UN I TE D ST AT ES, Plaintiff,

v. UPS C USTOMHOUSE B ROKERAGE, I NC., dba UPS SUPP L Y CHAI N SOLUTI ONS, I

NC., De fe nd ant. SLIP OP . 06-156 UNITED STAT ES COURT OF INTERNATIONAL TRADE

B E F ORE : C ARM AN , J UDGE Court No. 04-00650

[Defenda nt’s motions t o cer

tify order for inter locutory

appea l, to stay

proce eding s, and for

leave to file a re ply

brief a re grante d. Def

endant’ s motion for oral ar gument is denied.]
Peter D. K eisler

, Assistant Attorney

Gene ral, Da

vid M. Cohen

, Di re c tor , Patr ic ia

M. McCarthy , Assistant Director , Commercial L itigation B ranc h, Civil Division, U.S. Department of Jus tice (Me linda D. Har t, Nancy Kim), Edwar d Gre enwa ld, Depar tment of Homeland Security , Bur eau of

Customs and B order

Protection, Of Counsel, for Plaintiff. A k i n , G ump , S tr a

u s s , H a u e r & F e l d , L L P ( L ar s - E r i k

H j e l m , L i s a

W
. R o s s , an d

T h o m a s J. Mc Cart hy ), Was hin g ton , D .C. , f

or De fe nd ant. Tompkins & Davidson, L L P (L aura Siege l Rabinowitz ), Ne w York, N ew Yor k, for Amicus (National Custom s Br okers & Fr eig ht Forw arde rs Association of A merica , Inc.).
October 19, 2006 O P I NI ON & O R D ER C ARM AN , J UDGE : This matter is befor e this Court on Defe ndant’s Motion to Amend and Certify Orde r for Interlocutory

Appea l and for Stay

of the Proce edingPending A ppeal (“ De fe nd ant’ s Mo tio n to Ce rt if y” ). Pla int if

f f ile d a re sp on se to D e fe nd ant’ s Mo tio n to Ce rt if y inCourt No. 04-00650 Pag e 2

Plaintiff’s Opposition to Defenda nt’s Motion to Amend and Certify Orde r for Interlocutory Appea l and for Stay

of the Proce edingPending A ppeal ( “Plaintiff’s Response” ). Ther eaf ter, De fe nd ant f

ile d D e fe nd ant’ s Mo tio n f or L e ave to F ile a

Re ply to P la int if

f’ s O pp os iti on

to Def endant’ s Motion for Amendment and Ce rtification of O rder for Interlocutory

Appea l and Def endant’ s Motion for Ora l Argument (“D efe ndant’s Reply”). This Court, havingconsidere d all of the pa

pers a nd arguments contained the rein, a fter due deliberation, and for the r easons se t forth her ein, g rants De fenda nt’s Motion to C ertify , toge ther with De fenda nt’s motions t o stay pr oc e e din g s and

fo r l e ave to f

ile a re ply br ie f. Th e pa

rt ie s h avin ga

bly and c le arl y se t f or th t he ir
argume nts in t

he ir pa pe rs thi s Co ur

t de nie s D e fe nd ant’ s mo tio n f or or a l argume nt.

P R OC EDU R A L H I S T ORY The fa ctual and pr ocedur al history of this matter ar e fully

addre ssed in this Court’s prior opinion in thi s matter, 30 CI T __, Slip Op. 06-98 (J une 28, 2006) ( “UPS I ”). This Court presumes f

amiliarity with the UPS Iopinion. Brief ly , the B urea

u of Customs and Borde r Pr ote c tio n ( “ Pla int if

f” or “ Cus tom s” ) i mpo se d a

se ri e s o f s e pa

rate pe na lti e s a g a ins t D e fe nd ant, UPS C ustomhouse Broke rag e, Inc. (“ UPS” or “De fenda nt”), for alleg ed violations of the broker ’s statutory

obligation to ex erc ise responsible supe rvision and control. The alleg ed vio latio ns e a c h r e late d to UPS ’s fa ilure , a ft e r r e pe ate d c ouns e lin gand wa rn ingby Cus tom s, to proper ly classify cer tain computer e quipment. Defe ndant re mitted pay ment for thre e of the penalty notices but failed to satisfy other pe nalty

notices, and this ac tion ensued. The substantive leg al issue bef ore this Court in UPS Iwas “ the meaningof the statutory phrase ‘a mone tary

penalty not to ex cee d $30,000 in total for a violation or violations of’ 19Court No. 04-00650 Pag e 3

Section 641(d)( 1)(C) of

the Tar iff Ac t of 1930, 19 U.S.C. § 1641(d)(1)( C) (2000), 1 permits Customs to impose a monetary penalty when a broker “has violate d any

provision of any law enf orce d by the Customs S ervic e or the rules or r egulations issued under any such provision.” Se c tio n 1 64 1( d) (2 )( A) state s in re le va nt p art tha t “ the a pp ro pr iate c us tom s o ff

ic e r s ha ll 2 serve notice in writingupon any customs broker to show c ause why the broke r should not be su bje c t to a mon e tary pe na lty no t to e xce e d $ 30 ,0 00 in t ota l f or a vio latio n o r v iol atio ns of thi s section.” U.S.C. § 1641(d)(1).” UPS Iat 27 (quotingsection 641(d) (2)( A) of the Tarif f Ac t of 1930, 19 1 U.S.C. § 1641(d)(2)( A) (2000) (“§ 1641( d)(2) (A)” ). Wit h reg ard to this issue, Def endant f iled a 2 motion for summary

judgme nt seekingto limi t the amount of pena lties to which it would be subject. This Court, in UPS I , reje cted De fenda nt’s claims. I d. at 27-36. De fenda nt, being dis satis fi e d w iththe Court ’s ho ldi ngin U PS I , f ile d it s Mo tio n to Ce rt if

y . Wh ile thi s Co ur

t is
c on fi de nt i n it s r e a so nin gand ho ldi ngin U PS I , th e su

bs tanti ve qu e sti on

of law p re se nte d th e re in
never theless satisfies the r equire ments nece ssary to be ce rtified for

interlocutory

appea l to the Court of Appea ls for the F eder al Circuit (“CAF C”). A Court of I nternational Trade (“CI T”) judge may

cer tify an orde r not otherwise immediately appea lable provide d “a c ontrolling question of law is involved with respe ct to which ther e is a substantial g round for differ ence of op ini on and that an imme diate a

pp e a l f ro m th at or de r m ay

mate ri a lly

a dv anc e the ult imate termination of the litiga

tion.” 28 U.S.C. § 1292(d)(1) ( 2000) (“ § 1292(d)” ).

P A R TI ES ’ C ONT E NT I ONS I. De fend ant ’s Co nt e nt ion s Def endant a sks this C ourt to cer tify the followingquestion for immediate a ppeal to the CA F C:Court No. 04-00650 Pag e 4

Se c tio n 6 41 (b )( 4) of

the Ta ri ff Ac t of 19 30 , 1 9 U .S. C. § 16 41 (b )( 4) (2 00 0) , r e qu ir e s a 3 c us tom s b ro ke r t o “ e xer c ise re sp on sib le su pe rv isi on and c ontr ol o ve r t

he c us tom s b us ine ss t

hat it conducts.” Whether, under

19 U.S.C. §§ 1641(b)(4) and (d) (2)( A), a Customs broker ’s 3 alleg ed fa ilure to exercise r esponsible supervision and c ontrol on the basis of a pattern of entries r efle ctingthe same ta riff c lassification er

ror g ives rise to one, or mor e tha n o ne , p e na lty ; and

wh e the r t he re is a ny lim itatio n o n th e tot a l pe na lty amou nt f or the a lle g e dly

mis c la ssi fi e d e ntr ie s r e su lti ngthe re fr om. (Mem. in Supp. of Def

.’s Mot. to Amend & Certify Orde r for Interlocutory

Appea l & f

or Stay of the Proce edingPending A ppeal ( “De f.’s Mem.” ) 1 (f ootnote added) .) De fenda nt defines the iss ue fo r c e rt if

ic atio n to the CA F C a s “ wh e the r P la int if f m ay a sse ss m or e tha

n a sin g le pe na lty for [UPS’s] alleg ed fa ilure to exercise r esponsible supervision and c ontrol over the c lassification of computer

parts.” ( Def

.’s Reply to Pl.’s Opp’n to Def.’ s Mot. for Amendment & Certification of Orde r for

Interlocutory

Appea l (“De f.’s Reply”) 3- 4.) Ac cordingto Defe ndant, re solution of thi s is su e “ g oe s d ir e c tly

to t he he art of wh e the r D e fe nd ant i s li a ble fo r a ny a dd iti on a l pe na lti e s in this case.” (I d. at 4.) In satisfac tion of the first re quirement of § 1292( d), De fenda nt argues that a c ontrolling question of law is pre sented in UPS Ibeca use “[i] f the [CAFC] agr ees w ith Defe ndant that Plaintiff has alleg ed a sing le violation, namely the fa ilure to exercise r esponsible supervision and
c ontr ol .
. . ov e r t

he c la ssi fi c atio n o f c omp ute r p art s, it f oll ow s th at on ly

a sin g le pe na lty

is
wa rr ante d. ” (D e f. ’s Me m. 8 .) I f s o, De fe nd ant c la ims tha t Pla int if f w ou ld t he n b e un a

ble to
ma int a in t

his a c tio n b e c a

us e “ Cus tom s h a s a lr e a dy c oll e c te d a

pe na lty fo r t he a lle g e d f

a ilure to exercise r esponsible supervision and c ontrol over the c lassification of c omputer par ts.” (I d.) At a minimum, Defenda

nt argues that there is a controllingquestion of law c oncer ning theCourt No. 04-00650 Pag e 5

This Court duly

addre ssed this argument in UPS Iby stating that “[w] hile the mitigation 4 guidelines wer e not subject to notice a nd comment, they

are ‘still entitl ed to some def ere nce, since [they

are ] a ‘permissible construc tion of the statute.’” UPS I , Slip. Op. 06-98 at 32 (quoting Reno v. Kora

y , 515 U.S. 50, 61 (1995)). maximumamou

nt o f p e na lti e s Cu sto ms m ay se e k thro ugh a

sin g le pe na lty

no tic e or mul tip le penalty notices. (I d.) Ne xt, D e fe nd ant c la ims that th e se c on d r e qu ir e me nt o f § 12 92 (d )– that th e re e xist a
su bs tanti a l g ro un d f

or dif fe re nc e of op ini on –is me t. ( I d. 8- 9. ) D e fe nd ant a lle g e s th at U PS I conflicts with an e arlier

CI T ca se, United States v. Ricci, 21 CI T 1145, 985 F. Supp. 1145 (1997). De fenda

nt takes issue with UPS Ifor disting uishing Ricci be cause the pena lty issued there in–unlike in the matter bef ore this Court–was the r esult of an a udit by Customs . (De f.’s Mem. 9.) De fenda

nt asserts that the a

udit provisions of the Custom s penalty mitigation guidelines (“mitig ation guidelines”) w ere not invoked in Ricci and, there fore , wer e not a mea ns by which to distinguish the ca se in UPS I . (I d. at 9.) De fenda nt also sugg ests that this Court should not have re fer ence d the audit provisions of the mitigation guidelines be cause they “‘do not have the f

orce of a statute or

regulation.’” (I d. (quotingRicci, 21 CI T at 1147).) Def endant 4 maintains that Ricci established that § 1641(d) (2)( A) doe s not permit Custom s to issue more than one pena lty

for more than one violation of a broker ’s statutory

obligations. (Def.’ s Reply 7.) To the extent that UPS Iand Ricci diff er in this reg ard, D efe ndant urg es that there exis ts a diffe renc e of op ini on ri pe fo r r e so lut ion

on int e rl oc uto ry

a pp e a l. In discussing the third require ment of § 1292(d) , Def endant postulates that a

n interlocutory

appea l of UPS Iwill “expeditious ly settle the most significa

nt leg al principle at sta ke in t his dis pute .” (D e f. ’s Me m. a t 10 .) De fe nd ant s e e ms t o im ply that r e so lut ion

of thi sCourt No. 04-00650 Pag e 6

issue also may

result in settlement or at lea st renew ed settlement discussions betwe en the pa rties. (See I d. at 11; Def

’s Reply 9.) De fenda

nt further contends that ther e re main “sig nificant a nd g enuine issues of material fa ct” r eg ardingPlaintiff’s underly ing c laims. (Def

.’s Mem. 12.) Acc ordingto Defe ndant, the “sig nificant e x pense” of trial conc erningthe outstandingfac tual issues might be “ avoided c ompletely by cer tification of immediate a

ppeal.” (I d.) De fenda

nt insists that “the que stion for ce rtification g oes direc tly to the issue of [UPS ’s] li ability for
a dd iti on a l pe na lty

pa y me nts and

pr ov ide s th e ba sis fo r e xtinguis hin gPla int if f’ s c la im i n it s entirety .” (D ef.’ s Reply

8.) De fenda

nt adds that Th e iss ue fo r c e rt if

ic atio n is a

pure qu e sti on

of law that r e qu ir e s th e [CAF C] to rule on the me aningof the statute a nd applicable regulations. As such, it is one that can be decide d relatively quickly and which ma

y avoid a leng thy

and timec on sumin gtr ia l f

or bo th p art ie s. (I d. at 9.) De fenda

nt further asser ts “that the alter

native to immediate re view is to proce ed with a costly trial, and possible re -trial, of sig nificant fa ctual issues of liability and pena lty

exposure that can be entirely

avoided by

an interloc utory

appea l at this stage .” (I d.) De fenda nt also notes that the issue ra ised in UPS Iis one of first impression and “ has a pote ntially signific ant and wide
rea chingimpact on the entire customs brokera g e industry .” (D ef.’ s Mem. 10.) Wit h reg ard to stay

ing the proce eding s, Defe ndant states that neither Plaintiff nor Def endant will be pr ejudiced by delay ing the proce eding s pendingappea l. (Def .’s Reply 10.) Def endant notes that Plainti ff pr oposed that the trial in this matter be r esche duled for Ma rch 2007. (I d.) Ac cordingto Defe ndant, “Plaintiff’s c ontention that a stay of proc eeding s pending
a pp e a l ‘ wo uld

pr e jud ic e the Go ve rnme nt’ s inte re st i n a sp e e dy re so lut ion

of its c la im’ is s imp ly basele ss.” (I d. (citation omitted).) De fenda nt rea sons that “Plaintiff’s opposition to certificationCourt No. 04-00650 Pag e 7

of this issue–which is more attributable to a desire to avoid potential reve rsal than by a conc ern fo r a sp e e dy re so lut ion

of thi s li tig atio n–

that w ou ld c ontin

ue to s ub je c t bo th p art ie s a

nd thi s Court to significa

nt and unnec essar

y delay and expense.” (I d.)

II. P lai nt iff’s Co nt e nt ion s Pla int if f o pp os e s th e Mo tio n to Ce rt if y and argue s th at th e iss ue de c ide d in UPS I inv olv e d a

“ str a ig htf

or wa rd a pp lic atio n o f s e ttl e d c a se law . . . to u nd isp ute d f

a c ts, and an e qu a lly straig htforwa

rd ana ly sis of regulatory

provisions under these settled leg al principles.” (Pl.’s Opp’n to De f.’s Mot. to Amend and Ce rtify Orde r for Interlocutory

Appea l & f

or Stay of the Procee ding PendingAppea l (“Pl.’s Resp.”) 3.) For this reason, Plaintiff ar gues that no controllingquestion of law is pre sented by UPS I . (I d.) Plaintiff also contends that interlocutory appea l of this matter will likely not result in resolution of “two important issues: (1) liability and (2 ) a dd iti on a l pe na lty

pa y me nts .” (I d. ) C on se qu e ntl y , Pl a int if f i ns ist s th at th e iss ue de c ide d in UPS I“ca nnot rea sonably

be re g arde d as ‘c ontrolling,’ be cause interlocutory revie w would not terminate this ac tion, but merely delay and extend proce eding s throug h piece meal litigation and appellate revie w.” ( I d. at 4.) In addition, Plainti ff c omplains that “UPS’s moti on would require the [CAF C] to e ng a g e in a n unw or ka ble and fa c t- la de n in qu ir

y c on c e rn ingthe purp or

te dly relat ed and unr e lat e d vi ola ti ons occur ringin this action.” (I d.) Ne xt, Pla int if

f t ake s is su e wi th D e fe nd ant’ s a sse rt ion tha t Ric c i pr ov ide s th e ba sis to establish that a diffe renc e of opinion exists sufficie nt to warra nt interlocutory

appea l. (I d. at 5.) Plaintiff points outthat the fa cts of Ricci diff er sig nificantly

from the f

acts of the instant matter. ( Id
. at5
- 6
. ) T h e r e f

o r e , P l a i n t i f

f c o n c ur s w i thU P S I th atR i c c i i s i n a p p o s i t e . ( Id
. at6
. ) InCourt No. 04-00650 Pag e 8

addition, Plainti ff objec ts to Defenda nt’s sug g estion that an issue of f irst impression is sufficient to satisfy the “diff ere nce of opinion” prongof the re quirements for cer tification of an interlocutory

order . (I d.) Plaintiff also maintains that Defe ndant fa ils to establish t he third re quirement of § 1292(d)–that c ertifica

tion of UPS Ifor inter locutory revie w will advanc e the instant litigation. (I d. at 7.) Plaintiff posits that “reve rsal is extremely unlikely g iven the settled leg al principles applied in this case,” that “interloc utory revie w would not addre ss the issues of liability and any additional penalty

pay ments owed by

UPS,” and that “UPS identifies no ca ses pendingbefor e the [CI T] o r [CA F C] fo r whic h imme diate re so lut ion of its pr op os e d q

ue sti on fo r c e rt if ic atio n w ill have a n eff ect.” (I d. at 7-8.) Plaintiff a dds that interlocutory appea l will “result in increa sed delay s, g reater e x pense, a nd the adde d burden of

piece meal litigation and appellate revie w” a nd would be “unlikely

to lead to a spe edy

settlement.” (I d. at 8.) L as t l y , P l ai n t i ff

en tre at s th i s C o urtt o d en y De fe n d an t ’s re qu es tt o s t ay p ro ce ed i n gs be c a us e “ a sta y of pr oc e e din g s w ou ld v isi t e xtre me ha rd sh ip o n th e Go ve rnme nt a nd re su lt i n judicial ineffic iency .” (I d.)

J URI S DI CT I ON This Court has jurisdiction over this matter pursuant to 28 U.S.C.§ 1582(1) (2000)
.

D I S CUS S I ON As pr e vio us ly

no te d, thi s Co ur

t’ s a uth or ity to c e rt if y an inte rl oc uto ry

or de r i s p ro vid e d in 28 U.S.C. § 1292(d)(1). Apara llel provision allows district court judge s to certify an orde r notCourt No. 04-00650 Pag e 9

This Court notes that prior CI T opinions have also re lied upon case s interpre ting 5 § 1292(b) whe n consideringreque sts for interlocutory appea l pursuant to § 1292(d). See e.g ., United States v. King shead Corp., 13 CI T 961 (1989). otherwise immediate ly

appea lable provide d the “or der involves a controllingquestion of law a s to which there is substantial ground f or diffe renc e of opinion and that an immediate appe al from the orde r may

materia lly

advanc e the ultimate ter

mination of the litigation.” 28 U .S.C. § 1292(b) (2 00 0) (“ § 1 29 2( b) ” ). Th e te xt of § 1 29 2( b) and

§ 1 29 2( d) are su

bs tanti a lly

sim ila r, and the re is very littl e ca se law in this court interpr etingthe re quirements of § 1292( d). Thus, this Court fi nd s c a se s inte rp re tin g§ 1 29 2( b) to b e ins tr uc tiv e in d e te rm ini ngwh e the r t his Court ’s or de r i n UPS Iand the que stion presented the rein satisfy the pre requisites for

interlocutory

appea l pursuant to § 1292(d). 5 Th e le g isl ativ e his tor

y fo r § 12 92 (b ) i nd ic ate s th at th e pr ov isi on is t o b e a pp lie d s pa

ri ng ly and “only in exceptional case s where intermediate appea l may avoid protra cted a

nd expensive litigation.” Milbert v. B ison L abs., Inc., 260 F .2d 431, 433 (3rd Cir. 1958); see also United States v. Dantzler Lumber & Ex port Co., 17 CI T 178, 180 (1993) ( quoting Milbert f or limitation
on us e of § 1 29 2( d) (1 )) . Se c tio n 1 29 2( b) “ wa s n ot i nte nd e d me re ly to p ro vid e re vie w o f d if

fi c ult
ru l i n gs i nh ar d

ca s es . ” U
. S
. R

u b b er C o . v . W ri gh t , 3 5 9 F. 2 d

7 8 4 , 7 8 5 (9 thC i r. 1 9 6 6 ). Al th o u gh this Court’s ruling in UPS Iwas a difficult rulingin a har d case , this Court nevertheless f inds–for the re a so ns se t f

or th h e re in–

that th e re qu ir e me nts of

§ 1 29 2( d) have be e n me t. A c c or din g ly , th is Court c e rt if ie s th e su bs tanti ve qu e sti on

of law p re se nte d in

UPS Ifo r i nte rl oc uto ry

a pp e a l.Court No. 04-00650 Pag e 10

I. Requirem ents for Interlocutor y Appeal Se c tio n 1 29 2( d) se ts f

or th t hr e e re qu ir e me nts fo r c e rt if yingan o rd e r n ot o the rw ise imm e diate ly

a pp e a la ble . T he or de r m

us t ( 1) inv olv e a

c ontr oll ingqu e sti on

of law ( 2) wi th
re sp e c t to wh ic h th e re is s ub sta nti a l g ro un d f

or dif fe re nc e of op ini on , a

nd (3 ) a n imme diate appea l from the orde r may materia lly

advanc e the ultimate ter

mination of the litigation. 28 U.S.C. § 1292(d). This statutory provision may

also be re ad as de limit ing “ four statutory criter ia:” (1) “ther e must be a que stion of law,” ( 2) “it must be controlling ,” (3) “it must be contestable , and” ( 4) “its re solution m ust promise to speed up the litigation.” Ahre nholz v. Bd. of Tr. of Univ. of I ll., 219 F.3d 674, 675 (7th Cir. 2000) (inter preting§ 1292(b)) ; but cf. Volkswag en of A m., Inc. v. United States, 22 CI T 280, 284, 4 F. Supp. 2d 1259 (1998) (whe re court de limit ed only

two require ments under § 1292( d)). All ele ments must be present be fore this Court wil l gr ant an inter locutory order . Cf. Ahre nholz, 219 F.3d at 676 (“The criter ia ar e conjunctive, not disjunctive.”) Fur ther, it is irreleva

nt to this analy sis that the issue before the court is novel. See K

rang el v. Gen. D y

namics Corp., 968 F .2d 914 (9th Cir. 1992) (interpr eting § 1292(b)) . Wit h this prefa ce in mind, an a naly sis of eac h require ment will be taken in turn.

A. Question of L aw Th e fi rs t r e qu ir e me nt o f § 12 92 (d ) i s th at th e re be a “ qu e sti on

of law. ” 28 U. S.C. § 1292(d)( 1). A “ question of law” is one involving “ the meaningof a statutory or constitutional provision, regulation, or common law doc trine.” Ahrenholz, 219 F.3d at 676. To be a revie wable inter locutory

order , the ca se must turn “on a pur e question of law , something the court of a ppeals [can] decide quickly and cle anly

without having to study

the re cord.” I d. at 677.Court No. 04-00650 Pag e 11

B e c a us e the re le va

nt i ssu e in U PS I

wa s li mit e d to the int e rp re tatio n o f t he mon e tary

pe na lty languag e in § 1641(d)( 2)(A) , a “pur e” que stion of law is prese nted.

B. Controlling The sec ond criter ia for c ertification of an interlocutor y order pursuant to § 1292(d) is that the qu e sti on

of law b e “ c ontr oll ing .” 28 U. S.C. § 1 29 2( d) (1 ). In o rd e r f or the qu e sti on

of law t o be “c ontrolling,” it need not re solve the ac tion in it s entirety . In re Ceme nt Antitrust L itigation, 673 F.2d 1020, 1026 ( 9th Cir. 1982) (interpre ting § 1292( b)). Controlling questions of law that fall within this categ ory of dispositive issues include the que stion of whether a cla im ex ists as a matter of law, the que stion of wh e the r a de fe ns e that w ill de fe at th e c la im i s ava ila ble , a nd qu e sti on s a s to su bje c t matte r j ur isd ic tio n, pr op e r v e nu e , p e rs on a l juri sd ic tio n, and sta nd ingto maintain the ac tion.” 19 J ames Wm. Moore et a l., Moore’s F eder al Prac tice ¶ 203.31[2] (3d ed. 2006) (inter preting § 1292(b)) . “A c ontrolling que stion of law must encompass at the very least eve ry

order which, if err oneous, would be r ever sible err or on final a ppeal.” Katz v. Carte B lanche Corp., 496 F.2d 747, 755 (3rd Cir. 1974) ( interpre ting § 1292( b)). How ever , the orde r nee d not be deter minative of any of the plaintiff’ s claims on the merits. I d. “‘[C] ontrolling’ me ans ser ious to the conduct of the litigation, either pra ctically or leg ally .” I d. “[A]l l that must be shown in order f or a question to be ‘contr olling’ is that re solution of the issue on appea l could materia lly aff ect the outcome of the litigation in the district court.” Cement Antitrust, 673 F.2d at 1026. Th is C ourt

do e s n ot i nte rp re t th e “ c ontr oll ing ” re qu ir e me nt t o b e satis fi e d me re ly if resolution of the issue on interloc utory appea l will “appre ciably

shorten the time, ef

fort, or
e xpe ns e of

c on du c tin glit ig atio n. ” I d. at 10 27 . T o inte rp re t th e “ c ontr oll ing ” re qu ir e me nt i n th isCourt No. 04-00650 Pag e 12

manner rende rs the re quirement nug atory . “It is a car dinal principle of statutory construction that a statute ought, upon the whole, to be so c onstrued that, if it ca n be pre vented, no c lause, sentenc e, or w ord shall be supe rfluous.” TRW Inc. v. Andr ews, 534 U.S. 19, 31 (c itations and int e rn a l qu otatio ns omi tte d) . B e c a us e Con g re ss c ho se to i nc lud e the a dd iti on a l r e qu ir e me nt i n § 1 29 2( d) that th e “ qu e sti on mate ri a lly

a dv anc e the lit ig atio n in

or de r f or it t o b e imm e diate ly revie wable,” the “c ontrolling” require ment and the e x pedienc y require ment may

not be re ad as beingintercha

ng eable . Cement Antitrust, 673 F.2d 1027. In this matter, this Court finds t hat the orde r issued in UPS Iraises a controllingquestion of law. I f t his Court ’s int e rp re tatio n o f § 16 41 (d )( 2) (A ) i s e rr on e ou s, re ve rs ibl e e rr or wo uld
re su lt o n f

ina l a pp e a l. F ur

the r, re so lut ion

of the int e rp re tatio n o f § 16 41 (d )( 2) (A ) i s se ri ou s to the conduc t of this lit igation because the statutory provision delimits the extent to which Plainti ff
c an r e c ov e r t

he pe na lti e s it

ha s so ug ht t o im

po se up on

De fe nd ant. L ike wi se , a

ru lin gc ontr ary

to that rende red in UPS Icould af fec t Plainti ff’ s ability

to prosecute its claims in thi s matter.

C. Diffe renc e of O pinion The ne x t statutory

require ment that must be satisfied is that there be “a substantial ground for diff ere nce of opinion.” 28 U.S.C. § 1292(d). Clearly , there is a diffe renc e of opinion betwee n Customs and De fenda nt as to the interpre tation of § 1641(d)( 2)(A) . That diffe renc e of opinion gave rise to the pr esent litigation. Further , this Court finds t hat the g round on which the pa rt ie s d if fe r i n th e statut or

y int e rp re tatio n is “ su

bs tanti a l.” De fe nd ant’ s inte rp re tatio n c ou ld
se ri ou sly c ur ta il Pl a int if

f’ s a bil ity to e nf or c e the laws and

re gulatio ns a

pp lic a ble to c us tom s broker s. Conversely , and fr om Defe ndant’s per spective, the interpre tation of § 1641(d)( 2)(A)Court No. 04-00650 Pag e 13

In UPS I , Def

endant a rgued that either

(1) Plaintiff is limit ed to one- and-only -one 6 penalty notice cove ringall violations prior to the date the pr e-pe nalty notice wa s issued; or (2) the ag g reg ate moneta

ry penalty cannot e x cee d $30,000 for a ll violations prec edingthe issuance of the fir st pre-pe nalty

notice. (D efe ndant’s R. 56 Mot. for Summ. J . 2; Mem. of L aw in Supp. of Def .’s Mot. for Summ. J . 13, 21.) This Court notes that in its Mot ion to Certify Def endant attempts to soften its posit ion somewhat fr om that taken in its moti on for summary judgme nt, but that attempt is without i mport here . See infra note 8. adopted by

Customs and af

firmed by this Court m ay

expose customs brokers to incre ased penalties for

their fa ilure to satisfy

statutory and re gulatory

obligations. I n addition, as Def endant po int s o ut, the int e rp re tatio n o f t he pe na lty

maximumin § 16 41 (d )( 2) (A ) i s o ne of fi rs t imp re ssi on

and “ ha s a po te nti a lly

signif ic ant a nd wi de -r e a c hin gimp a c t on the e nti re c us tom s br ok e ra g e ind

us tr y .” (D e f. ’s Me m. 1 0. ) A c c or din g ly , th e thi rd re qu ir e me nt o f § 12 92 (d ) i s satisfied.

D. Advanc e the L itigation The fina l require ment of § 1292(d) is that resolution of the issue on interlocutory appea l “mater ially

advanc e the ultimate ter

mination of the litigation.” 28 U .S.C. § 1292(d)(1). I f the CAFC ac cepts the c ertified que stion on int erloc utory appea l, it may

aff irm or re verse this Court’s opinion in UPS I . I f a r ever sal is ordere d, the CAFC nee d not do so for the re asons Def endant pr op ound s. Ho we ve r, if

a re ve rs a l do e s o c c ur

fo r e ith e r r e a so n argue d b y De fe nd ant, thi s 6 litigation will likely

come to a sw ift end. De cision in Defe ndant’s fa vor may preve nt Plainti ff from pursuingany

penalties a g ainst Defe ndant or may signific antly

reduc e the a

mount of pe na lti e s ava ila

ble to C us tom s f

ro m U PS. O n th e oth e r h and , if the CA F C w e re to a ff

ir m th is Court ’s or de r i n U PS I , th e pa rt ie s mi g ht b e sp ur

re d to se ttl e me nt, the re by avo idi ngthe e xpe ns e and dela y ed outcome a ssociated with trial or a waitingdecision on the pe nding motion forCourt No. 04-00650 Pag e 14

summary judgme nt. Although, a s a g ener al principle, this Court does not envision protrac ted and
e xpe ns ive lit ig atio n r e late d to thi s matte r, the Court re c ognize s D e fe nd ant’ s inte re st i n p os sib ly concludingthis matter sooner r ather than later . Acc ording ly , this Court finds t hat re solution of the int e rp re tatio n o f § 16 41 (d )( 2) (A ) w ill mate ri a lly a dv anc e the ult imate te rm inatio n o f t his litigation.

II. Appli cability of

Ricci De fe nd ant p la c e s g re at e mph a sis on the re le va

nc e of Ric c i to thi s matte r. B e c a us e thi s Court does not ag ree , it will address separ ately Def endant’ s eff

orts to cre ate a

prec edent whe re none exists. Despite Defe ndant’s conte ntions to t he contr ary , Ricci is not inst ructive on the issue that was be fore this Court i n UPS I . The Ricci c ourt informs only on the matter of

the amount of broker penalty appropr iate under

the fa cts of that ca se for

the one pr e-pe nalty

/penalty notice Cus tom s is su e d. Th is C ourt ha s n ot ye t r e a c he d c on sid e ra tio n o f whe the r t

he pe na lty

amou nts soug ht by Customs are appropr iate. At such point that this Court reac hes the a ppropriate ness of the sp e c if ic pe na lti e s Cu sto ms i s se e kin gto e nf or c e a g a ins t U PS w ill thi s Co ur t ha ve ne e d to look to Ri cci f

or instruction. The re levant issue bef

ore this Court in UPS Iwas the a pplication of the statutory cap on penalties a s delimited in § 1641(d)(2)( A) to multiple pre-pe nalty /penalty notices issued by Cus tom s to UPS . Ri c c i me nti on e d th e § 1 64 1( d) (2 )( A) statut or y c a p o n p e na lti e s me re ly

in passing . The statutory

penalty cap ha d bear ing on the issue befor e the Ricc i court only to the extent that the court was taske d with determiningwhether the $30,000 maxim um penalty wasCourt No. 04-00650 Pag e 15

For this reason, it is irreleva

nt that the Ricci court did not mention the mitigation 7 guidelines audit provision. Section XI Iof the mitigation guidelines state s that “[f]rom any one a ud it the maximuma g g re g ate pe na lty fo r a ll v iol atio ns dis c ov e re d is $3 0, 00 0. ” 19 C.F .R. Pt. 171, App. C, Sect. XI I .C. (2006). This provision sugg ests that Customs could issue seve ral penalty notices for

sever al violations (whether related or unre lated) discove red dur ing a n audit. Ho we ve r, Cus tom s w ou ld b e lim ite d to an a g g re g ate pe na lty of $3 0, 00 0 f

or tho se se ve ra l pe na lty no tic e s. As Pla int if

f p oints o ut, “ a

dis c us sio n o f b oth

[pe na lty mit ig atio n] guid e lin e se c tio ns in Ric c i w ou ld h ave be e n r e dund ant b e c a us e , und e r R ic c i’ s f

a c ts, bo th p ro vis ion s a

rr ive at th e same conclusion of a

maxi mum sugg ested pe nalty of $30,000.” ( Pl.’s Resp. 6.) a pp ro pr iate g ive n th e fa c ts o f t he c a se be fo re it. Thus , th is C ourt sta nd s b y its fi nd ingin U PS I that Ricci is inapposite. Def endant c laims that the Ricci court wa s “interpr eting ” § 1641(d) (2)( A) whe n the cour t state d th at “ [t]he statut e lim its the amou nt o f m on e tary

pe na lty the Se c re tary

may imp os e to $30,000.” (D ef.’ s Reply

6 (quotingRicci, 21 CI T at 1147).) There fore , Def endant a dduces that thi s Co ur t’ s h old ingin U PS I

and Ric c i are in c on fl ic t. H ow e ve r, De fe nd ant’ s a sse rt ion is wi tho ut m e ri t. The Ricci c ourt was not “inter preting ” § 1641(d) (2)( A) but rather simply stating the limit ation imposed by

the statute. This Court does not dispute the statutory limit ation or the Ricci court’ s restate ment there of. F or the one penalty notice at issue in Ricci, Customs was limit ed by

§ 1641(d)( 2)(A) to a $30,000 monetar y penalty
. This Court differs f rom Def endant’ s 7
re a din gof

Ric c i in that D e fe nd ant w ants the $3 0, 00 0 maximumpe na lty to c ov e r a

ny and a ll
un sp e c if ie d v iol atio ns of

a br ok e r’ s o bli g atio ns pr ior to t he iss ua nc e of the fi rs t pr e -p e na ltyCourt No. 04-00650 Pag e 16

Def endant a dopts a softer position in its brief in support of its Motion t o Certify by 8 conce ding “ that Customs would [not ] be prevente d from initiating a separ ate pe nalty

proce eding subject to the $30,000 maxim um for . . . an unr elated violation that occ urre d prior to the first pre
penalty notice issued her e.” ( Def .’s Mem. 5.) notice. (See D efe ndant’s R. 56 Mot. for Summ. J . 2; Mem. of L aw in Supp. of De f.’s Mot. for

8 Summ. J . 13, 21.) Howeve r, this Court does not read § 1641( d)(2) (A) or Ricci to support Defe ndant’s po sit ion and he ld s uc h in

UPS I . Unli ke Ric c i, t

his Court did int e rp re t § 1 64 1( d) (2 )( A) and he ld that Customs is lim ited to a $30,000 pena lty demand f

or ea ch pena lty

notice Customs iss ues pursuant to the statute. Ag ain, the Ricci c ourt had no re ason to and did not consider § 1 64 1( d) (2 )( A) in t

he c onte xt of

mul tip le pe na lty

no tic e s b e c a

us e the re wa s o nly

on e pe na lty
no tic e be fo re that c ourt . Def endant ha s unconvincing ly attempted to cr eate a “dive rg ence ” (D ef.’ s Reply 7) betwee n this Court’s opini on in UPS Iand Ricci whe re none exis ts. W hile this Court found that there is “a substantial g round for differ ence of opinion,” 19 U.S.C. § 1292(d), as to the interpre tation of § 1641(d)( 2)(A) , that differ ence is not premised on Def endant’ s rea ding of Ric c i.

III. Other Ar gum ents Def endant r aises a numbe r of other issues that are more a

ppropriate in the context of a motion for rehe aring . Although D efe ndant did not file such a motion, the Court will dispose of the additional ar guments here
.Court No. 04-00650 Pag e 17

Def endant c ontends that it and “similarly -situated” c ustoms brokers ar e–by the rulingof th i s C o urti nU P S I– s u

b j e c tt o “ un l i m i t e d

p e n a l ty e x p o s ur e . ” ( D e f
. ’ s R e p l y 9
. ) If

b y “ s i m i l ar l ysit ua te d” c us tom s b ro ke rs , D e fe nd ant m e ans oth e r b ro ke rs that a lle g e dly fl a g ra ntl y vio late
c us tom s la

ws , igno re dir e c tio n f

ro m and tr a ini ngby

Cus tom s, and

mis state the ir

own e ff or ts t o
c or re c t th e a lle g e d v iol atio ns , th is C ourt su g g e sts tha

t th e se br ok e rs might w e ll b e su bje c t to penalties. How ever , Def

endant ove rstates its case by claimingthat it and its il k are now exposed to u nli mit e d p e na lti e s. Th e re is n o in dic atio n f ro m Cu sto ms’ s p a st p ra c tic e that it wi ll ag g ressively

pursue multiple penalties a g ainst one broke r. Howe ver, if it does, this Court
rema ins a che ck on the imposition of excessive penalties by Customs . See Ricci, 21 CI T at 1146 (“ Th is d e no vo sta

nd ard [of re vie w] .
. . a

pp lie s to . . . th e amou

nt o f t he pe na lty
. . . . Th e Court is direc ted to deter

mine the amount of pe nalty , if any , independe ntly of Customs’ decision.”). L astly , Def

endant points out that “[b] oth sections [V.D. and XI .B.] of the Mitigation Gu ide lin e s p e rt a in t o p e na lti e s im po se d und e r t

he a uth or ity of the same statut e , 1 9 U .S. C. § 1641(d)( 2)(A) .” (D ef.’ s Reply 6.) The mitig ation guidelines in section V ar e for violations of “any law enf orce d by the Customs S ervic e or the rules or r egulations issued under any such provisions” pursuant to 19 U.S.C. § 1641(d)(1) (C). 19 C.F.R. Pt. 171, App. C., Sect. V (2006). Th e mit ig atio n guid e lin e s in se c tio n X Ia

pp ly to t he “ fa ilure of

a lic e ns e d b ro ke r t o e xer c ise responsible super

vision and control over

the customs business that it conducts” pursua nt to 19 U.S.C. § 1641(b)(4). I d. at Sect. XI . By ref ere nce, the mitigation guidelines in section V may be
re a d a s a pp lic a ble a lso to v iol atio ns c ov e re d b y se c tio n X I . A c c or din gto a guid e lin e s n ote , “ [a]ll pe na lti e s a sse sse d f

or vio latio n o f 1 64 1( b) (4 ) s ha ll a lso c ite se c tio n 1 64 1( d) (1 )( C) a s th e statut e violated in all notices issued to the alleg ed violator.” I d. at XI .A.Court No. 04-00650 Pag e 18

Specifica lly , the statute states that “ [n] either the application for nor the grantingof an 9 a p p e a l un d e r

th i s s u b s e c t i o ns h a l l s t ay p r o c e e d i n g s i nth e [ C IT ]
. . . un l e s s a s t ay i s o r d e r e d

b y a judge of the [CI T] . . . or by the [CAFC] or a judg e of that court.” 28 U .S.C. § 1292(d)(3). Section V of the mitig ation guidelines cuts ag ainst Defe ndant’s theor y that Customs may only issue one pena lty

for similar violations. Section V.C.4. of the mitigation guidelines instructs that only

one pena lty

should be issued for c ontemporane ous violations. I d. at Sect. V.C.4. (empha sis added) ( “a se parate pena lty should not be assessed f

or ea ch non-pe rmitted transac tion if numerous transa ctions occur red c ontemporane ously ” (e mphasis added) ). The
conver se of this provision is that mult iple penalty notices may

issue for non- contempora neous vio latio ns of

a br ok e r’ s o bli g atio ns . In th e matte r b e fo re thi s Co ur t, t he se pa rate pe na lti e s U PS
rec eived we re f

or non-c ontemporane ous violations. Theref ore, de spite Defe ndant’s prote stations to the contra

ry , it appear s that Custom s has consistently interpre ted § 1641(d)( 2)(A) as providing it with the authority

to issue multi ple pena lty notices for

multipl e violations of a br oker’ s obligations. S ee U PS Iat 32.

IV. Stay of Proc eedings Def endant ha s reque sted a stay of these pr ocee dings pe nding the interlocutory appea l of the su bs tanti ve le g a l is su e a dd

re sse d in UPS I . Wh e the r t o gra

nt t he re qu e ste d s tay

lie s w ith in the discre tion of this C ourt. Application for cer tification of an inter locutory order will stay proce eding s in the CI T only if a judg e of the CI T or CAF C orders suc h. 28 U.S.C. § 1292(d)(3) (2000). 9 Although this Court is gr antingthe re quested stay , it is di sappointed by Def endant’ s eff

ort to discredit Plaintiff’s position with reg ard to De fenda nt’s motion to s tay

by ref ere ncingtheCourt No. 04-00650 Pag e 19

newly -established Ma

rch 2007 tria l date. De fenda nt sugg ests that Plaintiff’s reque st for a Ma rch 2007 trial date is subterf

ug e. (D ef.’ s Reply

10.) As Plaintiff explained in its m otion to amend the sche duling or der, c o-counse l will be unavailable dur ing late Novembe r and D ece mber on a family matter. In addition, Plainti ff’ s lead c ounsel repr esente d that she would be e ng ag ed in a leng thy trial in October

and ag ain in J anuar

y . Due to these exigenc ies, Plaintiff reque sted and Def endant did not oppose a

Marc h 2007 trial date. Under the circ umstances, the Ma rch 2007 tria l date does not indicate to this Court t hat Plaintiff is unwill ing or

unable to proc eed on the merits of this case . Rather, Plaintiff re quested that this Court consider pre- exis ting c ommitm ents when r e-sc hedulingthe trial. Afte r consideringPlaintiff’s motion and give n Def endant’ s expl icit consent, this Court gr anted Plaintiff’s motion to amend the schedulingorder , which esta blished the Marc h 2007 trial date. Reg ardle ss, this C ourt finds that staying the proce eding s pendingresolution of the question cer

tified for inter locutory

appea l is in t he best intere sts of the parties a nd the Court. Given the Ma

rch 2007 tria l date, neither party is likely to be seriously

prejudice d by

a stay of the proce eding s. The issue pre sented to the CAF C for interlocutor y appea l is central to Plaintiff’s ability to prosecute its claims ag ainst Defe ndant. It would be ineff icient to proce ed to judg ment
on the pe nd ingmot ion

fo r s umm ary

jud g me nt o r t o p ro c e e d to tr ia l, o nly to r e vis it the e nti re c a se in t he e ve nt o f a

re mand fr om t he CA F C. A c c or din g ly , th is C ourt sta y s p ro c e e din g s in

thi s matter for thirty day s following the CAFC’s fina l decision conc erningthe ce rtified question.Court No. 04-00650 Pag e 20

C ONCL US I ON For the fore g oing r easons, this Court finds that its opini on and orde r in UPS Iinvolve a controllingquestion of law a s to which there is a substantial g round for differ ence of opinion and that an immediate a

ppeal f rom the orde r may

materia lly

advanc e the ultimate ter

mination of the litigation. Acc ording ly , this Court certifies the f ollowing que stion to t he Court of Appe als for the F e de ra l Cir c uit : Whether, pursua

nt to 19 U.S.C . § 1641(d)( 1)(A) , the United States B urea u of Customs and B order

Protection may

issue more than one penalty notice for

a customs broker’ s alleg ed fa ilure to exercise r esponsible supervision and c ontrol based upon the customs broker’ s alleg ed re peate d misclassification of e ntere d merc handise ove r a pe riod of time and on multiple separ ate e ntry documents; and if so, whether

the ag g reg ate pe nalty

soug ht from those multiple penalty notices may exceed $30,000. F ur the r, thi s Co ur

t st ay s p ro c e e din g s in

thi s matte r u

nti l th ir ty da y s a ft e r t he CA F C r e nd e rs its decision on the a

ppeal. De fenda

nt’s application to file a

reply brief is grante d. Def

endant’ s motion for oral a

rgument is denied. So ordere d.

/s/ Greg ory W. C arma

n Gre g ory W. C arma

n Dated: October

19, 2006. New Y ork, Ne w York