Slip Op. 06 - 38
UNITED STATES COURT OF INTERNATIONAL TRADE
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UNITED STATES OF AMERICA, :
Plaintiff, :
v. : Court No. 05-00281
FIRST COAST MEAT AND SEAFOOD, SHAPIRO :
PACKING CO., and FPL FOOD LLC,
:
Defendants.
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Opinion & Order
[Defendants' motion to dismiss
amended complaint granted in part.]
Dated: March 14, 2006
Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
(David S. Silverbrand); and (Kevin Green) U.S. Customs and Border
Protection, of counsel, for the plaintiff.
DeKieffer & Horgan (J. Kevin Horgan) and Pelino & Lentz, P.C.
(John W. Pelino, Howard A. Rosenthal and Gary D. Fry) for defend-
ants First Coast Meat and Seafood and Shapiro Packing Co.
AQUILINO, Senior Judge: According to Black's Law
Dictionary, p. 453 (5th ed. 1979), the "most usual signification"
of the word duties is the
synonym of imposts or customs; i.e. tax on imports; but
it is sometimes used in a broader sense, as including all
manner of taxes, charges, or governmental impositions.
Plaintiff's three-count amended complaint that has been filed
herein pursuant to 19 U.S.C. §1592 and 28 U.S.C. §1582 attempts to
Court No. 05-00281 Page 2
implead the "broader sense", praying, as it does, for antidumping
duties in the amount of $9,507,725.50 (less $100,000 already paid
by defendants' surety), for a civil penalty of $13,596,877.47, and
also for "marking duties" totalling $446,288.00.
Named defendant FPL Food LLC has filed an answer to this
complaint, asserting four affirmative defenses and praying for
dismissal as against it. The other defendants, First Coast Meat
and Seafood and Shapiro Packing Co., seek the same relief via a
motion to dismiss interposed pursuant to USCIT Rule 12(b)(5) (fail-
ure to state a claim upon which relief can be granted).
I
This motion recognizes, as it must, that the court has to
"take all well-pled factual allegations as true and construe them
in favor of the non-moving party".1 On its face, and as dissected
during oral argument, plaintiff's amended complaint is not a
paragon of the art of pleading one's case. Among other things, it
avers in haec verba:
1. This is an action to recover penalties and duties for
violation of Section 592 of the Tariff Act of 1930, as
amended[,] 19 U.S.C. §1592.
* * *
1
Motion of Defendants First Coast Meat & Seafood and Shapiro
Packing Company to Dismiss Amended Complaint for Failure to State
a Claim for Which Relief Can Be Granted [hereinafter referred to
simply as "Defendants' Motion"], p. 1, citing United States v. Ac-
tion Prods. Int'l, Inc., 25 CIT 139 (2001), and Kemet Elecs. Corp.
v. Barshefsky, 21 CIT 912, 976 F.Supp. 1012 (1997).
Court No. 05-00281 Page 3
8. Between July 15, 1997 and March 2, 1999, Shapiro
Packing Company d/b/a[] First Coast Meat & Seafood was
the importer of record and attempted to enter or intro-
duce, or caused to be entered or introduced, shipments of
freshwater crawfish tail meat into the commerce of the
United States by means of entry documents filed with
. . . Customs[] under entry numbers 110-68105194, . . .
[etc.].
9. The merchandise described in paragraph 8 was entered
and introduced into the commerce of the United States by
means of materially false documents, markings, written or
oral statements, acts and/or omissions by Shapiro Packing
Company d/b/a[] First Coast Meat & Seafood. Specific-
ally, the entry documents misdescribed the merchandise,
provided false entry type codes, falsely marked the
merchandise, and failed to identify the true country of
origin of the merchandise.
10. Shapiro Packing Company d/b/a[] First Coast Meat &
Seafood knew or should have known the correct description
of the merchandise, the true country of origin of the
merchandise, the correct markings required, the correct
entry type code required, and/or that the merchandise was
in fact subject to anti-dumping duties.
11. The false statements, acts, and/or omissions referr-
ed to in paragraphs 9 and 10 above were material because
they prevented and/or had the potential to prevent
Customs from applying the correct dutiable rate to the
shipments, thereby causing the United S[t]ates to suffer
a loss of revenue of $9,954,013.50.
12. On or about August 14, 2003, the United States is-
sued penalty notices and duty demand on Shapiro Packing
Company d/b/a[] First Coast Meat & Seafood regarding the
entries described in paragraph 8 above.
* * *
14. Neither Shapiro Packing Company, First Coast Meat &
Seafood, FPL Foods, LLC, nor any other entity, has paid
the remaining duties owed the United States upon the
entries described in paragraph 8 above.
Whereupon count 1 asserts that the
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material false statements, acts and/or omissions de-
scribed in paragraphs 9 and 10 above were the result of
gross negligence and/or negligence on the part of
defendants . . . in violation of 19 U.S.C. §1592(a)(1),
which deprived the United States of lawful anti-dumping
duties in the amount of $9,507,725.50.
Amended Complaint, para. 16. Count 2 repeats this paragraph 16 to
the effect that the defendants are also
liable pursuant to 19 U.S.C. § 1592(c)(1) to plaintiff
for a civil penalty in the amount of $13,596,877.47,
which is equal to the domestic value of the merchandise.
Id., para. 19. Finally, misnumbered paragraph 19 of count 3
alleges:
As a result of Shapiro Packing Company, First Coast
Meat & Seafood's, and FPL Food LLC's violations of 19
U.S.C. §1592 the merchandise described above in paragraph
8 was entered into the United States in violation of 19
U.S.C. §1304, resulting in the assessment of marking
duties pursuant to 19 U.S.C. §1304(i) for those entries
. . . in the amount of $446,288.
A
The initial thrust of defendants' motion is to dismiss
count 3 on the ground that marking duties cannot be collected under
19 U.S.C. §1592. This court concurs.
The foregoing complaint, on its face, paragraph 1, seeks
to recover penalties and duties only for violation of section 1592.
Both sides refer to the case Pentax Corp. v. Robison, 125 F.3d 1457
(Fed.Cir. 1997), amended in part on reh'g, 135 F.3d 760 (Fed.Cir.
1998), wherein the court of appeals sought to characterize the
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relationship between subsections 1304(f), which has since been
relettered (i), and 1592(d). At best, it is clearly tenuous.
While both are and have been elements of the Tariff Act of 1930, as
amended, section 1304 is a "special" provision in subtitle II, part
I of the act, while 1592 is an "enforcement" provision in subtitle
III, part V. The subsection of section 1304 now lettered (i)
provides for "additional duties" for failure to mark as follows:
If at the time of importation any article . . . is
not marked in accordance with the requirements of this
section, . . . there shall be levied, collected, and paid
upon such article a duty of 10 per centum ad valorem,
which shall be deemed to have accrued at the time of
importation, shall not be construed to be penal, and
shall not be remitted wholly or in part nor shall payment
thereof be avoidable for any cause. Such duty shall be
levied, collected, and paid in addition to any other duty
imposed by law and whether or not the article is exempt
from the payment of ordinary customs duties.
This congressional impost thus stands entirely on its own, and is
collectible irrespective of any other duty or reason for payment or
nonpayment thereof. Moreover, it shall not be construed to be
penal. Ergo, plaintiff's reference to "a ten percent penalty that
arose from mismarking the goods"2 in Pentax is erroneous. Section
1592, on the other hand, does provide for penalties for fraud,
gross negligence, and negligence in entering, introducing, or
attempting to enter or introduce, any merchandise into the commerce
of the United States. Subsection 1592(d) further states that,
if the United States has been deprived of lawful duties,
taxes, or fees as a result of a violation of subsection
2
Plaintiff's Response to Defendants' Motion to Dismiss, p. 3.
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(a) of this section, . . . Customs . . . shall require
that such lawful duties, taxes, and fees be restored,
whether or not a monetary penalty is assessed.
The courts have enforced this provision against sureties, for
example, which themselves were not part of the requisite violations
of subsection (a), e.g., United States v. Blum, 858 F.2d 1566 (Fed.
Cir. 1988), United States v. Yuchius Morality Co., 26 CIT 1224
(2002), but such recovery of unpaid lawful duties has not tran-
scended the strictures of section 1592 as enacted, nor is there any
indication of congressional intent to the contrary.
In short, as a matter of law, it is impossible for the
United States to be deprived of 19 U.S.C. §1304(i) "additional
duties" by reason of violation of 19 U.S.C. §1592(a), and notwith-
standing that non- or mis-marking of imported merchandise can prove
to have been the result of fraud or negligence. See, e.g., United
States v. Golden Ship Trading Co., 25 CIT 40, 42-44 (2001). Cf.
Pentax Corp. v. Robison, supra.
B
In passing upon a motion to dismiss for failure to state
a claim upon which relief can be granted, the allegations of the
complaint should be construed favorably to the plaintiff. E.g.,
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The second prong of
the instant motion of defendants First Coast Meat and Seafood and
Shapiro Packing Co. is that potential lost duties may not be
Court No. 05-00281 Page 7
collected under 19 U.S.C. §1592(d). The motion seeks to dismiss
count 1 of plaintiff's amended complaint on the ground that the
plain language of Subsection (d) makes clear that it only
authorizes the collection of duties of which the United
States "has been deprived," i.e., actual duty losses. It
does not authorize the collection of duties of which the
United States may be deprived, i.e., potential duty
losses.
Defendants' Motion, pp. 4-5 (emphasis in original). Further:
. . . As the Amended Complaint makes no reference to any
"violation in respect of entries on which liquidation
[has] become final," 19 C.F.R. §162.71, it does not
allege, as to any of the subject entries, an actual loss
of duties.
Id. at 8 (emphasis again in original).
Whatever defendants' reading of subsection 1592(d)3, the
court's required favorable reading of plaintiff's amended complaint
does not lead it to concur in the immediate relief for which
3
But see 19 C.F.R. §162.71(a) (2005):
Loss of duties under section 592 . . . means the
duties of which the Government is or may be deprived by
reason of the violation and includes both actual and
potential loss of duties.
(1) Actual loss of duties . . . means the duties of
which the Government has been deprived by reason of the
violation in respect of entries on which liquidation had
become final.
(2) Potential loss of duties . . . means the duties
of which the Government tentatively was deprived by
reason of the violation in respect of entries on which
liquidation had not become final.
Italics in the original.
Court No. 05-00281 Page 8
defendants' motion prays. That is, the court concludes that such
a reading of complaint paragraphs 11 and 16 in particular, supra,
effectively undermines the motion to dismiss plaintiff's count 1.4
C
Counsel for defendants First Coast Meat and Seafood and
Shapiro Packing Co. have seen fit to present a third prong to their
motion to dismiss, namely, the amended complaint fails to state any
timely claim, including that of count 2. The bottom line of their
seemingly-carefully-crafted papers, as noted during the oral
argument thereon, is that when
the Court's consideration is properly limited to the
facts alleged in the complaint, the complaint is untimely
on its face and should be dismissed.
Reply of Defendants, p. 5 n. 1. On its face, there is something to
this position, but the oral argument also indicated that, as a
matter of fact, it may well be unfounded. Suffice it to report now
that counsel for the defendants did not back away from their
papers' position, which circumstance could therefore prove to be
either well-founded or the basis of a violation of USCIT Rule
11(b). Whichever, defendants' motion to dismiss this action as
4
The court further notes in passing that, according to amend-
ed complaint paragraphs 13 and 17, defendants' surety has, in fact,
paid $100,000.00 in duties owed and also that such parties in
interest have not necessarily been known for spontaneous satis-
faction of their bonds in matters like this before the Court of
International Trade.
Court No. 05-00281 Page 9
time-barred must be denied at this time, pending joinder of any and
all remaining issues and discovery and trial of the facts in
connection therewith.
II
In view of the foregoing, the motion of defendants First
Coast Meat and Seafood and Shapiro Packing Co. should be, and it
hereby is, granted to the extent that count 3 of plaintiff's
amended complaint be, and it hereby is, dismissed. In all other
respects, the said motion is hereby denied.
Defendants First Coast Meat and Seafood and Shapiro
Packing Co. may have until April 3, 2006 to file an answer to the
remainder of plaintiff's amended complaint. Whereupon all of the
parties to this action are to confer and present to the court on or
before May 1, 2006 a proposed schedule for trial of counts 1 and 2
of that complaint.
So ordered.
Dated: New York, New York
March 14, 2006
Thomas J. Aquilino, Jr.
Senior Judge