Court Opinion

ID: 4345583
Source: CourtListenerOpinion
Date Created: 2018-11-29 15:04:19.118683+00
Date Added: 2024-06-11T10:15:25.305493
License: Public Domain

Slip Op. 18-

                UNITED STATES COURT OF INTERNATIONAL TRADE

 UNITED STATES,

        Plaintiff,
                                            Before: Jennifer Choe-Groves, Judge
 v.
                                            Court No. 17-00031
 GREENLIGHT ORGANIC, INC.,

        Defendant.

                                  OPINION AND ORDER

[Denying Defendant’s motion for summary judgment.]

                                                                  Dated: November 29, 2018

William G. Kanellis and Kelly A. Krystyniak, Attorneys, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, D.C., for Plaintiff United States. With
them on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Patricia M. McCarthy, Assistant Director.

Peter S. Herrick, Peter S. Herrick, P.A., of St. Petersburg, FL, Joshua A. Levy, Kennedys CMK,
LLP, of Miami, FL, and Frances P. Hadfield, Crowell & Moring, LLP, of New York, N.Y., for
Defendant Greenlight Organic, Inc.

       Choe-Groves, Judge: This action comes before the court under 19 U.S.C. § 1592 (2012)

for fraud in the course of importing merchandise into the commerce of the United States. Before

the court is a motion for summary judgment brought by Defendant Greenlight Organic, Inc.

(“Greenlight”) against Plaintiff United States (“Government”). See Def.’s Mot. Summ. J., July

9, 2018, ECF No. 89; see also Mem. L. Supp. Def.’s Mot. Summ. J., July 9, 2018, ECF No. 89

(“Def.’s Mem.”). Greenlight asserts that the Government’s action is time-barred by the five-year

statute of limitations set forth in 19 U.S.C. § 1621 because the Government became aware of
Court No. 17-00031                                                                           Page 2

Greenlight’s fraudulent activities in 2011, more than five years before filing the summons and

complaint in this case. See Def.’s Mem. 1. Plaintiff has filed a response in opposition to

Defendant’s motion. See The United States’ Opp’n Def.’s Mot. Summ. J., Aug. 20, 2018, ECF

No. 93. The Government contends that the statute of limitations began to run in February 2012

when the Government first obtained double-invoicing records from Greenlight. See id. at 1–2.

For the following reasons, the court concludes that there are insufficient undisputed facts for the

court to determine when the Government first discovered Greenlight’s fraudulent activities for

the purposes of 19 U.S.C. § 1621 at this stage of the proceedings. Greenlight’s Motion for

Summary Judgment is denied, and this issue is reserved for trial.

                                     UNDISPUTED FACTS

       The following facts are not in dispute. The United States initiated this action on behalf of

U.S. Customs and Border Protection (“Customs”). See The United States’ Rule 56.3 Statement

of Issues of Material Fact 1, Aug. 20, 2018, ECF No. 93 (“Pl.’s Facts”); Def.’s Resp. to the

United States’ Rule 56.3 Statement of Issues of Material Fact 1, Sept. 4, 2018, ECF No. 95

(“Def.’s Facts Resp.”). Defendant Greenlight imports products including athletic apparel and is

owned by Parambir “Sonny” Aulakh. See Pl.’s Facts 1; Def.’s Facts Resp. 1–2.

       The Government filed a civil complaint against Greenlight on February 8, 2017. See

Pl.’s Facts 11; Def.’s Facts Resp. 20. The complaint sought the following relief: (1) the amount

of “approximately $238,516.57 in unpaid duties and fees, pursuant to 19 U.S.C. § 1592(d), plus

interest,” and (2) “a penalty for fraud, pursuant to 19 U.S.C. § 1592(c)(1) in the amount of

approximately $3,232,032, stemming from Greenlight’s violations of 19 U.S.C. § 1592(a)

relating to approximately 122 entries of wearing apparel.” See Pl.’s Facts 11; Def.’s Facts Resp.
Court No. 17-00031                                                                          Page 3

20. Greenlight denied liability under 19 U.S.C. § 1592 in its Answer. See Pl.’s Facts 12; Def.’s

Facts Resp. 21. Greenlight pled further that the Government’s action for fraud in this case was

time-barred because the statute of limitations expired before the Government filed the action.

See Pl.’s Facts 12; Def.’s Facts Resp. 22.

                       JURISDICTION AND STANDARD OF REVIEW

       The court has jurisdiction over the underlying action pursuant to 28 U.S.C. § 1582. The

court will grant summary judgment if the movant shows that there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law. USCIT R. 56(a). To

raise a genuine issue of material fact, a party cannot rest upon mere allegations or denials and

must point to sufficient supporting evidence for the claimed factual dispute to require resolution

of the differing version of the truth at trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248–49 (1986); Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 835–

36 (Fed. Cir. 1984).

                                             ANALYSIS

       The Government filed its Complaint in this matter on February 8, 2017 alleging

fraudulent misclassification and undervaluation. In pertinent part, 19 U.S.C. § 1592(a)(1) states:

       Without regard to whether the United States is or may be deprived of all or a portion
       of any lawful duty thereby, no person, by fraud, gross negligence, or negligence--
           (A) may enter, introduce, or attempt to enter or introduce any merchandise into
               the commerce of the United States by means of--
               (i) any document, written or oral statement, or act which is material and
                   false, or
               (ii) any omission which is material.

19 U.S.C. § 1592(a)(1). To prove a fraudulent violation of the statute, Plaintiff must establish,
Court No. 17-00031                                                                               Page 4

by clear and convincing evidence, that Greenlight (1) deliberately introduced merchandise into

the commerce of the United States by means of material false statements, acts or omissions; and

(2) intended to defraud the revenue or otherwise violate the laws of the United States. See 19

U.S.C. § 1592(a)(1), (e)(2); United States v. Inn Foods, Inc., 31 CIT 1474, 1484, 515 F. Supp. 2d
1347, 1357 (2007).

       A statute of limitations imposes a time limit for suing in a civil case, which is based on

the date when the claim accrued. CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2182 (2014). A

statute of limitations requires a plaintiff to pursue diligent prosecution of known claims and

promotes justice by preventing surprises through plaintiff’s “revival of claims that have been

allowed to slumber until evidence has been lost, memories have faded, and witnesses have

disappeared.” Id. at 2183 (citing R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342,

348–49 (1944)).

       In actions alleging fraud under 19 U.S.C. § 1592, the statute sets forth a five-year statute

of limitations for initiating a case before the Court:

       No suit or action to recover any duty under section 1592(d) . . . of this title . . . shall
       be instituted unless such suit or action is commenced within five years after the
       time when the alleged offense was discovered . . . except that--
       (1) in the case of an alleged violation of section 1592 . . . of this title, no suit or
           action (including a suit or action for restoration of lawful duties under
           subsection (d) of such sections) may be instituted unless commenced within 5
           years after the date of the alleged violation or, if such violation arises out of
           fraud, within 5 years after the date of discovery of fraud.

19 U.S.C. § 1621 (emphasis added). The language “within 5 years after the date of discovery of

fraud” invokes the discovery rule, which tolls the statute of limitations period until the date

when the plaintiff first learns of the fraud. United States v. Spanish Foods, Inc., 24 CIT 1052,
Court No. 17-00031                                                                         Page 5

1056, 118 F. Supp. 2d 1293, 1297 (2000) (citing United States v. Ziegler Bolt & Parts Co., 19
CIT 13, 17 (1995); United States v. Modes Inc., 16 CIT 879, 887, 804 F. Supp. 360, 368

(1992)). Determining when a statute of limitations begins to run is a fact-specific inquiry.

Spanish Foods, 24 CIT at 1056, 118 F. Supp. 2d at 1297–98. The question of when a plaintiff

discovered fraud is not one that often lends itself to resolution by way of summary judgment.

       Here, genuine issues of material fact exist as to when the Government first discovered

the fraudulent misclassification and undervaluation. The record on summary judgment does not

provide the court with enough information to assess when the Government first had knowledge

of Greenlight’s fraudulent activities. For example, the record does not demonstrate clearly

whether the Government had knowledge of Greenlight’s intent to defraud the revenue or

otherwise violate the laws of the United States when the Government discovered Greenlight’s

misclassification of its entries in 2011. More facts are needed to ascertain when the

Government first had knowledge of Greenlight’s fraudulent misclassification and

undervaluation activities, including when the Government began to suspect a potential double-

invoicing scheme and when the Government had knowledge of an intent to defraud with respect

to the misclassification of entries. Because more facts are necessary to determine when the

Government gained knowledge of the specific causes of action alleged against Greenlight, the

court is unable to determine on summary judgment whether Plaintiff initiated this case outside

of the statute of limitations period permitted in 19 U.S.C. § 1621. The court denies Defendant’s

Motion for Summary Judgment. The Parties may present evidence on this issue at trial.
Court No. 17-00031                                                                        Page 6

                                         CONCLUSION

       Accordingly, upon consideration of Defendant’s Motion for Summary Judgment, and all

other papers and proceedings in this action, it is hereby

       ORDERED that Defendant’s motion is denied.

                                                              /s/ Jennifer Choe-Groves
                                                            Jennifer Choe-Groves, Judge

Dated: November 29, 2018
       New York, New York