'Trek Leather' Concerns Persist Among Customs Lawyers
The U.S. Court of Appeals for the Federal Circuit decision in Trek Leather continues even now to be a major point of contention among customs lawyers, more than four years after it was issued (see 14091703). "There's a lot of uncertainty out there," said Michael Cone, a FisherBroyles lawyer, who moderated a March 8 panel on enforcement during the International Trade Update at the Georgetown University law school. Patricia McCarthy, assistant director for the Department of Justice commercial litigation branch, said despite the concerns within the trade, there remains a high bar for individual liability in Section 1592 cases.
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Since that decision, "the CIT has utilized the Federal Circuit jurisprudence created by Trek Leather to go after downstream folks, and I'm not saying it's wrong, what I'm saying is there's a lot of uncertainty," Cone said. "We're going to see, I think, more discretion by the DOJ to go after upstream and downstream participants in the import transaction under [Section 1592] and it's going to be interesting."
The government must still "establish evidence that this person had something to do with the transaction," said McCarthy, who noted she was speaking only on her own behalf and not for the DOJ. "I don't think that someone can be sitting in a corner minding his or her own business and then somehow get ensnared in Section 1592 liability." The Federal Circuit in Trek Leather said "what is critical is the defendant's conduct," she said.
McCarthy also talks about some of the difficulties of collecting penalties in antidumping or countervailing duty evasion and Section 1592 cases that involve fly-by-night importers. "One thing that popped out" in a "not particularly scientific" review of 2018 litigation was "a lot of default judgments," McCarthy said. "From the DOJ perspective, it was kind of a happy year because in the past, say, 10 years, we've had a lot of difficulty even getting default judgments."
Although default judgments have "symbolic value," they don't really provide the remedies being sought and suggest "a breakdown of the system," she said. When an importer "dissolves," the government will then go after the sureties. "Going after sureties is not the ideal option" and the sureties are not liable for penalties, she said. When no penalty is paid, that goes against the somewhat unique shared compliance regime established for importers, she said. There's some excitement at the DOJ for the coming Univar trial (see 1811210026), which will be the first jury trial at the CIT in about 20 years and is set to begin April 1, McCarthy said. The trial is expected to "take a few weeks," she said.