Slip Op. 15-94

UNITED STATES COURT OF INTERNATIONAL TRADE 

________________________________ 

UNITED STATES, :

 : 

Plaintiff, : Before: Nicholas Tsoucalas, 

 : Senior Judge 

v. : 

 : Consol. Court No.: 10-00119 

AMERICAN CASUALTY CO. OF : 

READING PENNSYLVANIA, and RUPARI: PUBLIC VERSION 

FOOD SERVICES, INC. : 

 : 

Defendants, : 

_____________________ : 

OPINION AND ORDER 

[Plaintiff’s request for leave to amend the Complaint is granted 

in part and denied in part. Defendant’s Motion to Dismiss is 

denied.] 

Dated:August 24, 2015 

Mikki Cottet, Senior Trial Counsel, Commercial Litigation Branch, 

Civil Division, U.S. Department of Justice, of Washington, DC, 

argued for Plaintiff. With her on the brief were Benjamin C. 

Mizer, Acting Assistant Attorney General, Jeanne E. Davidson, 

Director, and Patricia M. McCarthy, Assistant Director, of 

Washington, DC. Of counsel on the brief was Brian J. Redar, Office 

of Associate Chief Counsel, U.S. Customs and Border Protection, of 

Long Beach, CA. 

Lawrence M. Friedman, Barnes Richardson & Colburn, of Chicago, IL,

argued for Defendant. With him on the brief were Shama K. Patari, 

Barnes Richardson & Colburn, of Chicago, IL, and Peter A. Quinter, 

Gray Robinson, P.A., of Miami, FL.

Tsoucalas, Senior Judge: Plaintiff, United States 

Customs and Border Protection, (“Customs”) brought this action to 

recover civil penalties against Defendant, Rupari Food Services 
Consol. Court No. 10-00119 Page 2 

Inc., (“Rupari” or “Defendant”)1 for violations of Section 592 of 

the Tariff Act of 1930, 19 U.S.C. § 1592(a)(2012)2, and Defendant 

American Casualty Co. of Reading Pennsylvania, (“American 

Casualty”) to recover, under bonds, unpaid customs duties. Rupari 

moves for dismissal of this action, post-answer, on the grounds 

that the Complaint fails to state a claim upon which relief can be 

granted and Customs failed to plead fraud with particularity. 

Customs opposes dismissal and requests leave to amend its 

Complaint. For the following reasons, Customs’ request for leave 

to amend the Complaint is granted in part and denied in part, and 

Defendant’s Motion to Dismiss is denied. 

JURISDICTION AND STANDARD OF REVIEW 

The Court possesses jurisdiction to hear this action 

under section 201 of the Customs Courts Act of 1980, 28 U.S.C. §

1582 (2012).3 

 A motion to dismiss for a failure to state a claim may 

be raised by motion under USCIT R. 12(c) after the pleadings are 

 

1 Plaintiff also filed an action against William Vincent “Rick” 

Stilwell (“Stilwell”) individually, however, all parties agreed to 

dismiss all claims as to him with prejudice and without costs, 

fees, and expenses on July 17, 2015. Stipulation of Partial 

Dismissal, July 17, 2015, ECF No. 104. 

2 Further citations to the Tariff Act of 1930 are to the 

relevant portions of Title 19 of the U.S. Code, 2012 edition, and 

all applicable amendments thereto, unless otherwise noted. 

3 Further citations to the Customs Courts Act of 1980 are to 

the relevant portions of Title 28 of the U.S. Code, 2012 edition, 

and all applicable amendments thereto, unless otherwise noted.
Consol. Court No. 10-00119 Page 3 

closed but early enough not to delay trial. USCIT R. 12 (h)(2)(B). 

A Rule 12(c) motion is reviewed under the same standard as a motion 

to dismiss under Rule 12(b)(6). Koyo Corp. of U.S.A. v. United 

States, 37 CIT ____, 899 F.Supp.2d 1367, 1370 (2013). When 

reviewing a motion to dismiss for failure to state a claim, the 

court must accept as true the complaint’s undisputed factual 

allegations and should construe them in the light most favorable 

to the plaintiff. Bank of Guam v. United States, 578 F.3d 1318, 

1326 (Fed. Cir. 2009) (quoting Cambridge v. United States, 558 

F.3d 1331, 1335 (Fed. Cir. 2009). To survive a motion to dismiss, 

a complaint must contain sufficient factual matter, accepted as 

true, to state a claim to relief that is plausible on its face.

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955,

1974, 167 L. Ed. 2d 929, 949 (2007). To be plausible, the complaint 

need not show a probability of plaintiff’s success, but it must 

evidence more than a mere possibility of a right to relief. Id. at 

556-59, 127 S.Ct at 1965-66, 167 L.Ed.2d at 940-41. 

BACKGROUND 

Rupari is a Florida corporation that purchased crawfish 

from abroad and sold it to restaurants in the United States. Compl. 

¶¶ 3, 12, June 20, 2011, ECF No. 2; Pl.’s Opp’n to Mot. to Dismiss

(“Pl.’s Br.”) Purchase Agreement Ex. 10, at 13, Mar. 7, 1997, ECF 

No. 94-6. Rupari’s seafood sales team consisted of Mr. Larry 

Floyd (“Floyd”), Vice President of Rupari’s Seafood Sales 
Consol. Court No. 10-00119 Page 4 

Division, and Stilwell, a commissioned seafood salesman. Pl.’s Br.

Tr. of Dep. of William Vincent Stilwell (“Stilwell Dep.”) Ex. 1, 

at 13-14, Apr. 3, 2013, ECF No. 94-1; Pl.’s Br. Tr. of Dep. of 

Rupari Food Services Inc. (“Rupari Dep.”) Ex. 2, at 15-16, 17, 

Apr. 4, 2013, ECF No. 94-2. 

In 1997 and 1998, Rupari sold crawfish to members of the 

Popeye’s Operator’s Purchasing Cooperative Association (“POPCA”). 

Mr. Richard Porter (“Porter”), the POPCA director of purchasing 

and distribution, communicated with Rupari through Floyd regarding 

the sale of crawfish. Pl.’s Br. Decl. of Richard L. Porter (“Porter 

Decl.”) Ex. 10, at ¶¶ 6, 7, Mar. 16, 2014, ECF No. 94-6. 

On March 7, 1997, Porter and Floyd signed a Purchase 

Agreement wherein Rupari would sell POPCA 148,000 lbs. of “Chinese 

[c]rawfish [t]ail [m]eat.” Pl.’s Br. Purchase Agreement Ex. 10, 

at 13, Mar. 7, 1997. The agreement also stated that a formal POPCA 

supply agreement would be sent shortly thereafter. Id. Floyd and 

Porter consummated the formal POPCA supply agreement on June 8, 

1997. Id. at 14. 

 In August 1997, the United States Department of Commerce 

(“Commerce”) conducted an antidumping investigation concerning 

crawfish tail meat from China. Commerce published the final 

determination of its antidumping investigation of freshwater 

crawfish tail meat from China on August 1, 1997. Notice of Final 

Determination of Sales at Less than Fair Value: Freshwater Crawfish 
Consol. Court No. 10-00119 Page 5 

Tail Meat From the People’s Republic of China, 62 Fed. Reg. 41,347

(Aug. 1, 1997) (subsequently amended to correct ministerial errors 

at 62 Fed. Reg. 48,218 (Dep’t of Commerce Sept. 15, 1997) (“Final 

Determination”). 

Yupeng Fisheries Ltd., (“Yupeng”) a Chinese producer and 

importer of crawfish tail meat, was among the firms investigated 

by Commerce. Id. Yupeng did not receive a separate rate, and its 

crawfish tail meat exports were subject to the China-wide rate of 

201.63 percent. Id. at 41,358. Whole crawfish, however, were 

excluded from the scope of the antidumping duty investigation. 

Id. at 41,347. From 1996 to 1998, Yupeng sold Rupari whole cooked 

frozen crawfish and cooked frozen crawfish tail meat. Pl.’s Br. 

Stilwell Dep. Ex. 1, at 17-18. 

Floyd and Stilwell mainly communicated with Mr. Tian 

Wei, a Yupeng salesman, but also communicated with Mr. Wang Yon 

Min, Yupeng’s owner, (“Wang”), regarding the sale of crawfish to 

Rupari. Id. at 17, 21. 

On October 17, 1997, POPCA sent Floyd and Rupari a letter 

confirming that Popeye’s would purchase 1,500 cases of crawfish. 

Pl.’s Br. Crawfish Confirmation Letter from James Brailey, 

Purchasing Manager, POPCA, to Floyd Ex. 10, at 30, Oct. 17, 1997. 

In November 1997, Wang, Yupeng’s owner, created 

Seamaster Trading Company Ltd. (“Seamaster”) which was located in 

Thailand. Compl. at ¶13. Yupeng shipped crawfish tail meat from 
Consol. Court No. 10-00119 Page 6 

China to Seamaster in Thailand. Pl.’s Br. Packing List, Bill of 

Lading, Invoice, Manifest or Freight List Ex. 6, at 1-12, ECF No. 

94-5. Rupari was aware that Wang created Seamaster and was the 

principal owner of both Yupeng and Seamaster. Pl.’s Br. Rupari 

Dep. Ex. 2, at 5. 

Wang approached Mr. Somchai Sriviroj, (“Sriviroj”) the 

owner and managing director of Sea Bonanza Foods Company, Ltd., 

(“Sea Bonanza”) a fish processing company in Thailand, and asked 

if Sea Bonanza could repackage frozen crawfish tail meat. Pl.’s 

Br. Tr. of Dep. of Sea Bonanza Foods Company, Ltd. Ex. 4, at 8, 

July 8-9, 2013, ECF No. 94-3. 

On November 8, 1997, Seamaster entered into a contract 

with Sea Bonanza wherein Seamaster would ship crawfish tail meat 

from China to Thailand, and Sea Bonanza would repackage the 

crawfish tail meat in exchange for a processing fee. Pl.’s Br.

Contract between Sea Master and Sea Bonanza Ex. 5, at 2, Nov. 8, 

1997, ECF No. 94-4. 

In January and April 1998, Yupeng shipped from China to 

Seamaster, in Thailand, product invoiced as “frozen crawfish.” 

Pl.’s Br. Invoice Ex. 6, at 1, 3, Jan. 8, 1998, ECF No. 94-5. 

Sea Bonanza repacked the frozen crawfish tail meat for 

Seamaster and labelled the meat a “product of Thailand.” Pl.’s Br.

Tr. of Dep. of Sea Bonanza Foods Company, Ltd. Ex. 4, at 8, 22. 

According to the Agricultural Affairs Office at the American 
Consol. Court No. 10-00119 Page 7 

Embassy in Bangkok, crawfish is not harvested in Thailand; 

moreover, Sea Bonanza never processed live crawfish. Id. at 7, 

12; see also Pl.’s Br. Packing List Ex. 6, at 1, Apr. 18, 1998; 

Pl.’s Br. Facsimile from the Agricultural Affairs Office at the 

American Embassy in Bangkok, Thailand to Roy Johnson, Louisiana 

Dept. of Agriculture Ex. 8, at 1, Aug. 5, 1998, ECF No. 94-5. 

Rupari assisted Seamaster with obtaining a customs

broker and Seamaster became a non-resident importer of crawfish to 

the United States. Pl.’s Br. Rupari Dep. Ex. 2, at 4; Pl.’s Br.

Entry Summary Ex. 11A, at 1-42, Mar. 13, 1998, ECF No. 94-7. 

Rupari stopped purchasing crawfish tail meat directly from Yupeng 

and began purchasing crawfish tail meat from Seamaster. See Pl.’s 

Br. Stilwell Dep. Ex. 1, at 18, 20. Rupari had never purchased 

crawfish from a source in Thailand prior to purchasing crawfish 

tail meat from Seamaster. Id. at 20. 

On February 24, 1998, Porter sent a letter to Caro 

Produce regarding POPCA’s Crawfish Etouffe promotion beginning 

March 9, 1998, and ending April 11, 1998. Pl.’s Br. Letter from 

Porter to Caro Produce-Angel Homan, Ex. 10, at 36, Feb. 24, 1998. 

The letter recited that POPCA ordered 1,200 cases of crawfish in 

24.1 lb. bags from Rupari. Id. 

On March 13, 1998, Seamaster filed a consumption entry 

describing the imported merchandise as 1,900 cartons of frozen 

crawfish, classified under U.S. Harmonized Tariff Schedule 
Consol. Court No. 10-00119 Page 8 

(“HTSUS”) 0306.19.0010, free of duty, and marked as a product of 

Thailand. Pl.’s Br. Entry Summary Ex. 11A, at 1. 

American Casualty issued customs bonds to Seamaster for 

the importation of crawfish tail meat. Compl. At ¶6, Customs Bonds 

Ex. A, at 2-5, Apr. 15, 1998, ECF No. 2-1. American Casualty, as 

surety, guaranteed payment for any duty, tax, or charge, or 

compliance with law or regulation, as a result of Seamaster’s 

imports. Id. 

On April 18, 1998, Seamaster filed three consumption 

entries that described the imported merchandise as 1,750 cartons 

of cooked crawfish meat, classified under HTSUS 1605.40.1000, free 

of duty, and marked as products of Thailand. Pl.’s Br. Entry 

Summary Ex. 11A, at 10. Seamaster did not identify any of the 

entries as being subject to antidumping orders as required by 19 

C.F.R. § 141.61(c). See id. Rupari was listed as the notifying 

party on certificates of origin that accompanied these four 

entries. Pl.’s Br. Certificates of Origin Ex. 11A, at 7, 15, 26, 

37. The entry summaries, entry documents, invoices, and 

certificates of origin all stated that the crawfish meat originated 

in Thailand. Id. at 1-42. 

Seamaster, as the importer of record, entered four 

containers of crawfish tail meat into the commerce of the United

States through the Los Angeles/Long Beach Seaport by means of 

documents filed with Customs that claimed the merchandise 
Consol. Court No. 10-00119 Page 9 

originated in Thailand. Compl. at ¶17. The four entries were 

released for consumption and Rupari sold some or all of the entries

to POPCA. Pl.’s Br. Porter Decl. Ex. 10, at ¶10. All four entries 

were subject to a 201.63 percent antidumping duty margin under the 

antidumping order. Final Determination, 62 Fed. Reg. at 41,358. 

Seamaster did not classify the entries as subject to antidumping 

duties, nor did it remit any amount of the applicable duties to 

Customs. Compl. at ¶18. 

On May 4, 1998, Porter had a telephone conversation with 

Floyd, Rupari’s Vice President of seafood sales, regarding the 

alleged crawfish tail meat purchased from Rupari and upcoming 

shipments of frozen crawfish tail meat. Pl.’s Br. Ex. 10, at 3-4, 

Porter Decl. at ¶10. According to Porter: 

During that conversation, I asked Larry 

[Floyd] how it was that Rupari could sell its 

Chinese crawfish tail meat so cheaply. I also 

commented that Rupari’s crawfish was cheaper 

than all of the other Chinese crawfish tail 

meat being sold in the United States at that 

time. Larry responded that they, which I 

understood to be Rupari, “can get it in where 

it would not be known as Chinese crawfish.” I 

asked Larry how and he explained that the 

Chinese crawfish tail meat was shipped to 

Thailand where it was “processed.” He said 

that the country of origin could be the place 

where the crawfish is packed. Larry also used 

the word “tariff,” stating that Rupari’s 

crawfish would not have to pay the same amount 

in tariffs. I responded, “Is that on the upand-up?” I was uncomfortable with this 

approach and shared my concern with Larry. 

Id. 
Consol. Court No. 10-00119 Page 10 

 Also on May 4, 1998, Floyd sent Porter a facsimile on 

Rupari letterhead, in which he wrote the following: 

As per our conversation on the telephone 

earlier concerning cooked peeled crawfish meat 

from Thialand, [sic] this product was cooked 

in China and sent to Thialand [sic] in the 

whole round and totally processed in Thialand 

[sic] and packed under the Seamaster lable 

[sic]. I really don’t understand what all the 

comotion [sic] is all about because we could 

bring in the whole cooked product into the 

United States and peel and pack it here and it 

would become product of the U.S.A. 

Pl.’s Br. Fax from Floyd to Porter Ex. 20, at 1, May 4, 1998, ECF. 

No. 94-11. 

Seamaster, as the importer of record, attempted to enter 

five more entries of crawfish tail meat into the United States 

between approximately June 13, 1998, and June 20, 1998. Pl.’s Br. 

Entry/Immediate Delivery Forms, Certificates of Origin, Bills of 

Lading, Invoices, Ex. 11B, at 1-28 ECF No. 94-8. Seamaster 

classified the crawfish tail meat in these five entries as duty 

free under 1605.40.1000 HTSUS. Id. Seamaster labeled all five 

entries as products of Thailand. Id. The crawfish tail meat was 

subject to antidumping duties of 201.63 percent, because it 

originated in China, but Seamaster did not classify the merchandise 

properly. Id.; see also Final Determination, 62 Fed. Reg. at 

41,358. Customs examined and seized the five entries of crawfish 

tail meat under 19 U.S.C. § 1595a(c)(2)(E), because the cartons 
Consol. Court No. 10-00119 Page 11 

were intentionally marked as products of Thailand in violation of 

19 U.S.C. § 1304. Compl. at ¶21. 

On June 26, 1998, Customs issued a request for 

information to Seamaster, as importer of record, asking them to 

substantiate the claimed Thai origin of the five seized entries, 

and asking for an explanation of Seamaster’s relationships with 

Rupari and Sea Bonanza. Pl.’s Br. U.S. Customs Service Request for 

Information, Ex. 13, at 1, June 26, 1998, ECF No. 94-10. 

On June 29, 1998, Customs commenced a fraud 

investigation against Rupari for the possible circumvention of 

antidumping duties. Pl.’s Br. Tr. of Dep. of C. Vernon Francis, 

Ex. 12, at 12, Sept. 24, 2013, ECF No. 94-9. 

On July 1, 1998, Rupari, through its employee, Stilwell,

filed a letter with Customs on behalf of Seamaster, the importer 

of record, wishing to clarify the origin of the crawfish meat. 

Pl.’s Br. Letter from Stilwell to Mr. David Shaw, US Customs 

Service, Ex. 15, at 1, July 1, 1998, ECF No. 94-11. Stilwell 

stated in the letter that the crawfish tail meat in the five seized 

entries was “cooked, peeled, and processed” by Sea Bonanza at its 

plant in Thailand. Id. 

On July 6, 1998, Customs issued a second request for 

information to Seamaster asking for records from Sea Bonanza to 

substantiate the facts in the letter referenced claiming that the 

crawfish tail meat was processed in Thailand from raw crawfish 
Consol. Court No. 10-00119 Page 12 

harvested in Thailand. Pl.’s Br. Second Request for Information 

Ex. 13, at 2-4. 

On July 10, 1998, Rupari, through its employee Stilwell, 

filed documents in response to this second request for information.

Compl. at ¶25. One of those documents was a letter written by 

Seamaster that authorized Rupari to act as Seamaster’s 

representative in all dealings with Customs related to the release 

of the seized entries of Chinese crawfish tail meat. Pl.’s Br.

Letter of Authorization from Seamaster to U.S. Customs, Ex. 23, at

46, July 9, 1998. 

On July 13, 1998, Customs issued a third request for 

information to Seamaster again asking for further substantiation 

of the claim that the crawfish originated in Thailand. Pl.’s Br. 

Third Request for Information Ex. 13, at 5, July 13, 1998. 

On July 13, 1998, Rupari, through its employee Stilwell, 

filed a series of documents with Customs. Compl. at ¶27. Among 

those documents was a purported letter from Mahyam Tingham 

Fisheries Co. Ltd. stating that it cultivated crawfish in Bangkok, 

Thailand, which it sold to Sea Bonanza, complete with invoices for

the sale of live crawfish. Pl.’s Br. Letter of Explanation from 

Mahyam, Ex. 15, at 2-5, July 10, 1998. The Bureau of Business 

Information of the Government Service Division in Thailand has 

confirmed that they failed to find any business registration for 

the name “Mahyam Tingham Fisheries Co., Ltd.” Pl.’s Br. Letter 
Consol. Court No. 10-00119 Page 13 

from the Bureau of Business Information of Thailand to Ms. Barry 

Tang, Ex. 18, at 1, May 10, 2013. 

There was also a letter from Sea Bonanza stating that it

purchased raw crawfish from Mahyam that it processed into tail 

meat for sale to Seamaster, which Seamaster then imported into the 

United States. Pl.’s Br. Letter of Confirmation from Sea Bonanza, 

Ex. 23, at 47, July 10, 1998. 

[[ 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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On July 25, 1998, Wang, the owner of Yupeng, sent a 

facsimile to Rupari and Stilwell which stated that Yupeng did not 

have the money to pay the ocean freight to ship crawfish to 

Thailand; however, Yupeng would fulfill Rupari’s order of “whole 

crawfish” which would be mixed with “ten tons of crawfish meat.” 

Pl.’s Br. Facsimile from Wang to Rupari Ex. 16, at 1, July 25, 

1998, ECF No. 94-11. 

On August 5, 1998, the Agricultural Affairs Office of 

the American Embassy in Thailand confirmed that there was no 

commercial production of indigenous freshwater crawfish in 

Thailand. Pl.’s Br. Facsimile from Agricultural Affairs Office, 

American Embassy, Bangkok, Thailand, to Roy Johnson, Louisiana 

Dept. of Agriculture, Ex. 8, at 1, Aug. 5, 1998. 

On April 9, 2001, Customs sent Rupari and Stilwell a 

Pre-penalty Notice which set the tentative determination of 

culpability at fraud, but also noted that “[i]nasmuch as the 

Government may plead in the alternative in any de novo proceeding 

before the Court of International Trade, Customs alternatively 

alleges that the violation in question occurred as a result of 

negligence or gross negligence.” Pl.’s Br. Pre-penalty Notice, 
Consol. Court No. 10-00119 Page 15 

Ex. 19, at 2, Apr. 9, 2001, ECF No. 94-11. On November 14, 2001, 

Customs issued Rupari and Stilwell a Penalty Notice which included 

the same language as the Pre-penalty notice mentioned above. Pl.’s 

Br. Penalty Notice, Ex. 24, at 18-20, Nov. 14, 2001, ECF No. 94-

13. 

On April 7, 2010, Customs filed a complaint against 

American Casualty claiming that it owed the United States 

$1,279,648.83 plus statutory interest for unpaid customs duties 

under bonds pursuant to 19 U.S.C. § § 1505, 1592(d), 1505(c), and 

580. Compl. at ¶1, April 7, 2010, ECF No. 2. 

On June 20, 2011, Customs filed a Complaint against 

Rupari for violations of 19 U.S.C. § 1592 (a). Compl. ¶1, June 20, 

2011, ECF No. 2. The Complaint alleged that Defendant attempted 

to enter five containers of Chinese crawfish tail meat by means of 

documents falsely claiming that the crawfish tail meat originated 

in Thailand. Id. at ¶8. Customs sought the domestic value of the 

merchandise Rupari attempted to enter into the United States which 

was $2,784,636.18, or in the alternative, the maximum amount for 

grossly negligent or negligent violations of 19 U.S.C. § 1592. 

Id. at ¶52. 

On December 22, 2011, this Court ordered that the case 

against American Casualty be consolidated with that against 

Rupari. Order, Dec. 22, 2011, ECF No. 22. 
Consol. Court No. 10-00119 Page 16 

On May 13, 2013, Stilwell died. Def.’s Mot. to Dismiss 

Public Version, Death Certificate Ex. 5, at 1, July 19, 2013, ECF 

No. 75-5. Additionally, Floyd died, however, his date of death is 

not known by the court. On January 22, 2014, Customs conducted

the deposition of a confidential informant who recounted an alleged 

conversation with Stilwell in which Stilwell stated that [[ 

 

 ]] Pl.’s 

Br. Conf. Dep. of Confidential Informant Ex., 1 at 7, ECF No. 80. 

 Subsequently, Defendant filed a motion to dismiss 

arguing that Customs failed to properly allege fraud with 

particularity and Customs failed to exhaust its administrative 

remedies for Counts II (gross negligence) and III (negligence). 

Def.’s Br. at 4-5. 

Customs opposes Defendant’s Motion to Dismiss, and it 

also requests leave to amend its Complaint. Pl.’s Br. at 13. 

DISCUSSION 

There are three issues that the court must analyze in 

addressing Defendant’s Motion to Dismiss: (1) whether the court 

should allow Customs to amend its Complaint; (2) whether Customs 

alleged fraud with particularity; (3) whether Customs failed to 

exhaust its administrative remedies with respect to negligence and 

gross negligence. 
Consol. Court No. 10-00119 Page 17 

1. Whether the court should allow Customs to amend its 

Complaint. 

 Customs seeks leave to amend its Complaint, reasoning 

that Defendant would not suffer any prejudice, because this action 

has advanced significantly beyond discovery, Defendant answered 

the complaint, and Defendant waited until the close of discovery 

to file its Motion to Dismiss. Pl.’s Br. at 13-14. Customs also 

notes that this is its first request to amend the complaint. Id. 

Defendant opposes Customs’ request to amend, because it 

argues that waiting years after the Complaint was filed to amend

by adding new information constitutes undue delay that prejudices 

their case. Def.’s Reply to Pl.’s Resp. to Def.’s Mot. to Dismiss 

Confidential Version at 5-6, Mar. 29, 2015, ECF No. 98 (“Def.’s 

Reply”). 

Rule 15 of the Rules of the U.S. Court of International 

Trade provides that “[t]he court should freely give leave” to amend 

a pleading “when justice so requires.” USCIT R. 15(a)(2). While 

Rule 15 requires that leave to amend be freely given, the Court 

must also consider whether there was undue delay, bad faith or 

dilatory motive on the part of the Plaintiff, undue prejudice to 

the opposing party, a repeated failure to cure deficiencies by 

amendments previously allowed, and futility of amendment. Foman 

v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222, 226 

(1962). 
Consol. Court No. 10-00119 Page 18 

The view that delay becomes undue when it prejudices 

the opposing party is generally accepted. Ford Motor Co. v. United 

States, 19 CIT 946, 956, 896 F. Supp. 1224, 1231 (1995) (citing 

United States v. Mex. Feed & Seed Co., 980 F.2d 478, 485 (8th Cir. 

1992)). In turn, to demonstrate prejudice, Defendant “must show 

that it was unfairly disadvantaged or deprived of the opportunity 

to present facts or evidence which it would have offered had the 

amendment been timely.” Id. (quoting Cuffy v. Getty Ref. & Mktg. 

Co., 648 F.Supp. 802, 806 (D.Del. 1986)). 

First, Defendant argues that the inclusion of the 

Declaration of Porter would prejudice it, because the Declaration 

details a phone conversation between Porter and Floyd, in which 

Floyd allegedly stated that the crawfish tail meat was from China. 

Def.’s Reply at 7. Floyd is now deceased, and Defendant contends 

that as a result of his death, it has been deprived of an 

opportunity to challenge Porter’s statements. Id. 

Although Floyd is deceased, Defendant argues that the 

May 4, 1998 fax from Floyd to Porter, occurring the same day as 

the phone call, shows that the conversation was limited to whole 

crawfish which are not within the scope of the antidumping order. 

Specifically, Defendant points out that the fax refers to crawfish 

“in the whole round” and “whole cooked product.” Id. at 8. 

Defendant has not been deprived of an opportunity to 

challenge Porter’s statements, because the contemporaneous fax to 
Consol. Court No. 10-00119 Page 19 

Porter could show that the conversation was limited to whole 

crawfish which are not within the scope of the antidumping order. 

Id. Defendant is not prejudiced by the inclusion of Porter’s 

Declaration or the fax, because it has not been deprived of an 

opportunity to challenge Porter’s statements. See Ford, 19 CIT at 

956, 896 F. Supp. at 1231. The court will allow Customs to amend 

its Complaint to include information relative to the Declaration 

of Porter. 

Defendant also argues that amending the Complaint to 

include additional facts to support Count I, fraud, would be 

futile. Def.’s Reply at 5. Specifically, Defendants argue that 

including facts relating to the facsimile from Wang, Yupeng and 

Seamaster’s owner, to Rupari and Stilwell would not survive a 

motion to dismiss, because the government’s conclusion that the 

goods were transshipped to the U.S. from China and that Rupari and 

Stilwell were aware of the transshipment does not logically flow

from the facsimile. Id. at 8. 

If an amendment would not survive a motion to dismiss 

pursuant to USCIT Rule 12(b)(6), it is deemed futile. United 

States v. Active Frontier Int’l, Inc., 37 CIT ___, Slip Op. 13-8 

(Jan. 16, 2013). To survive a motion to dismiss, a complaint must

contain sufficient factual matter, accepted as true, to state a 

claim to relief that is plausible on its face. Twombly, 550 U.S. 

at 570, 127 S. Ct. at 1974, 167 L. Ed. 2d at 949. To be plausible, 
Consol. Court No. 10-00119 Page 20 

the complaint need not show a probability of plaintiff’s success, 

but it must evidence more than a mere possibility of a right to 

relief. Id. at 556-57, 127 S. Ct. at 1965-66, 167 L. Ed. 2d at

940-41. 

The court finds that amending the Complaint to include 

the information discussed in the facsimile would not be futile,

because the amendment would survive a motion to dismiss. See Active 

Frontier Int’l, Inc., 37 CIT ___, Slip Op. 13-8 (Jan. 16, 2013). 

The amendment would survive a motion to dismiss, because it 

evidences a more than a mere possibility of a right to relief, as 

one could reasonably interpret the fax to show that Rupari was 

aware of the transshipment of crawfish tail meat. See Twombly, 

550 U.S. at 570, 127 S. Ct. at 1974, 167 L. Ed. 2d at 949; see 

also Pl.’s Br. Facsimile from Wang to Rupari Ex. 16, at 1. 

Next, Defendant argues that the inclusion of the 

deposition testimony of a confidential informant who recalled a 

verbal, unrecorded, conversation with the now deceased Stilwell 

will prejudice its case. Def.’s Reply at 10. Customs seeks to 

amend the Complaint to include the deposition testimony, because 

[[ 

 

 

 ]] 

The Defendant has been deprived of an opportunity to present 
Consol. Court No. 10-00119 Page 21 

evidence it would have offered had the amendment been timely, 

specifically Stilwell’s testimony, to rebut the confidential 

informant’s account of the purported conversation with Stilwell, 

because Stilwell died on May 13, 2013, and the deposition of the 

confidential informant occurred afterwards on January 22, 2014. 

See Ford, 19 CIT at 956, 896 F.Supp. at 1231; Def.’s Br. Stilwell 

Death Certificate Ex. 5 at 1, ECF No. 75-5; Pl.’s Br. Dep. of Conf. 

Informant Ex. 1, at 1. Consequently, inclusion of this deposition 

will prejudice Defendant, and the court will not permit Customs to 

amend its complaint to add this information. 

2. Customs alleged fraud with particularity. 

The Defendant argues that Customs’ Complaint fails to 

contain sufficient underlying facts creating a plausible inference 

that Rupari knew the statements contained in letters and other 

documents to Customs were false and that they intended to deceive 

Customs. Def.’s Br. at 5-6. The Court disagrees. 

Rule 9(b) of the Rules of the Court of International 

Trade requires that Customs “state with particularity the 

circumstances constituting fraud or mistake. Malice, intent, 

knowledge, and other conditions of a person’s mind may be alleged 

generally.” USCIT R. 9(b). Even though knowledge and intent may 

be alleged generally, the pleadings must “allege sufficient 

underlying facts from which a court may reasonably infer that party 

acted with the requisite state of mind.” Exergen Corp. v. Wal-
Consol. Court No. 10-00119 Page 22 

Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009). “A fraud 

pleading must include informational elements of ‘who, what, when, 

where, and how: the first paragraph of any newspaper story.’” 

United States v. Islip, 22 CIT 852, 869, 18 F.Supp.2d 1047, 1063

(1998) (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th 

Cir. 1990)). “Most courts have required the claimant to allege at 

a minimum the identity of the person who made the fraudulent 

statement; the time, place, and content of the misrepresentation; 

the resulting injury; and the method by which the misrepresentation 

was communicated.” Islip, 22 CIT at 869, 18 F.Supp.2d at 1063

(citing 2 Moore's Federal Practice § 9.03, at 9–18 n.12 (3d 

ed.1998)). 

Defendant contends that the bare fact that Rupari had 

done business with Seamaster’s Chinese parent company, Yupeng,

prior to the imposition of antidumping duties does not permit the 

inference that Rupari knew that the crawfish originated in China. 

Def.’s Br. at 7. Defendant is correct that this fact alone does 

not permit the inference that Rupari definitively knew the origin 

of the crawfish to be China, but this individual fact cannot be 

viewed in a vacuum as suggested by Defendant. Rather, this fact 

must be viewed in light of the other facts mentioned in the 

Complaint, as discussed below. 

[[ 

 
Consol. Court No. 10-00119 Page 23 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 ]] 

Customs argues that the Declaration of Porter shows that 

Rupari knew that the crawfish tail meat was from China, and thus 

Customs pled fraud and intent with particularity. Pl.’s Br. 17-

18. In his Declaration, Porter recounts a conversation on May 4, 

1998, with Floyd, in which Floyd allegedly told him that Rupari’s 

“Chinese crawfish tail meat” was cheaper than all of the others, 

because the meat was shipped to Thailand where it was processed 

and then it “would not be known as Chinese crawfish.” Pl.’s Br.

Porter Decl. Ex. 10, at ¶10. 
Consol. Court No. 10-00119 Page 24 

In contrast, Defendant claims that the facsimile from 

Floyd to Porter on May 4, 1998, sent the same day as the 

conversation, shows that the conversation was limited to whole 

crawfish, which is not within the scope of the antidumping order, 

as the fax referred to crawfish “in the whole round” and as “whole 

cooked product.” Pl.’s Br. Fax from Floyd to Porter Ex. 20, at 1. 

Nevertheless, given that POPCA and Rupari previously 

signed a contract for the supply of “Chinese [c]rawfish [t]ail 

[m]eat,” and that the court construes the facts in the light most 

favorable to the plaintiff in reviewing a motion to dismiss, the 

court finds that Customs pled knowledge and intent with enough 

particularity that its fraud claim survives the Motion to Dismiss. 

See Pl.’s Br. Purchase Agreement between POPCA and Rupari, Ex. 10, 

at 13; see also Bank of Guam, 578 F.3d at 1326. 

Moreover, Plaintiff pled fraud with particularity, 

because the complaint detailed the identity of the person who made 

the fraudulent statement; the time, place, and content of the 

misrepresentation; the resulting injury; and the method by which 

the misrepresentation was communicated. See Islip, 22 CIT at 869, 

18 F.Supp.2d at 1063. Specifically, the complaint alleged that 

Stilwell, an employee of Rupari, fraudulently stated in a letter 

dated July 1, 1998, to Customs on behalf of Seamaster, the importer 

of record, that the crawfish tail meat in the five seized entries 

was processed and packed by Sea Bonanza in Thailand from raw 
Consol. Court No. 10-00119 Page 25 

crawfish harvested by Mahyam in Thailand. Compl. ¶23; see id. 

Customs further alleged that these statements had the potential to 

influence its assessment of antidumping duties. Compl. at ¶35. 

Moreover, the complaint alleged that Rupari, through its employee 

Stilwell, filed on July 13, 1998, a series of documents with 

Customs which it knew to contain false representations that 

Thailand was the country of origin of the crawfish tail meat. Id. 

at ¶27. The documents included the following: a purported letter 

from Mahyam stating that it cultivated live crawfish which it sold 

to Sea Bonanza, invoices for the sale of live crawfish, and a 

letter purportedly from Sea Bonanza stating that it purchased 

crawfish from Mahyam that it processed into tail meat for sale to 

Seamaster. Id. 

Finally, Defendant contends that Customs failed to plead 

fraud with particularity, because the fax from Yupeng to Rupari 

does not demonstrate that Rupari knew that the crawfish tail meat 

was from China at the time it responded to Customs. Def.’s Br. at 

8. The fax was sent on July 25, 1998, after Stilwell made 

representations and submitted documentation to Customs on July 1, 

10, and 13, 1998. Pl.’s Br. Facsimile from Wang to Rupari Ex. 16. 

Although the fax, in and of itself, may not show that 

Rupari knew that the statements were false at the time they were 

made to Customs, as the statements occurred before the fax, the 

fax could plausibly show that Rupari discovered that its statements 
Consol. Court No. 10-00119 Page 26 

were false after it sent its last response to Customs on July 13, 

1998, and that it failed to inform Customs that its previous 

statements, made just days before, were untrue. Thus, Plaintiff 

pled fraud with enough particularity to survive Defendant’s motion 

to dismiss. 

3. Exhaustion of Administrative Remedies 

28 U.S.C. § 2637(d) provides that “[i]n any civil action 

not specified in this section, the Court of International Trade 

shall, where appropriate, require the exhaustion of administrative 

remedies.” 28 U.S.C. § 2637(d). If a new level of culpability is 

first introduced in Court and not at the administrative level, the 

party against whom the claim is alleged has been prevented from 

seeking mitigation of the monetary penalty at the administrative 

level as contemplated by 19 U.S.C. § 1592(b) and 19 U.S.C. § 1618. 

United States v. Optrex, 29 CIT 1494, 1500 (2005) (not reported in 

federal supplement); see also Def.’s Br. at 12. 

Defendants charge that Commerce failed to exhaust its 

administrative remedies for Count II, gross negligence, and Count 

III, negligence, because, although the penalty letters indicated 

that Customs alleged negligent and gross negligent violations in 

the alternative, Customs did not pursue such claims. Def.’s Br. 

at 11, 14. The court disagrees. 

Defendants rely on Optrex to support their position. 

See Optrex, 29 CIT at 1500. In Optrex, Customs issued a pre-
Consol. Court No. 10-00119 Page 27 

penalty notice which alleged that Optrex was negligent in providing 

insufficient information in the entry documents to enable Customs 

to determine the correct classification of its products. Id. at 

1495. The final penalty claim against Optrex was based on 

negligence. Id. Customs then filed suit on a negligence theory. 

Id. at 1495-96. Subsequently, Customs sought leave of the court 

to amend its complaint to include penalties for fraud and gross 

negligence. Id. at 1496. The court in Optrex denied Customs’ motion 

reasoning that “the statute was designed to give an importer an 

opportunity to fully resolve a penalty proceeding before Customs, 

before any action in this Court.” Id. at 1500-03. In other words, 

Optrex was denied an opportunity to resolve the fraud and gross 

negligence claims before the action was filed in this Court, as 

these claims were not mentioned in the pre-penalty and penalty 

notices. Id. at 1495-1503. 

 The facts in the instant case are not analogous to those 

in Optrex. See id. Unlike in Optrex, here, Customs alleged 

negligence and gross negligence in the alternative in both the 

pre-penalty and penalty notices: 

Inasmuch as the Government may plead in the 

alternative in any de novo proceeding before 

the Court of International Trade, Customs 

alternatively alleges that the violation in 

question occurred as a result of negligence or 

gross negligence. (Emphasis added). 
Consol. Court No. 10-00119 Page 28 

Pl.’s Br. Pre-penalty Notice, Ex. 19, at 2; Pl.’s Br. Penalty 

Notice, Ex. 24, at 18-20. Here, by listing the negligence and

gross negligence claims in the notices, Customs put the Defendant 

on notice that they were pursuing penalties for negligence and 

gross negligence in the event they could not prove fraud. Customs 

thereby presented Defendant with the opportunity to resolve the 

negligence and gross negligence claims at the administrative 

level. 

 Defendant cannot say that it was deprived of a chance to 

mitigate the gross negligence and negligence penalties before 

Customs commenced this action. Defendant responded to the Prepenalty notice by letter dated June 8, 2001, in which it argued 

that it acted in a commercially reasonable manner under the common 

law standard of care, and that there were several mitigating 

factors in favor of cancelling the penalties for gross negligence 

and negligence. Pl.’s Br. Letter from Becker & Poliakoff to 

Customs, Ex. 23, at 1-19, June 8, 2001; see United States v. CTS 

Holding, LLC, 39 CIT ____, Slip Op. 15-70 (June 30, 2015) (finding 

that “Defendant’s attempts to resolve the penalty claim before 

Customs, prior to Plaintiff’s bringing this action, demonstrate 

that Defendant received sufficient, actual notice that the claim 

sounded in negligence.”) Accordingly, Customs afforded Defendant

an opportunity to resolve the negligence and gross negligence 

claims at the administrative level before the action was commenced 
Consol. Court No. 10-00119 Page 29 

in this Court. Defendant’s own arguments show that it believed 

Customs pursued penalties for gross negligence and negligence in 

the event that fraud could not be proven. 

 As with Optrex, Defendant also mistakenly relies on 

United States v. Nitek Electronics, Inc., 844 F.Supp.2d 1298, 1298 

(2012) (Not reported in Court of International Trade Reports), 

appeal filed and docketed, Appeal No. 15-1166 (Fed. Cir. ____). 

In Nitek, the court barred a penalty claim and held that Customs 

failed to perfect its penalty claim where it sought to recover a 

penalty “based upon a degree of culpability (negligence) that 

differs from that alleged at the administrative level (gross 

negligence).” Id. at 1305. In Nitek the court also found that 

“nothing prevented Customs from bringing penalty claims for both 

negligence and gross negligence in the alternative, as it has done 

in the past.” Id. at 1308. 

By contrast, in this case, the degrees of culpability 

alleged in the complaint, (fraud, or in the alternative gross 

negligence, or negligence) were exactly the same as those alleged 

at the administrative level (fraud or in the alternative gross 

negligence, or negligence). Id. at 1305. Unlike in Nitek, here, 

Customs brought the negligence and gross negligence claims in the 

alternative. See id. It cannot be said that Customs did not perfect 

its penalty claim or that Defendants were robbed of an opportunity 
Consol. Court No. 10-00119 Page 30 

to resolve the negligence and gross negligence claims at the 

administrative level. See id. 

Defendant also contends that the gross-negligence and 

negligence claims must be dismissed, because Customs failed to 

disclose all material facts establishing those violations in its 

Pre-Penalty notice. Def.’s Br. at 14. 

In order to bring a section 1592 claim in this Court, 

several statutory requirements must be met at the administrative 

level. 19 U.S.C. § 1592 (b)(1). When Customs has reasonable cause 

to believe there has been a violation of section 1592 it must issue 

a pre-penalty notice which “disclose[s] all the material facts 

which establish the alleged violation.” Id. at (b)(1)(A)(iv). 

A violation is grossly negligent where it results from 

an act or omission done with actual knowledge of or wanton 

disregard for the relevant facts and with indifference to or 

disregard for the offender’s obligations under the statute. 19 

C.F.R. Pt. 171, App. B (C)(2). In the Pre-penalty Notice, Customs 

wrote that Rupari purchased crawfish from Yupeng Fishery Ltd. in 

China, knowing that the crawfish originated in China, and prepared 

invoices and entry documents falsely stating that the crawfish 

originated in Thailand. Pl.’s Br. Pre-penalty Notice, Ex. 19, at 

3. The notice further alleged that this was done to avoid paying 

antidumping duties in contravention of Rupari’s obligations under 

the statute. Id. The court finds that Customs disclosed all 
Consol. Court No. 10-00119 Page 31 

material facts which establish gross negligence and it denies 

Defendant’s motion to dismiss the gross negligence claim. 

Negligence requires facts that establish that a duty of 

reasonable care and competence existed and that Defendant failed 

to exercise reasonable care and competence in making statements or 

providing information to Customs. 19 C.F.R. Pt. 171, App. B 

(C)(1). Here, although Customs did not explicitly state that 

Rupari owed a duty and breached that duty in the Pre-penalty and 

Penalty notices, clearly, Rupari was adequately apprised of the 

fact that this negligence claim involved allegations that Rupari 

breached a duty of reasonable care, as evidenced by Rupari’s own 

arguments against a finding of negligence by Customs at the 

administrative level: 

Rupari conducted itself in a commercially 

reasonable manner . . . . [A] general custom, 

use, or practice by those in the same business 

or trade may be considered some evidence of 

what constitutes reasonable conduct in that 

trade or business . . . . Other domestic buyers 

of crawfish and other seafood will, if 

necessary, testify that Rupari’s actions were 

no different than most such other domestic 

buyers in similar situations. 

Pl.’s Br. Letter from Becker & Poliakof to Customs, Ex. 23, at 4-

5, June 8, 2001; see also United States v. Dantzler Lumber & Export 

Co., 16 CIT 1050, 1059, 810 F.Supp. 1277, 1285 (1992) (finding 

that as long as Defendants were adequately apprised of the scenario 

of the action, Customs has met the requirement of disclosing all 
Consol. Court No. 10-00119 Page 32 

material facts establishing the violation). Thus, the court 

declines to dismiss the negligence count. 

CONCLUSION 

For the reasons stated above, Plaintiff’s request for 

leave to amend the Complaint is granted in part and denied in part

consistent with this opinion. It is further 

ORDERED that Defendant’s Motion to Dismiss is DENIED; it

is further 

ORDERED that Plaintiff’s Request for Leave to Amend the 

Complaint is GRANTED IN PART AND DENIED IN PART, consistent with 

the court’s opinion; it is further 

ORDERED that Plaintiff shall file an Amended Complaint, 

consistent with this opinion, no later than August 31, 2015; it is 

further 

ORDERED that Defendants must submit their Amended Answer 

no later than September 21, 2015; and it is further 

ORDERED that Plaintiff and Defendants must submit a 

joint proposed scheduling order no later than September 28, 2015. 

SO ORDERED.

 /s/ Nicholas Tsoucalas 

 Nicholas Tsoucalas 

 Senior Judge 

Dated: 

 New York, New York

August 24, 2015