It is hard to convince anyone they are wrong, especially judges. We lawyers (judges are lawyers) are a haughty bunch by training and disposition. Surrendering a centimeter to the other side diminishes us and our clients. For a court, the loss of face can be devastating. Revising a previous ruling suggests the possibility of inattention to detail or flouting of the law. Rather than self-flagellate, judges and parties tend to rely on the speculative system of appeals to make the necessary adjustments and balance the scales of justice.
Today the Court of International Trade (CIT) rejected the US Government’s request for the court to reconsider its judgment in favor of UPS, the defendant. The Government has long tried to collect a $75,000 penalty against UPS for misclassifying imported items and for not exercising “reasonable supervision and control” over its customs business as required by 19 USC 1641(b)(4) and 19 CFR 111.1. Previously, the Court of International Trade and, upon the appeal, the Court of Appeals for the Federal Circuit both agreed that UPS failed to properly classify the items. UPS still won (as it now stands) because the Government (specifically the CBP FP&F officer) failed to testify in the original trial that he considered all ten factors under the definition of “reasonable supervision and control.” See 19 CFR 111.1. In today’s ruling, the CIT rejected the Government’s request to reopen the trial to introduce the “ten factors” testimony and to reconsider the judgment it previously entered in UPS’s favor. The CIT refused to concede that it had committed “multiple and manifest errors” as alleged by the Government.
Although UPS won this latest skirmish, one of the most important issues to customs brokers remains unsettled in this prolonged litigation, namely whether CBP can penalize brokers beyond $30,000 for multiple violations under 19 CFR 111.91.
One certainty is that from now, CBP will regurgitate the ten factors each time it penalizes a customs broker. FP&F officers now have a lot more hoops to jump through.
For the curious, here are the ten factors under 19 CFR 111.1:
the training required of employees of the broker;
the issuance of written instructions and guidelines to employees of the broker;
the volume and type of business of the broker
the reject rate for the various customs transactions;
the maintenance of current editions of CBP Regulations, the Harmonized Tariff Schedule of the United States, and CBP issuances;
the availability of an individually licensed broker for necessary consultation with employees of the broker;
the frequency of supervisory visits of an individually licensed broker to another office of the broker that does not have a resident individually licensed broker;
the frequency of audits and reviews by an individually licensed broker of the customs transactions handled by employees of the broker;
the extent to which the individually licensed broker who qualifies the district permit is involved in the operation of the brokerage;
any circumstance which indicates that an individually licensed broker has a real interest in the operations of a broker.