united states versus u p s custom house number two zero zero eight dash fourteen  entire customs book which industry this case squarely presents the issue of what is the maximum penalty that the customs service now customs and border protection can impose against a customs broker for failure to exercise responsible particular the we'll consider the language since you argue in your brain yes you're ok what level of deference would you say i ought to be giving to the government based on their interpretation of their own regulation what case would you have me follow and what is the standard that you would say i should apply on the one eleven point one that those are the facts as for the customs has explained in the regulation as to what they should consider what they will consider  don't know what the statutes of the regulation says what i'm at you've argued we'll consider means must consider or shall consider and they've argued we'll consider means may consider which allows them the latitude to not consider things so i we understand exactly wealth of your positions i guess what we would like to know is what is the standard of deference that we give in particular to the government when there are spells in their own interpretation of their own regulation because that matters right it's right to know though it's a very different world than if it's something much more deferential broader in terms of whether they're close to the governments interpretation of its own regulation reflects a well reasoned thorough issue in question here we have a regulation that list specters that the custom says it will consider on the question of responsible supervision of control now in their brief and in their litigation position they are simply saying what we may consider those factors so i would say that is not a part of the chevron deference because that is their litigation position in this case they are simply saying we don't have to consider all these factors our position is not that the court or the low should have found a deficiency in each one of chevron differences are relevant that's statutory interpretation this is regulatory interpretation so we need to turn to the framework of say seminal rock for example so you're saying no difference whatsoever i'm saying that in this particular case their position in talking that regulation is not entitle that deference because it does not reflect a well reasoned thorough analysis of the issues they're simply saying in their brief that we don't have to consider all these factors it is not as if they had published something in the federal register that would indicate are you familiar with seminal rock i'm not running the government sites it for the articulation of the deferential standard they think needs to be given and it's pretty much the seminal supreme court case and it's one which involves nothing but litigation position on the part of the government so your argument it seems to me doesn't escape the exact situation of seminal rock in which the supreme court articulated the standard of deference we give to the government interpret their own actually matters is this court's opinion cathedral candle in which the judge pricing wrote an extensive opinion about the difference issue and that analysis one of the factors that judge bryson found persuasive in the palace found persuasive was whether or not the position that the government is asking for deference to is a litigation position or whether it's been well thought out and reflects a throw complete analysis by the agency on the issue there is no well thought out agency physician and what the whether they have to respect not to level the words all of these factors have to be considered maybe more can be conserved all these have to be considered with the correct approach we descended back to the cia to many more to send it to the c i t with instructions to send it to customs to consider this issue not of the correct approach would be to examine the record as to whether there was any evidence presented on those factors and there wasn't this we explained in the brief the government did not present judge climate in the cia did not do any analysis of those factors so there would be nothing to remember for but if i may i would like to address what we consider to be the most important issue in the case which is the maximum penalty provision in the statute because the issue here is very important not only for u p s but for the entire cost of joints before you get to that if if we agree with you on the will consider language if we don't lease a will consider does mean shall and that whatever the standard of deference that we give in terms of our review of this regulatory interpretation issue that we ultimately agree that you have surpassed it and succeeded and we don't reach those other issues correct but you would not have to reach that issue if you concluded there was no evidence to support an undervote underlying violation all around noon not if we say there's no evidence or in underlying violation if we say that the government didn't properly consider all of the factors that you should have under one eleven that doesn't mean there is no evidence of an underlying violation it means that they have to go back and reconsider i mean that there could very well be evidence it's just not they didn't consider all the factors they have to redo it so we if we send it back and tell them to re do this under want to live and abiding by the language of their regulation which would you would have me construe as me and mandatory upon them then we don't reach any of the other issues yes i would agree with joe your honor  did it would get a second bite at the apple to present evidence they didn't present before they shouldn't be allowed to take this to trial again when they had the opportunity to present their evidence on all those factors and they didn't and if this  there is nothing in the record that supports that they presented evidence on them so there be no reason to remember to be no reason have another trial and he would say it's of course the government's burden to present yes for now but here's the thing suppose know there are lots of cases where there are multi factors that must be considered in m s p b jurisdiction we've got douglas factors the reasonableness of penalty and in many cases it's not the case that all of those factors are present in any individual case and nor is anybody obliged to necessarily produce the evidence you know to show every one of them is in fact present if you follow me so why wouldn't this just be a matter of vacating imrie manning for the court to make sure that all of the factors have been considered by the government in allowing the c i t to decide what ought to happen going forward because we're not going to tell them you must have a new trial well and i realize that that's that's part of the present problem for us is that we can't we can't decide the way you want because we don't know what evidence really is in the records regarding maybe i mean i'm taking you at your word that it's not there but that's not necessarily what the government has  whether or not the government did or did not consider that what's interesting about the factors if you look at the factors is they speak to training instruction having written instructions for your employees  making sure that there's a license customs broker available those kinds of factors the government didn't present any evidence to the contrary and so for the government to get a second about the apple to go back to that point their position is we don't have to take a second bite we don't have to present any evidence on it if this court were to say well you do they have the opportunity and they didn't so there's a failure proof he said they had their opportunity when the said they can basically do whatever they can way whatever factors they want they have complete discretion they can basically just look at the totality of the circumstances we briefed all that blowing up most troubling really isn't this a situation where there is an error in the lower courts application of the interpretation of the regulation as a matter of law and we send it back to the lower court to say you've got the law you would violate everybody in correctly as to what the law was go back and reconsider how to move this case forward in light of the correct law well again we'd have to go through another trial because there's no evidence for the court to consider and i would hope that this court would not have us do that in this situation because the overriding issue as i thank you your honor but you've got a lot of questions yeah but we re circle issues and i'm understand of course focusing on some of them here but the overriding issue for me for u b s and for the brokerage industry is what's the maximum penalty we believe the statutes clear that the maximum penalty for a violation of violations is thirty thousand dollars in total and the judge carmen ignored the phrase in total the government ignores it in their brief and this court should apply the plain wording of the statute and find that the the maximum is thirty thousand dollars and there are several basis for doing that if you look at for example the the the for the next section in the that some unlicensed activity so it's congress knew how to impose that limit when they wanted to and in certain six hundred forty one d to l a they said specifically thirty thousand the regulation says that customs may assess a monetary penalty or penalties so it says penalty or penalty used not to exceed an aggregate of thirty thousand dollars for one or more of the reasons section so this is very clear  talks about whether you look at it as a penalty or penalties it's an aggregate of thirty thousand dollars and the government in their brief is actually arguing that this phrase not to exceed an aggregate of thirty thousand modifies penalty but not penalty mr lyman if you look at  because if they impose penalties in ninety eight and then we pay the piper if we were reliable and then we could continue to commit the violation then they could penalize us again and that's in their their mitigation guidelines where case and if there's anything for any you're saying that in the case of for any notice whether the notice involves one violation or twenty five the maximum is thirty thousand if the violations are of the same type yes that is our position and they all work the same type here the violation is not misclassifying or customs entry it is still you to exercise responsible supervision and control and if you look at where any failing to exercise responsible supervision in control every single time you allow this to happen because the entries are simply a manifestation of the overall responsible supervision and control problem they're focusing on what custom said was we trained you want this we told you up about this a while ago you're continuing to make the same error and that's a failure of your supervision in your operation and the best example of that judge would be to look at the actual penalty notices that we put in the appendix because they all say the same thing i've got it right here in front of they were responding to what we were explaining happened here that there were some untrained employees but their point was that the five entries are representative of the lack of attention u p s escape and so they're using the entries as just an example of the lack of supervision of control that's why the the violation is the lack of supervision control these entries are just examples of representative audience of any any single instance of this the justification for them to say you have a lack of supervision and control s i mean clearly they're frustrated with you they've told you over and over and over again and they've taken many efforts prior to sanctioning you to get you to curb your misclassification they did you know i wouldn't a single instance of misclassification constitute after all of that the lack of supervision and training well your honor if they only had us if there's only one entry that they want base all the penalty on i'm not denying that they could basically energy on one entry and say that's indicative of a lack of supervision control where they can say five entries are indicative of lack of supervision and control but they are still limited by the statute in their own interpretive regulation even if you oppose penalty or penalties in the plural and it's a violation of violations in the plural the wrong regulation says aggregate to thirty thousand dollars so they can they can go after us for one if they want to they have the discretion i'm not denying that but they are to begin with the customs regulation one eleven point one which is the definition of responsible supervision of control because congress did not define that in statute just carmen reasonably improperly chose to use a dictionary definition of will consider and in the sense of that having a capability of considering if you don't mind before we get into what you would from a substantive standpoint like us to do can you answer the question that i have heard opposing counsel initially i assume you don't agree with his stance one cathedral candle which i now have in front of me in my computer and have read i assume that you're going to tell me that seminal rock deference of plainly erroneous or inconsistent the regulation is the type of courts now in this case we actually have a plain language definition and protection of the a regulation that we don't even think it's that ambiguous to to this so i understand all the circumstances of the interpretation the interpretation  face and under the customs regulations they are published in the federal register but they they are what they are they are facing as as if the court read some carefully their very case specific they must be read in the context and this necessary to perform and maintain responsible supervision and control will vary depending upon the circumstances in each instance so this is a very fact specific definition here the fact will consider include but not large but are not limited to and the following time factors if you substitute if your honor substitute will consider with must consider then it's literally nonsensical because  required to consider factors which are explicitly not live which are not listed in the regulations so there is an infinite number of factors that c p p would be bounding itself to consider if not we i don't understand i don't understand that argument at all doesn't make sense to me so you'd better to five year period they could have issued penalties they could have actually taken action to suspend to revoke the license instead they chose a very measured approach to enforce compliance and after the end of the five year period they they said this is they they have given as judge comment found below they were fully i noticed that they were not exercising responsible supervision in control by allowing these mis classifications to happen if if if if your course that the upper does consider these factors mandatory i have to take  with mr lyman's suggestion that the record isn't develop allowed and this of course is genova review so what would be rick what the court would be looking at would be not what customs or the customs consider these because there's no issue here that the court what customs did below now i fully can see we did not bring this out ourselves because we do not believe the regulation required us to establish a consideration of other factors but the senior import supervisory  consider means must and the evidence oh record doesn't really answer the question so that's a failure group on the government's part that they actually can establish they were all considered do what do we misinterpretation of the regulation which is what they're arguing i mean those findings that he didn't make findings i didn't see anywhere and perhaps this is the problem i'm having into anywhere where he said that all of these factors were considered to mean that would in fact  for him to consider and the regulation because they are not limited to when he relied on them to back during going back i think to the to the question that the jurors will have what if what should the court do if he disagrees with we should then ourselves review the record and make a determination as to whether in fact of factors were considered now not on if you disagree with our reading of the regulation i think you could take notice of the fact that there is evidence in the record and that judge carter was sitting in the courtroom and heard the evidence of the other factors and he even even assuming that i think i would hope that the court wouldn't construe the regulations to preclude judge back harmon from considering other for further proceedings based upon that determination as to what the regulation says if they don't see how we can i mean putting aside your contention of the regulation i don't see how we could do that would be the appropriate mechanism you know one of the arguments that you're posing council suggested was that it would not be appropriate for the government to get a do or to introduce all new evidence they had the burden of proof they had their shot they didn't introduce evidence of all of these factors end of story what do you how do you respond to that first of all that we had our reason belief and that we are you know we believe our interpretation of the regulation is correct we weren't required to present th evidence of these factors we still maintaining that the evidence that the explicit language preserves our ability to present evidence of other factors and the evidence of the other factors the so overwhelming and we have very strong factual findings in our favor on these other we you know we didn't we didn't have any reason to believe we had to we were required to present evidence of all these factors and we don't think there would be a do over we'd be receiving notice for the first time is that  issued here exceeded thirty thousand dollars those penalty notices themselves included multiple penalties so the distinction between the use the violation of violations and the plural or penalty or penalties in the testified at a trial each violation it was a thousand dollar penalty assessed and the beginning and when they first started doing the penalty notices and that gradually increased to two thousand dollars per two thousand dollar increasingly they're increasingly ratcheting up the warnings with each one they're saying ok you know this is you this is in violation but you know you just stop doing it and then they they get they as over time th there's a there's a greater level of urgency then you you you know you are not as they were going to be taking further action that phase two of this approach that the training the warnings phase two was penalty notices and the agency at broker there's multiple ports of entry there's no reason to suggest that you know they get to you know exercise respond to fail to exercise responsible supervision and control throughout all the ports in the country for a period of time yes you did this is this violations of the type we have here the same classification misclassification issue and that it was the result of failure to exercise supervision and control as your position that customs could charge a thirty thousand dollars penalty for each one of those one hundred were that i think what mr lyon would say he says you can charges thirty thousand for the whole bunch if you put in that one notice but you can charge more and there are you saying that you could charge thirty thousand for each one of each of those one hundred i think is it would be possible to do that i mean that funding of those it didn't matter is a little matter maul if it would not be contrary to the statute to do the brokerage community what those things you might aspirational look for just like in the in the legislative history to the ma that they they they explain what what would be an importer could use to exercise reasonable care there's a there's a disjunct a list of factors that an importer can use and we're talking about you know maybe when they when they when the misclassification is made it's done me annually even though it's been taken off the computer takes and there's been a deliberate intent to use a convenience classification despite the fact the customs made it very clear that  improper to use it so there's it's not necessarily the same exact violation that there's not going to be clear there's there's no question that these that this is occurring in a context a larger context in the five year history of the training in the morning but it just seem though that on the whole that u b s had a record of being a you know good citizen as far as i mean they did run afoul on this issue there's no no question about that but it does seem that  that was achieving ninety eight percent compliance and then they go and they had a one time one time isolated incidents where they missed classify and entry and customs slaps him for thirty thousand dollars penalty that might be inappropriate but the government are going to try the correct classification was not eighty four seventy three thirty ninety one eighty four seventy three thirty ten for not incorporating a category two printed circuit assemblies or thirty twenty but they consider all the factors i would respectfully disagree based on their own customs rulings we put in our briefs the two customs rulings that they've issued on this very point where they sent back penalty notices to field offices and said you didn't present evidence on all these factors so we can't even consider that it's not something we discussed with mr carty was this question of what should happen if we agree with your reading of disagree ron or i think the court can look at the record that the government chose to present a trial and they aren't they argue that they just set the predictor tally of the circumstances approach which is what church calmed down that his opinion expressed drop in and said that customs totality the circumstances approach acceptable he defer to them on that and there would be well that's true you've correctly recited i think what happened but the fact of the matter is he was saying that in light i think credit if i'm wrong in light of his reading of the regulation now and he was saying here's what the regulation means so well the studio where has he would be now faced with a situation no the regulation means something else well what's interesting is that we argued that the only factor the gun even attempted to address was the reject rate because that's one of the factors in one eleven point one the reject rate and we pointed out that our reject rate when you consider just these entries against the hundreds of thousands of entries we made was less than two hundred  when you know a little gate when district court or us or the court of international in any lower tribunal proceedings are conducted with one legal backdrop so to speak a particular view of a regulation and then the  says no the regulation is something different isn't it safer to give both sides a chance to litigate the case under the correct regulation well then i would i would say as a general matter yes but i would say based on what the become an attorney actually pointed out was they had their witness understand who said yes yes we considered all the process they had their chance there if they wanted to develop more evidence on that and put that in the record they could have but i wouldn't put this in my course of if it did get sent back to the judge carmen would be free to after hearing from the parties fashion what proceedings he felt were necessary well yes your honor bodies could argue whether they thought another eviden session was needed well i think judge common good would need a lot of guidance on the what he said what he is supposed to do on that but i would point out that they they had their witness on the stand i asked whether she considered these other factors and she said yes without any explanation the government never attempted to develop but how they did consider them what weight they gave to them they gave nothing for judge harmon to consider so they had their chance and they had their witness saying that so i would ask the court not give them another opportunity but if the court is inclined to i would ask the court to also that if they're going to in other words he's indicated his his inclination here is to just to further customs ignoring their own regulation which says an aggregate of thirty thousand for penalty or penalties so he's already indicated what he's going to do we're going to be right back in the same book with a penalty your argument the case to submit