United States v. Univar USA Inc. , 375 F. Supp. 3d 1305 ( 2019 )


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  •                                      Slip. Op. 19-38
    UNITED STATES COURT OF INTERNATIONAL TRADE
    UNITED STATES,
    Plaintiff,
    Before: Mark A. Barnett, Judge
    v.
    Court No. 15-00215
    UNIVAR USA INC.,
    Defendant.
    MEMORANDUM AND ORDER
    On August 6, 2015, Plaintiff, United States (“Plaintiff” or “the Government”),
    initiated this action seeking to recover unpaid antidumping duties and a monetary
    penalty pursuant to 19 U.S.C. § 1592 stemming from 36 entries of saccharin allegedly
    transshipped from the People’s Republic of China (“China”) through the Republic of
    China (“Taiwan”) that Defendant, Univar USA, Inc. (“Defendant” or “Univar”), entered
    into the commerce of the United States between 2007 and 2012. Compl., ECF No. 2.
    On October 6, 2015, Defendant filed an answer and “demand[ed] a jury trial on all
    issues so triable, pursuant to Rule 38 of this Court and U.S. Const. amend. VII.”
    Answer at 10, ECF No. 8. The parties have completed discovery, the court has ruled on
    two motions for partial summary judgment and a motion for summary judgment, and this
    matter is scheduled for a jury trial to begin on April 1, 2019. See Docket Entry (Dec. 13,
    2018), ECF No. 210.
    At the pretrial conference on March 5, 2019, Defendant asserted that any
    determination of civil penalties pursuant to 19 U.S.C. § 1592 would not be an issue
    Court No. 15-00215                                                                  Page 2
    triable by jury. The Government disagreed. The court invited the parties to brief the
    issue, and the parties did so. See United States’ Mem. Relating to the Jury’s
    Consideration of Quantum (“Pl.’s Mem.”), ECF No. 232; Univar’s Mem. Demonstrating
    the Determination of any Discretionary Penalty is for the Judge, ECF No. 233. At issue
    before the court, therefore, is whether any determination of the amount of civil penalties
    pursuant to 19 U.S.C. § 1592 is an issue triable by the jury pursuant to federal statute or
    the Seventh Amendment to the U.S. Constitution. Having considered the parties’
    memoranda and arguments, and after due deliberation, the court finds that the
    determination of civil penalties pursuant to 19 U.S.C. § 1592 is not triable by jury.
    DISCUSSION
    U.S. Court of International Trade (“USCIT”) Rule 38(a) preserves a right to a jury
    trial provided by a federal statute or arising out of the Seventh Amendment to the U.S.
    Constitution. 1 The court first addresses whether section 1592 provides a right to have a
    jury determine any civil penalties and then turns to the Seventh Amendment analysis.
    A. Section 1592 Does Not Provide a Right to Have Civil Penalties
    Determined by a Jury
    The statute provides that in an action seeking recovery of any monetary penalty
    pursuant to 19 U.S.C. § 1592, “all issues, including the amount of the penalty, shall be
    tried de novo.” 19 U.S.C. § 1592(e)(1). Section 1592 provides the statutory framework
    for determining civil penalties depending on the degree of culpability of the violator.
    1
    While USCIT Rule 38(d) permits a party to withdraw a demand for jury trial, such
    withdrawal must be with the consent of all parties. Univar does not suggest that it is
    partially withdrawing a jury demand on the civil penalty issue and, in any case, the
    Government has opposed Univar’s assertion that any determination of civil penalties is
    for the court.
    Court No. 15-00215                                                                   Page 3
    When a grossly negligent section 1592(a) violation 2 affects the assessment of duties,
    the statute provides for a civil penalty of no more than “the lesser of [ ] the domestic
    value of the merchandise, or [ ] four times the lawful duties, taxes, and fees of which the
    United States is or may be deprived.” 19 U.S.C. § 1592(c)(2)(A). When a negligent
    section 1592(a) violation affects the assessment of duties, the civil penalty may not
    exceed “the lesser of [ ] the domestic value of the merchandise, or [ ] two times the
    lawful duties, taxes, and fees of which the United States is or may be deprived.” 
    Id. § 1592(c)(3)(A).
    3 The statue is silent, however, as to whether the judge or jury must
    determine the amount of the penalty; in fact, it makes no mention of juries.
    Congress adopted section 1592(c) in essentially its current form in 1978. The
    prior version of the law -- section 592 of the Tariff Act of 1930 -- required a fixed penalty
    regardless of the degree of culpability of the alleged violator and did not permit effective
    judicial review. S. Rep. No. 95-778, at 2, 17-18 (1978), as reprinted in 1978
    U.S.C.C.A.N. 2211, 2213, 2228-29; see also Customs Procedural Reform and
    Simplification Act of 1978, Pub. L. No. 95-410, § 592, 92 Stat. 888, 895. The penalty
    imposed for a violation of section 592 was forfeiture of the merchandise or payment of a
    fine equal to its domestic value. S. Rep. 95-778, at 2, 17, as reprinted in 1978
    U.S.C.C.A.N. at 2213, 2228-29. While Customs had authority to mitigate a penalty,
    upon judicial review, “the court [could] only decide whether or not a violation occurred.
    2 A violation of section 1592(a) occurs when a person—by fraud, gross negligence, or
    negligence—enters, introduces, or attempts to enter or introduce merchandise into the
    United States by means of a material and false act, statement, or omission. 19 U.S.C.
    § 1592(a)(1).
    3 Regardless of whether a monetary penalty is assessed, the United States shall require
    the payment of any “lawful duties, taxes, or fees” of which it has been deprived as a
    result of the violation of section 1592(a). 19 U.S.C. § 1592(d).
    Court No. 15-00215                                                                 Page 4
    It [could not] change the amount of the statutory penalty, domestic value.” S. Rep. No.
    95-778 at 2, as reprinted in 1978 U.S.C.C.A.N. at 2213. The court had no ability to
    tailor the penalty to the degree of culpability.
    With the passage of the Customs Procedural Reform and Simplification Act of
    1978, Congress changed the civil penalty from a fixed amount “to an amount varying
    according to the culpability of the importer.” S. Rep. No. 95-778, at 19, as reprinted in
    1978 U.S.C.C.A.N. at 2230; H.R. Rep. No. 95-1517, at 10 (1978) (Conf. Rep.), as
    reprinted in 1978 U.S.C.A.N. 2249, 2252; 19 U.S.C. 1592(c). For the first time, “the
    appropriateness of the amount of the penalty” became “a proper subject for judicial
    review.” S. Rep. No. 95-778, at 21, as reprinted in 1978 U.S.C.A.N. at 2232. While the
    legislative history is clear that the court is permitted “to make its own judgment about
    the appropriate remedy for a section [1]592 violation,” H.R. Rep. No. 95-1517, at 10, as
    reprinted in 1978 U.S.C.C.A.N. at 2253; see also S. Rep. No. 95-778, at 20, as
    reprinted in 1978 U.S.C.C.A.N. 2231, that history, when read in isolation, does not shed
    light on whether “court” means judge or jury. Cf. Feltner v. Columbia Pictures
    Television, Inc., 
    523 U.S. 340
    , 346 (1998) (considering whether the word “court” in the
    context of the statutory damages provision of the Copyright Act of 1976 meant “judge,
    not jury”). 4 Thus, the court is unable to discern any congressional intent to grant a
    4 A survey of section 1592 cases in the Court of International Trade does not aid in this
    respect. In several cases in which the court determined the civil penalty following a
    bench trial, the court has stated that it has the discretion to determine the penalty
    amount within the parameters set by the statute. See United States v. Optrex Am., Inc.,
    
    32 CIT 620
    , 621, 639, 
    560 F. Supp. 2d 1326
    , 1328, 1342 (2008); United States v. Inn
    Foods, Inc., 
    31 CIT 1474
    , 1475, 1488-90, 
    515 F. Supp. 2d 1347
    , 1350, 1361-62
    (2007), aff’d, 
    560 F.3d 1338
    (Fed. Cir. 2009); United States v. Nat’l Semiconductor
    Corp., 
    30 CIT 769
    , 771-72, modified on reconsideration, 
    30 CIT 1428
    (2006), vacated
    and remanded, 
    496 F.3d 1354
    (Fed. Cir. 2007); United States v. Complex Mach. Works
    Court No. 15-00215                                                                      Page 5
    statutory right to a jury trial on the determination of the amount of civil penalties
    pursuant to 19 U.S.C. § 1592(c).
    B. The Seventh Amendment Does Not Provide a Right to Have Civil
    Penalties Determined by a Jury
    The Seventh Amendment provides that “[i]n Suits at common law, where the
    value in controversy shall exceed twenty dollars, the right of trial by jury shall be
    preserved.” U.S. Const., amend. VII. The Seventh Amendment preserves the right to a
    jury trial that “existed under the English common law when the amendment was
    adopted.” Baltimore & Carolina Line, Inc. v. Redman, 
    295 U.S. 654
    , 657 (1935). It also
    applies to “actions brought to enforce statutory rights that are analogous to common-law
    causes of action ordinarily decided in English law courts in the late 18th century, as
    opposed to those customarily heard by courts of equity or admiralty.” Granfinanciera,
    S.A. v. Nordberg, 
    492 U.S. 33
    , 41 (1989) (citing Curtis v. Loether, 
    415 U.S. 189
    , 193
    (1974)). A two-step inquiry determines whether a modern statutory cause of action is
    Co., 
    23 CIT 942
    , 942, 947, 
    83 F. Supp. 2d 1307
    , 1308, 1312 (1999); United States v.
    Menard, Inc., 
    17 CIT 1229
    , 1229, 
    838 F. Supp. 615
    , 616 (1993), aff’d in part, vacated in
    part, 
    64 F.3d 678
    (table) (Fed. Cir. 1995); United States v. Modes, Inc., 
    17 CIT 627
    ,
    628, 635-36, 
    826 F. Supp. 504
    , 506, 512 (1993). In the absence of a jury demand, the
    court was not required to determine whether the penalty amount was to be determined
    by the jury in these cases. There is one case in which the jury determined the amount
    of civil penalty. See United States v. Priority Prods., Inc., 
    793 F.2d 296
    , 298 (Fed. Cir.
    1986) (“The case proceeded to a trial before a jury[;] . . . The jury found all three
    defendants . . . jointly and severally liable for a penalty of $30,000.”). However, there is
    no indication that Priority Products addressed whether the defendant had a right to a
    jury’s determination of the quantum of the civil penalty and the case predates Tull v.
    United States, 
    481 U.S. 412
    (1987) by two years. See id.; United States v. Priority
    Products, Inc., 
    9 CIT 383
    , 
    615 F. Supp. 591
    (1985); infra pp. 5-7 (discussing Tull). The
    court has located only one case in which the court was confronted with the same issue
    and decided, without explanation, that the defendant had a right to a jury trial to
    determine liability, but not to any other aspect of the case. See Order, United States v.
    Tri-State Hosp. Supply Corp., Court No. 97-04-00678 (CIT May 10, 1999), Docket Entry
    55.
    Court No. 15-00215                                                                    Page 6
    analogous to a common-law action that was tried in a court of law. 
    Tull, 481 U.S. at 417-18
    . First, the court must “compare the statutory action to 18th-century actions
    brought in the courts of England prior to the merger of the courts of law and equity.” 
    Id. at 417.
    “Second, [the court must] examine the remedy sought and determine whether it
    is legal or equitable in nature.” 
    Id. at 417–18.
    The parties do not dispute that Defendant has a right to have a jury determine
    liability pursuant to 19 U.S.C. § 1592(a)(1) and the court agrees. In Tull, the U.S.
    Supreme Court analogized actions by the Government seeking civil penalties under
    statutory provisions to a common law “action in debt,” for which the Seventh
    Amendment guarantees a defendant’s right to a jury trial on liability. 
    Id. at 420,
    424.
    Thus, Univar has a right to have a jury determine its liability for civil penalties pursuant
    to 19 U.S.C. § 1592(a)(1) and, by timely demanding a jury in its answer, has properly
    invoked that right.
    Nevertheless, “[t]he Seventh Amendment is silent on the question of whether a
    jury must determine the remedy in a trial in which it must determine liability.” 
    Id. at 425-
    26. Although a defendant may have a right to a jury trial to determine liability pursuant
    to section 1592(a), whether a defendant has a right to have a jury determine the civil
    penalty quantum is a separate inquiry. 
    Id. The answer
    to that inquiry “depend[s] on
    whether the jury must shoulder this responsibility as necessary to preserve the
    ‘substance of the common-law right of trial by jury.’” 
    Id. at 426
    (quoting Colgrove v.
    Battin, 
    413 U.S. 149
    , 157 (1973)).
    In Tull, the U.S. Supreme Court held that, although the Seventh Amendment
    guarantees a defendant a right to a jury trial to determine liability in a civil penalty action
    Court No. 15-00215                                                                    Page 7
    brought by the United States under the Clean Water Act, the defendant had no such
    right with respect to the determination of civil penalties. 
    Id. at 427.
    The Court reasoned
    that, in an action to recover civil penalties, the United States usually seeks the penalty
    amount fixed by Congress. See 
    id. at 426
    (citing United States v. Regan, 
    232 U.S. 37
    ,
    40 (1914); Hepner v. United States, 
    213 U.S. 103
    , 109 (1909)). Accordingly, the Court
    concluded that the determination of civil penalties does not involve the “substance of a
    common-law right to a trial by jury.” 
    Id. The Court
    also reasoned that, since Congress
    had the authority to determine the statutory penalty, Congress could delegate that
    function to trial judges. 
    Id. at 427.
    The Court noted that the determination of penalties
    under the Clean Water Act involved “highly discretionary calculations that take into
    account multiple factors,” and that such calculations were “traditionally performed by
    judges.” 
    Id. (citing Albemarle
    Paper Co. v. Moody, 
    422 U.S. 405
    , 442-43 (1975)
    (Rehnquist, J., concurring)).
    Applying the Court’s decision and reasoning in Tull to the instant action, the court
    concludes that the Seventh Amendment does not guarantee a right to a trial by jury to
    determine civil penalties pursuant to section 1592(c). As in Tull, “Congress’ authority to
    fix the penalty by statute has not been questioned.” 
    Tull, 481 U.S. at 426
    . Similar to the
    Clean Water Act, which provides for a maximum civil penalty of “‘$10,000 per day’
    during the period of the violation,” 
    id. at 414,
    section 1592(c) now sets varying maximum
    penalties depending on the degree of culpability, see 19 U.S.C. § 1592(c). Congress’s
    ability to delegate the civil penalty determination to trial judges at the Court of
    International Trade is not in question. Congress has done so here because, while it
    chose to set statutory maximums, it clearly intended for the court “to make its own
    Court No. 15-00215                                                                  Page 8
    judgment about the appropriate remedy for a section [1]592 violation.” H.R. Rep. No.
    95-1517, at 10, as reprinted in 1978 U.S.C.C.A.N. at 2253. In contrast, the court retains
    no discretion as to whether or not to award duties, taxes, or fees, of which the United
    States has been deprived as a result of a section 1592(a) violation. 19 U.S.C.
    § 1592(d) (separate and regardless of any civil penalty determination, payment of any
    lost duties, taxes, or fees, “shall be required”; such determination lies with the jury and
    Univar has not suggested otherwise). Correspondingly, similar to the Clean Water Act,
    which required “highly discretionary calculations . . . traditionally performed by judges,”
    
    Tull, 481 U.S. at 427
    , section 1592(c) requires a similar discretionary determination. 5
    5 In Tull, the Court noted that the Clean Water Act required consideration of “multiple
    factors” in calculating the amount of civil 
    penalties. 481 U.S. at 427
    . Although section
    1592(c) does not specify the factors the court must consider when determining civil
    penalties, the absence of articulated factors does not detract from Congress’
    commitment of the penalty determination to the court’s discretion. While not binding
    here, the court has identified and considered up to 14 factors when determining the
    appropriate penalty. See Complex Mach. Works 
    Co., 23 CIT at 949
    –50, 83 F. Supp. 2d
    at 1315 (outlining 14 factors); United States v. Nat’l Semiconductor Corp., 
    496 F.3d 1354
    , 1356 (Fed. Cir. 2007) (stating that the 14 factors identified in Complex Machine
    Works “are factors the Court of International Trade may consider when determining the
    appropriateness of a civil penalty for a violation of customs laws”). In Complex Machine
    Works Co., the court looked to numerous Acts imposing civil penalties, including the
    Clean Water Act, that articulated factors to guide the determination of the proper penalty
    amount. See Complex Mach. Works 
    Co., 23 CIT at 947-49
    & 
    n.10, 83 F. Supp. 2d at 1313-14
    . The factors are:
    (1) the defendant’s good faith effort to comply with the statute; (2) the
    defendant’s degree of culpability; (3) the defendant’s history of previous
    violations; (4) the nature of the public interest in ensuring compliance with
    the regulations involved; (5) the nature and circumstances of the violation
    at issue; (6) the gravity of the violation; (7) the defendant’s ability to pay;
    (8) the appropriateness of the size of the penalty to the defendant’s
    business and the effect of a penalty on the defendant’s ability to continue
    doing business; (9) that the penalty not otherwise be shocking to the
    conscience of the [c]ourt; (10) the economic benefit gained by the
    defendant through the violation; (11) the degree of harm to the public; (12)
    the value of vindicating the agency authority; (13) whether the party
    Court No. 15-00215                                                                     Page 9
    Therefore, a determination of a civil penalty pursuant to section 1592(c) is not “an
    essential function of a jury trial,” and the Seventh Amendment does not provide a right
    to have a jury determine civil penalties pursuant to section 1592(c). See id.; cf.
    
    Albemarle, 422 U.S. at 443
    (Rehnquist, J., concurring) (rejecting the notion that a party
    may demand a jury in a Title VII case as to the award of backpay “notwithstanding a
    finding of unlawful discrimination” because discretionary determinations implicating a
    court’s jurisdiction over equitable matters are not susceptible to jury demands).
    The Government’s arguments to the contrary are not persuasive. 6 The
    Government correctly asserts that the Seventh Amendment guarantees a right to a jury
    trial on the assessment of damages if such a right existed in a comparable action that
    pre-dated the Amendment. See Pl.’s Mem. at 3-4 (citations omitted). The U.S.
    Supreme Court has recognized that the assessment of damages in certain civil suits is
    a matter within the province of the jury. See, e.g., Day v. Woodworth, 
    54 U.S. 363
    , 371
    (1851) (“It is a well-established principle of the common law, that in actions of trespass
    and all actions on the case for torts, a jury may inflict what are called exemplary,
    sought to be protected by the statute had been adequately compensated
    for the harm; and (14) such other matters as justice may require.
    Id. at 
    949–50, 83 F. Supp. 2d at 1315
    . The Government has not suggested departure
    from those 14 factors.
    6 The court takes note that the Government’s position here is at odds with its position in
    Tri-State. In Tri-State, the defendant sought a jury trial on all issues. The Government
    agreed that defendant had a right to a jury trial on liability but, citing Tull, argued that the
    defendant was not entitled to demand that a jury determine the civil penalty to be
    imposed. Pl.’s Resp. to Def.’s Demand for Jury Trial, United States v. Tri-State Hosp.
    Supply Corp., Court No. 97-04-00678 (CIT May 10, 1999), Docket Entry No. 13. The
    Tri-State court agreed with the Government but did not explain its reasoning. See supra
    note 4. In arguing for a jury to determine the civil penalty here, the Government does
    not point to any intervening case law or statutory changes that might explain its change
    in position.
    Court No. 15-00215                                                                 Page 10
    punitive, or vindictive damages upon a defendant . . . .”); Dimick v. Schiedt, 
    293 U.S. 474
    , 480 (1935) (stating that “the common-law rule as it existed at the time of the
    adoption of the Constitution” was that “in cases where the amount of damages was
    uncertain[,] their assessment was a matter so peculiarly within the province of the jury
    that the Court should not alter it.”); Pernell v. Southall Realty, 
    416 U.S. 363
    , 370 (1974)
    (“Th[e] Court has long assumed that actions to recover land, like actions for damages to
    a person or property, are actions at law triable to a jury.”); 
    Feltner, 523 U.S. at 353
    (“[T]here is overwhelming evidence that the consistent practice at common law was for
    juries to award damages.”) (citations omitted). In none of the cases on which the
    Government relies, however, was the Government the plaintiff seeking a civil penalty.
    In contrast to civil suits between private litigants, the U.S. Supreme Court has
    analogized “the awarding of civil penalties to the Government . . . to sentencing in a
    criminal proceeding.” 
    Feltner, 523 U.S. at 355
    (citing 
    Tull, 481 U.S. at 428
    (Scalia, J.,
    concurring in part and dissenting in part)). 7
    There is also no historical evidence that juries determined discretionary civil
    penalties to be paid to the Government in customs cases at the time the Seventh
    Amendment was adopted. The Government cites five cases, each of which is
    inapposite. Pl.’s Mem. at 6-7 (citing Wight v. Curtis, 
    29 F. Cas. 1170
    , 1171
    (C.C.S.D.N.Y. 1845); Lawrence v. Caswell, 
    54 U.S. 488
    , 490 (1851); Maxwell v.
    7 The Government further avers that this court “has long recognized that in a section
    1592 action such as this one, it ‘may order a trial by a jury of any or all issues.’” Pl.’s
    Mem. at 5 (quoting Priority 
    Prods. 615 F. Supp. at 597
    ). As noted earlier, Priority
    Products predates Tull and there is no indication that the court considered whether the
    Seventh Amendment gave the Defendant a right to have the civil penalty determined by
    the jury.
    Court No. 15-00215                                                                   Page 11
    Griswold, 
    51 U.S. 242
    , 247 (1850); Greely v. Thompson, 
    51 U.S. 225
    , 230 (1850); In re
    One Hundred & Twenty-Three Packages of Glass, 
    18 F. Cas. 709
    , 711 (C.C.S.D.N.Y.
    1841)). Four of the five cases involved suits by private parties against the Collector of
    Customs8 to recover allegedly overpaid duties, rather than suits brought by the
    Government. See 
    Wright, 29 F. Cas. at 1170
    ; 
    Lawrence, 54 U.S. at 488
    ; 
    Maxwell, 51 U.S. at 242
    ; 
    Greely, 51 U.S. at 226
    . The remaining case involved an information filed to
    seek forfeiture of goods allegedly undervalued with the “intent, by a false valuation, to
    defraud the revenue of the United States.” In re One Hundred & Twenty-Three
    Packages of 
    Glass, 18 F. Cas. at 710
    . There, the issues concerned the real or market
    value of the goods on the date of the invoice and whether the invoice value was made
    up to defraud the revenue, questions presented to the jury. 
    Id. at 710-11.
    Those are
    the type of factual determinations that are traditionally within the province of the jury.
    Once that liability was determined, the penalty provided by statute was forfeiture of the
    goods. See 
    id. (citing An
    Act for the More Effectual Collection of the Impost Duties, ch.
    147, § 4, 4 Stat. 409, 410 (1830)). There were no factors to weigh and no discretionary
    civil penalty amount to be determined. Thus, the in rem remedy sought in that case is
    not analogous to the discretionary civil penalty that the Government now seeks
    pursuant to section 1592(c).
    CONCLUSION
    Univar filed a demand for a “jury trial on all issues so triable.” Neither section
    1592 nor the Seventh Amendment to the U.S. Constitution guarantees a right to have
    the jury determine civil penalties to be paid to the Government. The court finds that the
    8   In early customs cases, the named defendant was usually the Collector of Customs.
    Court No. 15-00215                                                              Page 12
    determination of the quantum of civil penalties pursuant to section 1592(c) is not an
    issue triable to the jury.
    SO ORDERED.
    /s/     Mark A. Barnett
    Judge
    Dated: March 26, 2019
    New York, New York