any of the following
reasons:
. . .
(c) The broker has violated any provision of any law
enforced by Customs or the rules or regulations issued under any
provision of any law enforced by Customs.
Court No. 06-00095 Page 11

of attorney for any employee who signs documents pertaining to

Customs business on the behalf of the licensed broker. While the

broker need not file the power of attorney for her employee with

the port director, she must provide proof of its existence if

requested to do so by Customs. Here it is alleged that Boynton did

not have a properly executed power of attorney for her employee,

Mr. Jay Lee, and that nonetheless she had him conduct Customs

business on her behalf from September 4, 1998 until July 22, 1999.

ALJ Sippel found, and the Secretary accepted, that this charge

had been proven by a preponderance of the evidence. While Boynton

claimed that a proper power of attorney had existed for Mr. Lee

since September 4, 1998, it is not disputed that she was unable to

produce the power of attorney for customs agents when requested to

do so. Because the regulation in question requires that the needed

power of attorney be produced to Customs on demand, and because

Boynton was not able to do so, she was in violation of the

regulation. This charge, then, is found to be supported by

substantial evidence.

Charge II deals with the proper recording of transactions. 19

C.F.R. § 111.21(a) states, in relevant part, that, “[e]ach broker

must keep current in a correct, orderly, and itemized manner

records of account reflecting all his financial transactions as a

broker. He must keep and maintain on file copies of all his

correspondence and other records relating to his customs business.”
Court No. 06-00095 Page 12

Customs presented evidence that Boynton failed to maintain and

produce for inspection required records and that she failed to

provide an explanation for her inability to produce the documents.

This charge involves, in particular, thirteen entries - nine of

which were failures to file entry summaries13 and four of which were

failures to pay the required duties. While Boynton is correct to

note that eventually all entries were made and duties paid, the

government is correct that under this regulation timeliness is

required and that Boynton has not shown any justification for her

late filing or her inability to produce the relevant documents when

requested to do so by Customs. While the seriousness of this

violation may be considered by the Secretary, in light of the

eventual filing by Boynton of all needed paperwork and duties, the

charge as stated is supported by substantial evidence and so must

be upheld.

Charge III deals with the standard of diligence in

correspondence and payments required of a Customs broker. Customs

brokers, as fiduciaries, are held to a higher standard of care than

are ordinary businessmen. Customs Directive 099 3530-007 Section

4. See also Kazangian v. Brady, 16 CIT 140, 141 (1992). The

standard of diligence in correspondence and payment required of a

13
An entry summary, filed on form CF 7501, is the Customs
document required to be filed with estimated duties no later than
ten days after release by Customs of the merchandise in question.
It provides an itemized listing of the essential information
about the imported merchandise for Customs.
Court No. 06-00095 Page 13

Customs broker is set out in the relevant parts of 19 C.F.R.

§ 111.29:

(a) Due diligence by broker. Each broker must exercise
due diligence in making financial settlements, in
answering correspondence, and in preparing or assisting
in the preparation and filing of records relating to any
customs business matter handled by him as a broker.
Payment of duty, tax, or other debt or obligation owing
to the Government for which the broker is responsible, or
for which the broker has received payment from a client,
must be made to the Government on or before the date that
payment is due. Payments received by a broker from a
client after the due date must be transmitted to the
Government within 5 working days from receipt by the
broker. Each broker must provide a written statement to
a client accounting for funds received for the client
from the Government, or received from a client where no
payment to the Government has been made, or received from
a client in excess of the Governmental or other charges
properly payable as part of the client’s customs
business, within 60 calendar days of receipt. No written
statement is required if there is actual payment of the
funds by a broker.
19 C.F.R. § 111.29(a).

Charge III consists of eleven specifications, each of which is

alleged to instance an example of Boynton’s failure to meet the

standard of diligence required of a customs broker. As each of the

specifications is independent, each must be considered to ascertain

if it is supported by substantial evidence.14

Specification 1 dates back to the time when Boynton was still

employed by Southwest Customs Services. One element of the due

14
Conceivably, ALJ Sippel and the Secretary could have
treated this as one discrete charge with the various
specifications being treated merely as evidence for the over-all
charge. However, because both ALJ Sippel and the Secretary dealt
with each specification in the manner of an individual charge, we
shall do so as well.
Court No. 06-00095 Page 14

diligence owed by Customs brokers is to respond to all Customs

correspondence that relates to questions about the timely payment

of duties, filing of financial statements, and accounting for

checks for funds. While Boynton was the qualifying broker for

Southwest, it received nineteen debit vouchers15 from Customs as a

result of insufficient funds for duty payments. The Customs Port

Director of the Los Angeles/Long Beach Seaport wrote to Boynton on

June 8, 1998, while she was still employed at Southwest, to remind

her of her due diligence obligations in making financial

settlements and instructed her to respond to Customs within 30 days

of the receipt of the letter, in writing, indicating the steps she

intended to take to ensure prompt payment of duties and to explain

the defaulted payments and her failure to properly supervise the

brokerage activities. Boynton did not respond to the Port

Director’s letter within 30 days. On July 30, 1998 a memorandum

was faxed to Boynton concerning her failure to reply. Boynton did

reply to this message on the 30th of July, 1998, but ALJ Sippel

reasonably did not find these explanations to be adequate as to the

causes of the problems, as Boynton merely noted that she was no

15
Debit vouchers are bank notices sent to Customs concerning
defaulted checks or defaulted Automated Clearing House (“ACH”)
payments. Debit vouchers are issued by the bank to the National
Finance Center (“NFC”). Upon receipt of a debit voucher, NFC
issues a debit voucher bill to the payor of the check, or the
owner of the ACH account. What actions must be taken when a
debit voucher is issued depends on the type and cause of the
voucher.
Court No. 06-00095 Page 15

longer at Southwest and gestured towards problems with the IRS at

Southwest and the Asian financial crisis. None of these

explanations were taken as sufficient and, of course, could not

explain why Boynton was late in replying to the Port Director’s

original letter. This charge, then, is supported by substantial

evidence and must be upheld.

Charge III Specification 2 relates to the time shortly after

Boynton started working under her own name after having left

Southwest. Shortly after she started working under her own name,

Boynton received four debit notices from Customs due to late

payments. Boynton was apparently on national sanctions at the time

and so did not qualify for the ten-day privilege in filing

payments. However, ALJ Sippel held that Boynton, at this time, had

reason to believe that she was no longer on national sanctions and

that, given this, she was not unreasonable to believe that she

qualified for the ten-day privilege. Additionally, some importers

were late in forwarding funds to her. Boynton, at this time,

relied on her own interpretation of Customs Bulletin 8816 on how to

16
Customs Bulletin 88-30 deals with what a Customs broker
must do if she does not receive funds in a timely manner from
importers. It holds that a Customs broker must submit entry
summary documentation even where the broker has not been paid the
duties, thereby making the importer liable under its bond for
liquidated damages. However, if the broker “knows” that she will
be receiving payment from the importer, she is not to use this
procedure. Obviously there is room for interpretation on this
matter, but Customs eventually gave Boynton specific instruction
on the proper interpretation.
Court No. 06-00095 Page 16

deal with late payments by importers. Boynton had not yet,

apparently, received instruction by Customs on the correct

interpretation of Bulletin 88. ALJ Sippel did not find, therefore,

that these actions indicated a failure to exercise due diligence by

Boynton and the Secretary did not introduce any additional evidence

on this point. Neither has the government, in its brief,

introduced any new evidence here. However, ALJ Sippel, oddly

enough, extended his findings with a matter not directly relevant

to this specification - Boynton’s use of a trade name in her

business without approval by Customs, and her unreliable testimony

on this point. Even assuming, however, that ALJ Sippel was

completely correct in his analysis of Boynton’s testimony, at this

point it is hard to see how that finding is directly relevant to

the matter at issue in this specification. Even though reliability

of testimony is almost always relevant, the lack of reliable

testimony cannot by itself be substantial evidence for this

specification. Because, apparently, no other evidence was

introduced, and because ALJ Sippel himself held that there was

reason to accept Boynton’s account on this issue, this

specification of Charge III is not supported by substantial

evidence and the Secretary’s decision on this specification must be

overruled.

Charge III Specification 3 was found not to be substantiated

by the Secretary. Accordingly, we need not consider it here.
Court No. 06-00095 Page 17

Charge III Specification 4 involves failure to forward duties

to Customs in a timely manner. In particular, Customs analyzed

Boynton’s entries from September 4, 1998 to March 14, 2000,

disclosing 312 late payments. Boynton does not contest that the

payments were made late but does insist that 125 were only a few

days late and that there was no conversion of funds. The latter

matter, however, is not directly at issue in this charge as here

the issue is merely the timeliness, or lack thereof, of duties

being forwarded to Customs. Because Boynton does not question the

lateness of forwarding of duties, and this is in itself evidence

supporting that determination, the charge is therefore supported by

substantial evidence and must be upheld.

Charge III Specification 5 involves a failure to pay on ten

out of twenty-two late-filed entries for importer KOS America, Inc.

(“KOS”). Here ALJ Sippel held that Customs had not introduced

evidence sufficient to show that this failure to pay was due to a

failure to exercise due diligence by Boynton. Although some

evidence pointed to her, other evidence pointed to either KOS, who

had the ultimate obligation to make sure payment was made, or

alternatively to the freight forwarder General Forwarding, Inc.,

employed as an agent by KOS. The Secretary disagreed with ALJ

Sippel here, arguing that by failing to use Customs Bulletin 88

procedures, Boynton had failed to exercise due diligence. It is

clear that Boynton did not here properly use Bulletin 88 procedures
Court No. 06-00095 Page 18

and that this was a problem. However, the specification in

question does not charge her with failure to use Bulletin 88

procedures in this instance but rather with failure to make

payments. Because substantial evidence does not support the charge

that this failure to make payments was Boynton’s fault or

responsibility, this failure in itself cannot constitute a lack of

due diligence, even if Boynton also did not do something else that

she ought to have. Therefore, this specification is not supported

by substantial evidence, and the decision by the Secretary on this

point is overruled.

Charge III Specification 6 deals with eight additional cases

of late or non-paid duties not included in the above specifications

dating back to the time when Boynton was the qualified broker for

Southwest. Customs presented evidence that Boynton’s failure to

exercise due diligence in these cases lead to liquidated damages

being assessed against the importers and a surety, International

Bond & Marine. Boynton claimed that this was not her fault as she

had left the employment of Southwest; however, as she had been the

qualified broker at the time of the transactions, she retained

responsibility for the non-paid duties. This charge is therefore

supported by substantial evidence and must be upheld.

Charge III Specification 7 deals with monies totaling

$119,496.72 paid to Boynton by importer National Media Corporation

(“NMC”) but not forwarded to Customs. Substantial evidence
Court No. 06-00095 Page 19

supports the charge that Boynton received monies paid by NMC to pay

duties but that these monies were not forwarded to Customs,

resulting in liquidated damages being assessed against NMC.

Boynton claimed not to have had a power of attorney to file claims

for NMC but she concedes that she did have power of attorney for

the company E4L, a subsidiary of NMC. Boynton also claimed that

the whole matter was due to a clerical mistake with customs at Los

Angeles International Airport (“LAX”). No evidence was introduced,

however, to support this claim, while Customs provided substantial

evidence that the funds forwarded to Boynton by NMC were not paid

to Customs. This specification, then, is supported by substantial

evidence and must be upheld.

Charge III Specification 8 relates to an instance where

Customs instructed Boynton on procedures to resolve 14 entries and

overdue payments. Boynton followed these procedures in the large

majority of the cases but not all. The record thereafter is

unclear, with Boynton claiming, and ALJ Sippel holding, that

payment for one entry of the 14 was made two weeks late and the

Secretary insisting that 3 of the 14 entries were paid late.

Neither Boynton nor the government in their briefs identify further

clarifying evidence. The dispute in question is not, as such,

whether some number of entries were paid late, but rather whether

Boynton’s actions here constituted a failure of due diligence.

Given that the record is unclear and given that, either way,
Court No. 06-00095 Page 20

Boynton paid the large majority of the entries on time and

eventually paid all entries within two weeks, the court here agrees

with ALJ Sippel that this specification is not substantiated and

holds that the decision of the Secretary in this instance is not

supported by substantial evidence.

Charge III Specification 9 deals with a particular late

payment made by Boynton. In this instance, Boynton failed, for

several months after she received funds, to remit duties received

via a freight forwarder for a client. In the meantime, Boynton

told the client that the funds had been forwarded. The exact cause

of the late payment is not, from the evidence, completely clear.

However, it is clear that Boynton was responsible for taking proper

measures here and did not. This charge is therefore supported by

substantial evidence and must be upheld.

Charge III Specification 10 deals with an instance where

Boynton filed an entry late and with the wrong sum of money. The

entry was late but not so late that penalties were assessed on the

importer in this case. ALJ Sippel held that the problem with the

sum for the payment was apparently a simple clerical error and

that, given these facts, this was not an instance of a failure to

exercise due diligence. The Secretary disagreed here with ALJ

Sippel, insisting that this instance must be viewed in the light of

the other charges against Boynton and that this indicates a pattern

of violations. This is not correct. Either this particular
Court No. 06-00095 Page 21

instance in itself indicates a failure to exercise due diligence or

it does not. That Boynton may have failed to exercise due

diligence in other cases does not make this such a case. The

Secretary also here seeks to rely on the “presumption of

regularity” granted to government action, arguing that we must

assume Customs to have considered all available evidence. Such a

presumption cannot substitute for the factual findings called for

by statute and the regulations. See, e.g.,Truong v. United States

Sec’y of Agr., 484 F. Supp. 2d 1324, 1329. It was not ALJ Sippel

who attempted to re-weigh the evidence in this specification but

rather the Secretary. This specification is not supported by

substantial evidence and cannot be upheld.

Charge III Specification 11 deals with fifteen importers being

placed on local sanctions due to Boynton’s failure to submit duty

payments in a timely fashion, requiring the importers to file live

entries and make payment of duties by cashiers check, money orders,

or cash. Boynton contends that these late payments were not her

fault but rather stemmed from the use by these importers of a

freight forwarder who in turn made late payments. The record does

not provide conclusive evidence as to this matter. However,

Customs regulations do make provisions for such cases via the use

of Bulletin 88 procedures, which define the broker’s

responsibilities. See supra note 16. By the time that these

instances arose, Boynton had been instructed by Customs in the
Court No. 06-00095 Page 22

correct Bulletin 88 procedures on numerous occasions. Because she

did not properly follow Bulletin 88 procedures in these cases, she

must be held responsible for the results. Substantial evidence,

then, supports the charge of a failure to exercise due diligence in

this instance.

Charge IV Specification 117 relates to the requirement that a

Customs broker keep Customs informed of her actual business address

at all times. 19 C.F.R. § 111.30(a) states, in relevant part,

“(a) Change of address. When a broker changes his business

address, he must immediately give written notice of his new address

to each director of a port that is affected by the change of

address.” It is agreed by all parties that, when she applied to

work under her own name, Boynton listed 25031 Oak Street, Lomita CA

90717 as her correct business address and that she at no time gave

written notice of a change of address to Customs or the relevant

port director. Customs contends, however, that soon after she

started working under her own name, Boynton began conducting

business at an unauthorized address, 9100 Sepulveda Blvd., Suite

102A, Los Angeles, CA 90045. Customs contends, and both ALJ Sippel

and the Secretary held, that Boynton had conducted significant

business at the Sepulveda Blvd. address without notifying Customs.

(This action was, in turn, apparently connected with the use of the

17
Specification 2 of Charge IV was held to be
unsubstantiated by ALJ Sippel and accepted as such by the
Secretary and so needs not be discussed here.
Court No. 06-00095 Page 23

unauthorized name “SCS” dealt with in the fifth charge and

discussed below.)

Boynton counters that, firstly, she did not do significant

business at the Sepulveda Blvd. address, but rather merely used it

to store and sort out files. Alternatively, she argues, Customs

had constructive notice of her change of address because she listed

this address on filings sent to Customs, and Customs came to this

address to interview her former employee, Mr. Jay Lee.

Customs’ charge, and the Secretary’s decision, is here

supported by substantial evidence. Boynton had business cards for

herself and for Jay Lee printed listing the Sepulveda address and

she, at her own admission, listed the address in Customs filings.

Mr. Lee worked from this address and importers sent information to

it. Boynton was told by Customs in a letter dated June 28, 2000,

to stop using the address, but she continued to do so. Her

argument that Customs had constructive notice of a change of

address cannot serve here as this merely shows that she was, in

fact, using this address without giving the actual written notice

required by the regulations. This charge, then, must be upheld.

Charge V deals with the use of the unauthorized name “SCS” and

various versions of this (e.g., “Special Consulting Services,”

“Sherri’s Customs Services,” etc.) by Boynton. 19 C.F.R.

§ 111.30(c) states:

Change in name. A broker who changes his name, or who
proposes to operate under a trade or fictitious name in
Court No. 06-00095 Page 24

one or more States within the district in which he has
been granted a permit and is authorized by State law to
do so, must submit to the Office of Field Operations,
U.S. Customs Service, Washington, D.C. 20029, evidence of
his authority to use that name. The name must not be
used until the approval of Headquarters has been
received. In the case of a trade or fictitious name, the
broker must affix his own name in conjunction with each
signature of the trade or fictitious name when signing
customs documents.

Boynton has not challenged Customs’ claim that, at the time she was

issued a license to work on her own on September 4, 1998, the

correct name of the brokerage was “Sherri N. Boynton.”

Specification 1 of Charge V deals with Boynton’s use of the “SCS”

acronym and related extensions while Specification 2 deals with

Boynton’s use of Southwest’s filer code, G91, along with both the

name “Southwest” and the name “SCS”, after her resignation from

Southwest during July of 1998. Customs has provided substantial

evidence to support these charges, and they are not contested by

Boynton in her brief to the court.18 Therefore, the findings of the

Secretary that Boynton violated section 111.30(c) must be upheld.

Charge VI deals with the use of a problematic power of

attorney by Boynton and her employee, Jay Lee. 19 C.F.R. § 111.32

states, in relevant part, “[a] broker must not file or procure or

18
As noted, in her initial complaint Boynton did contest
these charges. She did not at that point cite any significant
evidence that would have brought the Secretary’s decision into
question, and in her brief to the court she does not contest this
charge, moving from Charge IV to Charge VI without addressing
this issue, apparently conceding the charge.
Court No. 06-00095 Page 25

assist in the filing of any claim, or of any document, affidavit,

or other papers, known by such broker to be false.” Here Customs

charged, and the Secretary found, that Boynton submitted a false

power of attorney to Customs for the company Circuit Systems.

Although there was no showing of intentional fraud or forgery on

Boynton’s part, the power of attorney in question contained such

significant “red flags” that both ALJ Sippel and the Secretary held

it appropriate to attribute “knowledge” of the falsity of the power

of attorney to Boynton.19

Boynton, in her reply, points to ALJ Sippel’s conclusion that

there was no significant evidence of fraud or forgery on her part.

This is, of course, an important fact, but not one that goes to the

heart of the charge at issue here. Rather, to rebut the charge,

Boynton would have to show either that the power of attorney in

question was, despite the evidence otherwise, in fact a true

document or else show that knowledge of the falsity of the document

could not properly be attributed to her. She has not presented any

such evidence. Because the finding of the Secretary is supported

by substantial evidence, this charge must be upheld.

Charge VII was held to be not substantiated by both ALJ Sippel

19
For example, the power of attorney in question contained
multiple fonts, misidentified Circuit Systems as a corporation
rather than as a limited partnership, contained a false signature
from Mr. John Broyles as well as mis-identified him as the
company president rather than his correct title of
“production/quality manager” and misspelled his name.
Court No. 06-00095 Page 26

and the Secretary and so does not need to be reviewed.

Charge VIII pertains to Boynton’s failure to file timely

entries. The relevant regulation, 19 C.F.R. § 142.15, states in

pertinent part:

If the entry summary documentation is not filed timely,
the port director shall make an immediate demand for
liquidated damages in the entire amount of the bond in
the case of a single entry bond. When the transaction
has been charged against a continuous bond, the demand
shall be for the amount that would have been demanded if
the merchandise had been released under a single entry
bond.

Between September 1998 and March 14, 2000, Boynton filed a total of

322 late entry summaries. These entry summaries were an average of

20 days late, with one entry being as much as 264 days late.20 As

a result of Boynton’s tardiness in filing these entries, importers

were assessed liquidated damages, and the government estimated its

losses to be $579,385. Boynton contends that these late filings

were all due to late payments to her of duties by importers. This

is, perhaps, possible, but does not relieve Boynton of

responsibility because, in such cases, she would be obligated to

follow procedures set out in Customs Bulletins 88 and 93. Boynton

was informed of these procedures in writing on May 7, 1999 and

December 30, 1999, as well as telephonically on May 7, 1999, June

15, 1999, October 15, 1999, and October 25, 1999. Boynton was

20
These are, apparently, the same late entries discussed in
Charge III Specification 4. The legal issue here, however, is
distinct.
Court No. 06-00095 Page 27

additionally provided with copies of Treasury Decision 89-49 and

Public Bulletins 88 and 93, documents containing procedures on what

to do in such situations. Boynton claims that these procedures are

inherently confusing, but it is unclear how this, even if true,

would negate her responsibility here, which is clear. The charge

is supported by substantial evidence and must be upheld.

Charge IX is a somewhat general charge of a “failure to

supervise.” 19 C.F.R. § 111.28(a) states, in pertinent part:

(a) General. Every individual broker operating as a
sole proprietor and every licensed member of a
partnership that is a broker and every licensed officer
of an association or corporation that is a broker must
exercise responsible supervision and control . . . over
the transaction of the customs business of the sole
proprietorship, partnership, association, or corporation.

This is a “catch all” charge holding Boynton responsible for the

actions of her employees and for all brokerage business conducted

in her name that resulted in violations of Customs regulations.

Customs incorporated by reference in this charge charges I-VIII.

Insofar as this can be considered a distinct charge, and insofar as

the various charges and specifications of charges hereby

incorporated have been upheld as supported by substantial evidence,

this charge is also supported by substantial evidence.
Court No. 06-00095 Page 28

Conclusion

The Secretary has reasonably found that Boynton violated

several Customs rules and regulations, often on multiple occasions.

The Secretary’s findings of violations of Customs rules and

regulations are supported by substantial evidence, and must be

upheld, in Charges I, II, IV, V, VI, VIII, IX, and for

Specifications 1, 4, 6, 7, 9, and 11 of Charge III. However, not

all of the Secretary’s findings are supported by substantial

evidence. Specifications 2, 5, and 8 of Charge III,21 as well as

Charge VII are not supported by substantial evidence and so must be

overturned. The Secretary based her decision to revoke Boynton’s

license “on the record”, without specifying which charges, jointly

or alone, would be sufficient to warrant a revocation of Boynton’s

license, the most serious penalty Customs may impose here.

Because, after our review, “the record” is no longer the same as

that on which the Secretary based her decision as to an appropriate

penalty, it is necessary for us to remand the case to the Secretary

to consider what penalty is appropriate given the charges that

remain after our review.

Remand results are ordered by November 1, 2007. Plaintiff

may file any objections to the remand results by November 23,

21
Recall that the Secretary agreed that Specification 3 of
Charge III was not substantiated.
Court No. 06-00095 Page 29

2007. Any reply should be by December 14, 2007. It is so

ORDERED.

__/S/ Donald C. Pogue____
Donald C. Pogue, Judge

Dated: Oct. 02, 2007
New York, New York