Slip O p 10-70 UNITED STA TE COURT OF INTERNATIONAL T RADE

Before: Grego ry W. Carman, Judge Court No. 04-00650

[ Plaintiff’s Mot ion for Recons ideration of the Court’s January 28, 2010 Judgment is DENIED. ] Tony West

, Assi stant Att or ney General, Jeanne E. Davi dson , Di recto r, Patr i ci a M. McCart hy, Assi stant Di recto r, U.S . Department o f Ju sti ce, Ci vil D i vis i on, Commercial Li tigati on Branch (Jes si ca R. Toplin, Court ney S. M cNamara); Edw ard Greenwald, of couns el, Department o f Homeland Securi ty, U .S. Customs and Border Prot ecti on; for Plainti ff. Akin G ump Strauss Hau er & F eld LLP ( Terence J. Lynam, Lars- Erik A. Hjelm, Natalya Dari a Dobrowolsky , Li sa-Mari e W. Ross, Thomas James McCart hy), for Defendant. June 17, 2010 O P I N I O N & O R D E R C A R M A N , J U D G E : The Uni ted S tate s has moved under US CIT Rule 59 for reconsi derat i on of the Co urt’s January 28, 2010 O pini on and Order and the accompanyin g Judgment for Defendant, Uni ted S tate s v. UPS Customhouse Brok erag e, Inc., 34 CIT ___, 686 F. Supp. 2d 1337 (Jan. 28, 2010) (“Post-Appeal D eci si on”). The UNITED STA TES,

Plainti ff,

v. UPS CUSTOMHOUSE BRO KERAGE, INC.,

Defendan t.Court No. 04-00650 Page 2

challen ged deci si on followed a deci si on of the Co urt o f Appeals f or the Feder al Ci rcui t (“CAFC”), Uni ted S tate s v. UPS Customhouse Brok erag e, Inc., 575 F.3d 1376 (Fed. Cir. 2009) (“CAFC Deci si on”), whi ch parti ally vacated and part i ally remanded this Court ’s earlier Judgment for Plainti ff f ollowi ng a bench tri al, Uni ted S tate s v. UPS Customhouse Brok erag e, Inc., 32 CIT ___, 558 F. Supp. 2d 1331 (2008) (“P ost-TrialDeci si on”). Fami li arity wi th these prior opini ons i s ass umed. P A R T I E S ’ C O N T E N T I O N S I. The United Stat es Plainti ff as serts err or s as follows, whi ch i t clai ms requi re r econsi derat i on: A. Argument 1: A New Controlling Legal Standard R equired R emand or Reopening Trial Thi s argument consi sts of two pro posi tions : that (a) the CAF C Deci si on

announc ed a new c ontr olli ng legal standard r egar ding the cor rect interpret ation of 19 C.F.R. § 111.1 (“§ 111.1”), and (b) that t hi s Court er red by not prov i ding Plainti ff a chanc e to sati sfy that new legal standard by either tak i ng further tr i al evidenc e from Plainti ff, or by r emanding for admin i strat i ve pr oceedings consi stent wi th the new standard. (Pl.’s Mot . for Re consi derat i on, Doc. No. 126 (“Mot i on”) at 4-7.) B. Argument 2: The Court Impro perly Construed Cu stoms R egulations The gov ernment clai ms that the Cour t ex ceeded i ts proper ro le i n the Post-Court No. 04-00650 Page 3

Appeal Deci si on when i t in ter pret ed var i ous Cus toms reg ulati ons wi thout t he benefi t of agency in ter pret ation or briefing, and compounded thi s erro r by inc or rectly conclu ding that Plai nti ff c ould not pr ov e i ts case ab sent evidenc e that t he Fin es, Penal ties, and For fei tures Offi cer (“FP&F O ffi cer”) Bert We bster personally consi dered all ten § 111.1 factors. (Id. at 7-9.) C. Argument 3: Customs’ Error Was Harmless and Correctabl e at Trial De Novo Absent Proofof Substant ial Preju dice Thi s argument stems from Arg ument 1—that the CA FC Deci si on merely

announc ed the corr ect new legal standard gov ernin g the interpre tation of § 111.1. Accordi ng to the United Stat es, thi s Court er red in h oldi ng Customs’ prior mi sinterpr etat i on of the r egulation to be a pro cedural i rr egularity thatnulli fi ed the agency’s penalty action agai nst Defen dant UPS Customhouse Brok erag e, Inc. (“UPS”). (Mot i on at 9-10.) Plainti ff argues (w i thout concedi ng) that if the agency’s fai lure to consi der all of the § 111.1 factor s was procedural, t hat err or was h armless, and that t he Court should therefore reo pen the tr i al, take new ev i dence, and c onsi der t he § 111.1 factors de nov o on t he augmented tr i al recor d and in li ght o f the “new” legal standard. (Id. at 10-11; Pl.’s Reply in Supp. of Its Mo t. for Reconsi derat i on, Doc. No. 128 (“Reply”) at 6-9) (both ci tin g Empi re Ener gy M gmt. S ys. v. United Stat es, 362 F.3d 1343 (Fed. Ci r. 2004)).) Plainti ff als o ar gues that ev i dence of substanti al prej udi ce i s requi red t o setCourt No. 04-00650 Page 4

asi de, due to pr ocedural noncompli ance, an agency acti on, but that UPS presented no

such eviden ce. (Motion at 12 (ci tin g Am. Far m Lines v. Black Ball Freight Ser v., 397 U.S

. 532, 539 (1970); D i xon Tic ondero ga Co . v. United Stat es, 468 F.3d 1353, 1357 (Fed. Ci r. 2006); PAM, S.p.A. v . Uni ted S tate s, 463 F.3d 1345, 1349 (Fed. Ci r. 2006); Reply at3, 8-9.) II. UPS A. Argument 1 UPS clai ms that Plainti ff’s Argument 1 i mproper ly re i ter ates poin ts already rais ed and rej ected i n the Post-Appeal Dec i si on. (Brief of UPS Customhouse Brok erag e, Inc. in Opp’n to Pl.’s Mo t. for Reconsi derat i on, Doc. No. 127 (“Def.’s Opp.”) at 4-5.) UPS att acks the i dea that t he CAFC Deci si on’s i nterpr etat i on of § 111.1 is “new” w i th ci tations to two Custo ms H eadquarter s Rulings that long ago r eached the sam e conclu si on about § 111.1 as the CAF C Deci si on. (Id. at 5 (ci tin g HQ 225010 (July 21, 1994), 1994 U.S. Custom HQ LEXI S 1645, at*7 and HQ 115005 (May 2, 2000), 2000 U.S

. Custom HQ LEXIS 906, at *5).) B. Argument 2 On Ar gument 2, UPS not es that Plainti ff only contests the Court ’s method, not the conclus i ons of i ts reg ulator y analysi s; and, regardless of the FP&F Offi cer’s proper

ro le, Plainti ff f ai led to pr esent evidenc e that any one consi dered all of the § 111.1 factor s. (Id. at 8-9.)Court No. 04-00650 Page 5

C. Argument 3 On Ar gument 3, UPS contends that Plai nti ff’s error was p ro cedural since 19 U.S.C. § 1641(d)(2)(A) requires c onsi derat i on of the § 111.1 factor s and, as the CAF C Deci si on stated, “Customs di d not consi der all ten factor s li sted i n 19 C.F.R. § 111.1.” (Id. at 10 (quoting CAFC Deci si on, 575 F.3d at1383).) UPS argues that t he preci se nature o f Plainti ff’s error i s i rr elevant in any cas e, since “nei ther C ustoms nor the gov ernment pre sented evidenc e . . . that t he agency consi dered all of the section 111.1 factors.” (Id.) As to subs tantial prejudi ce, UPS states that pr ejudic e “i s wh at this entire case i s about,” and that UPS has argued all along t hat pro per consi derat i on of all ten § 111.1 factors would sh ow UPS notto be liab le. (Id. at 11.) S T A N D A R D O F R E V I E W Although t he Court ’s rules do not ex pli ci tly pr ov i de for a mot i on for “reconsi derat i on,” such motions are o rdin arily acc epted and analyzed under US CIT R. 59. See , e.g., Peerless Clothing Intern., I nc. v. Uni ted S tate s, 33 CIT ___, 637 F. Supp. 2d 1253, 1255-1256 (2009) . The granting of a motion for reconsi derat i on i s wi thi n the sound di screti on of the Co urt. S ee Yuba Natural Res., Inc. v. United Stat es, 904 F.2d 1577, 1583 (Fed. Ci r. 1990); Canadi an Wheat Boar d v. United Stat es, 33 CIT ___, 637 F. Supp. 2d 1329, 1333 (2009). “The major gr ounds justi fyi ng a gr ant of a motion to reconsi der a j udgment are an in ter venin g change i n the contro lling law, the availab i li tyCourt No. 04-00650 Page 6

of new evi dence, the need to cor rect a clear factual or legal er ro r, o r t he need to pr event mani fest injusti ce.” Almond Bros. Lumb er Co . v. United Stat es, 34 CIT ___, 2010 WL 1409656 at *4 (2010) (ci tin g NSK Cor p. v. United Stat es, 32 CIT ___, 593 F. Supp. 2d 1355, 1361 (2008) and USCI T R. 59(a)( 2).) A moti on for r econsi derat i on i s thus a mechan i sm to cor rect a si gni fi cant flawi n the or i gin al judgment, but is not a mechani sm to “allow a losing part y the chance to r epeat ar guments or t o r eli tigate i ssu es previously bef or e the court.” Peer less Clothing, 637 F. S upp. 2d at 1256 (c i tations omi tte d). D I S C U S S I O N Plainti ff’s c lai m in Arg ument 1 si mply reiterate s arguments already elabor ated in prior brief s to the Co urt and rejected in the Post-Appeal D eci si on. Plainti ff’s c lai m in Arg ument 2 that the Co urt er red by interpret i ng Customs regulations and basing i ts holdi ng on the r ole of t he FP&F O ffi cer does not mer i t r econsi derat i on becaus e the Court ’s analysi s of the FP&F O ffi cer’s ro le was n ot e ssen tial to the Post-Appeal Deci si on. Ar gument 2 i s therefor e i rr elevant t o the cor e reasoning upon whi ch the Court i ssu ed i ts judgment. Plai nti ff’s c lai m in Arg ument 3 that the Co urt should have found Cus tom’s admini strat i ve er ro r in ap plyi ng § 111.1 to be harmless, and refused to enter judgment for Defendant absent a showing of subs tantial prejudi ce, i s bas ed on ci tations to in apposi te case law. Argument 3 also i gnor es the fact that the Post-Appeal Deci si on was enti rely driven by a careful an alysi s and app li cati on of the speci fi cCourt No. 04-00650 Page 7

di rectives of the CAFC Deci si on i ssu ed i n thi s particular case. P lainti ff’s m otion for reconsi derat i on i s therefor e deni ed. I. Argument 1: Plainti ff Attempts to Reli tigate Iss ues Already Deci ded Plainti ff’s c ontent i ons in Arg ument 1 are id entic al to ar guments Plainti ff already made in bri efing to the Cour t before the Cour t is sued the Post-Appeal D eci si on, and are there fore r ejecte d as i mproper atte mpts to r eli tigate under the g ui se of a motion for reconsi derat i on. A. The Court Already Reject ed the Argument that the CAFC Dec isi on Announced a Surpris ing New Int erpretation of § 111.1 The Court has already consi dered and squarely r ejecte d Plainti ff’s m ai n contention—that the CAF C Deci si on consti tuted a new legal standard contr olli ng § 111.1, whi ch P lainti ff c ould not have anti ci pated before t rial. P ost-Appeal Deci si on, 686 F. S upp. 2d 1337, 1355 ( “The Court also r ejects Plainti ff’s c ontent i on that t he Court of Appeals’ opi ni on consti tuted a change i n the law regar ding 19 C.F.R . § 111.1 and should excu se Plainti ff’s f ai lure to prov e i ts case at trial.”) The Court’ s reasoni ng on this i ssu e has already been set fort h at length, based upon detai led consi derat i on of the

recor d of proceedings fro m su mmary j udgment thro ugh openi ng statements at t rial. Id. at 1355-1356. It is als o tr ue, as UPS poi nts out, thatthe CAF C Deci si on i s cons i stent wi th Customs Headqu art ers Ruli ngs i ssu ed long befor e the tr i al, undercutti ng Plainti ff’sCourt No. 04-00650 Page 8

clai m that it could not hav e antic i pated the CA FC Deci si on’s i nterpr etat i on of § 111.1. See HQ 225010 (Ju ly 21, 1994), 1994 U.S. Custo m HQ LEXIS 1645, at *7; HQ 115005 (May 2, 2000), 2000 U.S. Custom HQ LEXI S 906, at*5. B. The Court Already Reject ed Plaint iff’s Requ est for Evidentiary Proceedings or Remand to Sati sfy the “New ” Interpretati on of § 111.1 The sec ond partof Arg ument 1 i s that the Co urt er red in refus i ng to take further evidenc e from S upervisory Impor t S peci ali st and Trade Enforcement Coor dinator Lydi a Goldsmi th relat i ng to the alleged “new” legal standard g ov ernin g § 111.1. Plainti ff’s contention i s that i t has never had a chance to present ev i dence s atis fyi ng the cor rect legal standard, and that t he Courtwrongly foreclosed Plainti ff fro m presenti ng i ts evidenc e on the assump tion that the CAF C Deci si on made a factual fi nding that Customs di d not consi der each § 111.1 factor. Plai nti ff argues that it mu st be gi ven a chanc e to prov e i ts case b ecaus e the CAF C Deci si on di d not for eclose the i ssu e by engaging in “i mproper appellate fact-finding.” (Mot i on at 9-10.) The Court has already rej ected i n detai l and at length Plainti ff’s c ontent i on that it had no oppor tuni ty t o pre sent evidenc e sati sfying the cor rect leg al standard. PostAppeal Deci si on, 686 F. S upp. 2d at 1352-66. For e xample, the Cour t not ed the many occasi ons before tr i al on whi ch the partiesdebated, and the Court explic i tly left o pen, the questi on of the cor rect interpret ation and ap pli cati on of § 111.1, ultim atelyCourt No. 04-00650 Page 9

conclu ding that

Plainti ff knew well i n advance of tr i al that the success of i ts case could depend upon establi shing evidenc e to sati sfy ei ther of the two potent i al outcomes on the appli cabi li ty of the § 111.1 factors [i.e. whether or not demonstrating each factor was mandatory ]. No flaw i n t he t rial prev ented Plainti ff from doin g then what i t seeks to do now: puttin g on a wi tness to testif y reg ardin g the consi derat ion given to the ten factors of § 111.1. Id. at 1354. Plainti ff c onjur es an over blown ni ghtmare scen ario to supporti ts insi stence that i t

was en titled to r ely upon the interpret ation of § 111.1 that was rejected in the CAFC Deci si on: “the Co urt has ruled that t he Gover nment was required to pr esent multi ple

cases -in-chi ef to satis fy all possi ble interpr etat i ons of the agency’s own reg ulati ons, no matter how unreasonable those interpr etat i ons may have been.” (Mot i on at 5.) Thi s i s not atall accurate. The debate between the par ties here was spec i fi c and related to one central is sue: whether Custo ms w as requi red t o consi der all ten § 111.1 factor s. Th e Post-Appeal Dec i si on only indi cated that Plai nti ff had no excuse for fai ling to present evidenc e—whi ch i t now clai ms to have had all along, and offers thr ough one o f the wi tnesses i t called at tr i al—reg ardin g tho se ten factors. Post-Appeal Deci si on, 686 F. Supp. 2d at 1356. Plainti ff c ontends that the Post-Appeal Dec i si on ruled thatPlainti ff must adduc eCourt No. 04-00650 Page 10

proo f going to in ter pret ations “no matter how unreasonable.” Bu t the CA FC Deci si on ulti mately det ermin ed that t he gov ernment’s prefer red interpret ation—that the § 111.1 phrase “wi ll consi der” should not be read as mandator y—was the unreasonable i nterpr etat i on. See 575 F.3d 1376, 1382. Thi s Court o nly upheld that interpr etat i on after tr i al on the mi staken beli ef that it was required to do so by prin ci ples of deference to agency in ter pret ation. See Post-Tri al Deci si on, 558 F. S upp. 2d 1331, 1353. The sec ond partof Arg ument 1 also i gnor es that a fi nding of fact based on the tr i al recor d has already been made on the i ssu e of whether Customs consi dered all of the § 111.1 factor s—by thi s Court. The Post-Appeal Deci si on stated t he finding “that Plainti ff di d not establi sh at trial that the appro priate Customs offi cer consi dered t he § 111.1 factors when dec i ding whether t o im pose penalti es upon UPS.” 686 F. Supp. 2d at 1351-52. Althoug h thi s finding was b ased pri mari ly on t he absen ce of relev ant testim ony fro m the FP&F O ffi cer, the Cour t also consi dered Plai nti ff’s p ro posal to 1 present further testim ony fro m Ms. Goldsm i th. After exami ning the t rial transcri pt in detail, the Court found that any testim ony M s. Golds mi th offered atnew proceedi ngs for t he purpose of pro ving that Customs cons i dered all of the § 111.1 factor s si mply could not be consi stent wi th her pr i or sworn statements. Id. at 1357-58. The Court i s

Plainti ff c ontends that t he Courti mproper ly construed the F P&F Offi cer’s ro le, 1 whi ch the Court addr esses below.Court No. 04-00650 Page 11

certainly not obli ged to accept proffered te sti mony thatwould be inconsi stent wi th prior sworn statements given to t he Courtby the same wi tness. Th e need for furt her proceedings w as cons equently for eclosed bec ause thi s Court was able to make suffi ci ent factual fi ndings on the tr i al recor d before it, and not by rely i ng on any alleg ed “appellate fact-finding” i n the CAFC Deci si on. Plainti ff as ked, inthe alter nati ve, for remand “to allo w [Cu stoms] to apply the newly announc ed standard at t he admini strat i ve lev el i n the fi rst ins tance.” (Reply at 9.) The Court alre ady consi dered ex tensi ve case law in addressing Plainti ff’s al ter nati ve request for remand—whi ch w as argued eve n more for cefu lly by UPS in b riefing prior to the Post-Appeal Deci si on—and squarely rej ected that r eli ef. Post-Appeal D eci si on, 686 F. S upp. 2d at 1358-1366. II. Argument 2: The Po st- Appeal Deci sion DidNot Hin ge on Im proper Construal of Regulations R egarding the FP&F Officer’s R ole The gov ernment mi sreads the Post-Appeal Dec i si on when i t ar gues that the Court commi tte d mani fest err or by rely i ng on in ter pret ations of Customs regulations wi thout ag ency input and i mproper ly deter mining that e videnc e was requi red t hat the FP&F O ffi cer, Bert Webster, per sonally consi dered all of the § 111.1 factor s. The Court did not base i ts i nterpr etat i on of the r ole of t he FP&F O ffi cer solely upon regulato ry analysi s. Th e Court also reached i ts conclu si ons bas ed on a closeCourt No. 04-00650 Page 12

exami nati on of the t esti mony of Ms. Goldsmi th reg ardin g the F P&F Offi cer’s ro le. PostAppeal Deci si on, 686 F. S upp. 2d at 1356-57 (fi nding that M s. Golds mi th’s testim ony establi shed that the FP&F Offi cer was the relevantdeci si on-maker in the penalty procedure). The Court ’s finding was, in thi s regar d, based on the Court’ s role as the finder of fact, and not only on the stat ute and the reg ulati ons interpr eting that statute. The Court do es not beli eve t hat i t acted in corr ectly in exami ning the stat utor y and regulato ry sch eme, or t hat i t was mi staken as to t he corr ect ro le of the FP&F Offi cer i n penalty pro ceedings. Even i f the Court err ed i n ei ther o f these ways, h owever , the outcome of the case would remain the same. As the post-trial finder of fact, the Co urt has f ound that Plainti ff, w i thout adequate excuse, fai led to pr ov e at t rial that Customs (by i ts FP&F O ffi cer, Super vis or y Impor t S peci ali st and Trade Enforcement Coo rdin ator , or any ot her offi cer, for t hat matter ) cons i dered all ten § 111.1 factor s, and thus fai led to demonstr ate t hat i t was enti tled to recov er penalties against UPS. III. Argument 3: Customs’ Procedural Error Was Not Harmles s, Cus toms Failed t o Correct It at TrialDe Novo, and Substanti al Prejudi ce Need N ot Be Shown Plainti ff c ontends i n Arg ument 3 that the Co urt should have held Custom’s fai lure to consi der all ten § 111.1 factor s to be harmless erro r, and as a consequ ence should h ave t aken further testim ony in order t o fulfi ll i ts obli gation to make findings of fact regar ding whether t he ten § 111.1 factors were satisfi ed. Plainti ff c ontends thatCourt No. 04-00650 Page 13

enter i ng judgment fo r t he Defend ant was inappropr i ate in thi s context because Defendan t did not pr ov e sub stanti al prej udi ce resulting from er ro r. The Court cannot do what Plainti ff u rg es. Thi s Court’ s Post-T rial D eci si on i ni tially embraced a harmless error analysi s, bu t the CA FC Deci si on, rev ersi ng-in-part, rej ected that v ery approach. Plainti ff c i tes i napposi te case law fro m the CAFC and urges the Co urt t o follow tho se cas es, i gnor i ng the speci fi c di rectives regar ding this case given to t hi s Court in the CAFC Deci si on. Finall y, Plainti ff u rg es a substanti al prej udi ce analysi s that i s nei ther r equi red nor consi stent wi th the CAF C’s mandate. Arg ument 3 there fore establis hes no bas i s for reconsi derat i on. A. Erro rs Regarding § 111.1 Were Dis positi ve, Not Harmless Plainti ff c ontends that Customs commi tte d no err or in applying § 111.1, but even i f i t did, the er ro r could not det ermin e the out come of the tr i al. Plainti ff c i tes Empi re Energy Mgmt . Sy s., Inc. v. Roche, 362 F.3d 1343 (Fed. Cir. 2004) (“E mpi re Ener gy”) for the pro posi tion that pro cedural fai lures in admini strat i ve pr oceedi ngs, where they can be corre cted i n a later de no vo court pr oceeding, are no n-fatal. (Motion at 10; Reply at 5, 7.) Acc or ding to Plainti ff, the Court must undertak e i ts own analysi s of wh ether the § 111.1 factors were met. (Mo tion at 10 (“[e] rr or s at the agency lev el do notabsolve the tr i al court o f i ts responsi bi li ty t o apply t he facts found at tr i al to t he proper legal standard and determine whether t he Gover nment can c arr y its b urden”); Reply at 5Court No. 04-00650 Page 14

(“[t]he Court itself

i s to apply t he 10 factors i n sec tion 111.1 de novo, based upon the judi ci al recor d.”).) Empi re Ener gy is inapposi te. Empi re Ener gy r eviewed a c ontr act to constr uct a power faci li ty fo r t he mi li tar y, whi ch the mi li tar y admi ni strat i vely ter minated; the plainti ff appealed in part o n the basi s that “the contr acti ng offi cer di d not conduct an analysi s or for m a subjective beli ef that the conditi ons for default ter minati on were sati sfi ed.” Empi re Ener gy, 362 F .3d at 1356. The CAFC r ejecte d thi s argument, i ndi cati ng that cour t r eview of the termin ation dec i si on was an objecti ve inqu i ry to deci de whether ter minati on “was reasonable gi ven the ev ents that o ccu rr ed before the ter minati on deci si on was m ade,” and emphas i zed that t he subjective beli efs of the contracting offi cer were not relev ant. Id. at 1357-58. The CAFC upheld the termin ation i n Empi re Ener gy because the finding of the admi ni strat i ve appeals board was supp or ted by facts showing that t he plainti ff di d not make r easonable progr ess in perfor ming under the contr act (wh i ch w as not the basi s of the offi cer’s ter minati on deci si on). An objective rev i ew of the facts s upporte d the offi cer’s deci si on eve n where that r eview d i d not supportthe offi cer’s subjective reason for reachi ng that decis i on. Id. at 1358. Empi re Ener gy t husbears no di rect r elevance to the case at hand, in whi ch b oth thi s Court and the CA FC have been obli ged to exami ne the 19 U.S .C. § 1641(d)( 2)(A)Court No. 04-00650 Page 15

procedure for i mposing monetar y penalties upon cu stoms broker s, and as soci ated reg ulati on 19 C.F.R . § 111.1, whi ch li sts ten spec i fi c fac tor s that Customs “wi ll consi der” when i mposing such monetary penalti es. The relevance of the subjecti ve belief s of the Customs dec i si on maker are not at is sue here, and nei ther is the termin ation of mi li tar y contracts. Plainti ff, nonetheless, urges the Co urt t o ex tend Empi re Ener gy t o thiscase, arg uing that Empire Energy stands f or the pro posi tion that “i t does notmatter what [FP&F Offi cer] Bert We bster di d or did not do becaus e UPS is prot ected by the de nov o standard of rev i ew in thi s Court.” (Reply at 7-8.) Extendin g Empi re Ener gy in s ucha manner, and treat ing the § 111.1 fai lure i n thi s cas e as harmless, mi ght be possible—had the CAF C not speci fi cally rej ected such an approach in the CAFC Deci si on, as already detailed in the Post-Appeal Dec i si on and further dis cus sed below. The analysi s advocated by Plai nti ff i s, in fac t, essenti ally a paraphrase o f the approach adopted by t hi s Court in i ts ini tial P ost-TrialDeci si on. The Post-Tri al Deci si on, although couching i ts di scu ssi on i n the language of defere nce to Customs’ i nterpr etat i on of § 111.1, held that Customs’ fai lure to consi der all ten factor s di d not preclude recove ry and di rectly analyzed what the Cour t saw as the relevant § 111.1 factors on the basi s of the tr i al recor d. See 558 F . Supp. 2d 1331, 1352-54 (fi nding on the tr i al recor d that, despi te (a) UPS’s ver y low rejection rate and (b) UPS training pro gr amsCourt No. 04-00650 Page 16

i n response to Customs warni ngs (two relev ant § 111.1 factors), UPS fai led to ex erci se responsible su perv i si on and contro l). It need not be emphasi zed that, when the CAF C

rev ersed-in-part on t hi s very i ssu e, the CAF C was f ully aware of Empi re Ener gy. Had the CAF C deter mined that the failu re o f Cus toms to consi der each § 111.1 factor was i rr elevant, and t hat this Court was to make i ts own findings on the § 111.1 factor s de

novo , the CAF C would not have r ever sed thi s Court’ s deci si on and judgment o n those i ssu es. In i ssu i ng the Post-Appeal Deci si on and Judgment, conc luding that t he fai lure of the United Stat es to pr ov e that Custo ms c onsi dered each § 111.1 factor was fatal to

recov ery , thi s Court closely ex amined and hew ed to t he spec i fi c language of the CAF C Deci si on. Fo r ex ample, the Post-Appeal Dec i si on quoted t he CAFC Deci si on at lengt h and examined the preci se nature of the er ro rs i denti fi ed there —commi tte d by both Customs and b y this Court . 686 F. S upp. 2d at 1345-1350. Th e CAFC Deci si on rev ersedi n-part this Court ’s judgment speci fi cally on the basi s that “the Co urt o f Internat i onal Trade err ed in upholding [Customs’] determi nati on that U PS di d not ex erci se responsible su perv i si on and contro l in violati on of 19 U.S .C. § 1641.” 575 F.3d at 1378. The CAFC further speci fi ed that it vacated the “po rt i on of the Co urt o f Internat i onal Trade’s judgment” whi ch u pheld the penalti es, since “Cus toms di d not consi der all ten factors li sted in 19 C.F.R. § 111.1,” whi ch m eant thatCustoms’ “determin ation that UPSCourt No. 04-00650 Page 17

violated 19 U.S.C . § 1641 was i mproper .” Id. at 1383. Thus, the Court concluded, bas ed on the speci fi c language of the CAF C Deci si on, that t he Court ’s own cons i derat i on of the § 111.1 factor s di d not cure the er ro r, and that t he Courtcould not uphold Cus tom’s penalty deci si on unless Plainti ff c ould prov e that Custo ms h ad i tself cons i dered t he ten § 111.1 factors. The fac tor s goin g in to t hi s rationale are explained in depth in the PostAppeal Deci si on and wi ll not be repeat ed here. B. Subst antialPrejudic e to Defendant Not R equired Here Plainti ff’s fi nal clai m i s that Customs’ fai lure to consi der all of the § 111.1 factor s was, i f erro r atall, a “procedural” er ro r, and that t he penalty action thus cannot be set asi de absent a sh owi ng that U PS was s ubs tantially prejudic ed by the er ro r. (Mo tion at 12 (ci tin g, in ter ali a, Inter cargo Insurance Co. v. United Stat es, 83 F.3d 391, 395 (Fed. Ci r. 1996).) The fi rst r esponse to this arg ument i s, agai n, that Plainti ff’s d esi red r esult confli cts wi th the language o f the CAFC Deci si on. The CAFC Deci si on rev ersed-in-part the j udgment of thisCourt speci fi cally on the gr ounds that “the Cour t of Int ernational Trade err ed in upholding [Customs’] determi nati on that U PS di d not ex erci se responsible su perv i si on and contro l” since “Cus toms di d not consi der all ten factor s li sted i n 19 C.F.R. § 111.1,” and ther efore C ustoms’ “determin ation that UPS v i olated 19 U.S.C. § 1641 was i mproper .” 575 F.3d at 1378, 1383. Had the CA FC intended thatCourt No. 04-00650 Page 18

Customs’ erro r should be ch aracter i zed as a harmless procedural short coming, remediab le only o n a showing of subs tantial prejudi ce, the CAFC would have applied i ts own precedent (ci ted by Plai nti ff) reg ardin g such err or s. Th e CAFC di d not do so, however

. An exami nati on of the cases c i ted by Plai nti ff s uggests why. All of the cases c i ted by Plainti ff involv ed notic e or service requi rements. Vi olation of “tim i ng requirements” that were “merely pr ocedural ai ds” w as judged harmless. D i xon, 468 F .3d at 1355 n.1. Failu re t o comply wi th a serv i ce regulation di d not r equi re “[r]eci ssi on of a completed admini strat i ve r eview” ab sent sub stanti al prej udi ce. PAM, 463 F.3d at 1346. A minor defect in extensi on notices was h armless. Intercarg o, 83 F.3d at 394-397. And an agency was p ermitted to r elax r egulato ry requirements intended to assi st agency deci si onmaki ng, not pr ote ct i ndi vidu al li tigants, in an urgent si tuation. Ameri can Farm Lines, 397 U.S. at 538-39. 2 The regulation here, § 111.1, i n contrast t o the r egulations at i ssu e i n the aboveci ted cases, i s not a notice or serv i ce requi rement. I t isalso not a r egulation benefi tting the agency, “r elaxed” inthi s cas e for r easons of urgency. Section 111.1, to t he contrar y,

It is al so notable thatnone of the cases c i ted by Plainti ff involv ed a tr i al court’s 2 finding that t he plainti ff f ai led to pr ov e i ts case b ei ng set asi de by an appeals c ourton the basi s that the defendant di d not show “sub stanti al prej udi ce” from that failure. Sim ply stating the i dea rev eals i ts absu rdity.Court No. 04-00650 Page 19

cuts to the cor e of Customs’ penalty case agai nst UPS by part i ally defining the manner i n whi ch Cus toms may deci de whether UPS is li able. The gover nment ci tes no precedent thatviolati on of sucha reg ulati on i s presum ptively harmless ab sent a showing of subs tantial prejudi ce; the Courtwi ll instead conti nue to follow the o nly precedent r elevant t o the decis i on of this case: the CAFC Deci si on, Uni ted S tate s v. UPS Customhouse Broker age, Inc., 575 F.3d 1376 (2009). C O N C L U S I O N The Court has not commi tte d “multi ple and man i fest err or s” as al leged by Plainti ff ( Mot i on at 1)—but would do so i f i t were t o ignore t he language of the CA FC Deci si on and grantthi s moti on. The Courtrej ects Plainti ff’s arguments b ecaus e they (1) have already been presented t o, and rej ected by, this Court ; (2) are i nappli cable to the ext ent thatthey mis read t he basi s for the Co urt’s deci si on; and (3) u rg e the Co urt t o i gnor e the speci fi c di rectives of the CAFC reg ardin g this particu lar case. For the abov e reasons, i t is hereby ORDERED that Plai nti ff’s Motion for Reconsi derat i on i s deni ed. /s/Gregor y W. Car man Grego ry W. Carman Dated: June 17, 2010

New York, New York